In a Brave New World:
Washington - After weeks of tough negotiations on Capitol Hill, Senate Democrats have finally reached agreement on a new jobs bill. The tripartisan measure seeks to satisfy constituency groups disenchanted over the recent health care debate while simultaneously addressing the nation's top domestic priority.
Under the terms of the plan, a public jobs program and a proposed extension of credit to small businesses will be removed from the legislation. In a bid to win backing from Senate liberals, the government will raise taxes on Social Security and Medicare benefits. This money will be invested in the nation's largest financial institutions.
In exchange for this aid, amounting to $899.9 billion over 10 years, participating banks must agree to make loans available to 25-35 year old entrepreneurs. This "Cash for Kids" program would be overseen by the Office of Management and Budget, which has had great success in other budgetary programs in the past.
It is hoped that "Kids" will use the money to create jobs. In the past, this group has had trouble getting access to capital and developing sound business plans. But some now argue they could be the key to future economic growth. Unemployment remains in double digits for the tenth straight year.
Asked for comment on the proposal, Senate Majority Leader Chuck Schumer described the bill as a pragmatic measure. "While we failed in our efforts to help the great mass of existing small businesses and have no real program to help non-Kids gain access to capital, these other groups are not as desperate for government action. Older Americans are much healthier financially: they're in less need of this bold new initiative."
The deal is widely seen as necessary to win the support of Senate centrists, concerned that too much capital for small businesses would threaten existing multinational corporations. These Senators claimed to be concerned about growing budget deficits, although they did win inclusion of tax cuts for their home states as the price of their support.
While details are still unfolding, some Senate aides say that OMB will draft guidelines and strongly suggest how program funds may be used. And as a concession to Senate liberals, if no banks agree to take the money, the OMB is authorized to establish its own bank with super low interest rates and free checking. It is not widely expected the banks will turn down the free money, however.
Customers with existing banking relationships will face a new tax for depositing or borrowing more than $25,000 a year. The Treasury Department will also establish a voluntary program that will provide a "seal of approval" to banks that implement generous lending standards.