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Obama Tells Governors-elect Tough Budget Times Ahead

U.S. President Barack Obama participates in a meeting with newly-elected Governors at Blair House in Washington, December 2, 2010.

U.S. President Barack Obama met on Thursday with newly-elected state governors, Democrats, Republicans and Independents, appealing to them to work with him to repair the U.S. economy. The president said the economy is improving, but also warned of tough fiscal decisions ahead.

Two dozen governors-elect gathered in Blair House across the street from the White House to hear Obama.

The president began by telling a joke about Abraham Lincoln, the country's 16th president, and an encounter Lincoln had with a man after he was elected.

"The guy says, 'I am responsible for you being elected president of the United States.' And Lincoln says, 'Really?' And he says, 'Yes, I did all of the work. I was one of your hardest workers, and now I expect some help.' And Lincoln says, "Well let me tell you, if you are indeed responsible for helping me get elected, I forgive you," Obama said.

The president then turned to serious matters, echoing a message he delivered to Democratic and Republican members of Congress earlier in the week.

After what he called "vigorously contested' midterm elections last month, Obama said that regardless of political party or positions, everyone should work to find areas of agreement to help Americans facing economic difficulties.

The president predicted that despite political posturing, there will be a compromise on the question of extending tax cuts Congress approved under former President George W. Bush. "I am confident in the end that people are going to recognize that it's important for families who are struggling to have some relief. And it is important for our economy to make sure that money is still out there circulating at a time when we are recovering, but we are not recovering as fast as we need to," he said.

Obama administration officials are negotiating with members of Congress on a compromise on the tax issue.

After the president's meeting with the governors, the House of Representatives voted largely along party lines, 234 to 188, to permanently extend tax cuts for middle and lower income Americans.

Opposition Republicans say the tax cuts should be extended for wealthy Americans as well, something the president says would add to the budget deficit. The House measure now goes to the Senate, where analysts say it is unlikely to pass.

Tax issues, the question of lapsed government support for unemployed Americans, and worries about the $1.3 trillion U.S. federal budget deficit and $13 trillion national debt are important issues for state governors who have been forced to cut back on important programs.

After meeting with Obama, reporters asked two Democratic and an Independent governors-elect about worries they have about more fiscal pain coming their way as a result of decisions the president and Congress will make in months ahead.

"We now firmly understand, as does the president, that we have a dual task of continuing to grow jobs while we balance our budgets. And none of the 50 governors are living under the illusion that there is going to be hundreds of millions more federal dollars coming our way as they did over the last few years," said Democrat Pete Shumlin, Governor-elect of Vermont.

Dan Malloy, Democratic Governor-elect of Connecticut, voiced concern about any rapid steps if the president accepts and Congress eventually approves recommendations made by a presidential commission on the debt and deficit problems. "We support what the president is desirous of doing in an appropriate fashion and in a staged fashion. I don't think we should try to cut new economic carpet here until such time as the economy is stronger," he said.

In his meeting with governors-elect, President Obama said U.S. states and the federal government will struggle with what he called "very tough" budget circumstances.