Democrats battle anti-business charges

Democrats battle anti-business charges

Democrats are pushing back against charges that they are anti-business by waging a coordinated effort to improve the flow of credit to small businesses.

Senate Democrats this week will advance small business lending legislation that would set up a $30 billion fund designed to increase the flow of credit to small businesses.

Meanwhile, Federal Reserve Chairman Ben Bernanke spoke Monday morning to a conference of small business and banking leaders to highlight what President Barack ObamaBarack Hussein ObamaOvernight Energy: Dems ask Pruitt to justify first-class travel | Obama EPA chief says reg rollback won't stand | Ex-adviser expects Trump to eventually rejoin Paris accord Overnight Regulation: Trump to take steps to ban bump stocks | Trump eases rules on insurance sold outside of ObamaCare | FCC to officially rescind net neutrality Thursday | Obama EPA chief: Reg rollback won't stand Ex-US ambassador: Mueller is the one who is tough on Russia MORE has done to help the private sector.

 The White House and Democrats in Congress have come under growing criticism that they have pushed policies hostile to business.

House Republican Leader John BoehnerJohn Andrew BoehnerRestoring fiscal sanity requires bipartisan courage GOP congressman slams primary rival for Ryan donations Speculation swirls about Kevin McCarthy’s future MORE (Ohio) issued a statement Monday claiming that Obama’s policies “are hurting rather than helping by transferring economic power to the federal government at the expense of citizens and entrepreneurs.”

BoehnerJohn Andrew BoehnerRestoring fiscal sanity requires bipartisan courage GOP congressman slams primary rival for Ryan donations Speculation swirls about Kevin McCarthy’s future MORE claims that employers are “frozen” in a state of uncertainty over the prospect of tax increases and greater regulation. He cited healthcare reform, student lending reform and Wall Street reform as examples of legislative pushes that have hurt businesses.

Rep. Paul RyanPaul Davis RyanRepublicans are avoiding gun talks as election looms The Hill's 12:30 Report Flake to try to force vote on DACA stopgap plan MORE (Wis.), ranking Republican on the House Budget Committee, argued that the Treasury Department and Federal Reserve have pulled capital out of the private sector by encouraging banks to buy government bonds to heal their balance sheets.

“When the government floods the credit market with safer government bonds, it takes money away from the private sector,” Ryan said in an interview.

Executives such as Verizon CEO Ivan Seidenberg and General Electric CEO Jeffrey Immelt have criticized the Obama administration as anti-business.

When pressed on those criticisms during a television interview Sunday, Senior White House political adviser David Axelrod noted that corporate profits have risen 65 percent over the past two years.

“We’re working closely with business and we want to continue to work closely with business, but working closely doesn’t mean that we simply turn away from the kinds of corrective measures that are necessary to prevent that kind of disaster from happening again,” Axelrod said on ABC News, referring to the 2008 financial collapse.

The small business conference organized by the Federal Reserve on Monday was the capstone to a series of 40 meetings the Fed has held around the country to hear the concerns of businesses, trade associations and community banks.

Bernanke highlighted the threat that limited credit availability poses to small businesses and the economic recovery.

“The formation and growth of small businesses depends critically on access to credit,” Bernanke said.

He noted that small businesses account for 60 percent of gross job creation and that start-up businesses less than two years old create about one quarter of new jobs.

“Unfortunately, those businesses report that credit conditions remain very difficult,” Bernanke said. “For example, the net percentage of survey respondents telling the National Federation of Independent Business that credit conditions have tightened over the prior three months has remained extremely elevated by historical standards.”

Bernanke said he has heard complaints that federal banking regulators have made it more difficult to approve small business loans. He pledged that steps were being taken to address the problem.

Senate Democrats are pushing legislation this week that would give community banks access to $30 billion in federal funds at low interest rates. They estimate this could generate as much as $300 billion in additional lending to small businesses.

“The feedback we’re getting on the pieces of this bill having to do with lending and freeing up credit has been good,” said Richard Carbo, spokesman for the Senate Small Business Committee.

Paul Merski, chief economist at the Independent Community Bankers of America, said banks that would have access to this fund are “prolific small-business lenders.”

Republicans argue that the failure of Democrats to propose a long-term solution to the federal deficit has also cast a pall over credit markets. Private lenders have become more reluctant to lend at a time when federal deficits raise the specter of inflation. The dollars they loan out now will not be worth as much five, 10 and 15 years in the future if Treasury prints more money to help pay the national debt.

Ryan argues the Fed will likely have to mop up the trillions of dollars it has flooded into the market to prevent soaring inflation, which will clamp down on credit lines to the private sector in the long term.

 “I see tight credit for a long time,” Ryan said. “It’s hard to see the credit situation easing up any time soon.”

Republicans also argue that Wall Street reform legislation, which is expected to pass the Senate this month, will add to businesses’ credit problems.

 “It creates a new office to ban and lash in consumer credit products according to the whim of unelected regulators,” said Rep. Jeb Hensarling (R-Texas), a member of the House Financial Services Committee.

“Consumer credit rates could go up 1.6 percent.”

 Some economic experts, however, disagree with Republican claims that Democratic policies have stifled small business lending.

 “Banks are not willing to lend for the standard reason that the economy is weak and there are not a lot of good investment projects they want to finance,” said William Gale, a senior fellow in federal economic policy at the Brookings Institution. “The worries about future inflation are overstated, they’re not showing up in financial markets.”

 Merski of the Independent Community Bankers of America said many small businesses have had trouble getting loans because the weak economy has made them bigger risks.

 “A third of small business is backed up by real estate value,” he said. “If that’s used as your collateral for borrowing, it’s going to be a lot more difficult to get credit.”