ABINGDON, VA -- Mitt Romney downplayed the importance of new, positive jobs data released Friday, telling a crowd of supporters here in rural Virginia the drop in the unemployment rate had more to do with workers dropping out of the labor force than with any real expansion of hiring.

"There were fewer new jobs created this month than last month," Romney said of today's report from the Bureau of Labor Statistics which showed 114,000 jobs created in September, and revised the August number up to 142,000 new jobs.

Steve Helber / AP

Republican presidential candidate, former Massachusetts Gov. Mitt Romney gestures during a rally in Abingdon, Va., Friday, Oct. 5, 2012.

The Republican presidential nominee's tack broke from a now-monthly tradition of seizing on weak employment reports to portray President Barack Obama as ineffective in turning around a struggling US economy, Mitt Romney downplayed the importance of today's more positive labor data,

"The unemployment rate as you noted this year has come down very, very slowly, but it’s come down none the less.  The reason it’s come down this year is primarily due to the fact that more and more people have just stopped looking for work," Romney continued. "If the same share of people were participating in the workforce today as on the day the president got elected, our unemployment rate would be around 11 percent. That’s the real reality of what’s happening out there."

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The report from the Bureau of Labor statistics shows workforce participation remained essentially flat in September, at around 64 percent, with an uptick in workers who took part time jobs for economic reasons, such as not being able to get full time employment. Updward-revised jobs numbers from July and August also contributed to the lower jobless rate.

While workforce participation has generally declined over the course of the past four years, workforce participation actually inched upward last month – meaning a drop in those seeking work wasn’t directly attributable to the lower unemployment rate last month.

But if the jobs report itself was a secondary focus in Romney's remarks today, the economy was once again front and center, with Romney telling some 3,300 supporters gathered here that he could grow the economy faster than Obama, and promising brighter economic days ahead.

"My priority is creating jobs," Romney said. "I’ll help small business do that, with everything I can do. Now we can do better. We don’t have to stay on the path we’ve been on. We can do better."

"When I’m president of the United States – that unemployment rate is going to come down not because people are giving up and dropping out of the workforce but because we’re creating more jobs," Romney said later. "I will create jobs and get America working again!" 

The Obama campaign challenged Romney economic plans in a statement released shortly after the event concluded.

"In fact, independent economists say his plans would not create jobs, could slow the recovery, and could actually cost us two million jobs over the next two years. The American people want to move forward, not back,” Obama campaign spokesperson Lis Smith wrote.

President Barack Obama used Friday's new jobs report showing that the unemployment rate had fallen below 8 percent to warn voters in battleground Virginia against electing Mitt Romney as president.

The monthly jobs survey issued this morning by the Bureau of Labor Statistics showed that the economy added 114,000 jobs in September, and that the economy added 86,000 more jobs in July and August than had been initially estimated. Most significantly, the unemployment rate fell from 8.1 percent in August to 7.8 percent last month -- the lowest point since Obama first took office.

"This morning, we found out that the unemployment rate has fallen to its lowest level since I took office," the president said at a campaign rally in northern Virginia.

The new economic data was welcome news for Obama, whose performance in Wednesday's presidential debate prompted hand-wringing from Democrats, who said the president wasn't aggressive enough versus Romney. Friday's data offered Obama an opportunity to play offense on the issue of the economy, the No. 1 issue in the election and a topic on which he often plays defense versus Romney.

"Today's news certainly is not an excuse to try to talk down the economy to score a few political points. It's a reminder that this country has come too far to turn back now," Obama said. "I can't allow that to happen. I won't allow that to happen, and that is why I'm running for a second term as president of the United States."

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The report was politically significant in that, for the first time, the unemployment rate fell below 8 percent -- an important psychological barrier, especially since Romney has made frequent reference to the tally of months during which the jobless rate has been above that threshold.

Mandel Ngan / AFP - Getty Images

President Barack Obama waves during a campaign event on October 5, 2012 at George Mason University in Fairfax, Virginia.

Romney has made the anemic economic recovery his primary argument in prosecuting the case against Obama. He said the only reason that the unemployment rate had declined was due to people dropping out of the workforce.

"There were fewer new jobs created this month than last month," Romney said while campaigning Friday in Virginia.

"The reason it's come down this year is primarily due to the fact that more and more people have stopped looking for work," added the Republican presidential hopeful. He argued that while it "looks like unemployement is getting better," the real jobless rate would be closer to 11 percent if the workforce hadn't shrunk during Obama's time in office.

The BLS report was the penultimate monthly update on the U.S. employment situation before the election. The jagged rate of recovery has caused heartburn for Obama in his bid for re-election -- particularly some disappointing reports in the late spring -- offered Romney ammunition to use against the president.

In those months, Obama saw public opinion toward the state of the economy and his management of it sour to a degree in public polling.

It has also been growing confidence in the economy that helped contribute to the president's advantage over Romney in late summer and through September.

Forty-four percent of voters said in the most recent NBC News-Wall Street Journal poll that they believed the economy would improve over the next year, improved from 27 percent of voters who expressed such an opinion in the July edition of the poll.

The Obama campaign has also sought to erode Romney's advantage on the economy with rounds of blistering ads questioning the Republican nominee's experience in private equity, and how Romney manages his own personal wealth.

But Romney still held an edge over Obama in this week's NBC-WSJ poll. Forty-five percent of voters said they thought Romney would better manage the economy, versus 42 percent who said the same of Obama.

Two high-profile Republicans argued Wednesday that Mitt Romney's background in business might not directly apply to his work as a potential president.

The Republican presidential nominee often touts his time in the private sector as one of his top qualifications to be president. But conservative columnist Bill Kristol and former Utah Gov. Jon Huntsman (a primary foe of Romney's) said that might not be enough to sustain Romney in the White House.

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Speaking at a Brookings Institution panel discussion, both men expressed doubt that treating government like a business – an idea on which Romney and other candidates have campaigned – might not be as effective as Romney thinks.

“I think his attitude will be efficiency – I’m going to come in and look at government like a business, which isn’t always the right answer because government isn’t a business,” Huntsman said.

Kristol added that Romney’s presidential resume is “thin,” given that he only governed for one term as Massachusetts and that his business experience “isn’t comparable.”

He also said that, as campaigns focus more on rhetoric than substance, they’ve grown.

The Weekly Standard editor said there is a wider chasm between politicking and policy compared to previous presidential election cycles.

“If you have a conversation with Stuart Stevens, who’s running the Romney campaign, and then have a conversation with Mike Leavitt who’s running the Romney transition, it’s just two different worlds. Obama’s a little more complicated and I don’t have that many private conversations with his top people, but I honestly think it would not be that dissimilar,” Kristol said.

Regardless of who wins next month, Kristol said either Obama or Romney will have a short but important window to act on their legislative priorities -- including tax reform -- given the need for Congress to come together over a deal to head off the looming “fiscal cliff,” a combination of spending cuts and tax increases scheduled for the end of the year.

“I think 2013 becomes a big entitlement reform, tax reform, budget reform moment,” Kristol said, suggesting whoever wins would quickly apply his post-election political capital (of which Kristol insisted there would be some, regardless of how close the vote is) to work on a “huge legislative agenda.”

Updated 2 p.m. ET- DENVER – Voters will have their chance to size up President Barack Obama and Republican presidential nominee Mitt Romney side-by-side, when both men take the stage at the University of Denver Wednesday night for their first of three debates.

And with Election Day just a month away, expectations and anticipation for tonight’s showdown are mile high.

Romney, the Republican presidential hopeful, trails Obama in most polls, both nationally and in key battleground states. Tonight’s debate offers the challenger an opportunity to change the dynamics of the race and Romney is expected to take an aggressive posture in hopes of doing just that.

For his part, Obama will have to guard against his Republican opponent’s attacks – particularly on the anemic economy and the administration’s response to a terrorist attack against a U.S. embassy last month in Libya – all while trying to illustrate the “contrast” between himself and Romney.

"Gov. Romney, to me, seemingly shifts his shape. I don't really know what Gov. Romney stands for – you look at his Massachusetts record, you look at what he promoted when he was running for the U.S. Senate – and now you compare that with his various proposals since he's been running for office," said Colorado Sen. Mark Udall, a Democrat. "So I think this debate tonight will continue the dynamic of the campaign that's focused on contrasts and differences."

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The stakes on Wednesday evening are especially high for Romney, who’s trailed Obama in most polls since each party’s national conventions concluded at the beginning of September. A series of missteps by the former Massachusetts governor – involving his quick response to the Libya incident and the revelation of secretly recorded remarks seeming to write off 47 percent of voters, whom he called “dependent” upon government – have put the private equity titan in the unenviable position of having to make up ground versus Obama.

October’s three debates might be Romney’s last, best hope to accomplish that goal. Political observers typically look toward three moments in an election for a candidate to change the state of the campaign. The first two – choosing a running mate and the national convention – have come and gone.

Slideshow: On the campaign trail

Reuters, Getty Images

In the final push in the 2012 presidential election, candidates Mitt Romney and Barack Obama make their last appeals to voters.

Launch slideshow

That leaves the debates – tonight in Denver, Oct. 11 in Hempstead, N.Y., and Oct. 22 in Boca Raton, Fla. – for Romney to make his argument.

The Republican nominee will look to deliver the kind of aggressive attacks on Obama for which his conservative supporters have clamored.

Several Romney voters at events here in Colorado preceding Wednesday’s showdown said they feared he currently trailed Obama. All of them said they wanted to see the GOP nominee come out swinging versus the president.

“I don’t think he has been tough enough,” said Caroline Peale, who attended Ann Romney’s event on Tuesday afternoon in Littleton. “He has so much ammunition. He doesn’t use it!”

Peggy Fulster, a self-described independent voter who decided for Romney in recent months, said: “I believe he's behind, but I think he can make up ground. I think a lot of people are sitting on the sidelines to see what happens in the debates.”

Related: First debate crucial for Romney

The risk for Romney could involve seeming too aggressive; he must straddle a delicate dividing line between criticizing the president and seeming petulant in a way that could turn off many swing voters.

- / AFP - Getty Images

This combination of file pictures shows President Barack Obama Republican presidential nominee Mitt Romney addressing crowds.

Obama is sure to play defense at moments of the debate, which will be moderated by Jim Lehrer of PBS. But the debate format is largely open-ended in a way that could maximize interactions between the candidates. As a result of a coin toss, Obama will deliver the first opening statement and Romney will give the final remarks of the evening.

The president’s campaign has sought to play down expectations for Obama, emphasizing that the president hasn’t debated since the 2008 general election. Obama spent much of the past weekend and the first half of this week practicing for tonight’s matchup, huddling in Henderson, Nev., with senior staff and Massachusetts Sen. John Kerry, the 2004 Democratic presidential nominee who is playing the role of Romney in mock debates.

Obama, speaking a few days ago in Las Vegas, framed the debate as an opportunity to engage with Romney on issues of substance, playing down expectations and dismissing the notion of debate winners and losers.

“Gov. Romney, he's a good debater. I'm just OK,” the president said. “But what I'm most concerned about is having a serious discussion about what we need to do to keep the country growing and restore security for hardworking Americans. That's what people are going to be listening for. That's the debate that you deserve.”

Much of Obama’s campaign has focused on illustrating the differences between the two men, rather than embracing the model of an election that is effectively an up-or-down referendum on the president’s first term.

This evening, Obama is likely to continue in that vein, and has ample ammunition of his own to go after Romney. The Democrat’s campaign has turned Romney’s “47 percent” video into the subject of attack lines, and the president invokes Romney’s own low effective tax rate as evidence for why taxes should be reformed such that the wealthy pay a higher share of taxes.

One difficulty for both candidates involves letting the other's attacks get to them.

"I could see both men bristling a little bit at a comment the other one might make," said Udall. "There are times where you feel no good deed goes unpunished, and you want to at least push back – if not punch back – and set the record straight. I think there's a way to modulate it ... You respond with a punch, but it's got to be a clean, above board punch that's appropriate for that setting."

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Like Obama, Romney has spent a considerable amount of time preparing for these attacks and downplaying expectations. Romney’s team has pointed out that, despite the numerous primary debates earlier this cycle, the Republican presidential nominee hasn’t faced a Democratic opponent in about a decade, when he first ran for governor of Massachusetts.

“There’s going to be all the scoring of winning and losing, and you know, in my view, it’s not so much winning and losing or even the people themselves,” Romney said at a rally Monday evening in the Denver area.

Romney added: “I look forward to these debates. I’m delighted that we’re going to have three debates. It’ll be a conversation with the American people that will span almost an entire month.”

Ohio Sen. Rob Portman, a veteran of debate preparations for past Republican nominees, has taken the lead on playing Obama in practice sessions versus Romney. Portman traveled with Romney to Denver, and the two of them mostly worked privately on Tuesday in anticipation of tonight’s debate.

Would-be first lady Ann Romney pronounced her husband “excited” and “focused” in a rally Tuesday afternoon.

But whether there are that many undecided voters remaining on the sideline is another question. The challenge – for both candidates – could end up involving the number of voters who appear to have already determined their vote, making it more difficult than usual for either Romney or Obama to sway voters with a strong debate performance.

Tuesday’s NBC News/Wall Street Journal poll found that most voters, 60 percent, called the debate either "just somewhat important" or "not at all important."

Updated at 11:25 am ET Surrogates for Republican presidential candidate Mitt Romney and President Barack Obama clashed Sunday on NBC’s Meet the Press over Romney’s comment at a fundraiser that he cannot win 47 percent of the voters because they see themselves as “victims” and have become so dependent on government entitlements that they’ll vote for Obama “no matter what.”

Massachusetts Democratic Gov. Deval Patrick accused Romney of “turning his back on half the country” with his comments. Patrick said his own mother had relied on food stamps but aspired “to get to a better place, to get her GED, to get a job, to stand on her own two feet. The notion that she, or we, or people like us would be belittled while we needed some help to be able to stand on our own two feet is exactly what Gov. Romney is conveying.”

And despite persistent high unemployment – with the jobless rate staying above 8 percent since February of 2009 – Patrick contended that Obama deserved credit: “We’ve seen the country brought back from the brink of depression. Are we done? Of course not, of course not. But we’re certainly on a better course. ”

But Romney advocate Sen. Kelly Ayotte, R- N.H. told NBC’s David Gregory that Romney’s comments at the fundraiser were “not a governing philosophy” and that he “has a vision for 100 percent of America.”

She argued that the sluggish economy and continued high unemployment were Obama’s fault since he and the Democrats controlled both the White House and Congress for the first two years of his presidency and could do whatever they chose to do. She argued that Obama’s policies, principally the $830 billion stimulus, had failed – and the result is too many Americans being forced to rely on unemployment insurance and food stamps.

“I see 15 million more people on food stamps that don’t want to be there….These people want to get off of food stamps and have those good jobs, but where the economy is right now so many people have lost hope. In fact, the last jobs report showed that for every job added, four people have left the workforce,” she said. 

Ayotte noted that the labor participation rate keeps falling – “people are leaving the workforce.” The labor participation rate -- the proportion of the civilian population 16 years of age and older either working or seeking work-- is at 63.7 percent, the lowest level since the early 1980s.

Romney, she said, wants “upward mobility” for the single mother on good stamps and for other hard-pressed Americans 

On the question of the tax return that Romney released on Friday, Patrick said “the more important issue is what he plans to do with my taxes and yours and everybody else’s.”

He said Romney’s tax cut proposal included no offsetting revenues and would enlarge future budget deficits.

In an interview on the CBS program Face the Nation Sunday, former president Bill Clinton commented on Romney’s 47 percent remarks, saying some of the people who pay no federal income tax do pay Social Security and Medicare payroll taxes as well as state and local taxes.

“They are out of the federal income tax pool for two reasons: one is the economic crash which lowered a lot of people’s incomes. Even a lot of the newer jobs don’t pay high incomes,” Clinton said.

The second reason, he said is the combined effect of the Earned Income Tax Credit -- which offsets payroll tax payments by low-wage workers -- and the Child Tax Credit, which goes to middle-income and lower-income parents with children age 17 and younger. During his presidency, Clinton noted, he and congressional Republicans agreed to extend both tax credits.

Clinton said a lot of low-wage workers who benefit from the Earned Income Tax Credit and the Child Tax Credit, “would love to make enough money to pay federal income tax.”

Asked whether Romney had a point in arguing that too many Americans have become dependent on entitlement payments, such as food stamps, Clinton said, “We have to wait until normal growth resumes to make that judgment….  A heck of a lot of this money is unemployment and food stamps and Medicaid for people who lost their private health insurance.”

He predicted that “the number of people dependent on the government will go way, way down once we’ve got an economy that’s functioning again.”

Polls released last week showed Romney lagging Obama in three important states, Colorado, Wisconsin and Iowa.

According to the latest NBC News/Wall Street Journal/Marist polls in Colorado and Wisconsin, Obama is ahead by 5 points among likely voters (including those leaning toward a candidate), 50 percent to 45 percent.

In Iowa, the president’s lead over Romney is 8 points, 50 percent to 42 percent.

But the most recent Gallup national tracking poll shows the race exactly tied, with 47 percent favoring Romney and 47 percent favoring Obama.

Updated at 4:30pm ET Iowa is crucial to President Barack Obama winning a second term and just in case the Iowa delegates at the Democratic convention in Charlotte, N.C., might forget that fact, even for a moment, an all-star cast of speakers is showing up at the Iowa delegation’s breakfasts this week to flatter them, exhort them and remind them of how important they are.

John Brecher / NBC News

Newark, New Jersey Mayor Cory Booker speaks to Iowa delegates at their breakfast event prior to the Democratic National Convention on Monday, Sept. 3, in Charlotte, North Carolina.

The Iowa delegates gave rousing welcomes to mayors Antonio Villaraigosa of Los Angeles and Cory Booker of Newark, N.J., Monday morning at the delegation’s breakfast.

Related -- First Thoughts: The enthusiasm gap

Noting that he had worked as a union organizer for 25 years before being elected to the California legislature, Villaraigosa said Democrats’ grass roots organization is the key to victory. “We’re going to be knocking on doors, we’re going to be calling voters; we know that Iowa is critical to this election and I hope to visit.”

In fact, the Los Angeles mayor will be the keynote speaker at the Iowa Democratic Party’s annual Jefferson-Jackson dinner on Oct. 20.  

Booker warned the delegates of the lack of fervor that cost Democrats the New Jersey governor’s race in 2009. “If we had the same kind of enthusiasm, the same kind of energy, the same kind of organizing, the same kind of voter turnout that we did in 2008, we would have easily won in 2009,” Booker said. “The point is very simple: it’s not about them, it is about us, it is about how well we organize, how much we go door to door.”

Booker mentioned to the Iowans that his great-grandparents moved to Iowa from Alabama and that his grandmother was born in Des Moines in 1918. Telling the delegates that the election has big consequences – such as who appoints the next Supreme Court justice – Booker again brought up his family roots in assessing the election’s impact: “What’s exciting to me is that just like my personal family history, it’s going to turn on the state of Iowa.”

John Brecher / NBC News

Sue Dvorsky, Chair of the Iowa Democratic Party, listens to Newark Mayor Cory Booker speak to Iowa delegates at their breakfast event prior to the Democratic National Convention on Monday in Charlotte, North Carolina.

Iowa is where it all began for Obama with his dramatic caucus win in 2008 and it might be where victory is decided on Nov. 6. The importance of the state’s six electoral votes was underscored again this week by the rival campaigns’ scheduling: Republican vice presidential candidate Paul Ryan will be speaking at rallies in Adel and Cedar Rapids, Iowa, on Tuesday.

And Obama is heading back to Iowa the day after his acceptance speech to rally young voters at the University of Iowa – after just having campaigned in Sioux City and Urbandale on Saturday.

Iowa ranks sixth among the states in the amount of money being spent on TV ads by each side, behind Florida, Ohio, Virginia, North Carolina, and Colorado, according to NBC ad tracking data. The Obama campaign and Democratic outside groups have spent $22 million in Iowa so far, compared to $24 million spent by the Romney campaign and GOP outside groups.

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Alluding to the enthusiasm gap that Booker warned against, delegate Dennis Roseman, a retired University of Iowa mathematics professor and an active and early Obama supporter in 2008, said that things today are different from four years ago when Obama won Iowa in the caucuses and again in November.

“Four years ago was very exciting, it was all very new, it was all about change and what’s possible,” Roseman said. “We didn’t have the depth of the economic problems that we are facing right now. Even though things are improving, people’s attitudes are somewhat negative, having suffered through a lot. So right now it’s a struggle, no doubt about it.”

He added, “We’re doing really well in our part of the state and there’s a lot of enthusiasm – but we have a big state and we have to really fight hard to stave off either complacency or a certain amount of negativism.”

A big student vote for Obama is vital. In 2008, Obama won 70 percent of the vote in Johnson County, home of the University of Iowa, with a margin of more than 30,000 votes over Republican John McCain.

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Since Iowa is already a state with very high voter registration, Sue Dvorsky, chair of the Iowa Democratic Party, said the Democrats concentrate on adding new voters by registering college and university students “which can’t happen until they get back (to school in September) so now that effort is full-blown.”

Obama’s Friday campaign event at the University of Iowa will focus on college students “because we know that’s where our new registrants are,” Dvorsky said.

Republicans point to the 28,000 increase in active GOP voter registrations since 2008, but Dvorsky explained this by pointing to competitive GOP intraparty battles which had spurred interest among Republicans. “They’ve had three consecutive primaries. They had a very, very vigorous gubernatorial primary in 2010 that we didn’t have, then they had the (presidential) caucuses with multiple candidates and multiple winners that we didn’t have. And then they had a record number of primaries against their own (state legislature) incumbents – from the Right.”

As for the Republican advantage in voter registration (as of August), Dvorsky said she anticipated that when the Iowa Secretary of State’s office releases new numbers on Tuesday “we will have bitten into that substantially.”

She added that Republicans greatly improved their voter turnout effort in 2010, for example, “their vote by mail went by about 100 percent.”

But she portrays the Iowa GOP as divided among the Ron Paul forces, the Rick Santorum backers, and Mitt Romney’s supporters, calling it “a party that is still fairly fractured.”

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She also pointed to another motivation for Democrats to turn out on Election Day: the battle for control of the state Senate – the last line of defense for Democrats against legislation they oppose, since Gov. Terry Branstad is a Republican and the state House is Republican-controlled.

The Democrats now hold a one-seat majority in the state Senate. On Election Day, there will be 26 competitive state Senate elections.

“We believe we are in an existential position: we have (a) one seat (majority) in the Senate,” she said. “It must be retained. There is no option for us to fail.”

Asked about the Republicans’ great success in 2010 elections in Iowa and whether that’s a harbinger for this November, State Senate Majority Leader Mike Gronstal said, “You can point to 2010 and I can point to 2011 – last fall, a special election in a suburban district, Cedar Rapids, handpicked by the Republicans to pick up after appointing a Democratic state senator to the Iowa Utilities Board. They thought that was a seat they were pretty much guaranteed to get back” and create a tie in the state Senate.

But, Gronstal said, “We put together a great get-out-the-vote effort. We do that better than the Republicans in Iowa and we won that election handily in the end.”

Obama must rely on that same kind of get-out-the-vote effort on Nov. 6 to keep Iowa in his column.

There are still too many Americans looking for work, President Barack Obama said Friday in reaction to July's jobs numbers, renewing his demand that Congress extend expiring tax cuts for most U.S. households.

Presumptive Republican nominee Mitt Romney, speaking at the same time in the swing state of Nevada, highlighted a report showing the economy added 163,000 jobs in July as an indictment of the president's economic policies.

"These numbers are not just statistics," Romney said. "These are real people, really suffering, having hard times."

The monthly report by the Bureau of Labor Statistics has assumed a heightened level of political significance for an election in which the economy and jobs is the top issue. While job creation in July matched private forecasters' estimates, the unemployment rate ticked upward to 8.3 percent.

Pablo Martinez Monsivais / AP

President Barack Obama talks about taxes, Friday, Aug. 3, 2012, in the Old Executive Office building of the White House complex.

Obama hailed the positive jobs figures in the report and argued his administration had presided over the creation of 4.5 million jobs since January of 2009.

"But let's acknowledge: we've still got too many folks out there who are looking for work," he said at the White House. "We've got more work to do on their behalf."

The president used the occasion to push again for lawmakers to renew the so-called "Bush tax cuts" for households with incomes under $250,000 per year, and individual income under $200,000. The Democratic-held Senate passed a bill to that effect last week, but House Republicans defeated it in a vote on Wednesday.

Without referencing Romney specifically, Obama pointed to a report issued by the nonpartisan Tax Policy Center, which argued a plan like the presumptive GOP nominee's would effectively raise taxes on the middle class since a number of deductions favored by middle class households could be eliminated. (The Romney campaign called this report a "joke.")

"The people standing behind me should not have to pay more so the wealthiest can pay less," Obama said in reference to a group standing behind him during his remarks. "That's not top-down economics, that's upside-down economics."

The dueling presidential candidates' rhetoric served as a case study, though, of the alternative interpretations of July's new employment figures.

Romney, in a statement earlier in the morning and in his Las Vegas-area remarks, called the jobs report "another hammer blow" for the middle class.

The former Bain Capital executive stressed his private sector experience as a chief qualifier, and went so far as to promise the creation of 12 million jobs during his first term should he be elected.

The setting in Nevada, which has been among the hardest-hit states in the recession and where the housing market has struggled to recover, was no accident for Romney. Nevada is set to be one of the handful of states that could determine the Electoral College winner in November.

Romney's speech also allowed him to relitigate Obama's "you didn't build that" gaffe from last month, in which the president seemed to suggest that business owners owed some of their success to the government.

"The president has said we’re taking him out of context, but then you go look at the rest of his speech -- it’s on YouTube -- the context is worse than the quote," Romney said, earning him some of the loudest applause from the crowd.

A wave of tax increases and billions of dollars in automatic spending cuts would cause "a lot of damage" to the fragile economy, Treasury Secretary Timothy Geithner said on Monday.

Tax breaks for all Americans are set to expire at the end of the year, and $100 billion in cuts to domestic and military programs are set to take effect in January if Congress does not agree on a new deficit-cutting deal.

"Many people who look at this say that, yes, you'd at least get a recession out of this," Geithner said on PBS' Charlie Rose television show. "The cumulative size of those cuts - tax increases and spending cuts - are very, very large relative to the economy," he said.

The nonpartisan Congressional Budget Office forecasts that the mix of spending cuts and tax hikes would cause the U.S. economy to contract at an annual rate of 1.3 percent for the first half of 2013 if lawmakers do not act.

The White House is pushing Congress to extend for one year tax cuts for families earning less than $250,000 a year. Taxes for those earning more than that would increase in 2013 if Congress passes legislation the Obama administration wants.

Republicans argue that all tax cuts should be extended to avoid hurting the tepid economy.

Geithner warned lawmakers that investors could not stomach a repeat of last year's debt ceiling battle that increased the U.S. Treasury's borrowing costs and stripped the United States of its top credit rating.

"You saw huge damage to consumer confidence, to business confidence, and to confidence around the world in the United States because you had people in public office threatening to default on our nation's obligations," Geithner said.

President Barack Obama said on Monday that Congress "ought to be able to come together and agree on a plan, a balanced approach" to avoid the steep automatic spending cuts.

Euro Zone will stay intact - Geithner 

Geithner reiterated that the domestic fiscal problems and the European Union's economic crisis were still the biggest threats to the U.S. economy.

But he said he thought the 17-nation common currency euro zone would stay intact. "They've said, 'We will do everything it takes to hold the European Union together.' And you could say that's what they're trying to do," Geithner said.

His comments came as Moody's Investors Service cited an increased chance that Greece could leave the euro zone, which would set off a chain of financial sector shocks.

Although Geithner said European leaders had committed to do what it takes to hold their financial system together, he added they had to make that commitment credible to markets and investors.

"If you leave Europe on the edge of the abyss, if you leave it just teetering on the edge of financial disaster, it'll be much harder for this strategy to work," he said.

At the White House Monday President Barack Obama repeated his call for continuing the current tax rates for single people with income under $200,000 and married couples with incomes under $250,000, and for increasing tax rates on people above those thresholds.

Since the 2008 campaign Obama has been part of the prolonged debate over whether income tax policy ought to be rewound back to the Clinton Era. The current income tax rates have been in effect for nearly ten years and the House will vote in the next few weeks on whether to extend them for one more year. Millions of Americans working today have never known any other income tax rates.  They are set to expire at the end of this year and revert to 2000 levels.

“I’m not proposing anything radical here,” Obama said. Upper-income people should be required to “go back to the income tax rates we were paying under Bill Clinton.”

He added, “Republicans say they don’t want to raise taxes on the middle class; I don’t want to raise taxes on the middle class….Let’s agree to do what we agree on.”

If not “radical,” the president’s proposal Monday was also not new. In fact, he’s made the very same pitch in each of his budget proposals since 2008.

His repetitive stance has put Obama at cross purposes not only with Republicans but with some Democrats, such as Virginia Senate candidate Tim Kaine who wants to raise taxes only on those with incomes over $500,000.

As he did Monday, Obama has a habit of referring to these current tax rates as "tax cuts."

This labeling could make Obama’s audience think that the tax rates which were in effect prior to 2001 were somehow the "normal" or "permanent" income tax rates.  They weren't. Congress had changed the income tax rates five times in the 20 years leading up to 2000, according to the nonpartisan Tax Policy Center in Washington.

Although nothing in tax law is truly permanent, if anything in the past few decades has the appearance of permanency, it is the current income tax rates.

But the current rates are simply the ones that Congress and the president have chosen to allow to remain in effect -- or the ones that resulted from standoffs between Obama and congressional Republicans.

Obama himself summed up the history in his budget proposal earlier this year: in December 2010, congressional Republicans insisted on extending the current tax rates through 2012 “and threatened to allow taxes to increase on middle-class families if the Administration did not agree. Not extending the middle-class tax cuts would have hurt our nascent economic recovery, and would have imposed an enormous burden on working families….”

So Obama agreed to extend them to 2012 as part of a deal that also included a payroll tax cut and an extension of unemployment insurance benefits.

Obama said in his February budget proposal that he opposes the extension of the current tax rates on higher-income people and wants the return of the estate tax exemption and rates to 2009 levels. This would reduce the deficit by $968 billion over 10 years, the president’s budget officials estimate.

But what Obama didn’t say in his budget plan is that retaining the current tax rates for people with incomes under $200,000 and $250,000 for couples will come at a huge cost: according to the nonpartisan staff of the congressional Joint Committee on Taxation, the Treasury will lose nearly $1.4 trillion in revenue over ten years if those rates remain in effect.

Keeping the child tax credit would add another $267 billion in foregone revenue. This would all add to the future deficits and to government debt that younger Americans will need to pay off when they start working and paying taxes.

All this tax talk may refocus attention on the predicament which Congress and the president continue to find themselves in, pretty much as they did at the end of 2010.

No one disputes the fact that the U.S. economy is weak with 12.7 million people looking for work, 2.5 million needing work but having given up looking, and another 8.2 million working part time because their hours have been cut or because they can’t find a full-time job.

If the economy is this weak, and if there’s the danger a tax increase might, as Obama’s budget plan said “hurt our nascent economic recovery,” then how large a tax increase can the economy tolerate?

And is there a growing potential that “the economy is still too weak” argument will become a more or less permanent rationalization for not increasing tax rates on anyone at all?

To the latter question, the answer in the short term is clearly no: A major tax increase on people with incomes over $200,000 is going to take effect on New Year’s Day, as part of the Affordable Care Act: raising $20 billion in 2013, increasing to nearly $40 billion by 2019.

Republican presidential candidate Mitt Romney has called for not only extending the current income tax rates but cutting the top rate from 28 percent to 20 percent, while scrapping certain tax credit and preferences for higher-income people -- although he has not yet revealed which tax breaks he’d get rid of.

Wishing for better times, Democrats frequently invoke the late 1990s as the Golden Era of low unemployment, and budget surpluses. Obama did just that in his White House statement on Monday.

One of the lessons of the late 1990s is that many factors, including economic innovation and the development of new industries, caused higher tax revenues. As the Congressional Budget Office reported in 2000 and as current CBO chief Doug Elmendorf said in a 2001 research paper, this led to an increase in the share of income received by people in the highest tax brackets and a surge in capital gains from the soaring stock market.

The last major piece of tax legislation signed by President Bill Clinton, the Taxpayer Relief Act of 1997, created the child tax credit, lowered the estate tax, and cut the top capital gains tax rate from 28 percent to 20 percent – in other tax cuts for rich and for people with kids. It did, however, raise taxes on one group: cigarette smokers.

The U.S. economy generated a paltry 80,000 jobs in June, showing that the nation's job-creation machine is stumbling even as voters' attitudes about the economy begin to gel ahead of the November election.

The unemployment rate is unchanged at 8.2 percent, the Labor Department reported Friday.

Job-creation has stumbled since March amid worries about consumer spending, the debt crisis in Europe and stagnation in Congress.

"There's just not a lot of momentum in the economy," said Sam Bullard, an economist at Wells Fargo  in Charlotte, North Carolina.

Mitt Romney, the Republican challenger to President Barack Obama, is focusing his campaign on the weak jobs market that has dogged the presidency.

"The president's policies have not gotten America working again and the president is going to have to stand up and take responsibility for it," Romney said at a news conference in New Hampshire after the jobs report was released.

Later, at a campaign stop in Poland, Ohio, Obama told the crowd in the crucial swing state that while private sector job creation was headed in the right direction, more needed to be done to help the economy grow faster and create more jobs.

"I want to get back to a time when middle class families and those working to get to the middle class have some basic security. That's our goal," he said.

Related story: Just four more jobs reports until the election

The details of the report were unsettling. The government said the economy created 1,000 fewer jobs during April and May than previously estimated.

The somber report might push the Federal Reserve closer to taking new actions to lower borrowing costs to encourage companies to increase hiring. Analysts polled by Reuters expected an increase in payrolls of 90,000 jobs.

Slideshow: Bad jobs reports

Launch slideshow

Debt woes have bogged down much of Europe, sending some countries into recession. The eurozone crisis in turn has dulled economic growth around the world from China to Brazil. A survey on Monday found U.S. manufacturing contracted for the first time in nearly three years in June.

Europe is not the only worry weighing on the U.S. outlook. Washington plans enough belt-tightening at the start of 2013 to easily send the economy into recession. Cautious observers wonder if lawmakers can avoid this "fiscal cliff."

"Firms are saying, 'Is there really a reason to ramp up hiring right now?'," said Bullard.

Job creation averaged 75,000 per month during the second quarter, compared with an average increase of 226,000 in the first quarter. Part of the slowdown could be because mild weather led companies to boost hiring in the winter at spring's expense.

But recent weakness in everything from retail sales to business sentiment suggests something more fundamental is at play.

"We're not expecting things to take off in the second half of the year," said Sara Klein, an economist at Moody's Analytics in West Chester, Pennsylvania. "Weather wasn't the only factor." 

Until recently, the United States had been a relative bright spot in the global economy, especially in manufacturing. Most economists still expect lackluster growth over the rest of 2012 rather than a slip toward recession.

But economic weakness abroad has lately become a formidable hurdle, as Obama has acknowledged, and global policymakers are acting like a storm is brewing.

China, the European Central Bank and the Bank of England all eased monetary policy on Thursday, raising speculation they had coordinated their action.

The Fed eased policy further last month, but the recent run of weak data has fueled speculation the U.S. central bank could deliver more stimulus when its next meeting concludes on Aug. 1.

Even though June's pace of hiring was decidedly weak, the Fed might not want to unveil bold new measures now because the real storm could be months down the road.

"Hiring isn't as strong as earlier this year ... but not to the point where you see obvious need for Fed action," said Cooper Howes, an economist at Barclays in New York.

Reuters contributed to this report.

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