* Group seeks to slow spending on Medicare, Social Security
* Forecasts a somewhat lackluster 2013 with modest growth
* Chamber president says upbeat about immigration reform
By Richard Cowan and David Morgan
WASHINGTON, Jan 10 (Reuters) - The U.S. Chamber of Commerce on Thursday declared federal deficit reduction its top goal for 2013 and questioned whether Washington politicians were brave enough to take the steps necessary to rein in a fast-growing national debt.
"Do we have leaders with the courage to put the country first - ahead of their own careers, politics, ideologies and egos?" asked Thomas Donohue, president of the country's largest business group.
Donohue, in the chamber's 2013 "state of American business" address, said the upcoming budget fights in Congress should be addressed mainly by "controlling deficit spending through common sense entitlement reform."
Such reforms, which have long been discussed by Democratic President Barack Obama and members of Congress, would slow government spending on Social Security retirement benefits and the Medicare program for the elderly and disabled.
Besides controlling a national debt that now stands at $16.4 trillion, the chamber wants to make progress during 2013 on some long-held goals.
These include increasing U.S. energy production, expanding the export of American products abroad and easing the burden of federal regulations that the business group says handcuff economic growth.
Donohue said that while the U.S. economy continues to slowly improve, the chamber is forecasting a somewhat lackluster 2013 that sees growth in the range of 1.5 percent to 1.75 percent during the first half of the year, "gradually accelerating to 2.5 percent by the end of the year."
A divided Congress and Obama face deadlines of mid-February to early March for increasing the rapidly depleting Treasury Department borrowing limit and deciding the fate of deep, across-the-board spending cuts that would be split evenly between domestic and military programs.
At the end of March, temporary funding runs out for most government programs, raising the possibility of agency shutdowns.
Since the beginning of 2011, Republicans in Congress and Obama have battled over tax and spending policies, as they struggled to craft a "grand compromise" that would save at least $4 trillion over 10 years.
They have only managed to enact around $2 trillion in savings.
Donohue said the looming deadlines "will mean more uncertainty for our economy, our businesses and for financial markets at home and abroad."
Obama is demanding a "balanced" approach to deficit-reduction that uses a mix of spending cuts and revenue increases to get the U.S. fiscal house in order. This comes on the heels of Obama winning on New Year's Day an income tax rate increase for upper-level earners following budget battles in 2011 that focused squarely on spending cuts.
Republicans argue that the next round of deficit reduction must be achieved purely through spending cuts aimed mostly at entitlement programs.
IMMIGRATION REFORM OPTIMISM
During his speech and at a subsequent press conference, Donohue was upbeat about prospects for immigration reform, saying that he has been collaborating with Richard Trumka, president of the AFL-CIO, the nation's largest labor organization, as well as with state governors and industry leaders.
"I feel positive about it and look forward to this, this year," Donohue told reporters.
AFL-CIO spokesman Jeff Hauser told Reuters that the labor group was "working with the Chamber of Commerce to make sure that we develop an actual working immigration process in this country that includes a clear roadmap to citizenship for the 11 million (who are) undocumented."
Donohue said immigration reform must secure U.S. borders, improve guest worker programs and "provide a path out of the shadows" for undocumented immigrants - provided they meet "reasonable" conditions.
Among the conditions that have been discussed are establishing firm waiting periods for citizenship for those here illegally, imposing fines and possibly requiring back taxes to be paid.
Donohue touched on other chamber priorities for 2013:
- "Modest adjustments" to Medicare are needed "to turn down the growth on the curve of cost increases," he said. Without providing specifics, he mentioned changing patient co-payments, altering the "structure" of benefit programs and finding "refinements in how the healthcare is delivered."
- It is time to "quit fooling around" and raise federal gasoline taxes to help fund infrastructure investments, he said. The federal highway fund is low on revenue, in part because of a slow economy and in part because more fuel-efficient vehicles cut gasoline consumption.
- He said the chamber will not shy away from aggressive legal action to try to stop Obama administration regulations it opposes including the Dodd-Frank financial industry reforms. The chamber will seek "fixes to those areas of Dodd-Frank that Congress and the regulators simply got wrong." He also put the administration on notice that the National Chamber Litigation Center will "significantly expand ... in order to deal with regulations."