* Republicans accuse Democrats of election-year politics
* Obama had urged the Senate to approve bill
* Reid suggests cooling off period
(Updates with possibility of vote next week)
By Donna Smith
WASHINGTON, July 29 U.S. Senate Republicans
blocked a $30-billion plan to help community banks boost
lending to small businesses, dealing a blow to President Barack
Obama's election-year battle to reduce unemployment.
Tempers ran high as Democratic leaders failed to muster the
60 votes needed to advance the measure over Republican
objections. Republicans were upset that Democrats shut them out
from amending the package that also includes about $12 billion
in tax breaks for small businesses.
"Enough is enough. This has been anything but a jobs
agenda," said Republican Senator Olympia Snowe. The Maine
moderate has voted with Democrats on some issues, most recently
to extend jobless benefits to the long-term unemployed. This
time she stuck with her party and voted to block the small
business bill from advancing toward passage.
EVERYBODY COOL DOWN
Senate Majority Leader Harry Reid early in the day
expressed frustration at the impasse, but late on Thursday held
out hope that a deal could be reached sometime soon that would
allow the Senate to act on the bill next week.
"Lets take a little time over the next couple of days, kind
of cool down," Reid said.
Even if the Senate passes the small business lending bill
next week, it will be too late to get it to Obama's desk before
mid-September. The House of Representatives, which passed its
version of the bill in June, is set to begin a six-week break
on Friday. The House will be unable to vote on the version
passed by the Senate until then.
Senate Republican Leader Mitch McConnell had accused
Democrats of playing election-year politics and complained
about billions of dollars in spending added to the package.
By late Thursday, though, he was sounding more optimistic
"I think we are making some real headway here," McConnell
said. Some Republicans support the plan to inject capital into
community banks in a voluntary program that backers say could
mean as much as $300 billion in loans to small entrepreneurs.
Obama twice this week called for the Senate to pass the
bill. He wants to show Americans he is focused on job creation,
mindful that voter anxiety over the lackluster economy and the
9.5 percent unemployment rate could translate into big losses
for his Democratic Party in November congressional election.
Small businesses account for a significant portion of job
creation in the United States.
An earlier Democratic effort to pass a jobs package that
included money for cash-strapped states and extended some
expired individual and tax breaks was also blocked in the
Senate by Republicans who argued that the extra spending should
be covered by cuts elsewhere in the budget.
Senate Democrats are making another push to provide $10
billion in education funding to states and $16 billion to help
with the Medicaid health program for the poor. Reid filed a
separate bill on those measures and a procedural vote is set
OBAMA PUSHED FOR THE LENDING BILL
Obama has been pushing for passage of the lending measure
arguing that getting more capital into the hands of independent
community bankers would lead to more small business loans. It
is supported by independent bankers and business groups.
Since the 2008 financial crisis, small businesses have
found it difficult to obtain loans that would help them expand
as the economy recovers from the recession.
Many business owners are also worried about costs
associated with Obama's healthcare overhaul and fear they will
face higher taxes if Obama keeps a pledge to let President
George W. Bush's tax cuts for wealthier income groups expire as
scheduled at the end of 2010.
Some Republicans have cast the small-business proposal as
part of what they consider government overreach by the Obama
"While I support the bill's tax incentives for America's
job-creating small businesses, I can't support creating yet
another lending fund that turns the Treasury Department into
our national bank," said Republican Senator Lamar Alexander.
(Reporting by Donna Smith; Editing by David Storey and