The small business bill that will likely pass the Senate today is both another big-government boondoggle and a missed opportunity for real relief for small business.
The bill's "small business lending fund," which has been called "Son of TARP," has the government buy $30 billion in preferred stock in banks in return for the banks making politically correct loans with an emphasis on "linguistically and culturally appropriate outreach." Such an approach will not benefit innovative small firms, but most likely firms who toe the government's line on investing in renewable energy and anything else the government deems "appropriate." And it could also threaten taxpayers as it follow the same politically-directed investing approach as laws like the Community Reinvestment Act that were a big factor in the mortgage crisis.
It is also a sad commentary on the state of politics today that Congress didn't adequately debate dozens of amendments that, unlike the bill itself, could have provided substantial tax and regulatory relief to small business. The Senate voted down a repeal of Obamacare's IRS reporting mandate that firms must file a 1099-form on every purchase made for more than $600.
And, scores of other measures that cut or simplified taxes and regulations were never allowed by Senate Majority Leader Harry Reid to even come to a floor vote. This includes not just GOP amendments, but a bipartisan amendment that would have simply freed up credit unions to lend more more to small business without any government subsidy. The credit union amendment's main sponsor was Mark Udall, Democrat of Colorado, but Senate leadership still wouldn't let it move to the floor.
Congress can help small business spur jobs, but only if it stops rushing to “create jobs” and instead fosters the free-market conditions that unleash small-business hiring.