On Friday, Obama is set to announce tax credits for employers, with the aim of encouraging businesses to hire. Congress would have to vote on the proposal.
On Friday in Baltimore, President Obama will aim to jump-start job creation among small businesses with a new $33 billion program of tax credits.
Mr. Obama's proposal, which Congress must vote upon, would give any company - large or small - a $5,000 tax credit for every net new employee it hired this year. Also, if a company's total payroll grows faster than inflation (even because of pay raises), the employer would get reimbursed - in the form of a tax credit - for the added Social Security payroll taxes.
The benefits per firm would be capped at $500,000 - meaning that these measures would make the most difference for small businesses.
"This is meant to be a little bit like the 'cash for clunkers' program - to give an extra incentive to go out and hire, take someone where you were going to sit on the sidelines for another six months, and do it now," said a senior administration official on Thursday, who spoke on condition of anonymity.
The two programs, if enacted by Congress, would cut taxes for 1 million small businesses, the US Treasury estimates.
Obama's proposal is part of an effort to show he's doing something for Main Street. On Wednesday night in his State of the Union speech, he indicated he would introduce this program. Then on Thursday, he proposed redirecting $30 billion in the Troubled Asset Relief Program (TARP) to community banks, which would lend the money to small businesses. Next week, Obama will be in New Hampshire to talk about more jobs initiatives.
"The economic theory is that the economy has begun to grow, but a lot of businesses are still sitting on the sidelines," the White House official said.
In 2006, some 119.9 million people worked for companies employing less than 500 people, according to the Census Bureau. …