H.R. 3854 modified and expanded a variety of Small Business Administration loan programs. It was developed to help direct capital investments to start-ups and other small businesses in potentially high growth fields such as information technology and clean energy. The bill had general bipartisan support. Rep. Graves (R-MO) was leading the Republicans during the debate on H.R. 3954. He said the legislation will “significantly strengthen the ability of small businesses to obtain needed capital for retaining and creating new jobs.”
This was a vote on a motion by Rep. Cantor (R-VA), the second ranking Republican in the House, to send the bill back to the committee that developed it with instructions to add an additional provision. As described by a statement issued by the House Republican leadership, that provision required the administrator of the Small Business Administration to conduct a study to evaluate “whether there is a credit risk to the federal government (in issuing SBA loans) based on (several) policies (supported by the Democrats).”
Among those policies, according to the House Republican statement are: “The imposition of a surtax on the income of small business owners, a requirement that small businesses offer health care of a minimum acceptable coverage level, an increase in marginal tax rates of small business owners, (an) increase in the tax on capital gains, . . . increased energy costs resulting from enactment of a cap on carbon dioxide, new regulations on financial, and imposition of net neutrality rules on the Internet.”
Rep. Cantor said the reason for his motion was that “small businesses are the lifeblood of our economy . . . And right now our small businesses are struggling like never before . . . it is only logical that we do everything in our power to strengthen our small businesses and make it easier for them to create jobs . . . (but) Washington is doing the opposite. The wave of newly proposed tax increases, health care mandates, and financial and energy regulations . . . have created a pervasive state of fear about the future cost of doing business that is enveloping reluctant job creators.”
Rep. Cantor went on to say “if the economy is going to be resurgent, small business owners will have to provide the spark, (but) the misguided (Democratic) policies being brought forward either siphon capital away from small businesses or cause them to hoard capital . . . (W)e will see repercussions in the amount of capital investment small businesses attract; in the number of business formations and failures; and the amount of sales and new orders and investment in plant and equipment because of the very actions being proposed in this House and throughout Washington.”
Rep. Velasquez (D-NY) was leading the support for H.R.3854 among the Democrats. She responded to Rep. Cantor by noting that the bill provided $44 billion in capital for small businesses and was projected to create 1.3 million jobs. She pointed to the more than fifty organizations representing small businesses in a range of industries that supported the measure,, and suggested that Cantor “is interested in studying the problems, (while we (Democrats) are interested in real solutions, and the bill under consideration does that . . . (W)hat I would like to see (added) . . . to the study is how small businesses have benefited from (Democratically-supported) increased expensing limits for purchasing equipment, extended bonus depreciation, reduced capital gains rates on small business stock, and allowing businesses to carry back 5 years of losses.”
She concluded by saying: “(I)t is interesting to see how (Rep. Cantor) . . . would like to study things that haven't happened, like offsetting the reduction in capital available for such concerns resulting from an increase in tax on capital gains . . . This is a motion that does nothing to provide loans to small businesses or create jobs. But if (Rep. Cantor) wants to do a study, so be it.”
The motion carried by a vote of 272-149. All one hundred and seventy-one Republicans, as well as one hundred and one Democrats voted “aye”. The other one hundred and forty-nine Democrats, including a majority of the most progressive Members, voted “nay”. As a result, language was added to H.R. 3854, effectively mandating a study of the effect of several policies on the credit risk of federal small business loans.