WASHINGTON (Reuters) - A $19.3 billion package of small-business incentives and construction subsidies passed the House of Representatives on Wednesday as Democrats returned to job-creation efforts after their bruising healthcare battle.
The House approved 246-178 a bill designed to boost investment in small businesses, which have been reluctant to take on new workers as the economy recovers from the worst recession in 70 years. Only four Republicans voted for the bill.
It would lift all capital gains tax on small-business stock bought before 2012 and expand a tax deduction for business start-up costs.
The measure also would expand subsidies for state and local construction bonds in an effort to bring down the 9.7 percent unemployment rate ahead of the November congressional elections.
Democrats noted that the popular Build America bond-subsidy program has funded $78 billion in state and local construction projects.
“It’s been an effective tool in job creation,” said the bill’s author, Ways and Means Committee Chairman Sander Levin.
The bill bolsters state-run welfare programs and expands support for economic-development bonds — a priority of black lawmakers who say that Congress has not done enough to help those hit hard by the recession.
Separately, the House approved a plan that would create up to 300,000 summer jobs for young people, which would cost $600 million. That bill likewise passed with little Republican support.
The measures now head to the Senate, where their fate is uncertain.
Though Democrats say job creation is their top priority this year, the two chambers have often worked at cross-purposes as the more liberal House has chafed at the cautious approach taken in the Senate, where Republicans have greater power.
So far, Congress has sent Obama one job-creation bill, which shores up funding for a highway-construction program and gives a $13 billion payroll tax break to businesses that hire unemployed workers.
Facing a growing backlash over federal spending, Democrats have opted to break up their job-creation efforts into a series of smaller bills to avoid the sticker shock that accompanied last year’s $863 billion stimulus package.
To avoid adding to the country’s record budget deficit, Democrats have included tax increases in their jobs bills to compensate for the spending increases.
The bill approved by the House offsets its $19.3 billion in new spending by cracking down on offshore tax havens and eliminating a tax break for paper-mill byproducts.
Republicans said those tax increases would hurt companies that provide American jobs.
“There’s never a good time to raise taxes on employers of American workers, but given the weakness in the economy, now may be the worst time,” said Michigan Representative Dave Camp, the top Republican on the Ways and Means Committee.
Democrats are considering other approaches to spur job creation. Top House lawmakers are pushing to expand highway construction efforts and help states avoid layoffs of teachers and other public employees.
Their counterparts in the Senate have suggested boosting loans for small businesses relief and incentives to weatherize homes and factories.
The House and Senate have voted to extend unemployment aid, but it is wrapped up in substantially different bills that are unlikely to clear Congress soon. The Senate must act soon to avoid disruption in these programs.
Editing by Xavier Briand