Senate Leaves for Break, Plans to Take Up Small Business Bill After Recess
Today, President Obama pushed for the Senate to pass the Small Business Jobs and Credit Act — a modestly sized bill that might unlock as much as $300 billion in credit for small companies, which have created two-thirds of jobs in the past decade.
The bill is considered the Democrats’ last chance to enact any form of stimulus before the November mid-term elections, once the state aid bill becomes law next week. It creates a $30 billion lending fund to encourage small community banks to grant cheap loans to small businesses. It also includes a number of other provisions aimed at helping small businesses thrive and hire: $12 billion in targeted tax cuts and an increase in Small Business Administration loan limits, for instance.
“It is so important to pass this jobs bill for America’s small businesses. That’s where most of our jobs are created. And small businesses have been especially hard-hit by the economy,” Obama said at Gelberg Signs. “And yet, a minority in the Senate is standing in the way of giving our small businesspeople an up or down vote on this bill. And that’s a shame. These kinds of delays mean contracts are being put off, debts are adding up, workers are going without a job –- and we can’t afford it. We need to do what’s right, not what’s political, and we need to do it right now.”
But today, the Senate left without voting on the provision — though Sen. Harry Reid (D-Nev.) has paved the way for the Senate to take it up as soon as it returns from the August recess on Sept. 14. Yesterday, he filed for cloture, meaning the Senate will vote on whether to end debate the day it returns. Over the recess, Senate Democrats hope to convince Sens. George Voinovich (R-Ohio) and George LeMieux (R-Fla.) to vote for cloture, which requires 60 yeas in the Senate.
Republicans have not supported the bill because they have argued that Reid has not given ample enough time for them to offer amendments. Reid prevented Republicans from offering amendments because they kept offering controversial and non-germane provisions, such as a permanent extension of the Bush tax cuts. The bill has been held up for four weeks.
To win over Voinovich, LeMieux and possibly others, Senate Democrats have assured Republicans a vote on an amendment by Sen. Mike Johanns (R-Neb.). The amendment, pressed for by small business organizations and supported by some Democrats, takes on the 1099 information reporting requirement expanded by the health care reform bill, signed into law this spring.
The expanded reporting requirement, due to take effect in 2012, requires businesses to document any purchase of more than $600 in goods or services to the IRS — meaning a lot more paperwork. The Johanns amendment strips that requirement for purchases under $5,000. It pays for the estimated $10 billion in lost tax revenue in part by eliminating the $15 billion Prevention Trust Fund, which pays for cancer screenings, smoking secession and other programs.
Democrats refuse to kill the Prevention Trust Fund. So, they have offered a substitute amendment — keeping most of Johanns’ changes to the 1099 reporting requirement, but paying for it by repealing taxes on the five biggest oil companies. An explanation from Senate Finance:
[The Democrats' plan] would repeal Section 199 of the tax code, which currently allows these corporations to deduct six percent of their income from oil and gas production from their tax liability, effective December 31, 2010. This repeal would only apply to the five largest corporations with more than $1 billion of before-tax income.
The five major integrated oil companies, which include BP, had a combined profit of $25 billion in the first quarter of 2010. And, in the five years since enactment of the Section 199 deduction, these major integrated oil companies have posted $521 billion in profits. The profitability of these companies has been so robust that in the first quarter of 2009, when the U.S. GDP shrank by 6.4 percent and corporate profits decreased by 5.25 percent, these companies still earned more than $13 billion in profits. Furthermore, it is not clear the goal of this deduction, which is to improve America’s energy security by promoting domestic production, has been reached. When the Section 199 deduction took effect in 2005, domestic oil production averaged about 5.5 million barrels per day. Now, five years after the deduction took effect, domestic oil production has actually fallen slightly, to 5.48 million barrels per day.
In a statement today, referencing the dismal jobs report, Reid pushed Republican senators to support the bill. “More work lies ahead of us to repair our economy, and we cannot rest until every worker who wants a job can find one,” Reid said. “But Republicans must stop putting special interests before working Americans and work with us to pass bipartisan measures that will energize small businesses and the middle class, the engine of America’s economy. Small businesses are responsible for creating almost two-thirds of the jobs in our country, and I hope that every senator will return to Washington in September ready to pass critical support to boost our nation’s small businesses.”