- Associated Press - Monday, September 13, 2010

FAIRFAX, Va. | Ahead of midterm elections likely to produce big Republican gains, President Obama said Monday that conservative activists are right to be worried about the deficit and he foresees compromising with the GOP on that issue and others.

Responding to a question at a backyard town hall with middle-class Virginians, Mr. Obama extended an unusual olive branch to tea-party activists even as he implicitly acknowledged he’ll be confronting empowered congressional Republicans after November’s elections.

Whether the GOP retakes the House or just makes big gains in both the House and the Senate, Mr. Obama’s comments indicated he has been thinking about how to move forward without the large Democratic majorities he has enjoyed since taking office.

“Where I think we have a great opportunity to work together is on the issue of our long-term debt,” Mr. Obama told a resident who asked how he planned to work with a Congress with a much bigger complement of Republicans.

“I have to say I understand a lot of people who are upset on the other side, and some of them were rallying in D.C.,” Mr. Obama said, referring to a rally Sunday by the FreedomWorks group that attracted tea-party adherents.

“I do understand people’s legitimate fears about are we hurting our future because we’re borrowing so much to finance debt and deficits. I understand that. … So I think there’s an opportunity for Democrats and Republicans to come together and to say, ‘What are the tough decisions we’ve got to make right now?’ “

The federal government is on pace to record the second-highest deficit of all time with one month left in the budget year, according to new Treasury Department figures released almost at the same time Mr. Obama was speaking Monday.

The U.S. government deficit totaled $1.26 trillion through August, the department said. That puts it on pace to total $1.3 trillion when the budget year ends on Sept. 30, slightly below last year’s record $1.4 trillion deficit.

Mr. Obama has appointed a bipartisan deficit commission to come up with ideas and report back after the election, and he said he hoped to move forward then. He also mentioned energy and immigration reform as areas of possible compromise with Republicans.

Still, the president coupled the talk of compromise with familiar attacks on the opposition. He rapped Republicans for holding up a small-business lending bill in the Senate and took a couple swipes at House Minority Leader John A. Boehner, Ohio Republican, with whom the administration has been sparring over Mr. Boehner’s support for an extension of tax cuts for the top 2 percent of income earners.

“We could get that done this week, but we’re still in this wrestling match with John Boehner and Mitch McConnell about the last 2 to 3 percent,” Mr. Obama said, adding the Senate’s Republican leader to his list of targets.

Mr. Obama spoke at the Northern Virginia home of John Nicholas and Nicole Armstrong, who saw their retirement and college savings for their two children dwindle during the recent economic downturn.

Amid national unemployment that continues to hover near 10 percent, Mr. Obama is looking to refocus his efforts on the economy, seeking to ease the worries of anxious voters and Democratic lawmakers who fear that the sagging economy could lead to sweeping losses for their party.

“We stopped the bleeding, stabilized the economy, but the fact of the matter is the pace of improvement has not been where it needs to be,” Mr. Obama said.

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