Obama blames Congress Republicans on bus tour

By Alister Bull

PEOSTA, Iowa (Reuters) - President Barack Obama on Tuesday sought to turn voter anger over the economy toward Republicans in the Congress as he courted rural Americans in a campaign-style bus tour through a key election state.

Obama announced steps to boost hiring in farm communities, his latest effort to fight an unemployment rate which has stuck at over 9 percent despite earlier White House job initiatives.

Speaking in the key election state of Iowa, Democrat Obama portrayed Republicans as blocking progress on the economy.

"We could do even more if Congress is willing to get in the game," he said in Peosta, Iowa, referring to job creation measures he is pushing for in free trade, payroll taxes and road construction.

"The only thing that is holding us back is our politics. The only thing that is preventing us from passing the bills I just mentioned is the refusal of a faction in Congress to put country ahead of party, and that has to stop," Obama said. "Our economy can't afford it."

As he spoke, Texas Governor Rick Perry was a few miles to the north in Dubuque, Iowa, campaigning for the Republican nomination to run against Obama next year.

Together with former Massachusetts Governor Mitt Romney and Congresswoman Michele Bachmann, Perry has emerged as one of the leading candidates to challenge Obama in 2012.

Obama's re-election, seen by commentators as highly probable several months ago, is now less likely due to the poor economy.

Obama has traveled more than 300 miles in a bus along the back roads of the rural Midwest to press his case about the need for job creation.

He began a three-day tour of Minnesota, Iowa and Illinois on Monday.

Public approval of Congress has sunk to record lows in recent polls and the president is taking every chance to distance himself from anger toward political gridlock back in Washington.

"America is going to come back from this recession stronger than before, that I'm convinced of, I believe that," Obama said to applause. "And I'm also convinced that comeback isn't going to be driven by Washington."

Obama won all three states in the 2008 election.

ON THE BUS

The tour, on a jet-black $1.1 million high-tech bus with blacked-out windows and flashing police lights, also exposes the president to voters who, polls suggest, are furious about gridlock in Washington.

Although he was challenged by Tea Party supporters on Monday, the crowds Obama has faced so far have been pretty friendly, and many of the questions were challenging him to take a tougher line against Republicans.

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. Jobs are expected to be the central issue for voters in next year's presidential and congressional elections.

Obama has said he plans to put forward a specific plan for economic growth when Congress returns from summer recess in September.

His hands are tied by a divided Congress, where Republicans control the House of Representatives and oppose any significant spending measures to stimulate growth.

Obama is spending much of Tuesday at a rural economic forum in Iowa. He unveiled $350 million in funding for small businesses over the next 5 years -- not the big plan to be presented to Congress next month.

"These are tough times for a lot of Americans -- including those who live in our rural communities," Obama said.

(Additional reporting by Tabassum Zakaria and Laura MacInnis in Washington; editing by Mohammad Zargham)