Obama takes dance step to the right and calls "tax cut" . . . . "tax credit" . . . . .

[PHILIP SCHNEIDER]

. . . . . all in an attempt to do what's right but avoid giving conservatives the "credit".

BALTIMORE (Reuters) - President Barack Obama on Friday proposed $33 billion in tax credits to coax small businesses into hiring workers as he underscored his commitment to pushing job creation to the top of his agenda.

With public frustration over double-digit unemployment eroding his popularity, Obama has begun rolling out initiatives aimed at backing up his jobs pledge made in his economy-focused State of the Union Address earlier this week.

The latest proposal calls for a $5,000 tax credit for every net new worker hired in 2010. The amount would be capped at $500,000 per firm to make sure that the bulk of the benefits go to small businesses.

"The economy is growing but job growth is lagging," Obama told workers at a custom-machine plant in Baltimore.

He spoke after the release of data showing U.S. gross domestic product expanded at a faster-than-expected 5.7 percent in the fourth quarter, a trend he hailed as a "stark improvement" compared to economic decline a year ago.

But he insisted that more work was needed to spur employment and urged the U.S. Senate to push ahead with jobs legislation. The House of Representatives approved a $155 billion jobs bill in December.

Obama said his tax credit proposal could help small businesses to hire workers while lowering their taxes. He estimated that more than 1 million small businesses could benefit.

"Now's the perfect time for this kind of incentive," he said. "The key thing is it's time to put America back to work."

Small businesses are the biggest source of job creation and hold the key to reducing unemployment, so funneling money their way is a smart approach. The problem is, even though the economy has resumed growing, confidence is in short supply, leaving these companies reluctant to hire, economists say.

The tax credit plan was previewed by Obama in his State of the Union speech, where he reframed his policy agenda to put the emphasis squarely on jobs and the economy, Americans' chief concerns in a midterm congressional election year.

A shocking win last week by a Republican in an election to the U.S. Senate in traditionally Democratic-dominated Massachusetts has jolted the White House into concentrating its message on Obama's strategy to boost jobs.

(Additional reporting by Jeff Mason and Alister Bull; writing by Matt Spetalnick; editing by Mohammad Zargham)