WASHINGTON — In a win for President Obama and his political allies, Senate Democrats on Tuesday won a crucial vote to clear the way for a bill to create a $30 billion government fund to help open up lending for credit-starved small businesses.
The bill is probably the last piece of the Democrats’ ambitious jobs agenda that would become law before midterm elections, which will determine whether Democrats keep their majorities in the House and Senate. Democrats started the year with ambitious plans for a series of bills designed to boost the economy and job creation but have relatively little to show for it. The nationwide unemployment rate ticked up to 9.6 percent last month.
The new fund would be available to community banks with less than $10 billion in assets to encourage lending to small businesses. The bill would combine the fund with about $12 billion in tax breaks aimed at both large and small businesses over the coming decade.
Democrats say banks should be able to use the lending fund to leverage up to $300 billion in loans, helping to loosen tight credit markets. Some Republicans, however, have likened it to the unpopular bailout of the financial industry.
Democrats say the measure is needed to help small businesses cope with a credit crunch that worsened dramatically after the financial crisis two years ago.
“This bill is about righting a wrong that was done to small business when Wall Street closed Main Street down and cut off access to capital,” said Sen. Maria Cantwell, Washington Democrat.
“Small businesses are holding off on hiring while they wait for us to act,” said Senate Majority Leader Harry Reid, Nevada Democrat. “Banks large and small are holding onto their capital while they wait for us to act.”
The small-business tax cuts in the bill include breaks for restaurant owners and retailers who remodel their stores or build new ones. Larger businesses could more quickly recover the costs of capital improvements through depreciation. Long-term investors in some small businesses would be exempt from paying capital gains taxes, and loan caps under the Small Business Administration’s chief lending program would be significantly raised.
Much of the bill would be paid for by allowing taxpayers to convert 401(k) and government retirement accounts into Roth accounts, in which they pay taxes up front on the money they contribute, enabling them to withdraw it tax-free after they retire. Taxpayers who convert accounts this year would pay the taxes in 2011 and 2012, generating an estimated $5.1 billion.
By Elaine Donnelly
Extending sexual misconduct to combat units
Independent voices from the TWT Communities
Video reviews of today's hottest trends in Minecraft (servers and mods) along with a look at the latest video games with your host MCairsoft14 (alias Jerad Zad).
Covering the world of soccer, including the World Cup, Major League Soccer, D.C. United and the English Premier League and other interesting sporting events.
Contributions to the Communities Sports desk from readers.
Straight talk on climate science, energy economics, and public policy.
Benghazi: The anatomy of a scandal
Vietnam Memorial adds four names
Cinco de Mayo on the Mall
NRA kicks off annual convention