* AFL-CIO proposes plan to help small business
* Community banks ignored under TARP would also benefit (Adds fresh quotes, details and background)
By David Morgan
WASHINGTON, Nov 17 (Reuters) - The head of the largest U.S. labor federation urged President Barack Obama on Tuesday to use the $700 billion Wall Street bailout fund to help cash-starved small businesses as a way to stem rising joblessness.
In a preview of labor’s contribution to Obama’s Dec. 3 jobs forum, AFL-CIO President Richard Trumka said money from the Troubled Asset Relief Program could be loaned at commercial rates to small- and medium-sized businesses that cannot get credit from larger banks. [ID:NnN16515018]
The approach could also benefit small community banks that have been ignored by the financial rescue effort by having them manage the business loans.
“If small businesses can get credit, they will create jobs. And we need those jobs now,” Trumka said at a jobs forum hosted by the Economic Policy Institute, a left-leaning Washington think tank. “This is something we can do right now and it would make a critical difference.”
With the United States emerging from the worst economic downturn since the Great Depression, joblessness is a top political issue as Congress prepares for next November’s election with unemployment at a 26-1/2 year high of 10.2 percent. [ID:nN1726445]
Job losses have hit Democratic constituents especially hard, including blue-collar workers and minorities. Unemployment is 15.5 percent for blacks and nearly 13 percent among Hispanics.
Civil rights leaders who joined Trumka at the forum warned Congress not to ignore a “jobs crisis” that could disenfranchise American workers across the racial spectrum for a generation and cost hundreds of billions of dollars to fix.
“We get hit the hardest,” said Benjamin Jealous, president of the National Association for the Advancement of Colored People. “But this is fundamentally about the majority of the country.”
The AFL-CIO proposal to help businesses and banks is unusual for Big Labor. But officials with the 56-union federation said the real beneficiaries would be workers.
It is also part of a five-point AFL-CIO plan for job creation that Trumka intends to pitch to Obama at the Dec. 3 White House forum on joblessness with business leaders, economists and others.
The AFL-CIO’s plan also calls for extended benefits, food assistance and healthcare for the unemployed, more money for infrastructure projects and state and local governments, and job creation in distressed communities.
White House officials are already considering other uses for the TARP fund’s remaining $210 billion, including small business loans and assistance to debt-burdened families. (Additional reporting by Andrea Shalal-Esa, editing by Vicki Allen)