WASHINGTON: US President Barack Obama will propose a $33 billion tax credit to encourage small businesses to hire workers and raise wages in 2010, an administration official said on Thursday.

Democrat Obama will announce the plan in Baltimore today at a retreat for House of Representatives Republicans, a bipartisan mission he is undertaking as he tries to rally from the damage done to his popularity by 10 percent unemployment.

The plan was previewed by Obama in the State of the Union address, where he made jobs priority number one. It will grant a $5,000 tax credit for every net new worker hired in calendar 2010. The amount will be capped at $500,000 per firm to make sure that the bulk of the benefits go to small businesses.