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updated 2/8/2011 8:23:17 AM ET 2011-02-08T13:23:17

For now, the fever appears to be breaking in the Egyptian crisis, allowing President Barack Obama to turn back to pressing U.S. economic troubles and the impending political battles over solutions to America's huge and threatening debt burden.

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The overt subtext every day from now until November 2012 also will display an Obama who is carefully positioning himself for election to a second term. So far, his handling of the crisis in Egypt, while less than sure-footed, has found broad bipartisan support — a political bullet dodged. But the economy remains wobbly, and therein lies the key to re-election of America's first black president.

Video: Obama: Egypt ‘not going to go back to what it was’

He faces a Republican drive to cut spending that begins in earnest this week, building on November elections that returned the party to the majority in the House of Representatives on campaign promises of smaller government and reducing the federal debt.

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There is broad agreement among politicians of both parties that the country can no longer sustain a federal deficit projected to reach $1.5 trillion this year, and an accumulated debt of more than $13 trillion.

The lines will be drawn this week as the House begins working on a bill to keep the government in operation after March 4, with Republicans demanding that funding be $35 billion lower than what was enacted for last year. That would tide the government over through September. The new budget year begins Oct. 1.

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Budget director: 'tough choices' ahead
Preparing for the battle, Obama's budget director, in an article in the New York Times on Sunday, pointed to spending cuts in three popular programs in states and cities as examples of the "tough choices" ahead in the White House budget blueprint that also will propose lower spending overall. At the same time, Obama wants to direct money to new initiatives.

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He sends his spending proposal to Congress on Feb. 14.

The president already has called for a five-year freeze on discretionary spending, except for national security. That will reduce the deficit by more than $400 billion over 10 years, according to the White House.

Budget director Jacob Lew, however, cautioned Republicans against indiscriminate budget cutting in what he called areas critical to long-term growth, including education, innovation and public works. Such reductions, he said, "would stifle the economy just as it begins to recover. That, in turn, would deprive us of one of the most powerful drivers of deficit reduction, a growing economy."

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Obama has been recalibrating his positions on the economy since the Republican landslide in November. The Democrat has shown a willingness to compromise and has shaken up his White House, replacing key advisers with figures seen as more business-friendly. That in turn has led to a significant rise in his approval ratings with Americans.

Speech to the Chamber of Commerce
He spoke Monday at the Republican-friendly Chamber of Commerce, a major foe in the last election. It was his first speech to the organization which, not four months ago, he attacked for failing to disclose donors to its huge, $32 million congressional political campaign, "Their lips are sealed," Obama said at the time, "but the floodgates are open."

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Now, facing the new reality created by the November vote, White House officials say Obama's speech will not break new policy ground. In his radio and Internet address Saturday, Obama said businesses have an obligation to stay in the United States, hire American workers and invest in the nation's future.

"That's the message I'll be bringing to American business leaders at the Chamber of Commerce on Monday — that government and businesses have mutual responsibilities, and that if we fulfill these obligations together, it benefits us all," he said.

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The message is not limited to the Chamber. Obama already has met with top U.S. executives in December to push them to put some of the billions of dollars they are holding back into circulation to create jobs. He has compromised with Republicans on tax cuts. That gained him grudging support from big business.

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Obama also promises a review of government regulations, something that is at the top of the business agenda, particularly the financial sector that is facing a swath of new rules.

The president's renewed focus on the economy, however, could easily be knocked aside by events in Egypt.

Video: Calm returns to Egypt, for now

While the crisis seemed to ease as the government began talks with the opposition and gave ground on major points, the crisis is not over. A wrong step by the government and its security forces, balkiness in moving forward toward new elections and the departure of President Hosni Mubarak could easily tip the balance back to bloody violence. That would force Obama back into trying to manage a deep crisis abroad — one that is critical to American policy throughout the Middle East and beyond.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Obama, O’Reilly talk Egypt at Bowl pregame

  1. Closed captioning of: Obama, O’Reilly talk Egypt at Bowl pregame

    >> president obama sat down with bill o 'reilly for a wide ranging interview during the super bowl coverage. mike viqueira is at the white house with details. good morning.

    >> reporter: good morning. it's a super bowl tradition. an interview with the network airing the game. the president continued to walk the political and diplomatic tight rope on egypt while where you shalling -- brushing off personal attacks. mr. obama sat down with a frequent critic, bill o 'reilly where the subject turned to egypt and hosni mubarak .

    >> only he knows what he's going to do. here's what we know. egypt is not going back to what it was. the egyptian people want freedom.

    >> reporter: he's come close in recent days.

    >> an orderly transition must be meaningful.

    >> reporter: president obama would not call for mubarak to step down before september elections.

    >> what we can do, bill, is we can say that the time is now for you to start making a change in that country.

    >> reporter: while conceding that there are anti-u.s. elements within the muslim brotherhood , the president was eager to play down their influence over egypt 's future.

    >> i think the muslim brotherhood is one faction in egypt . they don't have majority support.

    >> reporter: later the interview took a different turn.

    >> does it bother you that people hate you?

    >> the folks who hate you don't know you.

    >> that's true.

    >> what they hate is whatever funhouse mirror image of you that's out there. they don't know you. so you don't take it personally.

    >> reporter: meredith, the president will try to mend fences with another group he's been at odds with -- big business . we'll head across the park to the u.s. chamber of commerce , this country's biggest lobbying organization .

    >> all right, mike viqueira, thank

Photos: Farewell Friday

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  1. Anti-government protesters celebrate inside Tahrir Square after the announcement of Egyptian President Hosni Mubarak's resignation in Cairo on Feb. 11. (Dylan Martinez / Reuters) Back to slideshow navigation
  2. Egyptians set off fireworks as they celebrate in Cairo’s Tahrir Square after President Mubarak resigned and handed power to the military. (Khalil Hamra / AP) Back to slideshow navigation
  3. President Barack Obama makes a statement on the resignation of Egypt's President Hosni Mubarak in the Grand Foyer at the White House in Washington D.C. (Carolyn Kaster / AP) Back to slideshow navigation
  4. Egyptians celebrate in Tahrir Square after President Hosni Mubarak resigned and handed power to the military on Friday. Egypt exploded with joy, tears, and relief after pro-democracy protesters brought down President Hosni Mubarak with a momentous march on his palaces and state TV. Mubarak, who until the end seemed unable to grasp the depth of resentment over his three decades of authoritarian rule, finally resigned Friday. (Khalil Hamra / AP) Back to slideshow navigation
  5. Protesters walk over a barricade after it was taken down to allow free entry to hundreds of thousands of Egyptians in Tahrir Square in Cairo February 11, 2011. A furious wave of protest finally swept Egypt's President Hosni Mubarak from power, sending a warning to autocrats across the Arab world and beyond. (Yannis Behrakis / Reuters) Back to slideshow navigation
  6. A spokesman for Egypt's higher military council reads a statement titled “Communiqué No. 3” in this video still on Friday. Egypt's higher military council said it would announce measures for a transitional phase after President Hosni Mubarak stepped down. (Reuters Tv / Reuters) Back to slideshow navigation
  7. Egyptian celebrates in Cairo after the announcement of President Mubarak's resignation. (Amr Abdallah Dalsh / Reuters) Back to slideshow navigation
  8. Protesters celebrate inside Tahrir Square after the announcement of Mubarak's resignation in Cairo on Friday. A furious wave of protest finally swept Mubarak from power after 30 years of one-man rule, sparking jubilation in the streets. (Amr Abdallah Dalsh / Reuters) Back to slideshow navigation
  9. An Egyptian reacts in the street after President Hosni Mubarak resigned and handed power to the military in Cairo, Egypt, on Friday, Feb. 11. (Amr Nabil / AP) Back to slideshow navigation
  10. Thousands of Egyptian anti-government protesters celebrate inside Tahrir Square after the announcement of Egyptian President Hosni Mubarak's resignation on Friday. (Amr Abdallah Dalsh / Reuters) Back to slideshow navigation
  11. Egyptian soldiers celebrate with anti-government protesters in Tahrir Square on Friday. Cairo's streets exploded in joy when Mubarak stepped down after three-decades of autocratic rule and handed power to a junta of senior military commanders. (Marco Longari / AFP - Getty Images) Back to slideshow navigation
  12. Anti-government protesters celebrate inside Tahrir Square after the announcement of Egyptian President Hosni Mubarak's resignation in Cairo on Friday. (Dylan Martinez / Reuters) Back to slideshow navigation
  13. Egyptians celebrate the news of Mubarak's resignation in Tahrir Square on Friday. (Tara Todras-whitehill / AP) Back to slideshow navigation
  14. An Egyptian woman cries as she celebrates the news of the resignation of President Hosni Mubarak, who handed control of the country to the military, Friday night, in Tahrir Square, Cairo. (Tara Todras-whitehill / AP) Back to slideshow navigation
  15. Egyptian anti-government protesters celebrate minutes after the announcement on television of the resignation of President Hosni Mubarak, in Cairo's Tahrir Square on Friday. Vice President Omar Suleiman announced that Egyptian President Hosni Mubarak had resigned. (Khaled Elfiqi / EPA) Back to slideshow navigation
  16. Opposition protesters celebrate Egypt's President Hosni Mubarak's resignation, in Tahrir Square on Friday. President Mubarak bowed to pressure from the street and resigned, handing power to the army. (Suhaib Salem / Reuters) Back to slideshow navigation
  17. Anti-government protesters celebrate inside Tahrir Square after the announcement of Mubarak's resignation in Cairo on Friday. (Dylan Martinez / Reuters) Back to slideshow navigation
  18. On Egyptian state television, Al-Masriya, Egyptian Vice President Omar Suleiman delivers an address announcing that Egyptian President Hosni Mubarak has stepped down, in Cairo on Friday. (TV via AFP - Getty Images) Back to slideshow navigation
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  1. Image: Anti-government protesters celebrate inside Tahrir Square after the announcement of Egyptian President Hosni Mubarak's resignation in Cairo
    Dylan Martinez / Reuters
    Above: Slideshow (18) Egypt's Mubarak steps down - Farewell Friday
  2. Image: Protester in Tahrir Square
    Emilio Morenatti / AP
    Slideshow (61) Egypt's Mubarak steps down - Week 3
  3. Image: Egyptian anti-Mubarak protesters
    Amr Nabil / AP
    Slideshow (93) Egypt's Mubarak steps down - Week 2
  4. Image: Mohamed ElBaradei
    Khalil Hamra / AP
    Slideshow (83) Egypt's Mubarak steps down - Week 1
  5. Image:
    Mayra Beltran / AP
    Slideshow (17) Egypt's Mubarak steps down - World reacts
  6. Image: President Obama Hold Town Hall Meeting In Ohio
    J.D. Pooley / Getty Images
    Slideshow (65) Obama's first years in office - Second year
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    Chuck Kennedy / Pool via EPA
    Slideshow (68) Obama's first years in office - First year

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