One major drawback of the federal government’s $700 billion bailout of the nation’s major banks has been the failure of those financial institutions to lend money to small businesses battered by the deep recession. The inability to access loans has made it virtually impossible for those businesses to rebound and hire new workers, which has contributed to double-digit unemployment rates in Nevada and elsewhere.
That is why Congress should endorse measures unveiled Wednesday by President Barack Obama that would make it easier for small businesses to borrow the money they need to expand.
One proposal would give community banks access to existing federal bailout money at low interest rates as long as those banks step up efforts to make small-business loans. Obama also asked Congress to increase the maximum amount of loans available from the Small Business Administration.
The president gave lawmakers ample reason to adopt these proposals when he reminded an audience in Landover, Md., that in the past 15 years, small businesses have created 65 percent of the nation’s new jobs.
Obama said: “These companies are the engine of job growth in America. They fuel our prosperity. And that is why they must be at the forefront of our recovery.”
We couldn’t agree more.
As Congress considers the proposals, though, it should make sure the lending programs are as transparent as possible so the public can see evidence that small businesses are being helped.
The lack of transparency is one of the reasons many Americans questioned the bailouts of big banks. Under the Troubled Asset Relief Program, created during the Bush administration, those banks were not required to disclose how they used the bailout money.
Community banks should be more than willing to participate because their future relies heavily on the success of surrounding small businesses and the strength of their cities’ economies. As those businesses secure loans, they should be able to regain their footing, enabling Las Vegas and other struggling cities to fully participate in the nation’s economic recovery.
9 month after Obama's failed Jobless stimulus Obama has discovered that they forgot small business. The engine of our economy jobs.
The facts continue to come in that the Bush era financial system intervention rather than the Obama era jobless stimulus bill has brought us out of the recession.
We need an honest assessment of what worked per Nancy Pelosi's test that the stimulus bill be timely, targeted and temporary.
Why -- because Obama wants to spend another $200 billion doing what has already failed to produce jobs.
If Obama wants to increase jobs he just has to reduce the 35% business tax.
What is known is the trajectory of the rate of job losses had already changed from a peak in December 2008 -January 2009 -- before Obama took office and passed the stimulus. Every month since January 2009 the job losses have been less and the economy GDP went positive in May of 2009. The only appropriate part about the stimulus was money to ameliorate the pain of unemployment like extended benefits as is done for every recession.
Vice President Joe Biden said that "everyone guessed wrong" then said they "misread how bad the economy was." That includes "spend and inflation as a cure" proponent Paul Krugman. To sell the Stimulus in January Obama said the FY-2009 deficit would be $1.9 trillion -- but it ended up at just $1.42 trillion so the economy did $400 billion better than Obama misread.
As the financial system intervention is unwound the stimulus must also be unwound to lessen the impact on the deficit, prevent runaway inflation, and avert a double dip recession.
Paul Krugman has come to tell us to not worry about our looming $9 trillion deficit. It only impact is political. Krugman is arguing that the debt to GDP ratio going from 30% to 70% is okay.
Krugman says "We're looking at a rise in the debt/G.D.P. ratio of about 40 percentage points. The real interest on that additional debt (you want to subtract off inflation) will probably be around 1 percent of G.D.P., or 5 percent of federal revenue. That doesn't sound like an overwhelming burden."
The slippery slope here is Obama depends on raging high inflation to diminish the original borrowed value and rely on the faith of the lenders like China that they have made a good investment.