New stimulus | Obama proposes $30 billion small business program
President Obama proposes $30 billion lending program for small businesses
According to a recent article in the Wall Street Journal, President Obama has come up with a proposal for a $30 billion lending program for small businesses. The funds would be allocated out of remaining TARP funds, and be used to inject capital into largely community banks that lend heavily to small businesses. The proposal immediately came up against detractors, as Obama’s budget decisions become more and more embattled. Small business lending is seen as one of the keys to stimulating economic recovery and rightly so – giving a cash advance to only the hugest of businesses makes little sense, given the scope of the economy overall.
Small businesses make up over half of US employment
It is estimated that over half of all workers in the US work for a small business, or a business that employs 500 people or less overall, and also that small businesses contribute about half of US GDP. Small businesses, by nature, are able to fill niches better than their large corporate counterparts. They are better able to deliver goods and services than their competitors to specialized markets, in everything from payday loans, community banks and credit unions, music stores–you name it. They also have far smaller overhead. Part of the program will be tax incentives for small businesses, such as breaks for new jobs created or higher wages for employees.
Opponents cite TARP rules and budget deficits
Those who aren’t exactly for the program come from both sides of the aisle, as Obama’s spending policies are seen to be even more excessive than his predecessor. In a Senate hearing for the bill, Senator Judd Gregg (R – NH) told White House Budget Director Peter Orszag the White House was using TARP as a “piggy bank” and that the program was intended for debt relief.
“The law is very clear. The monies recouped from the TARP shall be paid into the general fund of the Treasury for the reduction of public debt.” – Sen. Gregg
The Chairman of the Senate Budget Committee, Kent Conrad (D – SD) also criticized the current administrations’ failure to address the long term solvency of current spending policies, though gave credit to the need for stimulating vital sectors of the economy.
Problems of US debt
US Government debt at present is estimated to be around $8.5 trillion, or close to 90% of the Gross Domestic Product. Growing national debt is becoming one of the hot button issues facing the US government, and dealing with the debt is going to be an enormous issue in the next election. Both administrations after Clinton (Bush and now Obama) have seen record deficits and debt increases. The national debt has been trending upwards since the 1970s, and saw it’s biggest increases under Presidents Reagan, Bush (the younger), and Obama. The stimulus packages are necessary, but it seems that the legislature is tired of seeing Presidents willing to spend without cutting back on other expenses. Our government is going to emergency loans before long.