Obama says he inherited economic problems

President Barack Obama said on Monday he inherited many of the country's problems with high debt and deficits when he entered the White House, sounding a theme likely to dominate his 2012 re-election campaign.

Speaking at a Democratic fundraiser, where families paid $15,000 to get a picture with him, Obama defended his economic record and noted that problems in Europe were affecting the United States.

"We do have a serious problem in terms of debt and deficit, and much of it I inherited," Obama said. The financial crisis, he said, made the problem worse.

Democrats and Republicans agreed to a deal to raise the debt ceiling and cut government spending last week, but credit rating agency Standard & Poor's downgraded the United States, contributing to a steep fall in stock markets on Monday.

Obama noted that the United States had seen 17 months of consecutive private-sector job growth, rising corporate profits and stabilized credit markets under his watch.

"What's absolutely true, even before these last couple days in the stock market, is that recovery wasn't happening fast enough," he said. "When you have problems in Europe and in Spain and in Italy and in Greece, those problems wash over into our shores," he said.

Some 140 people attended the fundraiser, which was held at a private home.

CLEAR CONTRAST

Obama, who is ramping up his fundraising after taking a hiatus while the debt-ceiling debate raged in Washington, said the deficit issue would provide a clear contrast for voters in the 2012 race for the White House.

"What we're going to have is 16 months in which we debate this vision for America, and it's going to be as fundamental a debate as 2008," he said.

"In some ways it may be even a more profound debate because the contrast is going to be clear and it's going to be sharp."

Obama is pressing for Congress to extend a payroll tax cut and unemployment insurance to help boost the economy, but he expressed skepticism that lawmakers would get a lot done.

"As president of the United States my job is to work with Congress to try to get as much done as possible," he said.

"Whether we're going to see any progress out of this Congress right now -- because so far we haven't seen much when it comes to innovative ideas that actually put people to work and grow the economy -- remains to be seen."

Under the debt-ceiling agreement, a "super committee" in Congress will find further ways to tackle the deficit in the coming months. Obama said on Friday he would outline his own recommendations for that committee.

At a separate event for potential campaign donors on Monday, Obama previewed what could make up those recommendations, saying revenues needed to be raised, the tax code would have to be reformed, and modest adjustments to the Medicare healthcare program would have to be enacted.