WASHINGTON  - President Barack Obama, battling a public outcry over double-digit U.S. unemployment, on Tuesday will lay out several new steps to boost jobs and confront a challenge that has hurt his popularity.

Building on a jobs forum and road trip to the industrial heartland last week, Obama is expected to discuss extending aid to cash-strapped states, encouraging energy efficiency by weatherizing buildings and using bank-bailout money for jobs.

However, a deficit-wary White House said that this will not amount to a second stimulus package, implying any price-tag associated with the additional measures will be modest.

What my speech tomorrow will focus on is the fact that having gotten the financial crisis under control ... our biggest challenge now is making sure that job growth matches up with economic growth, Obama told reporters.

U.S. unemployment dipped slightly to 10 percent last month but Americans remain anxious about the economy, nudging Obama's approval ratings to 50 percent or below and potentially dimming his Democratic party's prospects in mid-term congressional elections next November.

The White House separately said Obama was not going to unveil the silver bullet idea on Tuesday, because if there was an easy solution out there, it would have already been done.

Under fire from Republicans for bailouts created when they in fact held the White House, Obama will review using some money previously earmarked for a $700 billion bank rescue fund that has been returned to the public purse.

Obama said that some of the money from the Troubled Asset Relief Program, or TARP, will be used to pay down the record U.S. budget deficit, but he was open to other options.

The question is, are there selective approaches that are consistent with the original goals of TARP, for example making sure that small businesses are still getting lending, that would be appropriate in accelerating job growth, and I will be addressing that tomorrow, Obama said.

The speech, in Washington, is scheduled for Tuesday at 11:15 a.m. EST.

The Treasury said on Sunday that TARP will cost U.S. taxpayers about $200 billion less than previously estimated.

Republicans oppose diverting any of this money from deficit reduction, and Obama is aware of the perils of not tackling the country's record budget shortfall, which hit $1.4 trillion in the financial year that ended in September.


Obama told a White House jobs forum on Thursday the best way to cut the deficit in the short-term was to boost jobs and growth, lifting tax revenue and curbing welfare payments. But he also stressed the risk of scaring away investors if the country fails to improve its budget position over time.

Obama signed a $787 billion emergency spending bill in February and is keen to avoid having any additional action tagged as a second stimulus package, not least because two-thirds of this money has still not been spent.

As a result, he is expected to focus on relatively low-cost initiatives that will not significantly add to the deficit.

Beyond exploiting the TARP windfall, the White House is also looking at extending aid to states, which have a gaping $144 billion budget deficit this year and will have to start firing workers like teachers and firefighters unless Washington can find some way to ease their pain.

Renewing unemployment insurance and other welfare support that has already been extended under the emergency stimulus act will be politically hard to resist, with over 15 million Americans out of work and the jobless rate at a 26-year high.

Another idea Obama highlighted at the jobs forum last week was a so-called cash-for-caulkers plan to improve energy efficiency by weatherizing buildings. This recalled the wildly popular cash-for-clunkers deal earlier this year to trade in old gas-guzzling automobiles for new higher mileage rides.

Obama has also mentioned tax incentives to encourage firms to add to payrolls, echoing measures that appear to have helped Germany avoid suffering a steep climb in unemployment despite also going through a severe recession last year.

I hope he goes for some work-sharing tax credit. The idea is picking up lots of support in Congress. It is hard to envision a quicker way to get unemployment down, said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

(Reporting by Alister Bull; Editing by Cynthia Osterman)