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The Senate passed a long-stalled measure on Thursday that would boost lending to small businesses, giving President Barack Obama’s Democrats one of their last chances before November elections they are working to revive the sluggish economy.
The 61 to 38 vote sends the measure back to the House of Representatives, which has passed a similar bill and is expected to approve the Senate’s version as soon as next week.
With the unemployment rate stuck at 9.6 percent, voters cite jobs and the economy as their top concern and say Obama has not done enough on these issues.
Republicans are poised to rack up big gains in the November 2 elections and could win control of one or both chambers of Congress.
If the measure clears Congress, it would be a rare victory on the job-creation front for Democrats, who have seen many of their other efforts blocked by Republicans this year.
Republicans have characterized the bill as a bailout along the lines of the unpopular Wall Street bank rescue effort, and blocked action since the end of July.
“For something this common-sense, it’s been harder work than we thought it would be,” said Democratic Senator Max Baucus, who helped craft the bill.
Smaller firms have complained of trouble getting access to credit after the 2007-2009 financial crisis, when many banks sharply pulled back their lending activity. Credit continues to be tight.
The bill, backed by industry groups, would create a $30 billion fund that the government would invest in independent community banks to encourage lending to small firms.
It would also exclude from taxes all capital gains on sales of small-business stock, and ease tax rules for expending and depreciating equipment. Tax breaks in the bill total $12 billion.
DEMOCRATS SAY COULD CREATE 500,000 JOBS
Democrats estimate the lending incentives could lead up to $300 billion in new small business credit over the coming years and create 500,000 new jobs. Some 8 million jobs have been lost since the recession began in late 2007.
Obama welcomed passage of the bill.
“It’s going to make a difference in millions of small business owners across the country who are going to benefit from tax breaks and additional lending so companies have the capital to grow and hire,” he said at an education event in Washington.
The bill passed with the help of two Republicans, who broke with their party to give the Democrats the votes they needed to overcome a procedural roadblock.
One of those Republicans, Senator George Voinovich, said the need to help small businesses outweighed his frustration that Republicans were not able to offer changes to the bill.
“My support for the small business legislation is based upon the many calls of support I heard from Ohio’s small and medium manufacturers, most of whom are still struggling to recover from this recession,” said Voinovich, whose Rust Belt state has been hit particularly hard by the worst recession since the Great Depression.
Many Republicans have invoked small businesses as they oppose an Obama proposal that would raise income taxes on the wealthiest 3 percent of U.S. households, arguing it would snare many who file business income as personal income.
Republican Senator Charles Grassley said he supported the bill’s tax provisions, but not its lending facility.
“The small-business fund in the bill just doesn’t have enough safeguards in place to ensure that recipients are credit-worthy or that the taxpayers will be made whole in the end,” Grassley said.
The government’s definition of a “small business” varies by sector, but typically encompasses firms that employ fewer than 500 workers or take in less than $7 million in annual revenue.
(Additional reporting by Richard Cowan, Trisha Zengerle and Kim Dixon, Editing by Vicki Allen and Philip Barbara)
Copyright © 2010 Reuters