Small Business Aid Bill Close to Enactment
UPDATE: The Senate passed the small business package on Thursday 9/16, and the House is expected to pass the legislation early next week.
The Senate today successfully invoked cloture by a 61-37 vote on HR 5297, a bill to provide relief to small businesses. The legislation provides $12 billion in tax breaks, a $30 billion lending fund and other aid. A vote on final passage is expected by Thursday and the House will likely accept the Senate version in order to move it to the president for his signature. It may be the last stimulus spending bill that the deeply-divided Congress adopts this year.
Before invoking cloture on the Senate substitute amendment, two amendments involving an offset to the health care reform bill passed earlier this year were rejected. An amendment from Senator Mike Johanns (R-NE) to repeal the 1099 reporting requirement for business purchases from corporate vendors of $600 or more failed. The $17 billion cost would have been offset by limiting a preventive care fund and the individual mandate to purchase health insurance. Another amendment that would have exempted more businesses from the requirement also failed. Its $10 billion cost would have been paid for by repealing the manufacturing tax deduction for the five biggest oil and gas firms.
The Senate had to modify the bill because one of the original offsets was used by legislation to provide extra funding to states. The loss of eliminating the Advanced EITC was offset by jettisoning nearly $1.5 billion in agriculture disaster relief.
While the cost of the package is supposedly offset, CRFB takes issue with one of the pay-fors. Allowing people to rollover their individual retirement accounts to Roth IRAs will technically raise just over $5 billion over the ten year period since the rollovers will be taxed. But it will cost an estimated $15 billion over the longer run because withdrawals from Roth IRAs are not taxable.
CRFB supports finding long-term offsets for short-term stimulus. But using short-term offsets that actually increase the debt over the longer term not only goes against the principle of offsets, but is fiscally irresponsible.