U.S. President Barack Obama delivers his first State of the Union address on Capitol Hill in Washington on Wednesday. (Kevin Lamarque/Reuters)

U.S. President Barack Obama will lobby lawmakers on Friday to support his proposals to cut taxes and spur jobs in small businesses.

Obama hinted at the proposal in his televised State of the Union address on Wednesday night. He outlined key points of the plan to a meeting of Republican congressmen in Baltimore, Md., on Friday.

At the heart of the plan is a proposal to offer small business owners a tax credit of $5,000 US for every net new employee they employ in 2010, the White House says.

The plan would also reimburse the Social Security payroll taxes businesses pay on every dollar increase in wages they pay to existing employees.

If the proposal makes its way through Congress and becomes law, firms will be able to claim the credits on a quarterly basis, which will disseminate the funding faster, the administration says.

The White House estimates the total price tag for the plan at $33 billion US in 2010. The money collected as Wall Street banks pay back their bailout money will pay for it, the administration says.

Polls have shown that the economy is Americans' top priority. Indeed, Obama has shifted his own focus away from his contentious health-care reform bill and towards job creation to try to solidify his support in recent weeks.

Opposition out there

Obama urged a bipartisan tone in his Wednesday night speech, and Republican leaders seemed somewhat conciliatory on Friday.

"We want to have a serious conversation with the president about our proposals," Representative Mike Pence, chairman of the House Republican conference, told ABC's Good Morning America on Friday.

"We're going to hear from the president for a few minutes, but he's going to hear for quite a while about our proposals," the Indiana Republican added.

Others were less open. While Republicans are in general in favour of any kind of tax cut, "from a policy perspective, it's very difficult to make it work," Ohio Republican and House Minority Leader John Boehner said.

Obama first promoted the idea of a tax credit for adding workers late last year. But House Democrats omitted it from a jobs bill they passed in December because of doubts about how to make the credit work.

Officials insist the bill will be tailored to make it hard to cheat the system. The tax credit would be capped at $500,000 to ensure it only goes to legitimately small businesses.

It would only come on net new jobs — so a company that lays off 10 full-time employees making $50,000 a year and hires 20 part-time employees making $25,000 a year would be ineligible, the administration insists. Rules would also prevent companies from renaming themselves or merging just to claim the jobs credits.

The tax credits would be doled out quarterly, to get the funds into the economy faster, Obama said.

With files from The Associated Press