In a campaign-style speech in Cleveland today, President Barack Obama proposed giving tax breaks to businesses that invest in the United States, not other countries.

“Instead of tax loopholes that incentivize investment in overseas jobs, I’m proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in America,” Obama said. “And I’m proposing that all American businesses should be allowed to write off all the investment they do in 2011.

“This will help small businesses upgrade their plants and equipment, and will encourage large corporations to get off the sidelines, and start putting their profits to work in places like Cleveland and Toledo and Dayton,” he said.

These proposals are the president’s latest ideas for jump-starting a still-sluggish economy, one that is creating jobs at a snail’s pace and is threatening the careers of many Democrats in Congress. On Labor Day, Obama proposed a six-year plan for increasing federal investments in transportation infrastructure, including $50 billion next year alone.

(To read ideas from Portfolio.com readers on how to fix the U.S. economy, click here.)

Much of the president’s plan isn’t new. His transportation plan is similar to the one developed by the House Transportation and Infrastructure Committee a year ago. That bill, however, was put on hold because Congress had bigger priorities at the time.

The economic stimulus bill allowed businesses to immediately write off up to 50 percent of their investments on new machinery and equipment, instead of depreciating the cost over time. That break expired in 2009, however. Small businesses, meanwhile, can write off up to $250,000 of their capital expenditures this year, a limit that’s scheduled to drop to $25,000 next year unless Congress acts.

Businesses welcomed these investment incentives, but the jury is still out on their effectiveness. Tax breaks aren’t going to lead a business to invest in new equipment if they don’t think the customers are there.

Obama already had endorsed making the R&D tax credit permanent, a tax break that’s been on the books since 1981 but has lapsed repeatedly only to be reinstated retroactively. This on-again/off-again pattern has made the tax credit less effective than it could be, and business groups have long supported making the tax credit permanent.

It’s too late in the legislative game to expect any action on the president’s proposals before Election Day—a mid-term election that is looking grim for the ruling Democrats in Congress. Poll after poll are showing, if not a Republican takeover of the House or the Senate, a significant narrowing in the GOP's favor.

So with his speech and his plan, Obama was trying to show Americans that he’s still working to boost the economy, even though "Recovery Summer" turned out to be a bummer. Plus, he wanted to make the case that he’s pro-business, even though he opposes extending tax cuts passed in the early days of George W. Bush's administration for families making more than $250,000. These tax rates should revert to what they were during former President Bill Clinton’s tenure, he said.

“For those who claim that this is bad for growth and bad for small businesses, let me remind you that with those tax rates in place, this country created 22 million jobs, raised incomes and had the largest surplus in history,” Obama said.

House Republicans countered Obama with a simple two-prong economic plan: First, reduce non-security related federal spending to 2008 levels—before the hundreds of billions of dollars added by the Wall Street bailouts and economic stimulus bill. Second, keep all of the current income tax rates in place for two more years, so that successful small business owners wouldn’t have to worry about a tax hike.

Most small business owners don’t make more than $250,000, so they wouldn’t face higher taxes under Obama’s proposal. Only the most successful small business owners would be hit by this tax increase—and they’re the ones most likely to hire more workers. Most small businesses are structured so that their profits pass through to their owners, and are taxed at individual income tax rates.

“What small businesses need right now is more customers and certainty over their taxes,” said Bill Rys, tax counsel for the National Federation of Independent Business.

“It is extremely difficult for small business owners to plan for future investments or new hires when they are unsure what their tax liability will be next year,” he said.

Steve Henley, national tax practice leader at accounting firm CBIZ MHM, agrees with NFIB that extending the Bush-era for tax cuts for all individuals—including high earners—is more important for small businesses than investment incentives.

Higher tax rates would force reduce the amount of capital that stays in these businesses, meaning these firms would have less money to spend on new workers and new equipment.

“You’d get a much better shot in the arm if you did not let the Bush tax cuts expire for people over $250,000,” Henley said.

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Kent Hoover is the Washington bureau chief for bizjournals.