The Democratic-controlled 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 new workers.
The $40 billion-plus bill is the last vestige of the heralded jobs agenda that Obama and Democrats promoted early this year. They ended up delivering only a fraction of what they promised after emboldened Senate Republicans blocked most of the agenda with filibusters.
The Senate passed the measure last week. The 237-187 House vote Thursday that sent the bill to the president split along party lines as 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, poised for big gains in midterm elections just six weeks away, said the new loan fund is just a smaller version of the unpopular 2008 bailout of the financial system.
"What we have today before us is junior TARP," said Rep. Lincoln Diaz-Balart, R-Fla.
While community bankers enthusiastically support the measure, it's 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.
The vote gives Obama and his Democratic allies on Capitol Hill a much-needed, but minor, victory as midterm elections approach.
Earlier this year, Democrats had ambitious designs to boost "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.
The new loan fund would be available to community banks to encourage lending to small businesses. Supporters 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."
Democrats counter that it's undeniable that small businesses are confronted with a credit crunch that worsened dramatically after the financial crisis two years ago.
"More capital for business means they can expand and create new jobs," said Rep. Kathy Dahlkemper, D-Pa. "Helping businesses grow is essential to our economic recovery and getting people back to work."
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.