[Congressional Record (Bound Edition), Volume 156 (2010), Part 11]
[Senate]
[Pages 15258-15261]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    SMALL BUSINESS LENDING FUND ACT

  Ms. LANDRIEU. Mr. President, I rise to speak on an issue that is 
still pending before this body. Unfortunately, it looks as though we 
will not be able to wrap this up in the next few hours. It looks 
encouraging that we may be able to take it up immediately when we 
return in September.
  Before I speak about that, I compliment Senators Lincoln, Casey, 
Harkin, and others who have come to the floor in the last few hours but 
have been working for months, if not years, on the child nutrition 
bill. It is quite extraordinary that this Chamber at this late hour, 
because of the work of Senators Lincoln, Harkin, Casey, and others, has 
decided by unanimous consent to pass a significant and major piece of 
legislation the Senator from Pennsylvania beautifully described. I 
compliment all of them for their work.
  I wish we had been able to do the same thing for the small business 
bill we have been fighting for, the Small Business Job Creation Act of 
2010. We can't seem to get to a point where we can get unanimous 
consent. So we will have to fight this out a step at a time. We had 
some significant votes this last week by including a Republican 
amendment, including in the small business bill a $30 billion lending 
program. We have potentially other aspects to strengthen it. But the 
bill is in extremely good shape.
  I wish to put this up for a visual. I know people will find it hard 
to believe we could have literally over 100 organizations, 
extraordinarily strong and powerful bipartisan, conservative, moderate 
and liberal organizations, supporting small business. It may seem 
surprising that with all this support, we couldn't pass the bill before 
we leave. I wish to call out again just a few: The American Hotel and 
Lodging Association, the American International Automobile Dealers 
Association, the Associated Builders and Contractors of California, the 
California Bankers Association, Engineering Contractors, Hispanic 
Bankers of Texas, National Association of Self-Employed, National 
Restaurant Association, Recreation Vehicle Industry Association, the 
U.S. Hispanic Chamber of Commerce. I just listed one-half dozen or a 
dozen. Members can see we have hundreds of extraordinary organizations 
that have stepped up to say what I have been saying, what the Senator 
from Washington, Ms. Cantwell, has been saying, what the senior Senator 
from Washington, Senator Murray, and Senators Boxer and Merkley are 
saying: We are not going to end this recession until we find a way to 
get capital and cash in the hands of small business. That will lead the 
way out of this recession. It is not going to be led by Wall Street. It 
is going to be led by Main Street.
  I would like to put up our Main Street sign. Main Street is going to 
lead the way. There was a beautiful article written by Harold Meyerson. 
It was dated August 4 in the Washington Post. The article is entitled 
``Jobs in the Cards?'' It reads, in part:

       All things considered, American big business is doing just 
     fine, thank you. Profits, productivity and exports are up. 
     New hires, rehires and wage increases, as I have written, are 
     nowhere to be seen. They're no longer part of the U.S. 
     corporate business plan, in which higher profits are premised 
     on having fewer employees. Sell abroad, cut costs at home--
     the global marketplace that American business has created is 
     paying off big-time.
       Not so for American small business, which inhabits those 
     less rarified realms of the economy in which depressed 
     domestic demand and bottled-up credit remain a mortal threat. 
     The great private-sector trickle-down machine has largely 
     stopped working for small business.

  He is right. If we don't get small business started up again and 
focus on them and help them, this recession will never come to an end. 
Maybe that is

[[Page 15259]]

what some people on the other side of the aisle want. Maybe they put 
politics before progress. But this is dangerous, it is wrong, and it is 
painful. We have to figure out a way.
  I ask unanimous consent to have the article from which I just quoted 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               [From the Washington Post, Aug. 4, 2010.]

                           Jobs in the Cards?

                          (By Harold Meyerson)

       All things considered, American big business is doing just 
     fine, thank you. Profits, productivity and exports are up. 
     New hires, rehires and wage increases, as I have written, are 
     nowhere to be seen. They're no longer part of the U.S. 
     corporate business plan, in which higher profits are premised 
     on having fewer employees. Sell abroad, cut costs at home--
     the global marketplace that American business has created is 
     paying off big-time.
       Not so for American small business, which inhabits those 
     less rarefied realms of the economy in which depressed 
     domestic demand and bottled-up credit remain a mortal threat. 
     The great private-sector trickle-down machine has largely 
     stopped working for small businesses. A May report from the 
     Congressional Oversight Panel on the TARP (chaired by 
     consumer advocate Elizabeth Warren) found that bank lending 
     to small businesses has plummeted, particularly among the big 
     banks that taxpayers helped bail out. The Wall Street banks' 
     lending portfolio declined 4 percent between 2008 and 2009, 
     the report concludes, but their lending to small business 
     declined 9 percent. Smaller banks--``strained by their 
     exposure to commercial real estate and other liabilities''--
     have similarly reduced their lending.
       As the corporate sector hums along without hiring, hope for 
     a recovery increasingly depends on boosting consumer demand 
     through public investment and jump-starting small-business 
     expansion through tax credits and a reopened lending window. 
     For the past half-year, the administration and congressional 
     Democrats have been unable to overcome Republican senators' 
     resistance to increasing public investment. Senate 
     Republicans have also blocked their efforts to cut taxes and 
     increase loans to small business--even though such policies 
     have long been GOP priorities and small business has long 
     been considered a key Republican constituency.
       Late last week, the Senate's 41 Republicans united to block 
     a bill that would have temporarily eliminated the capital 
     gains tax on small businesses that issue stock, increased the 
     tax deduction for start-ups, increased their depreciation 
     allowance, and established a $30 billion fund, offset by 
     budget cuts elsewhere, dedicated to small-business lending by 
     small banks. The bill was backed by generally pro-Republican 
     business lobbies; to add a further note of absurdity to the 
     GOP opposition, some of the bill was written by Republican 
     senators. The Republicans' ostensible reason for opposing 
     these motherhood-and-apple-pie provisions was that Democrats 
     were limiting the number of amendments they could bring up. 
     Their actual reason was to deny Democrats a legislative 
     victory on the kind of stimulus package that still commands 
     substantial public support and, just possibly, to forestall 
     any economic uptick before November.
       Republicans are certainly right that Democrats, for 
     political and economic reasons, are focusing more on helping 
     small business recover. A June survey from the firm of 
     Democratic pollster Stan Greenberg argued that ``Democrats 
     can win the economic debate by making small business the 
     center of their agenda.''
       But there's another way Democrats can assist small business 
     besides continuing to press for their small-business 
     stimulus. The president can choose a champion of small 
     business to direct the newly created Consumer Financial 
     Protection Agency. He can nominate Elizabeth Warren.
       To date, we have heard chiefly that the big banks look 
     askance, and then some, at the prospect of Warren heading the 
     agency. She is among the nation's leading critics of the 
     credit card rip-offs that big banks have long inflicted on 
     cardholders as a matter of policy. Precisely for this reason, 
     she stands out as a small-business hero, because in the 
     absence of bank lending, small businesses increasingly are 
     turning to credit cards as a source of funding or operating 
     revenue. Fully 83 percent of small businesses, the Federal 
     Reserve reported in May, use credit cards. Three-quarters of 
     small businesses that apply for business credit cards secure 
     them, according to a 2010 survey from the National Federation 
     of Independent Business, while just 39 percent of bank-loan 
     applicants obtain loans. A 2009 study from the National Small 
     Business Association concluded that 59 percent of small 
     businesses used cards to meet their capital needs.
       Bank loans to small businesses have been increasingly 
     supplanted by bank credit cards. And no one is more expert 
     that Warren on how banks exploit their cardholders. She is, 
     by common consent, one of the leading academic authorities on 
     the topic as well as a passionate advocate for getting 
     cardholders a fairer shake.
       Enemy of Wall Street? When necessary, absolutely. Friend of 
     Main Street? None better. If he nominates Warren and can get 
     her confirmed, President Obama will have found one more way 
     to aid American small business.

  Ms. LANDRIEU. The bill we have put forward, supported by hundreds of 
organizations, has a way forward.
  I wish to also include for the Record another editorial by Mr. 
Richard Neiman of the Wall Street Journal. I submit it again because it 
is so good. The Journal mistakenly editorialized against this bill, but 
there are people sending letters to the Wall Street Journal to take a 
second look. Richard Neiman is one of them.
  He writes:

       Unlike TARP, the SBLF would incentivize banks to loan by 
     lowering the dividend rate at which banks must repay the 
     government if the banks meet lending performance metrics. 
     Further, the SBLF removes the TARP stigma that discouraged 
     small banks from participating in government programs that 
     support lending. It is these banks that are the primary 
     source of credit for small businesses which lack the same 
     access to capital markets as large companies.
       The SBLF is not a sequel to TARP, but it can be a segue 
     toward a stronger future for our nation's small businesses 
     and their employees.

  I ask unanimous consent to have this article printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              [From the Wall Street Journal, Aug. 5, 2010]

          Small Business Lending Fund Will Help Recovery, Jobs

                          (By Richard Neiman)

       Your editorial, ``Son of TARP'' (July 30) is unfortunately 
     titled, and underestimates the potential of the proposed 
     Small Business Lending Fund (SBLF).
       Small business growth is the only way out of this 
     recession. Yet our entrepreneurs are not being provided the 
     credit they need, as the TARP Congressional Oversight Panel 
     often hears from small business owners. Our recent report on 
     the issue demonstrates that, during the crisis, lending to 
     small businesses fell by 9 percent at our Nation's largest 
     banks, and the bankruptcy of nonbank business lenders such as 
     the CIT Group has further limited credit options.
       The financial crisis and recession have created the lack of 
     demand for credit that your editorial points out, but it is 
     as important to point out the lack of supply. Small banks are 
     reluctant to take on more risk when small businesses' 
     customer base is weak. Breaking this stalemate requires old-
     fashioned underwriting to identify the good deals which are 
     still waiting to be made.
       The SBLF is intended to provide public-sector support to 
     bring credit- and lending-worthy parties back to the table. 
     Unlike TARP, the SBLF would incentivize banks to lend by 
     lowering the dividend rate at which banks must repay the 
     government if the banks meet lending performance metrics. 
     Further, the SBLF removes the TARP stigma that discouraged 
     small banks from participating in government programs that 
     support lending. It is these banks that are the primary 
     source of credit for small businesses which lack the same 
     access to capital markets as large companies.
       The SBLF is not a sequel to TARP, but it can be a segue 
     toward a stronger future for our nation's small businesses 
     and their employees.

  Ms. LANDRIEU. I also ask unanimous consent to have printed in the 
Record another very nice article that appeared in the Wall Street 
Journal by Ruth Simon, one of their reporters, who outlines a 
particular story about Pinnacle Bank, which is basically in support of 
our bill. This is a story about a bank in Florida. It will be in the 
Record for Members to read.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              [From the Wall Street Journal, Aug. 5, 2010]

            SBA Program Proves a Hit, But Now It Is in Limbo

                            (By Ruth Simon)

       Pinnacle Bank made just two loans through the Small 
     Business Administration in 2007 and 2008. So far this year, 
     the Orange City, Fla., bank's total is nine, to borrowers 
     from an auto dealer to a computer-equipment wholesaler to a 
     bakery.
       ``The SBA program is the only way we can continue to lend 
     right now,'' says David Bridgeman, president of Pinnacle, 
     which has two branches and assets of $213 million, including 
     about 600 loans. For many of the $3.4 million in loans 
     Pinnacle made through the SBA in 2010, the bank has to set 
     aside capital against only the 10% slice that isn't 
     guaranteed by the U.S. government.
       Across the nation, many banks have turned to the SBA's so-
     called 7(a) program to help unfreeze credit. Nearly 3,000 
     lenders

[[Page 15260]]

     have made 7(a) loans in the current fiscal year, up 21% from 
     2008.
       The 7(a) program, the SBA's largest loan program, is hardly 
     a cure for the credit shortage affecting many borrowers. The 
     agency is involved in less than 10% of all small-business 
     loans, and some banks won't participate because of red tape. 
     Lenders must follow the SBA's rules when making 7(a) loans, 
     which can be used for working capital, fixed assets and other 
     business expenses. The term of the loan can be as long as 25 
     years.
       Last year, Congress temporarily sweetened the 7(a) program 
     by increasing the SBA guarantee to 90% of any given loan from 
     as little as 75% previously. Lawmakers waived fees costing 
     borrowers as much as 3.5% of the loan amount, as well as 
     costs charged in a separate SBA program providing structured 
     financing for fixed assets.
       But the sweetened program is now in limbo, drawing 
     complaints from borrowers and lenders, as lawmakers haggle 
     over broader small-business legislation.
       Since the SBA program was sweetened, more than 1,300 
     lenders that hadn't made an SBA loan since at least 2007 have 
     barreled in, while existing participants like Pinnacle have 
     been pushing more borrowers through the agency's pipeline to 
     take advantage of better terms.
       About $16.2 billion in 7(a) loans have been made under the 
     more-attractive terms. By May, the program's loan volume had 
     returned to before-the-credit-crunch levels.
       ``The extra 15% of guarantee helped us stretch a little 
     more,'' says Vito Pantilione, president of Parke Bank, a unit 
     of Parke Bancorp Inc. The five-branch Sewell, N.J., bank 
     recently used the program to make loans to two printing 
     companies looking to adapt to electronic publishing.
       Since hiring a local banker with expertise in SBA loans in 
     August 2009, Bank of Holland, a Holland, Mich., unit of Lake 
     Michigan Financial Corp., has made more than two dozen loans 
     through the federal agency.
       ``We do not have capital issues, but it's very difficult to 
     find businesses that . . . have not lost money and suffered 
     some weakening of their balance sheet,'' says Garth Deur, 
     Bank of Holland's president.
       Sweetened government backing makes it easier for banks to 
     stomach the risks of lending to local businesses that hit 
     bumps when the economy slowed or to finance entrepreneurs 
     with a solid business plan but little track record, Mr. Deur 
     says.
       The SBA has repurchased 0.2% of the loans made with the 
     higher guarantees. That rate, which reflects defaults, is in 
     line with the program's historical levels.
       Congress extended the higher guarantees three times, but 
     the latest round of funding was exhausted in May, causing a 
     decline in SBA loan volume. A provision included in the 
     small-business job-creation bill now before the Senate would 
     resuscitate the 90% guarantee through Dec. 31 and allow the 
     SBA to increase the maximum loan amount to $5 million from $2 
     million. The bill already has passed the House, but the 
     Senate is bogged down by disputes over the broader bill.
       ``On the financing side we're stuck'' until Congress acts, 
     says Mark DeHaan, who is hoping to get a 7(a) loan for $1.6 
     million from the Bank of Holland to pay construction and 
     start-up costs for an educational child-care center in Grand 
     Rapids, Mich.
       Pinnacle largely avoided the worst sins committed by banks 
     throughout in Florida, such as lending on raw land being 
     purchased for housing developments. Still, Pinnacle had a net 
     loss of $1.8 million in 2009 as falling real-estate values 
     and rising unemployment forced the bank to boost loan-loss 
     reserves. Pinnacle has shed about a third of its troubled 
     loans but is looking for additional capital.
       Mr. Bridgeman, who started his banking career 28 years ago 
     as a teller in Kentucky and took over as Pinnacle's president 
     in 2003, says the bank decided to rev up its SBA lending 
     after a tough regulatory exam forced it to halt most 
     traditional lending in order to conserve capital.
       Pinnacle made 11 SBA loans for $3 million in 2009. The bank 
     has generated fee income by selling some of its SBA loans on 
     the secondary market.
       Car dealer J. Brendan Hurley was rejected by four other 
     banks before Pinnacle won approval in March for a $560,000 
     loan through the SBA to help him add Dodge cars to his 
     Chrysler franchise in DeLand, Fla. Since getting the loan, 
     Mr. Hurley has hired six new employees, and service volume 
     has doubled, he says.
       ``The fact that I had a commitment from Pinnacle sealed the 
     deal to get the Dodge franchise,'' he adds. Mr. Hurley is 
     seeking a second SBA loan from Pinnacle that would allow him 
     to build a new facility designed to meet Chrysler Group LLC's 
     requirements.

  Ms. LANDRIEU. Finally, I have another article written by Barbra 
Barrett of the Miami Herald. It reads:

       The U.S. Senate might leave town this week without 
     finishing up what Democrats had hoped would be a significant 
     political achievement . . .
       On its face, the legislation would pour billions into a 
     slate of programs to help small business obtain federal 
     microloans, government contracts and export assistance.

  I ask unanimous consent to have this article printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                 [From the Miami Herald, Aug. 5, 2010]

           Small Business Bill Appears to be Stuck in Senate

                          (By Barbra Barrett)

       Washington.--The U.S. Senate might leave town this week 
     without finishing up what Democrats had hoped would be a 
     significant political achievement before the August recess: 
     passing a multibillion-dollar swath of programs to help 
     struggling small businesses.
       On its face, the legislation would pour billions into a 
     slate of programs to help small business obtain federal 
     microloans, government contracts and export assistance. But 
     the bill also is part of the political wrangling that's going 
     on in Washington ahead of fall's midterm elections.
       Republican senators unanimously blocked the legislation a 
     week ago, preventing an up-or-down vote that could have given 
     the Democratic majority a political victory going into the 
     August recess. In response, President Barack Obama gave a 
     speech Monday urging the Senate to pass the bill.
       Senate Majority Leader Harry Reid has vowed to try again 
     this week, but it's uncertain whether the vote will happen.
       Observers say the legislation could have sweeping effects 
     in North Carolina.
       More than 85 percent of companies in the state have fewer 
     than 100 employees, said Scott Daugherty, N.C. small-business 
     commissioner and executive director of the Small Business and 
     Technology Center.
       ``We are substantially a state of small companies,'' he 
     said.
       The Economic Policy Institute recently calculated that 
     there are nearly five job seekers for every open job. The 
     unemployment rate in North Carolina remains above 10 percent.
       Failure to pass the bill would bring Democrats such as U.S. 
     Sen. Kay Hagan, who supports the act, back to their states 
     this weekend with one fewer success to show from their party.
       And it would give Republican U.S. Sen. Richard Burr, who is 
     running for reelection, another point of criticism against 
     the Democratic majority and the Obama administration.
       Burr declined to be interviewed for this story, but in a 
     prepared statement, his spokesman, David Ward, turned blame 
     for the struggle of small businesses on the Democrats.
       ``What (small businesses) really need is for Congress and 
     the administration to stop overburdening them with federal 
     mandates, excessive bureaucratic red tape, tax increases and 
     high energy costs,'' Ward said.
       Carter Wrenn, a Republican political consultant in Raleigh, 
     said Burr should easily be able to defend his ``no'' vote to 
     his Tar Heel constituents.
       ``He can explain that all the job programs haven't worked, 
     and he can explain that this is just one more,'' Wrenn said.
       He said the legislation is a spending bill dressed up as a 
     bailout.
       ``The truth is there's a trillion dollars now in the 
     banking industry now that's loanable that ain't being 
     loaned,'' Wrenn said. ``The real problem is everybody's so 
     uncertain about the future that no one wants to loan money.''
       Burr's no vote last week on the procedural question on the 
     bill drew immediate criticism from the Democratic Senatorial 
     Campaign Committee, which supports his challenger, Elaine 
     Marshall, in the upcoming Senate race.
       ``Again and again, Burr shows he's more loyal to Republican 
     leaders in Washington than to North Carolina small 
     businesses,'' Deirdre Murphy, DSCC spokeswoman, said in a 
     statement.
       And David Axelrod, Obama's senior adviser, said Tuesday 
     that GOP senators can expect to hear questions from 
     constituents about why the bill didn't move forward.
       ``Make no mistake: It will be an issue if politics intrudes 
     on what we should be doing,'' Axelrod said. ``I think if I 
     was in the position of Senator Burr, I'd rather go home and 
     say I did something constructive for the small businesses of 
     my state.''
       Much of the bill includes bipartisan proposals. Among them 
     are provisions that would increase amounts of Small Business 
     Administration loans, leverage $1 billion in export capital, 
     offer tax breaks for investments and startup costs, and give 
     temporary funding for rural exports.
       At the bill's center is a $30 billion program for community 
     banks to extend loans to small businesses. Burr's opposition 
     puts him at odds with the N.C. Bankers Association, which 
     supports the legislation.
       ``We think it is imperative,'' said Thad Woodard, the 
     group's president. ``Our folks have emphasized this as a 
     lubricant for small-business lending.''

  Ms. LANDRIEU. She is right. We have worked across the aisle as much 
as we could. But for some inexplicable reason, we can't seem to get 
unanimous consent to move such an important and extraordinary bill 
forward.

[[Page 15261]]

  The small business bill, the Main Street bill, has $12 billion in tax 
cuts for small business. Democrats are for tax cuts for small 
businesses that will help them to create the jobs we need. It is very 
targeted, very strategic, very thoughtful, very careful, and focused on 
reducing the deficit as well. All I hear from the other side is: Extend 
tax cuts permanently to everybody, to heck with the deficit. Who cares 
if we get to a balanced budget. We want to go back to the way things 
were.
  Democrats don't want to go back to the way things were. We want to go 
forward in a new way--with sound fiscal policy, balanced budgets, 
focused on Main Street, focused on small business. That is what 
Democrats and a handful of our Republican colleagues want--
unfortunately, not enough to get the job done. I do thank the great 
coalition of Senators who have helped.
  I also wish to submit an article by Jeff Cox, of CNBC, ``Four Things 
That Could Help Companies Start Hiring Again.'' He talks about positive 
momentum, loans to small business, and foreign demand.
  One of the things he mentions is:

       American consumers--even those with jobs and savings--are 
     focused on paying down debt and not greasing the economic 
     skids.
       As such, job markets may have to rely on low export prices 
     and consumers in robust developing economies to help generate 
     demand.

  He is correct. We are going to have to rely on markets outside the 
United States to sell our goods there and pull ourselves out of this 
recession. Do Members think small businesses get the least amount of 
help with exports? No, they don't. In our bill, we have extra support 
for the Department of Commerce and the Small Business Administration to 
help small businesses in Louisiana, in West Virginia, and around the 
world to reach out from our main streets to main streets in foreign 
countries to try to sell goods. It is going to be a Main Street-to-Main 
Street partnership around the world. With the Internet, this is 
possible. Before the Internet, it would be laughable to even suggest 
such a thing.
  But with the Internet, with the global air transportation, with 
expanded trucking and train transportation, we literally can move goods 
from Main Street right here. I would not be surprised if Georgetown 
Cupcake, which I spoke about yesterday, ships their cupcakes to India 
or China because they are really good cupcakes and maybe they do not 
make them as well there. That may be a little exaggeration, but I think 
it makes the point that if we can help our small businesses, there is 
no telling where these cupcakes--and in my State, it would be King 
Cakes--can go to support businesses on Main Street.
  So I ask unanimous consent that this article be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                      [From CNBC, August 5, 2010]

        Four Things That Could Help Companies Start Hiring Again

                             (By Jeff Cox)

       Job creation in 2010 has been slow but unsure, coming in a 
     weak trickle that has left investors unsatisfied and asking 
     what it will take to actually get employment moving in a 
     meaningful way.
       Thursday's weekly jobless claims report only reinforced 
     what Wall Street already knew--that despite halting signs of 
     improvement, 479,000 new filings for unemployment insurance 
     was hardly indicative of a robust recovery.
       As such, the stock market sold off and strategists and 
     analysts were left to ponder how long it will take for things 
     to turn accelerate off the weak growth that has taken place 
     this year.
       ``The question is when is that going to pick up enough to 
     meaningfully lower the unemployment rate and spark the 
     virtuous cycle of upward momentum, to get employment, wages 
     and aggregate demand higher,'' says Tom Higgins, chief 
     economist at Payden & Rygel in Los Angeles. ``That takes 
     time. If you look back at the last two cycles, employment 
     recoveries have been slow.''
       Economists and employment experts say four things will have 
     to happen to get jobs moving:


                          1. Positive Momentum

       Slowdowns are as much psychological phenomena as they are 
     economic, with confidence the key as much as any other 
     factor.
       With the news mostly bad about the economy, companies are 
     afraid to hire until a more positive tone comes about.
       ``Hiring has tended to be slow the last two cycles,'' 
     Higgins says. ``The trajectory coming out of this recession 
     is even shallower. That likely means the trajectory of hiring 
     is much shallower.''
       One of the main problems is an economic Catch-22: Companies 
     won't hire until they see more strength from consumers, and 
     consumer spending can't get stronger if people don't have 
     jobs. That means corporate America will have to rely on 
     ``small positives'' to keep building until confidence is 
     established, says Kurt Karl, chief US economist at Swiss Re 
     in New York.
       ``Businesses like to look at year-over-year growth in 
     sales, and that just isn't that strong yet. But it should be 
     better and better as we get deeper into the recovery,'' Karl 
     says. ``With these unemployment recoveries, you either get 
     one extreme or the other. You're either booming, or it's 
     crash and burn. But we're muddling in between.''


                       2. Loans to Small Business

       While the biggest companies sit on the lion's share of the 
     $1.8 trillion in cash on corporate balance sheets, small 
     businesses are groping for funds.
       That's not been made any easier by banks that have been 
     loathe to lend as they meet capital requirements laid out in 
     the new financial reform legislation. Without that access to 
     capital, small businesses will be unlikely to add new 
     employees.
       ``We need small businesses, which generate 60 percent of 
     the jobs, to get more access to lending, to capital, so 
     people can take risks,'' says John Challenger, CEO at job 
     outplacement firm Challenger, Gary & Christmas. 
     ``Entrepreneurs rely on savings, but those savings have been 
     depleted.''
       The ability to invest in companies and develop products 
     will help spur the demand needed to create jobs, Challenger 
     says.
       Small businesses in the recessionary environment ``don't 
     have access to the savings they might normally have. On the 
     front end, with small businesses not there to pick up the 
     slack, that's a very important hindrance to getting this 
     economic engine going,'' he says.


                           3. Foreign Demand

       American consumers--even those with jobs and savings--are 
     focused on paying down debt and not greasing the economic 
     skids.
       As such, the jobs market may have to rely on low export 
     prices and consumers in robust developing economies to help 
     generate demand.
       ``One thing we do know is exports are strong. Overseas 
     economies are doing quite well,'' says Brian Gendreau, market 
     strategist with Financial Network Investment, based in El 
     Segundo, Calif. ``For large-cap stocks, more and more 
     revenues are going to come from abroad. That's where we're 
     going to get the growth.''
       Of 250 companies in the Standard & Poor's 500, 46.6 percent 
     of all sales came outside the US in 2009, actually a slight 
     decrease from the previous year, according to S&P.
       But Gendreau sees capital expenditures increasing in a way 
     that seems to anticipate more spending coming soon.
       ``Companies seem to be spending a lot of money in 
     anticipation of demand that doesn't look obvious it will show 
     up,'' he says.


                          4. Capital Spending

       Indeed, one of the main precursors seen for employment 
     growth is capital spending by companies on plants and 
     equipment.
       In fact, Deutsche Bank analysts say cap-ex spending this 
     year is robust--growing 20 percent over the previous 
     quarter--and the trend traditionally leads the jobs market by 
     a full quarter. The movement in cap-ex, says Deutsche 
     economist Joseph A. LaVorgna, suggest a strong jobs-creation 
     move in the third quarter.
       ``Taken literally (the comparison between cap-ex and jobs) 
     implies we will see several million jobs created over the 
     next few quarters,'' LaVorgna said in a note to clients. 
     ``While we are not so bold to forecast such sizeable job 
     gains, we wonder whether there is some upside risk to our 
     slightly above consensus forecast for July private 
     payrolls.''
       Deutsche is projecting Friday's nonfarm payrolls to show 
     job gains of 110,000 in July, compared to the consensus of 
     90,000.
       That would be some indication that Wall Street is putting 
     cash to work.
       ``We all know companies are sitting on mounds and mounds of 
     cash, possibly record amounts of cash,'' Gendreau says. ``The 
     question is, when are they going to start putting it to 
     work?''

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