U.S. Sen. John McCain said a congressional delegation he led that met with Morsi expressed to him their "strong disapproval" about his 2010 comments. The delegation and Morsi had a "constructive discussion" about the remarks, he told reporters.
Still, despite calls by some in Washington to rein in aid to Egypt's Islamist-led government, McCain said the delegation will press in Congress for approval of some $480 million in new assistance to Cairo.
Sen. Lindsey Graham, also in the delegation, warned that "the Egyptian economy is going to collapse if something is not done quickly." He urged Morsi to finalize a repeatedly delayed deal with the International Monetary Fund for a $4.8 billion loan.
The flap was a new twist in Morsi's attempts to reconcile his background as a veteran of the Muslim Brotherhood — a vehemently anti-Israeli and anti-U.S. group — and the requirements of his role as head of state, which include keeping the strategic relationship with Washington.
Morsi's remarks came from a mix of speeches he made in 2010 when he was a leading Brotherhood figure. The remarks were revived when an Egyptian TV show aired them to highlight and mock Morsi's current policies. On Tuesday, the White House denounced the comments as "deeply offensive."
In the video, Morsi refers to "Zionists" as "bloodsuckers who attack Palestinians" as well as "the descendants of apes and pigs." He says Egyptians should nurse their children on "hatred for them: for Zionists, for Jews. They must be breast-fed hatred." He also calls President Barack Obama a liar.
Morsi, who came to office in June, told the visiting U.S. delegation on Wednesday that the remarks were taken out of context, aimed at criticizing Israeli policies, and not Jews, according to presidential spokesman Yasser Ali.
Morsi told them distinction must be made between criticism of what he called the "racist" policies of the Israelis against the Palestinians and insults against the Jewish faith.
Morsi also told them the remarks were part of a speech against Israeli aggression in Gaza and "assured them of his respect for monotheistic religions, freedom of belief and the practice of religions," Ali said.
Despite the explanation, Morsi went beyond attacking "Zionists" to directly refer to Jews and used traditional anti-Semitic slurs like "pigs."
But the explanation was a rare instance when an Islamist was forced to address criticism of what is routine rhetoric for the Brotherhood. They and other Islamists often engage in tirades against Israel, sometimes trying to stick to references to "Zionism," the founding ideology of Israel, but often slipping into attacks on Jews.
The Brotherhood's leader, Mohammed Badie, recently accused Jews of corrupting the world and slaughtering the Palestinians. A top leader of the group last month called on Israelis of Egyptian origin to return, saying the Jewish state will cease to exist in 10 years.
The Brotherhood has long prided itself on its non-compromising stand on Israel and that its members were the first to fight Jewish groups in Palestine in the 1940s. Morsi himself rarely mentions Israel by name and refuses to meet any Israeli official.
Islamists tend to place the Arab-Israeli conflict in a religious framework, dating back to the rise of Islam some 1,500 years ago and conflicts with Jews at the time. Egypt's liberals share the resentment toward Israel felt by most Egyptians, but are more careful to restrict their criticism to Israel's policies and not the Jews.
Still Morsi has promised to abide by Egypt's 1979 peace treaty with Israel and has continued security cooperation with Israel over the volatile Sinai Peninsula and their border. In November, Morsi brokered a truce between the Jewish state and Gaza's Hamas rulers in November, a feat that won him warm praise from the Americans.
There have been bumps: Morsi's administration was embarrassed by the leak of a letter sent in his name to Israeli President Shimon Peres in reply to one he received from him. Morsi withdrew Egypt's ambassador in Israel in protest against Israel's air campaign against Gaza's Hamas militants late last year.
The flap over the comments now risks straining ties with Washington. The U.S. State Department on Tuesday said the remarks complicated efforts to provide economic and military aid to Egypt.
Egypt's economy has tumbled since the 2011 uprising that toppled autocrat Hosni Mubarak. Tourism and foreign investment have dried up, sending Egypt's foreign currency reserves into a tailspin, dropping by more than half. Now the weakening of Egypt's currency has sped up.
The U.S. gives $1.3 billion in annual military assistance to Egypt since 1979 peace treaty and now gives Egypt $250 million annually in economic aid. Washington is now considering a package of debt relief and further aid to help salvage the economy.
"All of us are supportive," said McCain. "We are working hard to try to see that this money is forthcoming."
U.S. goodwill is instrumental for securing the IMF loan, seen as key to helping close the budget gap and, more importantly, as a stamp of approval for investors to return.
Egypt's talks with the IMF were derailed when Morsi balked at implementing highly unpopular tax increases sought under the package. At the same time, political tension has mounted over the newly adopted constitution and moves by Morsi that opponents have denounced as a grab of authority.
Morsi is Egypt's first freely elected president, but opponents accuse him and the Islamists of trying to sweep up power in the country.
Last year, McCain called on the U.S. to use aid as leverage to push for democratic progress in Egypt. But on Wednesday, he called for patience from the U.S., saying that expectations of democratic transition are high from all sides.
"The fact is that the economy of Egypt is in such condition that it requires expeditious aid to be supplied," the Arizona Republican said. "It is hard to have democracy when people are not eating."
The senators said they have also pressed on Morsi on addressing the criticism by his opponents over the recently adopted constitution, saying that women and minority rights must be protected. They also called for allowing international observers to monitor Egypt's upcoming parliamentary elections, likely to be held this spring.
"You are going to have to explain to the world that there is a process to amend the constitution," said Graham, a South Carolina Republican.
Other senators also raised concern about the deteriorating security situation in Sinai, saying they raised the issue with Morsi and Egypt's Defense Minister, Abdel-Fattah el-Sissi.