By Jeff Mason
WASHINGTON (Reuters) - President Barack Obama sought common ground with Republicans on Tuesday over his top priorities of job creation and deficit reduction, winning hints of support in both areas but a rebuke on healthcare reform.
Obama, a Democrat, has been forced to work more closely with Republicans since an election in Massachusetts in January deprived his party of its "super majority" in the Senate.
As lawmakers eye November elections that could change the balance of power in the Congress further, the president sought to engage the opposition on shared priorities, while accusing them of sometimes prioritizing politics over policy.
The president showed evidence of a more focused, retooled strategy after his roughly 90-minute meeting with congressional Republican and Democratic leaders at the White House.
Rather than calling for sweeping measures to boost jobs -- his top priority in 2010 -- Obama said "incremental steps" may be necessary to get initial job-boosting initiatives passed.
"I think that it's ... realistic for us to get a package moving quickly that may not include all of the things I think need to be done," Obama said during an impromptu press conference at the White House.
"It may be that that first package builds some trust and confidence that Democrats and Republicans on Capitol Hill can work together," he said.
Republican leaders told reporters after the meeting they saw a basis for support from both parties on trade, nuclear power and offshore drilling. But they called for wide-ranging legislation to reform healthcare to be scrapped.
Obama's first year in office was characterized by sweeping proposals on healthcare, climate change and financial reform that are all still pending in Congress. Meanwhile, the economy -- though improving -- is still a top concern for U.S. voters.
The economy grew by a brisk 5.7 percent year-on-year in the fourth quarter of 2009 and unemployment dipped to 9.7 percent in January. But the jobless rate remains historically high and the White House wants additional stimulus on top of a $787 billion emergency spending package Obama signed last year.
JOBS, JOBS, JOBS
Obama said one area where both parties could agree was eliminating capital gains taxes for small businesses. He said he hoped all sides would also support a way to get more capital to community banks lending to small businesses.
The House of Representatives passed a $155 billion jobs bill in December but the Senate has yet to act.
Senate Democratic leaders unveiled a set of job-creating ideas last week and said they would solicit Republican input before moving ahead with legislation.
Senate Majority Leader Harry Reid hoped to introduce a bill
on Monday and pass it by the end of the week, but he has been delayed by a severe snowstorm that has prevented many lawmakers from coming to work.
A jobs bill that could go through the Senate would extend soon-to-expire jobless payments, healthcare subsidies for the unemployed and highway-funding programs, according to the text of the bill obtained by Reuters.
"Frankly, it is not ready yet," Senate Republican leader Mitch McConnell told reporters after the meeting with Obama, referring to a jobs bill. "Most of my members have not seen it yet. We're certainly open to it and ... there is a chance we can move this forward on a bipartisan basis."
In one potential sign of conciliation, House Republican leader John Boehner said the party was mulling appointing members to Obama's proposed bipartisan deficit commission.
Obama plans to issue an executive order to set up the commission to study options on spending and taxes after lawmakers failed to create a congressional panel on the issue.
Republican leaders, however, did not budge on Obama's plans to reform the healthcare industry, calling on Democrats to scrap current versions of the bills and start over.
(Additional reporting by Alister Bull, Ross Colvin, Steve Holland, Matt Spetalnick and Andy Sullivan; Editing by Cynthia Osterman)