Obama charges GOP with blocking small business plan

10:25, August 01, 2010      

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U.S. President Barack Obama on Saturday accused Republicans of blocking a White House plan that aims to provide assistance to small businesses and increase jobs in the worst economic climate since the 1930s.

During his weekly radio and Internet address Obama charged GOP leaders with using procedural tactics to prevent the bill from coming up for a vote.

"At a time when America is just starting to move forward again, we can't afford the do-nothing policies and partisan maneuvering that will only take us backward," he said.

The legislation provides 30 billion U.S. dollars to community and smaller banks to boost lending to small businesses. It also contains tax cuts and an exemption from capital gains taxes for small businesses that qualify.

Obama had initially pushed Congress to pass the bill before the August recess and has been traveling the country to drum up support for the measure.

"As we work to rebuild our economy, I can't imagine anything more common-sense than giving additional tax breaks and badly-needed lending assistance to America' s small business owners so they can grow and hire," he said. "That's what we're trying to do with the Small Business Jobs Act - a bill that has been praised as being good for small businesses by groups like the Chamber of Commerce and the National Federation of Independent Business. It's a bill that includes provision after provision authored by both Democrats and Republicans."

Obama is trumpeting the plan in the face of declining presidential popularity numbers and an upcoming Congressional election in which Democrats are forecast to lose seats.

Steven Kull, director of the International Policy Attitudes program at the University of Maryland, said the president's ratings could drop further if the GOP can portray the bill as another stimulus measure.

Indeed, many Americans view the 787 billion dollar stimulus passed last year as a waste of taxpayer money -- although many economists said it rescued the economy from even further decline -- that ultimately did not create the jobs that many thought it would.

But if the bill becomes law and coincides with a drop in unemployment, it could help Obama in the polls, Kull said.

The U.S. unemployment rate remains in double digits and is not expected to return to pre-recession levels for at least three years, economists said.

Aparna Mathur, resident scholar at the American Enterprise Institute, said lending to small businesses would have a positive effect under normal circumstances. But in this harsh economic climate, she said, the bill misses the mark.

"It's not just access to credit right now, it's also demand in the economy," she said. "It's also the climate of uncertainty in terms of investment. And people are uncertain about the kind of taxes that they might be forced to pay in the future given the large size of the federal debt."

Slashing corporate taxes -- the United States pays the second highest corporate tax rate in the developed world, after Japan -- would do more to spur the economy than extending credit to small businesses and signal that the United States is friendly to investment, Mathur contended.

It would also make the United States more competitive with the European economies, she said.

Barry Bosworth, a former presidential advisor and senior fellow at the Brookings Institution, however, said corporate tax reductions have the weakest impact. The advantage of Obama's loan program, he said, is that it is temporary and most of the money will be paid back.

Still, most small businesses are likely to oppose the plan, as they want something bigger, such as permanent tax breaks, Bosworth said.

Source: Xinhua


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