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* Obama crafting hiring plan to focus on schools, taxes
* Short-term spending likely to meet Republican resistance
* Actual impact of measures on job creation unclear
By Laura MacInnis
VINEYARD HAVEN, Mass., Aug 25 (Reuters) - U.S. President Barack Obama is finalizing a jobs package that could include a program to refurbish school buildings nationwide and tax breaks to encourage firms to hire workers.
The package, to be unveiled in early September, is Obama’s chance to convince skeptical voters he can bring down the 9.1 percent unemployment rate and steer the United States away from another recession -- ahead of next year’s election.
Critics say the president, who bailed out the auto industry and spent $860 billion to revive the economy after he took office in 2009, has few jobs-boosting options and will have a hard time getting Republicans to accept any new spending plan.
But economists and advisers familiar with his strategy say Obama will argue next month that the financial crisis was worse than anyone thought at the time and say more stimulus is needed to make any real dent in the unemployment rate.
The details are still being discussed during the president’s annual vacation in Martha’s Vineyard, White House spokesman Josh Earnest said.
But the broad contours of the jobs package are quickly coming into focus.
The president is widely expected to repeat his calls for an extension of a payroll tax cut, push for patent reform and bilateral free trade deals, and suggest an infrastructure bank to upgrade the country’s roads, airports and other facilities.
Retrofitting schools with energy efficient technology would allow the government to directly hire for labor-intensive work and also give a boost to the clean energy sector that Obama has said could be an important U.S. economic motor.
Other measures being considered, according to economists who have advised the White House, include tax credits for firms hiring more workers, funds for local governments to hire teachers, and retraining help for the long-term unemployed. Steps to boost the ailing housing market are also under review.
“What’s going to be included in this plan are some reasonable ideas that could have a tangible impact on improving our economy and creating jobs ... the kinds of things that Republicans should be able to support,” Earnest said. “These are bipartisan ideas that the president is going to offer up.”
Republicans, who control the House of Representatives, are broadly opposed to any big new spending and have argued Obama’s previous stimulus spending stretched budget deficits and added to the national debt without making a dent in employment.
But with unemployment stuck above 9 percent, and with the economy expected to continue to grow at an anemic rate for two years or more, the White House believes it needs to give the labor market another leg up.
A senior administration official said Obama would focus next month’s economics speech on jobs. He will save a plan for long-term deficit-cutting for later.
Jared Bernstein, a former economic adviser to U.S. Vice President Joe Biden, said spending measures from the jobs package must be able to take hold before deficit cuts kick in.
Otherwise, he said, it would be “like putting on the accelerator and the brake at the same time.”
Keeping with the car analogy, Bernstein said extending the payroll tax cut “doesn’t press any harder on the accelerator but doesn’t take your foot off accelerator.”
Douglas Holtz-Eakin, a former aide to President George W. Bush and adviser to Obama’s 2008 rival Senator John McCain, said Republicans would not accept “Keynesian” spending but may be open to tax reforms that promote healthier long-term growth.
“He should emphasize that growth is the top priority,” Holtz-Eakin said of Obama’s address, which is expected to coincide closely with a Sept. 6 jobs speech by Republican presidential candidate Mitt Romney.
‘HOUSE ON FIRE’
One of Obama’s major tasks with his upcoming speech is to make the case that without the economic rescue measures he already put through, things would be worse.
Michael Greenstone, an economics professor at the Massachusetts Institute of Technology and a former Obama economic adviser, estimated that because millions of jobs were lost in the downturn, even a normally healthy rate of job creation would take at least 12 years to get the United States back to pre-recession employment levels.
“I know it’s not popular to say this, but when the Obama administration came into office the house was really on fire, and it turns out that it was a bigger fire that people realized, even at the time,” Greenstone said.
Obama may struggle to convince voters the new measures can help hiring. Though the White House contends the auto bailout and other steps saved jobs that would have otherwise been lost, many Americans are losing faith in Obama’s economic abilities. That is reflected in his approval ratings, which have fallen to around 43 percent, the lowest level of his presidency.
Alice Rivlin, a former Clinton economic official and Federal Reserve vice chairwoman, said new policies would have to be designed in a way that ensures money is spent quickly and people are hired directly for them to be effective.
“They are all good ideas. My cautionary note is they are all quite difficult to do well,” Rivlin said. (Additional reporting by Alister Bull in Vineyard Haven and Caren Bohan in Washington; Editing by Deborah Charles and Eric Beech)