U.S. Senate Takes Up Small Business Jobs Bill
The bill, crafted jointly by the Senate's finance and small-business committees, makes many temporary, and some permanent, changes to popular Small Business Administration programs that provide government guarantees for loans to small firms, including higher loan limits and higher guarantees.
The legislation also offers tax incentives meant to spur investment and promote what its authors call "tax fairness."
It makes changes to programs designed to strengthen small-business exports and access to federal contracts.
And it includes the Obama administration's small-business lending fund, which would lend money to community banks so that they can make small-business loans, as well as its initiative to finance state and local programs to help businesses get bank credit. (Check back here for an update to this post with a summary of the main provisions. In the meantime, a very detailed summary of the bill and the legislative text are posted at the Senate Finance Committee Web site.)
Two weeks ago, the House passed its own versions of the Obama administration's loan programs, as well as some of the same tax incentives the Senate is taking up. The House has not considered changes to S.B.A. programs or the export and contracting measures.
Senate Democrats said that while the programs in the bill would cost $10.8 billion, the legislation raises $12.7 billion separately, largely by giving people enrolled in tax-deferred employer-sponsored retirement more access to after-tax Roth accounts.
The bill also proposes additional tax reporting requirements and penalties, and new powers to collect back taxes, while closing an ethanol tax-credit loophole and raising money through interest payments from banks participating in the small-business lending program.
"Our bill is all paid for," said Senator Max Baucus of Montana, chairman of the Finance Committee, as he introduced it on the Senate floor. "Our bill would reduce the tax gap, promote retirement preparation, and close tax loopholes."
Relying on conversions and contributions to Roth retirement accounts to pay for the bill may prove controversial, however.
While the proposal raises money in the short term — because people who are presently not paying taxes on their retirement savings will do so once they switch to a Roth plan — government coffers will eventually suffer when those people retire and start withdrawing money tax-free from their retirement accounts.
It is attractive politically, said Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center, because "people pay more taxes today only if they choose to do so; ergo no one can complain about the tax increase. We simply pass the problem on to our children and grandchildren, who will pay the cost when we use our retirement savings in our old age."
Even so, the bill appears designed to win bipartisan support — or at least enough Republican support to clear the 60-vote procedural hurdle to bringing legislation to a final vote.
Most of the proposals in the amendment's S.B.A. title were offered by Senator Olympia J. Snowe of Maine, ranking Republican on the Small Business Committee.
Many of the tax incentives appeared in a bill from Senator Charles Grassley, of Iowa, the top Finance Committee Republican. (Mr. Grassley proposed permanent changes, while the amendment's provisions would be in effect only for the next year or two — although in Washington, temporary tax incentives have a way of becoming permanent.)
For the moment, neither Mr. Grassley nor Ms. Snowe has publicly committed to supporting the bill. In early June, an aide said that Mr. Grassley would wait until the Senate was ready to vote on the final package before making up his mind.
"It could have add-ons that would be unappealing," the aide explained in an e-mail message. Notably, the small-business lending fund passed the House without a single Republican vote.
Eight Republicans, including Ms. Snowe and Mr. Grassley, voted with 58 Democrats and independents to bring the measure to the floor — a cause for optimism about the bill's chances, said Regan LaChappelle, a spokeswoman for Harry Reid, the Senate majority leader.
A final vote on the bill will wait at least until the Senate returns from its week-long Fourth of July recess.