The measure, which goes to the House, would create a $30-billion lending fund and provide $12 billion in tax breaks. It was a tough election-year victory for President Obama.
Overcoming months of gridlock, the Senate approved a small-business bill Thursday that hands President Obama an election-year victory but shows just how difficult it has become for lawmakers to agree on the best way to boost the sluggish economy and create jobs.
The measure passed by a 61-38 vote, with just two Republicans crossing party lines to support the bill. It would create a $30-billion small-business lending fund and provide $12 billion in tax breaks to help companies invest and hire. The bill now heads to the House, which is expected to pass it swiftly.
Yet a months-long impasse over the bill to aid small businesses, which have been hard hit during the economic downturn and are championed by both parties as engines of the recovery, highlights the partisan divisions before the fall midterm elections.
"It tells you the depth of the gridlock and dysfunction that unfortunately has gripped the Congress," said Sen. Evan Bayh (D-Ind.). "Hopefully, some of that will abate after the election."
Congressional action on the legislation has been watched closely in Southern California, where small businesses are a backbone of the regional economy and were particularly pounded by the slump.
The bill enjoyed bipartisan support at the outset, but the addition of the $30-billion lending fund to give credit-starved firms access to capital created insurmountable partisan divisions.
Republicans quickly opposed the lending fund as a "mini-TARP" — reminding voters of the unpopular Troubled Asset Relief Program that was the cornerstone of the 2008 federal bank bailout.
Republicans filibustered in July, demanding the chance to offer more amendments, including some unrelated to the legislation. Democrats shelved the bill as the debate dragged on and other legislation took priority.
Those expected to champion the bill from the business community — the U.S. Chamber of Commerce and the National Federation of Independent Businesses — instead focused on using the legislation as a vehicle to overturn an onerous business reporting requirement in the new healthcare law.
"All of a sudden it became a partisan exercise again," said Sen. Orrin Hatch (R- Utah). "It's amazing to me how difficult it is to work together around here, even when we want to. It's almost like an arrogance of power: 'We're going to teach those Republicans.' "
Republican Sens. George LeMieux of Florida and George Voinovich of Ohio, neither of whom are seeking reelection, joined 57 Democrats and two independents to pass the measure.
The House passed a version of the bill this year, and at one point over the summer, frustrated House lawmakers walked across the Capitol to stage a quiet sit-in at the Senate chamber to protest the delays on this and other job bills.
"While I am grateful for this progress, it should not have taken this long to pass this bill," Obama said on the eve of Senate action. He has promised to quickly sign the legislation.
The $12 billion in tax breaks are intended to encourage investment, entrepreneurship and hiring.
Businesses would also be able to write off more of their costs of buying equipment or making shop improvements. Those who are self-employed could deduct healthcare costs from the self-employment tax. The bill would also continue to waive Small Business Administration loan fees, which had been cut as part of the 2009 recovery package.
The $15-billion cost of the bill is offset by closing tax loopholes and increasing tax reporting requirements and penalties.
Democrats estimate the legislation could create 500,000 jobs.
Amendments earlier in the week sought to lift a much-criticized healthcare-tax-reporting requirement that both Democrats and Republicans agree needs to be fixed. But the amendments failed as senators could not agree on a way to recoup the $17 billion in revenue that would be lost by doing away with the provision.
Republicans also made two procedural moves Thursday to attach tax credits for research and development and biodiesel development, but both were rejected.