There’s no question that the economy needs more fiscal or monetary stimulus – Joe Stiglitz said as much today, in no uncertain terms. “It needs to be better designed. It needs to be focused more on returns on investment, education, infrastructure, technology. And if you do those kinds of high- powered investments, the long-term national debt will be actually lower and the growth in the future will be higher,” the economist said on Bloomberg today.
But we know that’s not going to happen. Outside of the state fiscal aid bill, you won’t see many more stimulus measures. And even that cuts some renewable energy loan funds (which Harry Reid hopes to cover with other money from the Energy Department budget) to pay for the package.
So really, the only bill on the horizon that might have a positive economic impact is the small business loan bill. This would provide a bunch of tax breaks for small business to encourage hiring, and would authorize a $30 billion dollar lending fund that could leverage up to $300 billion in private money. While lack of credit cannot be seen as the primary reason for the lack of job creation in the small business sector, with more weight given to lack of sales, small business have had a line of credit problem that’s hurting their cash flow.
Yesterday, the Senate adjourned for a month, but Reid filed for cloture on the bill, and Senators hope to build support over the recess.
Just before adjourning at 10:02 p.m., Reid filed a series of cloture motions to set up votes on the small business bill on Tuesday, Sept. 14. Reid withdrew all pending amendments, reoffered a substitute and moved to block any further amendments.
Reid set up procedural votes on an amendment by Sen. Mike Johanns (R-Neb.) that would loosen a paperwork requirement for businesses, plus another vote on a similar amendment by Sen. Bill Nelson (D-Fla.), and finally a procedural vote on the bill itself.
The votes would start at 11 a.m. on Sept. 14, on the Johanns amendment.
The paperwork requirement was a key element of what the Republicans sought on the bill. Democrats allowed it with a side-by-side amendment. Johanns wants to eliminate 1099 requirements for all vendors from whom businesses buy more than $600 in goods in a year. Bill Nelson’s side-by-side would raise the threshold to $5,000. There are implications in lost revenue for losing the paperwork requirements, and Johanns would solve that by basically raiding money from the health care law, while Nelson’s side-by-side would be paid for with fees on the oil industry. David Rogers has more.
It’s unclear whether either have the votes to pass, and whether this will satisfy the Republicans like George Lemieux (R-FL), who support the bill, to offer cloture.
Basically, this is all that you’ll see on stimulus between now and the elections, and it’s not really stimulus in the sense of new spending that can increase aggregate demand. Prospects look dim on that front.