Legislation (H.R. 2614) combining a variety of provisions—including tax-cuts, Medicare “givebacks,” a minimum wage increase, pension reforms, and reauthorization of a Small Business Administration loan program—was approved, 237-174, by the House on October 26. The Senate began debate on the measure on October 27, but no vote was expected by the end of the day. The President has indicated that he intends to veto the measure if it reaches his desk in its current form.
It is estimated the bill would reduce federal revenues by $245 billion over ten years. It contains a range of provisions, many of which would affect women and families. One such section pertains to Medicare “givebacks.” Several other aspects of the bill are detailed below.
Tax and Minimum Wage Provisions
The measure would increase the hourly minimum wage by $1 over two years, raising it to $6.15. Other tax-related provisions included in the bill would:
School Construction Bonds
The package includes a bill (H.R. 4094) sponsored by Reps. Nancy Johnson (R-CT) and Charles Rangel (D-NY), to provide tax credits for those who invest in bonds used to finance the construction and renovation of public schools.
The package includes a bill (H.R. 1102) aimed at helping to expand workers’ retirement savings. The measure was originally approved by the House in July; it was then amended and approved by the Senate Finance Committee on September 7 (see The Source, 7/21/00, p. 3; 9/8/00, p. 2). The bill contains a section focused specifically on helping women to increase their retirement savings. Some of those provisions would:
The legislation emphasizes portability, with several provisions designed to help workers carry over pension savings when they change jobs. In addition, the bills would increase the annual amount that an employer can contribute to an employee’s pension plan.
The measure would allow larger annual contributions to Individual Retirement Accounts. The current limit of $2,000 would be increased to $5,000. For individuals aged 50 and older, the limit would be $7,500. It also would institute a non-refundable tax credit to encourage retirement savings for low-income individuals and families. For individuals earning less than $25,000 annually and families earning less than $50,000 annually, a retirement tax credit of $2,000 would be available.
SBA Loan Program
The vehicle for the package was H.R. 2614, a bill designed to reauthorize and revamp the Small Business Administration’s 504 lending program, also known as the Certified Development Company program. The SBA’s 504 and 7(a) lending programs are designed to assist entrepreneurs, including women, who have difficulty acquiring loans from traditional financial institutions.
H.R. 2614 pertains to the 504 program, which most often supplies loans for business expansion and the purchase of new equipment. While the 7(a) lending program authorizes the SBA to guarantee loans in full, the 504 program involves a combination of public and private funding. Typically, 10 percent is supplied by the entrepreneur, 50 percent is supplied by a commercial loan, and 40 percent is supplied by an SBA-guaranteed loan. The bill would increase the maximum SBA guarantee for a regular 504 loan from $750,000 to $1 million.
Another provision in the bill would make women-owned businesses eligible for a special category of public policy 504 loans. Already, additional SBA-guaranteed funding is available for businesses aligned with seven public policy goals: business district revitalization, expansion of exports, expansion of minority business development, rural development, enhanced economic competition, changes necessitated by federal budget cutbacks, and business restructuring from federally-mandated standards to protect the environment or employee health and safety. In addition to including women-owned businesses in the program, H.R. 2614 would expand the maximum SBA-guarantee for a public policy 504 loan from $1 million to $1.3 million.
The House originally approved the measure by voice vote on August 2, 1999 (see The Source, 8/6/00, p. 3). When the Senate gave its unanimous consent approval on June 14, 2000, the measure was amended to make permanent the 504 program, which also is known as the Certified Development Company (CDC) program. The amendment also would extend operational fees for participating borrowers and financial institutions through FY2003. Under the amendment, overall authorization for the 504 program would be $4 billion for FY2001, $5 billion for FY2002, and $6 billion for FY2003.