ATKINSON, Ill (Reuters) - President Barack Obama said on Wednesday he will propose a plan in September to jump-start the economy as he struggles to convince skeptical voters that he has something new to offer.
Obama, with his approval ratings falling, is set to propose short-term measures to boost hiring and call on a congressional panel to deliver more than the $1.5 trillion in savings its members seek by November 23, partly through increased tax revenue.
"When Congress gets back in September, my basic argument to them is this: we should not have to choose between getting our fiscal house in order and jobs and growth. We can't afford to do just one or the other, we've got to do both," Obama said at a town-hall style meeting in Illinois.
The White House offered scant details on what new initiatives Obama would offer to keep the economy from diving back into recession.
Administration officials said the plan was still a work in progress but new measures could include tax breaks and spending through construction projects.
Obama's insistence that higher taxes be a part of any long-term plan to improve America's fiscal health, and his push to spend more now to bolster the labor market, could mean his proposals go nowhere.
But the environment has changed in recent days, and while both parties remain deeply divided, there could be a new opening for Republicans and Democrats to compromise.
Intense public anger over the debt-limit fight, growing pressure from Big Business to tackle deficits and even consider tax hikes, data showing surprising economic weakness, a wildly gyrating stock market and the loss of America's AAA rating could force both sides off their hard positions.
Still, Republicans, intent on making Obama a one-term president, on Wednesday repeated opposition to new taxes and criticized the suggestion of new economic stimulus spending.
"Quit borrowing. Quit spending. Quit trying to raise taxes," said Senate Republican Leader Mitch McConnell.
Any failure of Obama's plan could play into his hands politically as the president tries to convince voters that Republican refusal to compromise is to blame for America's fiscal and economic mess.
Obama's Democrats control the Senate and Republicans control the House of Representatives.
Obama faces serious doubts about his economic leadership in the wake of the United States' first credit rating downgrade and with unemployment stuck above 9 percent, a major impediment to his re-election prospects next year.
A Gallup poll completed on Saturday showed Obama with a 39 percent approval rating -- the lowest of his presidency.
Obama has been criticized in recent weeks by political opponents, allies on the left and Wall Street. Republicans say he has no plan to reduce unemployment while some Democrats say he has not been aggressive enough in promoting the need for stimulus spending to keep the economy moving.
"The president has to make a strong case to the American people and go up against his opponents," said Dan Seiver, professor of finance at San Diego State University in California. "He is a great compromiser but it hasn't served him so well in the past six months."
Republicans on Wednesday were quick to criticize what they said sounded like an attempt to fluff up tired ideas without a clear plan on how to help the economy and curb spending.
"To get our economy moving, what the American people need from the president is leadership and serious solutions that reflect a true change in his approach to our economy and the role of government," said House Speaker John Boehner, the top Republican in Congress.
Obama was wrapping up a three-day campaign-style bus tour through the Midwest on Wednesday during which he has sought to convince voters that Republican refusal to compromise was to blame for America's fiscal and economic mess.
In his speech after the September 5 Labor Day holiday, Obama also will lay out a long-term deficit reduction package based on the $4 trillion deal he tried to broker with Boehner last month to avert default on U.S. debt obligations, administration officials said.
That agreement would have imposed roughly $3 trillion in spending cuts -- including curbs on social programs such as Medicare, the health insurance program for the elderly -- and $1 trillion in revenue increases, mostly through tax reform.
Those talks failed and Congress forged a lesser deal that created a powerful 12-member congressional panel given the task of finding up to $1.5 trillion or more in savings to tackle the deficit. If it does not agree on at least $1.2 trillion in savings, automatic spending cuts that hit a wide range of government programs would be triggered.
Additional reporting by Laura MacInnis, David Alexander, Donna Smith, Deborah Charles and David Morgan in Washington; Editing by Will Dunham