In campaign mode, Obama talks jobs in Midwest

CANNON FALLS, Minnesota (Reuters) - President Barack Obama blasted Republicans over taxes on Monday as he launched a bus tour of the U.S. Midwest to tout his job-growth strategy and distance himself from anger toward Washington that could dent his 2012 re-election hopes.

The three-day trip takes him to Minnesota, Iowa and Illinois, states he won in the 2008 presidential election, although Iowa recently has been seeing a lot of Republicans vying to battle him for the White House next year.

The White House says Obama is on a listening tour to hear from Americans about the economy and talk about how to boost jobs and hiring. With U.S. unemployment mired at just above 9 percent, jobs are expected to be the central issue for voters in next year's presidential and congressional elections.

The tour also exposes the Democratic president to voters who, polls suggest, are furious about political gridlock in Washington as he begins serious campaigning for the November 2012 election.

"There is nothing that we're facing that we can't solve with some spirit of America first, a willingness to say we're going to chose country over party," Obama said before taking questions from a friendly crowd of 500 at a town hall-style meeting on a riverbank.

Acknowledging "a lot of folks were feeling a little anxious and distressed" after the wild stock market swings last week, Obama said that restoring a spirit of compromise would do a lot to improve confidence in the economy.

"You've got to send a message to Washington that it is time for the games to stop, it is time to put country first," he said. "This is a political crisis."

Obama touted his job-growth agenda, which includes extending a payroll tax cut, finalizing free-trade pacts and authorizing infrastructure projects to create construction worker jobs.

And he targeted Republicans for refusing to compromise on fiscal issues. He cited a debate last week among eight Republicans vying for the party's presidential nomination in which all said they would not consider allowing even a $1 increase in government revenues -- through taxes or fees -- for every $10 in cuts.

"That's just not common sense," Obama said.

FRUSTRATION

Republicans slammed the trip as a taxpayer-funded "debt end" bus tour and hammered Obama over high unemployment, record national debt and the flagging economy.

Even some of Obama's fellow Democrats have expressed frustration that the president has not promoted plans to boost jobs growth more aggressively.

But that anger was not visible at his first stop, where Obama was asked about education, his healthcare law and the Social Security pension program among other topics, but took no heat from the questioners about his economic leadership.

Obama was distracted for much of the summer by a divisive debate over the debt and deficits that triggered a downgrade in the U.S. credit rating and undermined the public's faith in Washington.

A Gallup tracking poll completed on Saturday showed Obama with a 39 percent approval rating -- the lowest of his presidency -- but recent polls have shown far lower approval ratings for Congress.

Obama was headed next on Monday to Decorah, Iowa, then holds a rural economic forum in Peosta, Iowa, on Tuesday and town hall meetings in Atkinson and Alpha, Illinois, on Wednesday before returning to Washington.

The unmistakable campaign style of the trip will help the Democratic president test his organization and grassroots support as the field of Republican presidential candidates takes clearer shape.

Texas Governor Rick Perry entered the race for the Republican nomination on Saturday and immediately joined early front-runner Mitt Romney and Michele Bachmann in the top tier of candidates in the field.

Iowa, which launched Obama's journey to the White House in 2008, has recently been playing host to Republican presidential hopefuls who have been criticizing his record as they crisscrossed the state.

Bachmann on Saturday won the Iowa straw poll, an early test of strength among the Republican candidates.

Former Minnesota Governor Tim Pawlenty became the first major casualty of the 2012 campaign when he dropped out of the race for the Republican nomination on Sunday after a disappointing showing in the Iowa straw poll.

Obama's trip followed a spate of bad news that has dented confidence in his leadership, particularly after weeks of bitter debate over raising the U.S. debt limit that exposed deep partisanship verging on government dysfunction.

The leading ratings agency Standard & Poor's downgraded the country's AAA credit rating and fears of another U.S. recession have grown, adding to investor concerns about Europe's ongoing debt crisis. Stock markets whipsawed over the past week, producing one of the most volatile periods of Obama's presidency.

(Additional reporting by Patricia Zengerle in Washington; Writing by Patricia Zengerle and Alister Bull; Editing by Vicki Allen)