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Why Obama's $300 Billion Jobs Plan is Already Dead

President Obama is set to unveil a new jobs creation plan Thursday reportedly consisting of $300 billion in tax breaks and additional spending next year. Too bad the consensus on Wall Street is that gridlock in Washington makes the new jobs initiative dead on arrival.

"If [Obama] attempts to push through another sizable stimulus package, Republican Congressional leaders are almost certain to defeat it in the House," writes Mike Ryan, chief investment strategist at UBS Wealth Management (UBS), in his latest note to clients.

Jeffrey Kleintop, chief market strategist at LPL Financial, hopes for a pleasant surprise but also doubts the president's plan will pass Congress as proposed.

Meanwhile, down in the trenches, Art Cashin, UBS's director of floor operations at the New York Stock Exchange, told CNBC the buzz among traders is that "the likelihood of new fiscal spending passing Congress is virtually zero in today's environment."

And even if the president could somehow pull off a legislative miracle, $300 billion in spending and tax breaks isn't likely to create enough new jobs to make a dent in perniciously high unemployment, goes the thinking on the Street. Kleintop notes that the proposal is "too small to make a measurable impact on jobs and is largely just an extension of current policy."

The jobs plan would be especially ineffective on the tax-break front, which would reportedly include a one-year extension of the payroll tax cut for workers. Tobias Levkovich, Citigroup's (C) chief U.S. equity strategist, points out that tax breaks won't provide an incentive for companies to hire workers they don't need. Taxes aren't keeping employers from adding new jobs. It's a lack of demand.

Remember -- corporate profits bounced back out of the worst of the downturn because of cost cuts (mostly in the form of layoffs), not a commensurate jump in sales.

That's left many market watchers scratching their heads when it comes to the president's plans. "It is unclear exactly what the president can conjure up in the short term that will promote job growth without significantly deepening the current budget shortfall," writes UBS's Ryan.

Given that the president's jobs plan is unlikely to pass Congress -- and won't do much even if it does -- "there is considerable room for disappointment this week from Washington," Ryan says.

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