Opening a meeting of the President's Economic Recovery Advisory Board on Monday, Obama said he agrees with the Republicans that America's fiscal situation is "untenable," but its plans would force a 20 percent cut in education funding.
He said that "just doesn't make sense" at a time when the economy's struggling and other countries are becoming fiercer competitors.
Obama announced a new initiative called "Skills for America's Future" that aims to promote partnerships between America's top companies and community colleges.
The intent is to build a nationwide network to maximize workforce development, the president said.
"We want to make it easier to join students looking for jobs with businesses looking to hire," Obama said in a White House fact sheet. "We want to put community colleges and employers together to create programs that match curricula in the classroom with the needs of the boardroom."
The initiative has the backing of Gap Inc., McDonald's, Accenture and other big-name companies, the official said.
The announcement came on the eve of a White House summit on community colleges, which is being led by Dr. Jill Biden, Vice President Joe Biden's wife, who is a community college teacher.
The president has said that increasing enrollment and completion rates in two-year colleges will bolster U.S. competitiveness in the world economy, and is a major component in his drive to restore America's world leadership in the percentage of its population earning college degrees.
The Skills for America's Future plan projects each state creating at least one high-impact partnership between industry and community colleges, the official said. It also foresees expanded partnerships helping achieve Obama's goal of an additional 5 million community college degrees and certificates by 2020.