WASHINGTON — Congress on Thursday sent President Barack Obama a long-delayed bill to help struggling small businesses with easier credit and other incentives to expand and hire workers.
The $40 billion-plus bill is the last vestige of the jobs agenda that Obama and Democrats promoted early this year. They ended up delivering only a fraction of what they promised after Senate Republicans blocked most of the agenda with filibusters.
Also Thursday, Senate Democratic leaders decided to delay a vote on preserving soon-to-expire middleclass tax cuts until after congressional elections in November.
The Senate passed the small-business measure last week. The 237-187 House vote Thursday that sent the bill to the president split mostly along party lines. Among Arkansas’ delegation,Democratic Reps. Vic Snyder and Mike Ross supported it, while Republican Rep. John Boozman opposed it.
Rep. Marion Berry of Arkansas was one of 13 Democrats to oppose the bill. Rep. Walter Jones of North Carolina was the only Republican to support it.
“The small-business jobs bill passed today will help provide loans and cut taxes for millions of small-business owners without adding a dime to our nation’s deficit,” Obama said in a statement. “I look forward to signing the bill.”
Democrats praised the measure for creating a $30 billion federal fund to help smaller banks issue loans to small businesses and for cutting taxes by $12 billion over the coming decade.
“It combines ... tax relief with increased access to critical financing so that our nation’s small businesses can move forward on new or delayed expansion plans,” said Rep. Chellie Pingree, D-Maine. “Small business growth means job creation.”
Republicans objected to provisions creating the new loan fund. They said the plan amounted to little more than a smaller version of the Troubled Asset Relief Program.
“This is TARP, pure and simple,” said Rep. Jeb Hensarling, R-Texas. “It is the capital purchase program with a different name.”
Because the measure is a top priority of the White House and congressional Democrats, bank experts expect the money to begin flowing fairly quickly.
“Having an additional capital source available can increase the comfort level for greater lending by banks around the country,” said Paul Merski, a senior vice president and the chief economist at the Independent Community Bankers of America, which represents community banks.
The measure is getting only tepid support from GOP leaning small-business groups, which are more focused on expiring tax cuts.
“There’s some OK stuff in it, but the impact’s going to be minimal,” said Bill Rys, tax counsel for the National Federation of Independent Business.
Scott Hauge, president of Small Business California, said the legislation will save many owners from bankruptcy by reducing tax burdens and making it easier to obtain loans.
“It’s a really, really big deal,” Hauge said.
The small-business measure was among the last remaining legislative initiatives intended to spur the struggling economy as Congress prepares to adjourn so members can campaign for the midterm elections in November.
Earlier this year, Democrats had designs to boost environmentally friendly “green jobs,” provide new funding for roads, bridges and other infrastructure projects, pay for a summer jobs program for disadvantaged young people and renew health insurance subsidies for the jobless.
What was actually enacted was far smaller: more unemployment checks for the jobless; relief from payroll taxes for companies that hire new workers; and billions of dollars in aid for states and local schools.
Supporters of the new loan fund say banks should be able to use the fund to leverage up to $300 billion in loans.
Republicans said that banks have plenty of money to lend but that loan demand is way down.
“It won’t do any good. Business doesn’t need credit - business needs customers,” said Jade West, a lobbyist for the GOP-leaning National Association of Wholesaler-Distributors. “If they don’t have a customer base because demand is down, they’re not going to borrow because there is nothing for them to borrow for.”
Economist Alan Blinder, a former Federal Reserve vice chairman, said many small businesses have had “extreme” difficulty getting loans, though he said poor sales remain their biggest problem.
“They always have a hard time getting credit, and given the state of the markets they’re having an even harder time now,” Blinder said in an interview. “This ought to be helpful on that score, but if the econo-1 my grows at 1/2 percent, we’re spitting in the wind because there’s no demand.”
“The thing that drives small businesses over and above everything else is the ability to sell their product,” he said.
Democrats also counter that it’s undeniable that small businesses are confronted with a credit crunch that worsened dramatically after the financial crisis two years ago.
The legislation would also aid lending by lowering Small Business Administration loan program fees and raising loan guarantee and lending limits. Loan caps under the Small Business Administration’s chief lending program would be significantly raised.
The small-business tax cuts in the bill include breaks for restaurant owners and retailers who remodel their stores or build new ones. Long-term investors in some small business startups would be exempt from paying capital gains taxes.
But much of the tax relief would actually go to larger businesses for write-offs of facilities and equipment such as computers, trucks and machinery.
The measure also would allow small-business owners to deduct the costs of health insurance for themselves and their families from self-employment taxes, but only for the 2010 tax year.
Meanwhile, Senate Majority Leader Harry Reid decided Thursday to delay any vote on preserving the middle class tax cuts after a meeting with other Senate Democrats failed to produce a consensus on how to proceed.
“Democrats believe we must permanently extend tax cuts for the middle-class before they expire at the end of the year, and we will,” Reid spokesman Jim Manley said. “Unfortunately, to this point we have received no cooperation from Republicans to do so.”
Enacted in 2001 and 2003 under President George W. Bush, they were the most sweeping tax cuts in a generation. If Congress takes no action, taxpayers at every income level face significant tax increases next year.
Republicans want to extend all the tax cuts. Obama and Democratic leaders in Congress want to extend them for individuals making less than $200,000 and married couples making less than $250,000.
“We will come back in November and stay in session as long as it takes to get this done,” Manley said.
White House spokesman Amy Brundage accused Republicans of “holding middleclass tax cuts hostage in order to borrow $700 billion for tax breaks to the millionaires and billionaires at a time of record deficits.”
Don Stewart, a spokesman for Senate Republican leader Mitch McConnell of Kentucky, blamed the delay on division within the Democratic caucus. “If anyone can show me where there’s a Democratic bill to hold hostage, I’ll buy them lunch,” Stewart said.
Information for this article was contributed by Andrew Taylor and Stephen Ohlemacher of The Associated Press, by Brian Faler, Ryan J. Donmoyer, Catherine Dodge and Courtney Schlisserman of Bloomberg News, by David Lightman of McClatchy Newspapers, by Lisa Mascaro of Tribune Washington Bureau and by Sharon Bernstein of the Los Angeles Times.
Front Section, Pages 1 on 09/24/2010