WASHINGTON (Reuters) - A plan to expand and make permanent a popular research tax credit will support 1 million workers, the Obama administration said in a report it released on Friday.

"The credit is a significant incentive to conduct research that would not otherwise be performed here in the U.S.," Michael Mundaca, assistant Treasury secretary for tax policy, told reporters on Thursday.

The proposal is included in Obama's 2012 budget and is popular among businesses and both parties, though paying for the cost to fund the credit will likely push enactment out several years.

The credit is one of the few areas of agreement between most Democrats and Republicans in Congress, but its cost has relegated its renewal to an annual funding fight.

The push to expand the subsidy comes as the Obama administration and Democratic lawmakers battle Republicans over budget cuts for fiscal 2012.

Mundaca said there are enough revenue raisers in the budget to cover the some $6 billion in costs.

Regardless, congressional investigators have criticized the credit saying most companies that got tax breaks were already going to do the research anyway. Treasury argues that the credit in fact spurred more research at the firms.

In 2008, more than 12,700 corporations claimed $8.3 billion in research credits, the most recent data shows. Of that, manufacturers claimed nearly 70 percent. Scientific, professional and technical services trailed with about 10 percent of the overall figure.

As part of the administration's effort to reach out to the business community, Treasury Secretary Timothy Geithner will meet with regional business leaders in Northwestern Arkansas later on Friday.

The country's is struggling with persistently high unemployment and the White House is under pressure to push policy that will help create jobs and aid the economic recovery.

So far, two programs to bolster small business lending have been established. One provides low-cost capital to qualified small banks and the other is designed to help small manufactures and businesses obtain loans from the private sector.

(Reporting by Kim Dixon and Rachelle Younglai)

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