Today, President Obama announced details of his plan to grow jobs, first outlined in his State of the Union address. One of his leading proposals is providing tax credits of up to $5,000 to businesses for every new employee they hire in 2010.

Bill Milliken co-owns the Portland Market House, a purveyor of specialty foods in the city's downtown. He hopes that Congress will approve the president's plan. "It's $5,000 bucks. I don't know about all these big corporations, but for me as a small business owner, $5,000, whether it's help with wages or anything else is a substantial amount of money."

Milliken and his partner opened a coffee shop in the Market House in December, and just hired a fourth employee. They're thinking about hiring a fifth.

Critics, including Republicans, say that businesses will only be motivated to hire if their sales rebound. But Milliken says a tax credit against his business income tax will be the extra nudge that some employers need to hire again.

"I think the reason why people aren't hiring right now isn't because of necessarily the state of the economy as much as the uncertainty," he says. "And that's what I think, one of the values of this tax credit is, is, yeah, it's only for a year, and it can seem like a gimmick but the reality is, this next year is really crucial because of the uncertainty issue. and I want to hire an employee but I'm uncertain."

The tax credits, which are capped at $500,000 per firm, are targeted specifically at small businesses. Supporters of the credit say it will give a big boost to Maine, where firms with under 500 workers account for more than 97 percent of the state's employers.

"As you know small businesses are the job creators in our economy. Sixty-five percent of the net job growth comes from small businesses," says Karen Mills, who heads the federal Small Business Administration.

Mills says that $5,000 tax credit will make a big difference for small firms, especially if they hire multiple new employees. "Because if you hire a worker making $50,000 or $80,000, even a $100,000, you're talking about a
an 8 to 10 percent reduction in cost for bringing that worker on who can provide more production and more productivity to the small business."

The Obama administration had pitched the idea of a late tax credit last year but it stalled in the House. Alan Krueger, an assistant secretary with the U.S. Department of the Treasury, says there is no better time to roll out the tax credits than now.

"We learned today that gross domestic product grew 5. 7 percent in the fourth quarter, yet we already knew that employers continued to shed workers in the fourth quarter, even though final demand was a healthy 2.2 percent," Krueger says. "So we're in a situation now where hiring remains a key challenge even though the economy is beginning to expand."

Krueger says that policymakers have put in safeguards against employers who might try to game the system. For example, a business that lays off 20 employees, and hires back 10 would not qualify for the credit.

Still, Republicans are skeptical about the effectiveness of tax credits -- Obama's plan also calls for credits for employers who give raises or expand work hours -- and of the $33 billion price tag.

Maine Republican Sen. Susan Collins says that while she wants small businesses to hire workers and increase wages, she "would want to ensure that the President plans to pay for this proposal without adding to the already exploding national debt."

Even fans of the tax credits say it may not be enough incentive for small businesses to start adding workers. "That's really going to come when the economy in general improves," says Mike Tipping, a small business organizer with the Maine People's Alliance.

Tipping says the government will see more of a return by investing in community jobs programs. Such programs give money to state and local governments to create jobs in the private and public sector that address community needs. "The Maine Small Business Coalition really believes at looking the whole picture, looking at small businesses in terms of their communitites. The community jobs program would mean direct investment in employment, in jobs for people here in Maine."

The state's largest lobbying group for businesses, the Maine State Chamber of Commerce, refrained from weighing in on the president's plans. The chamber's Peter Gore says the group has not had a chance to ask members what they think, but will be meeting with some next week.

If the tax credits are approved, they would last for all of 2010, and would apply to hires made from the beginning of the year. In the interst of full disclosure, SBA chief Karen Mills is the wife of Bowdoin College President Barry Mills, who sits on the MPBN Board of Trustees.