WASHINGTON (Reuters) - The House of Representatives on Thursday approved a small business lending program sought by President Barack Obama to boost economic growth and encourage job creation.
The House voted 241-182, mostly along party lines, for a bill which would authorize a $30 billion fund the Treasury Department would use to provide capital to small community banks, allowing increased lending to small businesses.
“America’s small business owners are the backbone of our economy,” said House Speaker Nancy Pelosi. “With this legislation, we are helping to ensure they have what they need to be the engine of our recovery.”
Republican opponents called the program another bailout for financial institutions similar to the $700 billion Wall Street rescue in 2008. They argue that tax increases coupled with huge deficits and greater regulation are discouraging job growth.
“Washington can best help small businesses by creating a job-friendly environment and providing clarity about the future,” Republican Representative Tom Price said in a statement. “Bailouts are not the answer.”
The Independent Community Bankers of America backed the bill, calling it a “bold new program that will go a long way toward aiding our nation’s economic recovery.” The group said the $30 billion fund could be leveraged into as much as $300 billion in new credit to small businesses.
The legislation is being combined with another bill earlier passed by the House that would provide $3.5 billion in small business tax breaks before it is sent over to the Senate for a vote.
It is unclear when the Senate will take up the small business lending bill. Senate Democratic leaders were struggling on Thursday to round up the 60 votes needed to pass another economic bill backed by Obama which would extend popular business tax breaks and unemployment insurance benefits for the long-term unemployed.
The bill would also extend extra Medicaid aid to cash-strapped states and prevent a 21 percent pay cut for doctors treating Medicare patients. The bill would also raise taxes on investment fund managers, who currently pay a low 15 percent capital gains tax rate on much of their earnings, to help offset the cost its cost.
Some senators are balking at adding to already bloated budget deficits even though the bill has been trimmed down to try to meet those concerns. The Congressional Budget Office said the revised bill would add about $55 billion to the deficit over 10 years, compared to about $80 billion for an earlier version.
Senate Finance Committee Chairman Max Baucus said leaders were working to muster the 60 votes needed in the 100-member chamber to get the bill passed. “We’ll get 60 votes. I can’t say exactly when, but we will get 60 votes,” Baucus said.
Reporting by Donna Smith; editing by Todd Eastham