Small business bill appears to be stuck in Senate

McClatchy NewspapersAugust 5, 2010 

WASHINGTON — The U.S. Senate might leave town this week without finishing up what Democrats had hoped would be a significant political achievement before the August recess: passing a multibillion-dollar swath of programs to help struggling small businesses.

On its face, the legislation would pour billions into a slate of programs to help small business obtain federal microloans, government contracts and export assistance. But the bill also is part of the political wrangling that's going on in Washington ahead of fall's midterm elections.

Republican senators unanimously blocked the legislation a week ago, preventing an up-or-down vote that could have given the Democratic majority a political victory going into the August recess. In response, President Barack Obama gave a speech Monday urging the Senate to pass the bill.

Senate Majority Leader Harry Reid has vowed to try again this week, but it's uncertain whether the vote will happen.

Observers say the legislation could have sweeping effects in North Carolina.

More than 85 percent of companies in the state have fewer than 100 employees, said Scott Daugherty, N.C. small-business commissioner and executive director of the Small Business and Technology Center.

"We are substantially a state of small companies," he said.

The Economic Policy Institute recently calculated that there are nearly five job seekers for every open job. The unemployment rate in North Carolina remains above 10 percent.

Failure to pass the bill would bring Democrats such as U.S. Sen. Kay Hagan, who supports the act, back to their states this weekend with one fewer success to show from their party.

And it would give Republican U.S. Sen. Richard Burr, who is running for re-election, another point of criticism against the Democratic majority and the Obama administration.

Burr declined to be interviewed for this story, but in a prepared statement, his spokesman, David Ward, turned blame for the struggle of small businesses on the Democrats.

"What (small businesses) really need is for Congress and the administration to stop overburdening them with federal mandates, excessive bureaucratic red tape, tax increases and high energy costs," Ward said.

Carter Wrenn, a Republican political consultant in Raleigh, said Burr should easily be able to defend his "no" vote to his Tar Heel constituents.

"He can explain that all the job programs haven't worked, and he can explain that this is just one more," Wrenn said.

He said the legislation is a spending bill dressed up as a bailout.

"The truth is there's a trillion dollars now in the banking industry now that's loanable that ain't being loaned," Wrenn said. "The real problem is everybody's so uncertain about the future that no one wants to loan money."

Burr's no vote last week on the procedural question on the bill drew immediate criticism from the Democratic Senatorial Campaign Committee, which supports his challenger, Elaine Marshall, in the upcoming Senate race.

"Again and again, Burr shows he's more loyal to Republican leaders in Washington than to North Carolina small businesses," Deirdre Murphy, DSCC spokeswoman, said in a statement.

And David Axelrod, Obama's senior adviser, said Tuesday that GOP senators can expect to hear questions from constituents about why the bill didn't move forward.

"Make no mistake: It will be an issue if politics intrudes on what we should be doing," Axelrod said. "I think if I was in the position of Senator Burr, I'd rather go home and say I did something constructive for the small businesses of my state."

Much of the bill includes bipartisan proposals. Among them are provisions that would increase amounts of Small Business Administration loans, leverage $1 billion in export capital, offer tax breaks for investments and startup costs, and give temporary funding for rural exports.

At the bill's center is a $30 billion program for community banks to extend loans to small businesses. Burr's opposition puts him at odds with the N.C. Bankers Association, which supports the legislation.

"We think it is imperative," said Thad Woodard, the group's president. "Our folks have emphasized this as a lubricant for small-business lending."

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