President Barack Obama, seeking to boost U.S. jobs in an election year, called on Tuesday for Congress to pass a $30 billion package to aid small business lending that he hopes will increase hiring.

Obama, who has been criticized for not doing enough to generate job growth, proposed the plan in February.

I'm calling on Congress to pass (the) small business jobs package as soon as possible, Obama said in remarks prepared for delivery at the White House. I urge both chambers to act on these proposals as soon as possible. This shouldn't be a partisan issue.

He made no mention of the outlook for the economy or the current state of financial markets in the text of his speech. Stocks were down sharply on Wall Street amid concern about European banks and higher short-term funding costs.

The House of Representatives Financial Services Committee approved its version of a bill to boost small business lending by a 42-23 vote last week, with no Republican support. House Speaker Nancy Pelosi said the legislation would be brought up for vote soon in the full House.

Obama, who is to meet with Republican senators later on Tuesday to discuss his legislative agenda, is anxious to show that his administration is focused on jobs.

U.S. unemployment is at 9.9 percent and will be a dominant concern for voters in the November mid-term congressional elections, where Republicans hope to take control of the House from Obama's Democrats and increase their numbers in the Senate.

The plan calls for the government to inject capital into independent banks. In return the banks would pay the government a dividend, but the dividend rate would decline as their lending to small businesses increased.

In addition, the Obama administration proposes small business credit measures at the state level that could generate up to $20 billion in private lending by leveraging $2 billion of federal funding.

Government can't create jobs, but it can help create the conditions for small businesses to grow and thrive and hire more workers, Obama will tell small business owners gathered in the White House Rose Garden.

(Reporting by Alister Bull and Steve Holland; Editing by Vicki Allen )

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