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Calling the stagnant economy a “national crisis,” President Barack Obama challenged Congress on Thursday to quickly pass a broad jobs package of tax cuts and other incentives that the president said could give the economy a jolt. It may be the White House’s last chance to change its political fortunes before the 2012 campaign kicks into high gear. The jobs plan, called The American Jobs Act, “will cut payroll taxes in half for every working American and every small business,” Obama said to a joint session of Congress. Experts have put a price tag of about $440 billion on the plan. The $447 billion is more than the $300 billion initially expected. Obama said the bipartisan “super committee” should cut the deficit by more than the planned $1.5 trillion to pay for the program. “Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans including many who sit here tonight. And everything in this bill will be paid for,” Mr. Obama said. Obama said he would support trimming Medicare and Medicaid entitlement programs to pay for the plan. “Ultimately, our recovery will be driven not by Washington, but by our businesses and our workers,” Mr. Obama said. “But we can help.” The president’s plan, unveiled in a speech to a joint session of Congress, is an attempt to wrest the initiative in Washington’s protracted debate about fiscal policy. Both parties emerged from the debt-ceiling fight this summer with their approval ratings heading south as the economy stalled and the unemployment rate stayed above 9%. The address came on the heels of a government report that showed the economy added zero jobs in August. The options available to policy makers, including at the Federal Reserve, are constrained both by the tepid public interest in spending more money on stimulus projects and the limits of monetary policy with short-term interest rates close to zero.

More than half up of $240 billion in tax relief of Mr. Obama’s plan consists of payroll-tax cuts for employees and employers, an idea the White House hopes will appeal enough to Republican lawmakers and is the policy that has the best chance to pass. On the tax front, Mr. Obama’s plan would cut the payroll tax for employers in half for businesses’ first $5 million of wages. Additionally, businesses would get a full payroll tax holiday for any increase in payroll up to $50 million. Companies will get a $4,000 tax credit if they hire someone who has been looking for a job for more than six months and an extra tax credit for hiring military veterans, the president said. Under this plan, the typical working family would get a tax credit of about $1,500, he said. Under the plan, the Social Security payroll tax would be cut to 3.1% on employees. It is usually set at 6.2%. This year, the tax has been 4.2%.

The president also called for more than $60 billion in spending to extend unemployment insurance benefits through 2012 and funding initiatives for Americans who have been out of work for more than six months. Republicans applauded Mr. Obama’s proposal to let workers keep receiving unemployment checks while they audition for a job. Mr. Obama’s plan includes an initiative, modeled after programs in states like Georgia and North Carolina, which would allow people who have been unemployed for six months or more to work for up to eight weeks while receiving unemployment benefits, a way to forestall the problems that come with long-term unemployment. The president’s plan also includes a work-sharing initiative that allows people to receive some unemployment benefits to avoid layoffs.

Mr. Obama studiously avoided calling his American Jobs Act a “stimulus” plan, a term freighted with political baggage. But it proposes $85 billion in aid to state and local governments, including cash for hiring teachers and refurbishing schools, as well as a $10 billion infrastructure bank and $50 billion for transportation projects. Republicans liked the idea of an infrastructure bank, funded with federal dollars, though others were suspicious of how the funds would be spent. Mr. Obama’s suggestions for increased spending on roads, rail lines, airports and waterways, as well as aid to states, drew GOP opposition.

The plan would put $25 billion toward refurbishing at least 35,000 schools, the White House said, and an additional $5 billion would go toward community colleges. The proposal doesn’t include a new plan to deal with the housing market. White House officials said the administration would put forward a housing proposal in coming weeks.

White House officials say they don’t expect Congress to pass every piece of the proposal. In that sense, the jobs plan is in part a political strategy designed to give Mr. Obama room to campaign against Congress if lawmakers don’t act. After this fall, hopes of accomplishing legislation diminish significantly with the election looming. Mr. Obama largely bucked pressure from members of his own party who have urged him to put forward a bold, left-leaning vision of how to stimulate the economy. Lawmakers may try to enact some elements in Mr. Obama’s speech that have bipartisan support to show Washington can tackle hard problems. “I think it would surprise us all how quickly optimism could return if the relation between the parties could improve,” Mr. Cantor said. The GOP also opted against offering a formal televised response to the speech and has been wary in recent days of appearing overly partisan. But a handful of GOP lawmakers, including Sen. Jim DeMint (R., S.C.) and Rep. Joe Walsh (R., Ill.), didn’t attend Thursday’s address, deriding it as little more than a campaign speech.

The president made cutting the deficit a footnote in his speech Thursday night. But, aware of voter interest in curtailing spending, he stressed that his plan will be paid for by closing tax loopholes and other deficit-reduction measures. Mr. Obama will call on a congressional supercommittee crafting a deficit-reduction package to aim for a larger number that also pays for his $447 billion plan over the next decade. Obama said he would propose a deficit-reduction plan on Sept. 19 that will cover the cost of his jobs bill and include “modest adjustments” to Medicare and Medicaid and more taxes for the rich and corporations. Economists have noted the relative small size of the plan and the debatable impact of a temporary cut in payroll taxes. The payroll-tax and unemployment-insurance provisions would be equivalent to about 1% of gross domestic product. Mark Zandi, chief economist at Moody’s, estimated that the plan would add 2 percentage points to real GDP growth and 1.9 million payroll jobs, while reducing the unemployment rate by a percentage point. White House officials said most of the spending in Mr. Obama’s plan would take effect in 2012, although some funding, such as $35 billion for teacher hiring, could be spread over the next two years, White House officials said.

Obama, pushed through an $800 billion economic stimulus package in 2009, said his jobs plan would cut taxes for workers and businesses and put more construction workers and teachers on the job through infrastructure projects.

“And to help responsible homeowners, we’re going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4% — a step that can put more than $2,000 a year in a family’s pocket, and give a lift to an economy still burdened by the drop in housing prices,” Obama said. The changes to mortgage issues, will put a greater burden on Freddie Mac will have a stimulative impact. Obama wants Congress to pass his “American Jobs Act” by the end of this year. But that may be hard to achieve with politicians already focusing on the presidential and congressional elections in November 2012. If Obama can push through his plan, it might provide an economic boost quickly enough for him to reap political benefits. If it stalls in a divided Congress, his strategy will be to blame Republicans for obstructing the economic recovery.

The latest figures show 14 million people are unemployed. An alternative gauge of unemployment, which includes discouraged workers and those with part-time employment, rose to 16.2% in August from 16.1% in the prior month. And over six million workers have been unemployed for over six months. Fed officials say this is especially troubling because these “long-term” unemployed workers have more trouble re-entering the work force because their skills atrophy.