President Barack Obama signed legislation extending unemployment benefits Thursday, a hard-fought achievement his party will use to portray Republicans as callous to the needs of ordinary workers in a fall election campaign tied to the country's economic fate.

WASHINGTON — President Barack Obama signed legislation extending unemployment benefits Thursday for 2.5 million jobless Americans, a hard-fought achievement his party will use to portray Republicans as callous to the needs of ordinary workers in a fall election campaign tied to the country's economic fate.

But Democrats continued to struggle over the next steps to improve the economy, confronting a 9.5 percent jobless rate and voters who are demanding jobs and paychecks, not just unemployment checks.

After this week's victory on unemployment, Democrats still must decide whether to allow Bush-era tax breaks for wealthy Americans to expire at the end of 2010 — a step Republicans say would represent the largest tax hike in recent history.

Obama signed the unemployment bill into law just hours after congressional passage, then urged lawmakers to move swiftly to their next orders of business.

"Now it's time for Congress to act on more proposals that support our economic recovery, including passing critical aid to our states and support to small businesses," Obama said, saying passage of tax and lending measures "should not be held hostage to partisan tactics."

The House voted 272-152 earlier in the day to extend unemployment insurance through November for those who have not exhausted up to 99 weeks of aid. The payments are retroactive to late May.

Republicans had stalled the $33.9 billion package for weeks, arguing that aid should be paid by making cuts elsewhere. Democrats have maintained that jobless benefits are emergency spending that traditionally have not been offset.

There were clear indications this week of how the legislative battle will be used on the campaign trail.

Republicans argued that Democrats' handling of the unemployment legislation, like the stimulus package of 2009, represented another stumble on economic issues.

"Their first plan failed miserably so they're coming with a plan adding another $34 billon to the national debt," said GOP Rep. Steve Salise of Louisiana during the floor debate.

But while Republicans sought to burnish their credentials as fiscal hawks, Democrats warned that GOP control of the House would spell a return to tax breaks and other policies of the George W. Bush administration that contributed to the growth of the federal deficit.

House Speaker Nancy Pelosi , D-Calif., recalled that Republicans not only stalled jobless aid, but blocked the health care overhaul and Wall Street restructuring while promoting an extension of the Bush tax cuts "for the wealthiest people in America."

Many economists have concluded that unemployment benefits not only provide laid-off Americans with vital cash to pay bills, but also offers an important, if modest, boost to a still fragile economy.

Hiring remains slow as companies are reluctant to invest. And despite months of economic growth, the nation has not begun to generate enough jobs on a monthly basis to lower the unemployment rate.

Federal Reserve Chairman Ben S. Bernanke testified before Congress this week that the unemployment rate is expected to remain at higher than normal rates for the next several years.

Against this backdrop, Democrats on Thursday pressed an agenda of manufacturing and small business incentives that experts say will provide only modest relief.

"They want to appear like they're doing something, but what they are doing — while not harmful and maybe beneficial (is) not likely to have a significant effect on the economy and job creation over the next three, six or 12 months," said Sherle Schwenninger, director of the economic growth program at the New America Foundation, a think tank.