UPDATE 2-Obama: US can't afford two years of gridlock

Published 11/05/2010, 11:07 AM

* Obama sounds conciliatory note

* President faces Republican threat to stall his agenda

(Adds quotes and details)

By Matt Spetalnick

WASHINGTON, Nov 5 (Reuters) - U.S. President Barack Obama, still smarting from his Democrats' big losses in congressional elections, said on Friday the United States cannot afford to get mired in legislative gridlock for the next two years while countries like China forge ahead.

Three days after voters punished Obama's party for the weak economy, he called for "putting politics aside" as he struck a conciliatory tone with victorious Republicans, saying he was open to hearing their ideas for tackling stubbornly high unemployment.

Obama now faces a threat by Republican leaders to try to roll back his signature policies, including a healthcare overhaul and Wall Street reform, and to block his agenda for the rest of his term.

"We can't spend the next two years mired in gridlock. Other countries like China aren't standing still so we can't stand still either. We've got to move forward," Obama told reporters before departing on a 10-day Asia tour.

Voters unhappy with the sluggish economy delivered a stinging rebuke to Obama and his Democrats in Tuesday's congressional elections, handing Republicans control of the House of Representatives and trimming the Democratic majority in the Senate.

Obama spoke after the government reported a bigger-than-expected increase in employment in October but not enough to budge the 9.6 percent jobless rate.

He called the latest unemployment figures "encouraging news" but said there was still much more work to be done to boost jobs, and he urged Republicans to work with him. But he gave no sign of ceding ground on any specific issues.

"I am open to any idea, any proposal, any way we can get the economy growing faster so that people who need work can find it faster," Obama said.

OBAMA PUSHES PROPOSALS

Obama pushed for progress on several of his proposals that have faced resistance from Republicans, including tax breaks to encourage businesses to purchase new equipment and to invest in research and development and extending unemployment benefits.

He also repeated his call for making permanent the middle-class tax cuts. The White House signaled on Thursday it was willing to negotiate with Republicans on extending expiring Bush-era tax cuts but Senate Republican leader Mitch McConnell took a hard line against compromises with Obama.

Obama has invited top leaders from both parties to a meeting and a dinner at the White House on Nov. 18.

Turning to his Asia trip, Obama said: "I'm looking very much forward to helping to pry some markets open, help American businesses, and put people back to work here at home during the course of this trip."

He has set a goal of doubling U.S. exports in the next five years.

"This is a reminder as well that the most important competition that we face ... will not be Democrats and Republicans," he said, citing foreign competition.

"Our future depends on putting politics aside to solve problems, to worry about the next generation instead of the next election." (Additional reporting by Caren Bohan and Ross Colvin; Editing by Vicki Allen and Bill Trott)

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