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What will it take to bring back 7 million jobs?

With job losses this recession the worst since the 1930s, government stimulus can only do so much.

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The nation won't know for a while whether the stimulus will deliver on that estimate. But with the unemployment rate pushing near 10 percent, lawmakers are considering a range of additional policies.

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These include:

• Extending the first-time homebuyer tax credit, worth up to $8,000.
• Extending unemployment benefits and health benefits for laid-off workers.
Tax breaks for businesses that hire new employees or spend on new equipment and facilities.
• Additional federal spending on infrastructure, or aid to state governments.

"Under any plausible scenario, the effects of [additional] fiscal stimulus are still likely to fade in the second half of 2010," Alec Phillips, an economist at Goldman Sachs, wrote in a report Friday assessing these proposals. He said the proposals, depending on their sizes, might increase gross domestic product in 2010 by anywhere from 0.2 to 1.6 percent.

A central concern is whether fiscal stimulus will be effective at a time of high federal deficits, say some experts, since many businesses and consumers will factor in the likelihood of higher taxes down the road.

Republicans in Congress wrote letters this week to Mr. Obama and House Speaker Nancy Pelosi (D) of California, arguing that Democratic policies are hindering instead of helping in the quest for jobs. "Nearly 3 million private sector jobs have been lost in America since the 'stimulus' was signed into law," House Republican Leader John Boehner and colleagues said.

What's unknown, of course, is what the job market would look like without the stimulus. Republicans have proposed their own stimulus measures, centered around tax cuts for businesses and households, and reforms to bring down the cost of health insurance.

Some economists say that it's possible employment will pick up faster than expected.

Michael Darda of MKM Partners in Greenwich, Conn., argues that fears of a persistently weak "new normal" in the labor market are overblown.

"Large declines in both output and employment tend to give way to more rapid recoveries," he writes in a recent report. But even a recovery that surprises people for its strength, he said, doesn't mean a quick return to low unemployment rates of 5 percent.

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How would a tax break for hiring work? Click here to find out.

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