Obama’s JOBS Act Nod Traps Democrats
Senators Forced to Move Legislation Quickly
President Barack Obama’s decision to back House Majority Leader Eric Cantor’s JOBS Act early on has tied the hands of Senate Democrats, who will mount a last-ditch effort today to replace the bill with their own alternative.
Senate Majority Leader Harry Reid (D-Nev.) on Monday pointed to Obama’s support for the Virginia Republican’s Jumpstart Our Business Startups Act and indicated the Senate will pass the legislation this week regardless of whether the Democratic amendment has the votes.
“This bill passed the House on a bipartisan vote and has President Obama’s support,” Reid said.
“We could make this legislation even better by passing the modest consumer protections included in the substitute amendment we’ll consider tomorrow,” he added. “But Members of both parties agree we should pass it quickly. We will finish work on this legislation this week.”
Obama’s decision to back the Cantor bill made a certain amount of political sense, even though it boxed in Senate Democrats. If he were to oppose a bill consisting of bipartisan proposals, including some that he previously backed and that previously passed the House with bipartisan margins, he could look like the obstructionist. That would be problematic given that he’s running in part against Republican obstruction of his agenda.
But by backing the bill early on, Senate Democrats have little choice but to send it on its way to the White House quickly, even though many of them believe it opens too large a loophole for companies to avoid regulations intended to protect investors.
Reid moved to limit debate on amendments last week to the chagrin of rank-and-file Democrats who wanted more opportunities to tweak the bill.
Just two amendments to the House bill will be offered — the Democratic substitute that narrows the scope of the bill and a bipartisan amendment that would reauthorize the Export-Import Bank, which is backed by big business groups, Senate Banking ranking member Richard Shelby (R-Ala.) and Obama. Both amendments require 60 votes.
On Monday, Reid talked only in passing about investor protections, making his biggest plea for the Export-Import Bank amendment.
“Democrats brought this measure to the floor in an effort to find more common ground,” he said. “And passing it together would be another accomplishment both parties could be proud of.”
The White House, for its part, is trying to thread the needle and support both sides.
White House spokesman Amy Brundage reiterated Monday that Obama “strongly supports the efforts of Senate Democrats to improve on the House-passed bill, particularly by ensuring that there are strong safeguards in place to protect investors and prevent abuse” as well as adding the Export-Import Bank language. And the White House in its original endorsement of the bill talked about adding investor protections.
But the White House has not issued a veto threat, and without one, Democrats have little negotiating leverage.
Indeed, Cantor used the White House’s support for his bill as a cudgel against Senate Democrats on Monday, ignoring the White House’s push for changes.
“Over the past week, Leader Reid and Senate Democrats have worked overtime to find excuses not to pass the bipartisan JOBS Act despite support of 390 members in the House, the President and job creators across the country,” he said in a statement.
He warned Democrats not to amend the package.
“Rather than making 11th hour claims about phantom investor protection issues or adding partisan amendments like the [Export-Import] Bank reauthorization that threaten to derail the bill, the Senate should pass the JOBS Act and get it to the President’s desk immediately,” he said.
House Republicans contend that while the bill will exempt startup companies from some regulations, others will continue to exist that will adequately protect investors, with the House Financial Services Committee releasing a fact sheet Monday listing provisions unaffected by the law.
But a number of Senate Democrats said last week that they feared a rush to legislate would expose investors to fraud and cited concerns from consumer groups, AARP and the Securities and Exchange Commission.
Majority Whip Dick Durbin (D-Ill.) was perhaps the harshest critic on the Senate floor, complaining that companies with up to $1 billion in revenue would be exempt from many filing requirements — representing the majority of IPOs.
“Many people, including myself, who years ago were lured into the repeal of Glass-Steagall because of the notion of letting 1,000 flowers bloom, realized what happened,” he said, referring to New Deal legislation that prohibited banks from selling securities. “When it was all over, there were no flowers. Unfortunately, what was left was the rubble of the recent recession. It is time for us to vow not to make that mistake again.”
The Export-Import Bank amendment presents Republicans with a dilemma. The amendment has bipartisan backing — despite Cantor’s claim that it is “partisan” — and has strong support from the business community. But it is opposed by the conservative Club for Growth, which considers it meddling in the market.
The bank is designed to facilitate the purchase of U.S. exports to international buyers. The bank’s authorization expires at the end of May, but it will hit its loan limit in about two weeks.
Reid said that the bank last year “helped 3,600 private companies add almost 300,000 jobs in more than 2,000 communities” and that reauthorizing it would cut the deficit by $1 billion.
Humberto Sanchez contributed to this report.