Tuesday, September 21, 2010
The Small Beer Bill - WSJ.com
When politicians are talking, keep your eyes on both their hands...
The Wall Street Journal has this opinion and more:
"The White House is right that a capital gains tax cut will help small businesses raise capital. So why raise that tax rate to 20% from 15% on January 1 for everyone else? This bill isn't even a net business tax cut, because the temporary small business cuts are offset by permanent corporate tax increases. Mr. Obama is promising $12 billion of tax cuts with his left hand while proposing to collect about $300 billion in tax increases from this bill and others with his right.
More troubling is the bill's $30 billion Small Business Lending Fund. We've called this Son of TARP because it authorizes Treasury to purchase preferred stock in banks with less than $10 billion in assets if they agree to increase their lending to small businesses. This empowers Uncle Sam to take equity stakes in community banks and savings and loans so long as they lend as Congress sees fit.
The bill encourages risky loans by applying a sliding-scale interest rate on Uncle Sam's preferred stock. Banks that issue fewer new loans will pay as much as 5% interest, while aggressive lenders will pay as little as 1%."
