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A Possible Bailout For Small Business
July 17, 2009

Under pressure for not doing enough to fix the economy, the Obama administration is now considering allowing small businesses to access the government's $700 billion bailout kitty.

"This is just one idea among many that the administration is considering as part of our ongoing efforts to serve taxpayers by stabilizing the economy," says an administration official who spoke on condition of anonymity. "We are still in the early stages of discussion, and no decisions have been made on this matter."

Under the proposal, the administration would use money from the Trouble Asset Relief Program, or TARP, to expand a Small Business Administration program for small-business loans. The discussions were first reported by the Washington Post Friday evening. TARP funds have already been redirected from financial institutions to automakers--General Motors ( GMGMQ.PK - news - people ) and Chrysler--and to American International Group ( AIG - news - people ) and other smaller life insurance companies.

Given its timing, the news appears to be a trial balloon floated by the administration as it struggles to ameliorate the country's economic slump. Throughout the week, Republicans have lambasted Democrats for the economy's continued weakness. Unemployment is now at 9.5%. Less than $100 billion of the $787 billion stimulus legislation passed in February has actually been spent. All week, Washington has been abuzz with discussion about whether a second stimulus is needed.

"Obviously, we shouldn't be thinking about spending more in the same way to try and reverse this job loss," House Whip Eric Cantor, R-Va., said of the stimulus package on Fox News on Friday. "We've got to get smart about this. We've got to go about working together to point back toward the small businesses that are the true job generators and creators in this economy."

Moreover, for the first time, President Obama--out of the country on official travel--is encountering public frustration with his administration's policies. According to Rasmussen Reports, 37% of Americans strongly disapprove of the president's performance, compared with 30% who strongly approve. On Capitol Hill, the president's key agenda items--health care, energy and financial regulatory reform--are also encountering stiff opposition.