Obama said on Saturday political sacrifices will be needed

www.reuters.com

Under pressure to reduce America's 9.2 percent jobless rate, Obama used his weekly radio and Web address to vow to seek common ground with his Republican opponents and try to overcome serious disagreements on taxes and spending cuts that he says will improve the atmosphere for job creation.

He is to meet with top lawmakers from both parties on Sunday evening in what he says will be a session to perhaps begin the hard bargaining that will be necessary for a deal. Negotiators are working through the weekend.

"Both sides are going to have to step outside their comfort zones and make some political sacrifices," Obama said. "And we agree that we simply cannot afford to default on our national obligations for the first time in our history."

Obama and House of Representatives Speaker John Boehner are trying to craft a sweeping budget deal that would ensure the national debt remains at a sustainable level by cutting $4 trillion from budget deficits over 10 years.

That would give lawmakers political cover to raise the government's debt ceiling of $14.3 trillion before August 2, when the country is due to run out of borrowing capacity. Failure to act soon, some warn, could push the United States back into recession and send shock waves through the global economy.

Democrats and Republicans remain at odds over what elements should be part of the deal. Democrats are pushing for roughly $1 trillion in new tax revenue, while Republicans want to restructure popular benefit programs.

The uptick in the jobless rate in June to 9.2 percent complicated the debate over the debt deal and was a harsh reminder of the fragility of the U.S. economy.

Republicans who would like to deny Obama a second term when he runs for reelection in November 2012 are keeping up the pressure on the president over jobs.

"If we've learned anything, it's that we cannot spend, tax, or borrow our way to prosperity," Representative Cathy McMorris Rodgers of Washington state said in the Republican weekly address. "To create jobs and set our country on a sound fiscal course, we must stop spending money we don't have."

Obama, Boehner and other congressional leaders are due to meet at the White House on Sunday at 6 p.m. EDT, with staffers working through the weekend to lay out options.

There could be some hard bargaining in the session but it is not likely to produce a final deal, White House spokesman Jay Carney said.

Boehner also tamped down expectations that Democrats and Republicans could reach agreement over the weekend. He said on Friday that the two sides must overcome serious disagreements on taxes and spending cuts.

"It's not like there's some imminent deal about to happen," Boehner told a news conference. "This is a Rubik's Cube that we haven't quite worked out yet."

(Editing by Bill Trott)