The latest data on unemployment is an ugly surprise: There were 500,000 unemployment claims in mid-August, the highest since November, well exceeding the predictions of economic forecasters. Today, The Wall Street Journal reports that 61.8 percent of all job cuts at the end of last year took place in small businesses.
If you're wondering what the government can do about this problem, how about a plan to cut taxes on small businesses and make it easier for them to get credit to invest in their operations and expand and hire more workers? It sounds pretty good, which is why Democrats have proposed it in the Senate, hoping that the tax cuts and small-biz focus would persuade Republicans to join them.
Instead, Republicans have repeatedly blocked action on the long-stalled bill, ostensibly because the Democrats won't let them vote on non-germane amendments, like capping the federal budget. In reality, Operation Sand In The Gears of Progress continues apace, with Republicans hoping to reap political gain from Democratic obstruction.
Speaking to reporters yesterday, a senior administration official said there was an overwhelming case for the small-business lending bill, and generally erring on the side of doing even more to support the economy well into the future. But the official also admitted that there was little chance that Congress would pass any kind of stimulus measure after the August recess, with the possible exception of this small-business bill, because the Obama team hasn't figured out how to alter the political constraints to make productive legislating possible. It's hard to imagine a scenario where the midterm elections make things any easier.
-- Tim Fernholz
