Idaho’s two members of the U.S. House of Representatives split along party lines on a plan designed to increase bank lending to small businesses impacted by tighter credit caused by economic difficulties. Rep. Walt Minnick sided with the Democratic majority in the House on the plan, while Rep. Mike Simpson and most Republicans opposed the plan, which now heads to the Senate.
The legislation would create a $30 billion fund for smaller banks that Democratic leaders say would boost lending to small businesses. The legislation also offers funding to federal and state-level programs intended to help small businesses. The legislation classifies the $30 billion fund as a loan that would be repaid within 10 years.
"As an Idaho businessman, I know that success of our small businesses is what will ultimately bring us out of this recession,” Minnick said. “It's important to provide entrepreneurs with access to capital so that they can get the loans that they need to expand their businesses or start new projects."
The Congressional Budget Office estimates the legislation would cost $3.3 billion. It would be funded by a separate plan that would change a provision in tax law that would make it harder for taxpayers to evade gift taxes on investments. It would also exempt a fuel called crude tall oil exempt from a biofuel production credit.
Simpson told IdahoReporter.com he questioned the effectiveness of the bill. “I have always opposed reacting to the economic crisis by simply pouring taxpayer dollars into private companies, which is what this bill does by providing capital injections to banks,” Simpson said. “There are a lot of questions about whether this bill will have any positive effect on our economy, since there are no guarantees that banks will actually lend the funding they receive through the program to small businesses. I am also frustrated that the Democrats, once again, have decided to pay for new government spending by raising taxes.”
President Barack Obama supports the small business lending plan, which draws the $30 billion from funds repaid by the Troubled Asset Relief Program (TARP) of 2008. The Huffington Post reported last month that Paul Atkins, then a member of the Congressional Oversight Panel that tracked TARP spending, questioned whether the loan programs’ incentives would spur banks to issue new loans to small businesses.