On a conference call about the small business bill today, Senators Jack Reed (D-RI) and Jeff Merkley (D-OR) both strongly supported the Bush tax cut plan put forward by the President, and rejected any proposal for extending the tax cuts at the high end. They also said that the votes look to be there for the small business package when it gets a vote next week, though anything else in the September work period would be very difficult.

Sen. Reed said that the small business bill, which would provide some tax breaks for small businesses (like a write-off for capital gains and a “carryback” provision to move forward deductions on losses), along with a $30 fund to recapitalize community banks to lend to small business, would get a cloture vote on Tuesday. Both Reed and Merkley expressed optimism on the vote. Merkley stressed its importance. “I’ve had 36 town hall meetings this month, and in every one, I hear stories of businesses who have had credit lines cut, because of their traditional banking partner being constrained by leverage limitations,” he said. (UPDATE: Merkley’s office writes to clarify that he’s had 36 meeting this year, which he wrapped up this month.) He added that this lending fund, which got 60 votes in the Senate as a stand-alone measure, would “ship $30 billion from Wall Street to Main Street” and use the expertise of community banks to judge the best businesses in which to invest.

The problem remains aggregate demand more than a credit crunch, but for business that have seen their credit line reduced and struggle to make payroll or expand, this will help on the margins. You do have to look at the cumulative effect of these bills, too: between the HIRE Act, the extension of unemployment, the FMAP/education aid for states, the small business bill and any of these potential Obama plans on infrastructure and tax changes, you are looking at around $230 billion dollars in ongoing stimulus. That’s probably the difference between positive and negative growth right now, as well as positive and negative private sector hiring.

But no reporters on the call wanted to talk about the small business bill, but instead the rest of the work period, and the Obama Administration proposals from yesterday’s Cleveland speech. And here, despite wavering elsewhere in the caucus on the Bush tax cuts, Reed and Merkley would have none of it.

“We do have unity in the caucus,” Reed said regarding the tax issue. “I think the President’s right. We should continue to provide relief for those under $250,000. But we have to begin to recognize the deficit and take steps.” He said that the Republicans were saying that Congress must pay for every initiative except the Bush tax cuts, and that they won’t let most Americans get a tax cut unless the wealthiest do. “I think that logic will fail.”

Reed rejected the idea of extending the tax cuts temporarily, saying the resources would be better spent “reducing payroll taxes,” which was an interesting entry into the debate. Essentially, Reed would rather give a payroll tax holiday than lower taxes for the rich, which is a progressive taxation decision. “There’s some discussion about temporarily extending the tax cuts. Implicit in that discussion is that we will one day end these provisions. And I don’t hear anyone on the other side talking about ending the tax cuts,” Reed added, pointing to Republican dishonesty on the issue.

Merkley was even more honest. “Those who are affluent will still benefit from extending the other tax cuts on the marginal brackets at the lower end. In fact, they will get a larger tax reduction than from folks who make less.” Merkley seemed to realize the leverage in the debate; if nothing gets passed, everyone gets a tax increase. “It’s going to be very hard for them to deny a $7,000 tax cut for the wealthy, in addition to what it does for others. It’s a tough argument for them to make.”

Reed stressed that getting anything to pass requires Republican votes, and while they seem to have 60 secured for the small business bill, nothing else is assured. “After (the small business bill) we’ll have a debate about the Bush tax plans,” he said, “but because of the time constraints, and the campaign season, the ability to do anything major beyond that is very limited.” That would include the Obama proposals on business tax breaks and infrastructure, although Reed in particular expressed support for the latter, saying that there are bridges and highways that would have to be shut down in Rhode Island unless they get fixed, and this kind of investment is crucial to the long-term competitiveness of the economy.