One Stimulus Bill Passes--But Not the One You're Thinking

With much of the nation's attention focused on President Obama's oil spill address and much of the fiscal policy universe focused on the extenders bill, another bill was passed by the House on Tuesday. The Small Business Jobs Tax Relief Act of 2010 (H.R. 5486) provides, as you would expect, a number of small business tax breaks, although the gross cost is expected to be very small (less than $4 billion). The bill is actually expected to raise revenue (about $3.5 billion, although CBO has not yet weighed in) due to a few revenue raising provisions, most notably the tightening of the cellulosic biofuels credit. 

The House's intention is to pair this bill with the Small Business Lending Fund Act of 2010 (H.R. 5297). This bill would create a (you guessed it) Small Business Lending Fund of $30 billion, which would buy equity in small lending institutions. The dividends these institutions would pay to the Treasury would depend on how much they increased their small business lending. CBO estimates the cost of this bill at $3.4 billion, with about $1.4 billion being the "subsidy cost" of the Lending Fund and with $2 billion being the cost of a Small Business Credit Initiative (which would provide money to states that are doing similar lending projects.) 

The House is expected to pass SBLF very soon, which would send both bills to the Senate. Combined, they are deficit-neutral, so the Senate might find an easier time trying to pass these bills than they are having with another piece of legislation. But the real meat-and-potatoes of whatever stimulus effort comes out of Congress will be in the extenders bill, so it's important that that bill is made as fiscally responsible as the small business bills are.