WASHINGTON — Limited in his ability to create jobs through direct spending, President Barack Obama is considering measures to encourage the private sector to free up its cash reserves and hire more workers to ease the nation’s unemployment crush.
As Obama prepares to unveil a new jobs agenda next week, his aides are reviewing options that would provide tax incentives to employers that expand their payrolls. That approach is a more indirect effort to spur the economy and relies less on direct intervention and massive public-works projects.
Among the proposals is a $33 billion tax credit that Obama first proposed early last year but that Congress whittled into a smaller one-year package.
Under one version of the plan, employers would receive a tax credit of up to $5,000, subtracted from their share of federal payroll taxes, for every net new hire. White House officials caution that the overall plan is still subject to change.
The tax credit is a relatively untested idea. Congress passed a version in March 2010, known as the HIRE Act, which provided $13 billion in tax credits to qualified employers that hired new workers. But there are no data to track its success.
“The HIRE Act was very small,” said Mark Zandi, chief economist at Moody’s Analytics and an adviser to Democrats and Republicans. “It really didn’t add to payrolls.”
A new plan “must be bigger. Something more along the lines that the Obama administration proposed in 2010,” he said.
