Senate advances small-business lending bill, handing Democrats a victory

After months of wrangling, the Senate on Tuesday voted to advance a small-business bill that would create a $30-billion lending fund and offer other tax breaks that President Obama has championed to propel the sluggish economy to create jobs.

The 61-37 vote gives Democrats a legislative victory on the economic issues that are tops on voters’ minds heading into the midterm election, as polls show Republicans could take control of the House and possibly the Senate. A final vote is expected later this week.

“This is one of the most important things we’ve done here in recent months,” said Senate Majority Leader Harry Reid (D-Nev.). He said the bill would create thousands of jobs.

Obama increasingly stumped for the bill this summer, prodding Republicans to quit stalling the legislation as small businesses press for help to hire and expand.

Two Republicans, Sen. George LeMieux of Florida and Sen. George Voinovich of Ohio, voted with 57 Democrats and two independents to advance the bill.

The bill started as a popular bipartisan effort, but got tangled in election-year politics. Republicans filibustered in July, demanding the chance to offer more amendments. Democrats shelved the bill as the debate dragged on and other legislation took priority. Republicans also opposed the $30-billion small lending fund, which they compared to a miniature version of the federal bailout of banks under the Troubled Assets Relief Program.

Obama pledged to sign the bill swiftly, saying at a neighborhood talk on Monday that “right away I think a lot of small businesses around the country will feel more comfortable about hiring and making investments.”

The bill creates the lending fund to help smaller banks make loans to businesses, and also offers $12 billion in tax breaks to encourage investment, entrepreneurship and hiring. The cost of the bill is offset by closing tax loopholes and increasing tax reporting requirements and penalties.

Two amendments that would have undone a small-business reporting requirement under the new healthcare law that both parties acknowledge is onerous were defeated Tuesday.

If the Senate gives the bill final passage, the legislation would be sent to the House, which passed a smaller version of the small-business bill in summer.

lisa.mascaro@latimes.com