Obama to call for urgent steps on economy

WASHINGTON (Reuters) - President Barack Obama will lay out a jobs package worth more than $300 billion on Thursday, staking his re-election hopes on a call for urgent action to revive the economy and challenging Republicans who have consistently opposed his initiatives.

With his poll numbers at new lows amid voter frustration with 9.1 percent unemployment, Obama will make tax cuts for middle-class households and businesses the centerpiece of the plan and will press for new spending to repair roads, bridges and other deteriorating infrastructure.

He will use his televised speech before a joint session of Congress, at 7 p.m. EDT, to urge passage of his "American Jobs Act" by year-end.

If it succeeds, his plan might provide an economic boost quickly enough to help Obama's re-election prospects. If it fails, his strategy will be to paint congressional Republicans as obstructionist and blame them for the stagnating economy.

Already on Thursday morning, White House Chief of Staff Bill Daley went on the offensive against what he described as a do-nothing climate on Capitol Hill.

"It's time for Congress, after a five-week vacation, to come back and do something and not just say 'no' to everything that gets proposed in this town," Daley said on CBS.

Surprisingly weak jobs data has heightened fears the United States may be headed for another recession. The Federal Reserve is considering ways to bolster demand but has said the onus for recovery mainly lies with lawmakers who control spending.

G7 finance ministers meeting in France on Friday are set to encourage countries that can afford it to do more for growth. Treasury Secretary Tim Geithner said on Thursday efforts to create U.S. jobs could help the world economy regain speed.

At home, Obama is desperate to change perceptions that he is a weak leader. His economic stewardship has been criticized by both Republicans and fellow Democrats, casting a shadow over his prospects for re-election in November 2012.

"It's a major leadership moment for Obama," said Terry Madonna, a political scientist at Franklin and Marshall College in Lancaster, Pennsylvania. "He's running out of months before voters settle in on whether his presidency has failed."

An NBC/Wall Street Journal poll this week showed Obama was no longer the favorite to win next year.

'SHARED RESPONSIBILITY'

The White House said Obama will describe in stark terms the difficulties the U.S. economy faces and argue Washington must do all it can to help the labor market heal -- a message he will press throughout the autumn as the 2012 race heats up.

A renewal of payroll tax cuts for workers and tax cuts to encourage businesses to hire are the biggest elements of the jobs plan. Media reports have estimated it will cost $300 billion or more.

Obama will send his ideas in legislative form to Congress next week, White House senior adviser Valerie Jarrett told Reuters Insider. She said Thursday's speech was designed to encourage "shared responsibility" for the economy's woes.

"It's not just up to the president. It's up to Congress, it's up to the business community, it's up to the American people. Everyone has to get involved in this," she said.

Obama's goal is to get legislation passed this year to make a dent in unemployment by spring 2012. To bolster his chances for re-election, he needs to be able to point to economic improvement by the middle of next year.

If Congress, which controls the nation's purse strings, does not act, the White House is prepared to paint Republicans as obstructing his efforts to solving the jobless problem.

The bruising battle in July over the country's debt levels that led to a Standard & Poor's ratings downgrade highlighted a wide chasm between Obama's Democrats and Republicans who control the House of Representatives.

Republicans see a $800 billion economic stimulus package Obama pushed through in 2009 as wasteful and want immediate cuts in the deficit. Democrats say while long-term deficits must be trimmed, the economy needs a fiscal boost.

The White House has said the jobs package will be paid for with future cuts but has not offered details. Obama will urge the congressional "super committee" that convened on Thursday to find more than $1.2 trillion in budget savings, but not unveil his suggestions until next week or later.

House Republican leaders John Boehner and Eric Cantor have signaled they were open to some infrastructure spending and to a program Obama will pitch to help train unemployed workers.

But Mitch McConnell, the top Republican in the Senate, said the president's readiness to accuse those who don't support his ideas of being overly partisan was a political smokescreen.

"There is a much simpler reason to oppose the president's economic policies that has nothing whatsoever to do with politics -- they simply don't work," he said. "This isn't a jobs plan, it's a re-election plan."

Senate Democratic Leader Harry Reid, meanwhile, said that Republicans also had their eyes squarely on the 2012 vote.

"The other side seems convinced that a failing economy is good Republican politics. They think if they kill every jobs bill and stall every effort to revive the economy, President Obama will lose," Reid said. "Republicans aiming at the President have caught innocent Americans in the crossfire."

(Additional reporting by Laura MacInnis, Jeff Mason, Doina Chiacu, Tim Reid, Tom Ferraro, Alister Bull and David Lawder; Editing by Jackie Frank)

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