President Barack Obama reviews his fiscal policy speech with advisors in the Oval Office, April 13, 2011. Pictured, from left, are: Rob Nabors, Assistant to the President for Legislative Affairs; Treasury Secretary Timothy Geithner; National Economic Council Director Gene Sperling; Office of Management and Budget Director Jack Lew; and Director of Speechwriting Jon Favreau. (Official White House Photo by Pete Souza)



CHICAGO (AP) -- Failure by Congress to raise the U.S. debt limit "could plunge the world economy back into recession," President Barack Obama declared Friday, and he acknowledged that he must compromise on spending with Republicans who control the House to avoid such a crisis.

"I think it's absolutely right that it's not going to happen without some spending cuts," the president told The Associated Press in an interview in his hometown, agreeing with House Speaker John Boehner's assessment.

Obama urged swift action to raise the ceiling on the money the nation can borrow, saying he doesn't want the United States to get close to a deadline that would destabilize markets. He said he was confident Congress ultimately would raise the limit.

"We always have. We will do it again," he said.

The president also said that he doesn't expect either side to get everything it wants in deficit negotiations and that he's pushing for "a smart compromise that's serious."

He warned of dire consequences if the debt ceiling is not raised before it hits its limit of $14.3 trillion in mid-May. But he said some questions about where the government trims its operations will have to be left until after the 2012 presidential election.

The interview came a day after the Democratic president held the first major fundraising events of his re-election campaign, which was launched a week ago. To win a second term, Obama must convince a nation suffering from stubbornly high unemployment that he deserves more time to help the economy recover from a recession he inherited from George W. Bush.

"I think the economy's going to continue to improve, and I think that I can make an effective case ... that not only have I been able to yank this economy out of that hole" but also that he has been able to start making wise fundamental changes. He pointed to overhauling the health care system, investing in clean energy and making college more affordable.

"I'm the person who is best prepared for us to finish the job so that we're on track to succeed in the 21st century," Obama said.

The 2012 presidential race is the first in which the tea party coalition, which rails against the growth of government, excessive spending and Obama's presidency, will play a major role.

Obama said his views differ from the tea party in terms of the proper role of the government in society, but he also said he welcomes active public participation in democracy.

On the subject of the nation's continuing war efforts, Obama refused to estimate how many troops he would pull out of Afghanistan this summer, saying he's waiting for a recommendation from Gen. David Petraeus, who is overseeing the mission.

"I'm confident that the withdrawal will be significant," he said, "a real process of transition" and "not a token gesture."

On Libya, Obama said he doesn't anticipate any stepped-up U.S. military role, even as he conceded that a stalemate exists on the ground. He credited the United States and NATO with averting a "wholesale slaughter" of civilians and said Libyan leader Moammar Gadhafi is under increasing pressure to leave.

The president said Gadhafi is "getting squeezed in all different kinds of ways," running out of money and supplies.