By Laura MacInnis
CLEVELAND (Reuters) - President Barack Obama cast his re-election battle with Mitt Romney as a clash between starkly different economic visions on Thursday and warned that his Republican rival would hollow out the middle class in a speech that could set the tone for months of intense campaigning.
Seeking to gain some footing after a string of bad economic news and a political stumble, Obama said the November 6 election would put the United States on one of two paths: an economy built on education and scientific research that delivers a broadly shared prosperity, or a Republican approach that cuts taxes for the wealthy and undermines opportunity for many others.
"This November, you can remind the world how a strong economy is built - not from the top down, but from a growing, thriving middle class," Obama told a crowd of 1,500 at a community college gymnasium in Ohio, a politically divided state that could be key in determining who wins the November election.
Romney, the presumptive Republican presidential nominee, was not ceding the battlefield to Obama. Campaigning at the other end of Ohio, he struck first in a speech that ended four minutes before Obama took the stage.
With the economic recovery on the verge of stalling for the third summer in a row and Romney having pulled even with the president in voter surveys, Democratic allies have worried Obama could lose the election if he simply tried to convince voters they are better off than when he took office in 2009.
On Thursday, in a somber and deliberately paced presentation that recalled Obama's days as a law school lecturer, the president described a 20-year history of U.S. economics that began with the prosperous years of Democrat Bill Clinton's administration.
Obama then described the economic downturn during the administration of his predecessor, Republican President George W. Bush, and warned that Romney appeared ready to follow the same approach to the economy.
"We were told that huge tax cuts, especially for the wealthiest Americans, would lead to faster job growth," Obama said. "We were told that fewer regulations, especially for big financial institutions and corporations, would bring about widespread prosperity. "We were told that it was OK to put two wars on the nation's credit card; that tax cuts would create enough growth to pay for themselves.
"That's what we were told. So how did this economic theory work out? For the wealthiest Americans it worked out pretty well. ... But prosperity never trickled down to the middle class."
In essence, Obama - whose speech did not include any new economic ideas - appeared to be banking on the notion that voters will consider the U.S. economy's past and its potential, not just the present, when they vote this fall.
"He defined what I take to be his argument over the next five months," said Brookings Institution scholar William Galston, a former adviser to Clinton. "He is going to argue that nobody likes where we are now. The issue is what we'd do about it."
Romney remains a blank slate to many voters, but Obama's predecessor, Bush, is still unpopular. Two-thirds of Americans blame Bush for the troubled economy, according to a Gallup poll; only half point to Obama.
Standing behind a podium that bore the motto "FORWARD," Obama argued that a President Romney would bring back the weak oversight, budget-busting tax cuts and illusory growth that marked Bush's term.
"We can't afford to jeopardize the future by repeating the mistakes of the past. Not now, not when we've got so much at stake," he said.
VOTERS: FEW SIGNS OF IMPROVEMENT
Romney in his speech noted that Obama had "been president for 3 1/2 years."
"And talk is cheap; actions speak very loud. If you want to see the results of his economic policies, look around Ohio, look around the country," Romney said at Seilkop Industries, a Cincinnati manufacturer.
Ohio was hit hard by the recession but has bounced back, thanks to a natural-gas boom and strong growth in manufacturing and biotech.
Unemployment in the state, which peaked at 10.6 percent early in Obama's term, has since fallen to 7.4 percent, well below the national average of 8.2 percent. Obama's decision to bail out domestic automakers also has provided a boost.
"I think the people in Ohio recognize that we are better off than we were when President Obama took the oath of office," said former Ohio Governor Ted Strickland, a national co-chairman of Obama's campaign.
But focus groups indicate that many voters in Ohio and across the nation feel they are seeing few signs the economy is turning around.
Obama's approval ratings have slipped to their lowest level since January - to 47 percent from 50 percent a month ago - because of deep economic worries, wiping out most of his lead in the presidential race, a Reuters/Ipsos poll showed on Tuesday.
He did not help his cause last week when he said the private sector was "doing fine" compared with struggling local governments, a remark that Republicans said showed he had little understanding of Americans' economic troubles.
"It's not a campaign that is on strong footing right now," said Princeton historian Julian Zelizer. "I think the Democrats have reason to be nervous."
FROM GRIT TO GLITZ
After the speech, Obama headed from blue-collar Cleveland to a glitzy New York fundraiser hosted by Vogue magazine editor Anna Wintour and "Sex and the City" star Sarah Jessica Parker, whose character reigned as a symbol of consumerism during the bubble years.
The contrast could provide a rich target for Republicans, but Obama is under pressure to raise money wherever he can to counter what could be a billion-dollar effort to defeat him.
The slow drip of gloomy economic news continued on Thursday.
In a sign of lingering weakness in the job market, the Labor Department said the number of Americans filing new claims for unemployment benefits rose for the fifth time in six weeks.
Europe's economic crisis, which has eaten into U.S. economic growth, showed signs of worsening as Moody's Investment service downgraded Spain's credit rating to near-junk status, pushing borrowing costs for the euro zone's fourth-largest economy into the danger zone.
Obama, noting that Republicans in Congress had blocked many of his economic proposals, told his Ohio audience they could take the future into their hands on November 6.
"The only thing that can break the stalemate," he said, "is you. This November is your chance to render a verdict. ... You can move this nation forward."
(Additional reporting by Sam Youngman in Cincinnati and Caren Bohan and Samuel P. Jacobs in Washington; Writing by Andy Sullivan; Editing by David Lindsey and Peter Cooney)