Joseph Schuman Senior Correspondent
President Barack Obama today signed into law a chain of tax cuts for small businesses and up to $14 billion in federally funded loans aimed at stimulating job creation, in what’s likely to be the government’s last bid to boost the economy before the midterm elections.
“Government can’t create jobs to replace the millions that we lost in the recession, but it can create the conditions for small businesses to hire more people through steps like tax breaks,” Obama told a gathering of small-business owners at the White House before signing the bill. “Small businesses produce most of the new jobs in this country. They are the anchors of our Main Streets. They are part of the promise of America, the idea that if you’ve got a dream and you’re willing to work hard, you can succeed.”
President Barack Obama signs the Small Business Jobs Act in the East Room of the White House on Monday. The legislation provides $12 billion in tax incentives and establishes a $30 billion fund to increase credit access for small businesses.
In recent months, as payroll growth faltered and economic expansion appeared to stall, Obama made passage of the bill one of his top priorities and a key rallying point against Republicans as a filibuster kept the measure from moving forward in the Senate. It has been the lone Democratic victory on Capitol Hill as Republicans and the White House went to war over nearly all things economic ahead of the Nov. 2 elections.
Last week Senate Democrats were forced to suspend efforts to extend nearly all tax cuts put in place under the administration of George W. Bush after Republicans refused to allow a vote unless tax cuts for the richest 2 percent of American households were included. And a Democratic bill that would give companies tax incentives to keep jobs at home rather than outsource them abroad stands little chance of getting a Senate vote because of a Republican filibuster.
Two other recent Obama proposals — new funding for roads, rails and other infrastructure projects and a series of tax credits aimed at increasing business spending — seem unlikely to be considered by the current Congress.
Sens. George Voinovich of Ohio and George LeMieux of Florida, saying small businesses are “starving” for new capital, were the only Republicans to join Democrats on the small-business bill. Rep. Walter Jones of North Carolina was the sole Republican in the House to do so. Other Republicans argue the small-business loans amount to a taxpayer bailout.
The $42 billion law would extend several small-business loan programs created by last year’s Recovery Act and give tax cuts to small businesses and their owners that would encourage new investment and hiring.
The White House said more than 1,400 small or midsize companies with more than $680 million of loan applications already in the pipeline and approved by banks would immediately benefit from the program. In total, about $14 billion in new loans could be funded.
The maximum size of loans supported by the Small Business Administration would also increase, to $5 million from $2 million, and some manufacturing-related loans could reach up to $5.5. million
The largest microloans, often used by entrepreneurs and for startup capital, would increase to $50,000 from $35,000. And the SBA’s so-called express loans — usually tapped for working capital that companies use to buy new inventory and process new orders — would increase to $1 million from $35,000.
The new tax cuts would let small businesses write off hundreds of thousands of dollars in equipment purchases while eliminating capital gains taxes for about 1 million companies, and many entrepreneurs would be allowed to deduct the first $10,000 in startup costs.
The law also lets self-employed Americans deduct all health insurance costs for themselves and their families
Joseph Schuman Senior Correspondent