In the waning hours of the GOP's unsuccessful effort to derail the Senate stimulus bill, the name of small business was frequently taken in vain. Small businesspeople "are the forgotten folks," lamented Arizona Sen. John Kyl, alluding to Amity Shlaes's revisionist account of the Great Depression, now in vogue in conservative circles. "Small businesses create 80 percent of the jobs, so you would think a good piece of the relief would go to small business. No, it is just three-tenths of one percent."
In fact, as readers of this space know, there's a lot in the Senate bill for small firms, including generous provisions for writing off investments and using current losses to offset prior profits, as well as other measures to loosen up lending. But if that is not enough, the GOP has only itself to blame. In all, two dozen Republican amendments came up for a vote, and just two of them offered additional tax relief to small firms. Both failed, by design. (I'll come back to why in a moment.)
Of course, one could argue that Democrats, in firm control of the Senate agenda, restricted the number of Republican amendments the chamber would consider, although more Republican than Democratic amendments actually went to a vote. But rifling through the 198 amendments filed by the Republican opponents to the stimulus reveals the same paucity: only eight of them remembered the forgotten folks. (I'm not counting here those amendments offered by Olympia Snowe, a moderate from Maine and the ranking Republican on the small business committee -- unlike most of her fellow partisans, she supported the bill.) Instead, Republicans focused their efforts on denying poor people refundable tax credits, stripping Amtrak of stimulus funding, and diverting school construction money to private schools. They sought stringent oversight requirements, but also to relax environmental regulations for infrastructure projects. They tried to use the stimulus to keep the prison at Guantánamo open and to repeal the Children's Health Insurance Program authorization just signed into law.
Even the National Federation of Independent Business, among the most formidable lobbies in Washington and widely viewed as a close GOP ally, found Republican ears deaf to its immediate priorities. The NFIB was particularly keen to see a six-month payroll tax holiday incorporated into the stimulus. "Eliminating the payroll tax for an extended period of time provides a double benefit to the economy by helping struggling businesses reduce costs and providing working Americans with extra money to spend where they see fit," explained the organization's chief lobbyist, Dan Danner, in a letter (pdf) to Congress. "No other proposal will have a more immediate and profound effect on the economy."
Though Senate Minority Leader Mitch McConnell pushed the idea in late January, the NFIB came up empty-handed once Senate debate commenced in early February. Or nearly empty-handed. It turns out John McCain adopted a variation on this idea in an alternative stimulus package he proposed last Friday. McCain's Amendment 364 drew down the spending (to just military and transportation projects) and ratcheted up the tax relief. Besides a permanent cut in employer (but not employee) payroll taxes, McCain proposed temporarily slashing corporate income rates.
This was one of the two Republican bills with business tax incentives to come to a vote -- the other was a measure by John Thune of South Dakota, which included an income tax deduction for small firms. In each case, though, the small business elements were a small part of a much larger, thoroughly unappetizing package that essentially repudiated the Democrats' priorities. Neither, then, had any chance of passing the Senate, and both failed along party lines. They were not really works of legislation so much as poses.
Republicans, it seems, concluded that the greater political advantage lay not in fixing but in fighting, however futilely, the stimulus. Indeed, Oklahoma's James Inhofe said as much on the Senate floor. This was on Monday, just a few hours before the vote to end debate. As other Republican senators cast their opposition ruefully as a matter of principle, Inhofe laid bare the calculus. "This is something I think is going to end up being a positive thing for Republicans," he began. "In 1992, a very similar thing happened. We had a Democrat in the White House, we had a Democratic-controlled House, a Democratic-controlled Senate, and we saw what happened. They started spending money....I believe we are going through the same thing we did in 1992 and we are going to have the same results we had in 1994."
Yesterday, the Washington Post's Chris ("The Fix") Cillizza wondered if the compromise reached yesterday between the House and Senate might induce some Republicans to switch. Don't hold your breath. The GOP appears set to wait it out until 2010. But that's a long time away. And with each passing day, it only seems for many small firms to get longer.
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