The spending freeze that President Obama will endorse tonight at the State of the Union address did not preclude, advisors were quick to point out, another jobs bill to increase demand in the struggling economy. The House has already passed their version of a jobs bill, with a price tag of $154 billion, and including transportation infrastructure spending, aid for state and local governments, and social safety net expansion for unemployment benefits and COBRA subsidies to help the jobless pay for health insurance.

The Senate did not take up the bill last year, and have been working on legislation over the holiday break. We’re starting to see the outlines of it, and it’s underwhelming.

With lawmakers eager to pivot to economic legislation, Senate Democratic leaders have drafted an initial version of an $80 billion-plus job-creation bill that will be heavy on tax breaks designed to spur businesses to make new hires [...]

The measure isn’t quite finished yet, but sources said the current version would cost just over $80 billion. Though that number may change as the process moves forward, it is clear Senate Democrats have no intention of moving a jobs package as large as the $154 billion measure the House passed in December on a narrow, party-line vote. The House measure included money to extend unemployment benefits and COBRA health insurance coverage, items that aren’t in the draft Senate bill but may move in the chamber separately.

“There is ‘big bill fatigue’ in the Senate right now,” said a Senate Democratic aide.

There’s “I don’t have a job” fatigue in the country, and an $80 billion dollar bill largely focused on tax cuts won’t do much to help.

The centerpiece of this legislation is a job creation tax credit, which some progressive economists have actually supported as a way to nudge businesses into hiring, but which could be gamed by employers who were planning on hiring anyway. Chuck Schumer thinks it has the all-important “bipartisan support.”

Schumer and (Orrin) Hatch have proposed a tax credit that would allow businesses of all sizes to skip out on the Social Security payroll tax in 2010 on any new employees they hire, as long as the new workers had previously been unemployed for at least 60 days.

“I think this sort of marks the way of the future as we can sort of work together,” said Schumer, who asserted that the plan would cost only $8-9 billion and create as many as 3 million new jobs.

And while the plan would apply to businesses of all sizes, the New York Democrat said small businesses would see “a bigger bang for the buck.”

If the tax break really did have that kind of an impact, I’d support it. But color me skeptical.

Meanwhile, the combination of minor initiatives helping the middle class and a budget freeze on non-security discretionary spending, both of which seem to cancel the other out, left the NY Times editorial board cold, as well it should have. And that’s not all – Obama will apparently call for a separate business tax break in his speech tonight:

President Barack Obama tonight will propose extending through 2010 a temporary tax incentive that encourages businesses to accelerate purchases of equipment, an administration official said.

Obama will call for renewal of the 50 percent so-called bonus depreciation in his State of the Union address to the nation, said the official, who spoke on condition of anonymity.

Extending the break, which expired Dec. 31, would save companies that make purchases of equipment such as tractors, wind turbines, solar panels and computers a total of $38 billion over this year and next by allowing a 50 percent write- off of the cost in the first year, the official said.

I suppose there’s some rationale for this for certain manufacturers, but really we’re combining a series of narrow, targeted tax breaks for the middle class, extension of bonus depreciation for businesses as a tax break, AND a job creation tax credit. So tax cuts, tax cuts, and more tax cuts, offset by tax cuts.

Oh, and the Federal Reserve isn’t about to get off its duff and force banks to tap into their excess reserves for lending, which could unleash $1 trillion into the economy.

Grr…