Reid tells Nevadans stimulus plan will aid economy - Business

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Feb. 18, 2009
Copyright © Las Vegas Review-Journal

Reid tells Nevadans stimulus plan will aid economy

Senator says 'This is not going to be a Great Depression'

By JOHN G. EDWARDS
LAS VEGAS REVIEW-JOURNAL

Harry Reid
The Senate majority leader said President Obama will announce a foreclosure plan today

Senate Majority Leader Harry Reid, D-Nev., who helped persuade Congress to pass the $787 billion stimulus package, assured attendees of a Nevada State Bank-sponsored conference Tuesday that the program will help lift the country out of its economic malaise.

"This is not going to be a Great Depression," Reid told 600 attendees of the bank's Opening Doors 2009 conference at Mandalay Bay. "This is a recession we're going to work our way out of. I think the economy is going to get better."

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"(President) Obama is betting on the economy getting better. Some of the Republicans are betting on the economy getting worse. Republican governors all over America are pulling for this legislation."

Nevada's senior senator also said that Obama is going to announce a $50 billion program today to help alleviate the home foreclosure debacle. He did not disclose any details of the program.

However, he said the plan will be particularly important in Nevada, where one out of 75 homes is in foreclosure, about twice the national rate.

Reid outlined for the gathering highlights of the stimulus legislation, which he predicted will increase jobs and boost small businesses.

One provision of the bill that Obama signed into law Tuesday allows businesses to cancel debts without incurring income taxes on any money that is not repaid to a borrower, he said.

Another gives first-time home buyers an $8,000 tax credit that can be kept if the buyer doesn't sell the home within three years. "That's something that's going to stimulate the purchase of homes," Reid said.

In a Feb. 9 analysis in the journal Tax Notes, however, Martin Sullivan said he doubted the Republican-backed provision would make a "significant dent in the credit market crisis." Instead, he said, the provision creates an incentive for lenders to foreclose on homes because lenders may be able to get a higher price by selling the house.

The senator said the stimulus bill includes another provision designed to jump-start the renewable energy industry, including solar power developers.

Congress previously granted the solar energy industry a 30 percent tax credit, but that measure lost its potency when the economy continued to collapse and few businesses had income to shelter from taxes. The stimulus bill allows developers to get grants for 30 percent of their investments even if they have no profits to create tax liabilities.

The legislation also includes a streamlined loan guarantee program for renewable energy and an investment tax credit of 30 percent for renewable power equipment manufacturers.

Reid said the stimulus bill includes $1 billion for small businesses, and John Scott, Nevada district director of the Small Business Administration, explained several changes for SBA loans.

Fees for SBA loans will be reduced or eliminated, Scott said. He said he is waiting for details on the size of the cuts as officials write regulations for the SBA provisions.

The SBA loan guaranty for 7(a) loans, which are the most popular SBA loan product, will be increased up to 90 percent of the loan amount from 75 percent to 85 percent currently. The government expects the higher guaranty will create an incentive for banks to make SBA loans and third-party investors to buy SBA loans from banks, Scott said.

Scott said he hopes that the new provisions generate more SBA loans. The total for SBA loans in Nevada declined from $277 million in 2007 to $209 million last year. The number of SBA loans dropped to 758 from 1,200 in 2007.

The SBA official attributed the decline to reduced demand for business loans, tighter lending standards at banks and the failure of some financial institutions. Silver State Bank, the Henderson-based bank that the government seized in September, was one of the area's top SBA lenders for several years.

Congress budgeted $6 million for SBA microloans ranging from $500 to $35,000 each and another $24 million to provide technical assistance to businesses after they receive loans.

Supporters were encouraged to see money budgeted for microloans, Scott said, because of fears during the Bush administration that the government might cut funding for microlending programs. The Nevada Micro Enterprise Initiative uses these funds to make loans to small businesses in Nevada.

Taking a broader perspective, Barron's, the weekly business tabloid, criticized the stimulus package, because only 25 percent of the $787 billion will be used in the current fiscal year, according to the Congressional Budget Office.

"It's just impossible to do it any other way," Reid told the Review-Journal, noting the difficulty of starting all the programs at once.

Reid said 80 percent of the money will be used during the first 18 months, but he said some programs, such as funding for high-speed passenger railways, will take longer than that. The United States is alone among developed countries in lacking an extensive passenger rail system, he said, noting that one potential route would connect Las Vegas and Los Angeles.

In other comments, Reid defended the president's criticism of executives from companies who have received federal bailout money taking business trips to Las Vegas.

"We shouldn't have these companies that got billions of dollars be out junketing whether it is Disneyland or anywhere else," Reid said.

"Because of the greed of Wall Street and others, we're in the situation we're in," Reid said. "Financial institutions are going to be regulated fairly significantly."

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. Ben wrote on February 20, 2009 11:06 AM: There could be no better investment in America than to invest in America becoming energy independent! We need to utilize everything in out power to reduce our dependence on foreign oil including using our own natural resources. Create cheap clean energy, new badly needed green jobs, and reduce our dependence on foreign oil. The high cost of fuel this past year seriously damaged our economy and society. The cost of fuel effects every facet of consumer goods from production to shipping costs. After a brief reprieve gas is inching back up. OPEC will continue to cut production until they achieve their desired 80-100. per barrel. If all gasoline cars, trucks, and SUV's instead had plug-in electric drive trains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota. There is a really good new book out by Jeff Wilson called The Manhattan Project of 2009 Energy Independence Now. http://www.themanhattanprojectof2009 Gobeavs wrote on February 20, 2009 07:05 AM: Your article left out the part about Reid promising more regulations to the business world. I was at the Nevada State Bank conference and could not believe he actually is promoting more regs to a room full of small business owners. Between that and the disconnected diatribes about his past, I think the man is losing it. gjaLV wrote on February 18, 2009 09:08 PM: On February 15, 2009 the Las Vegas Review-Journal reported on page 3B that Nevada ranked dead last in per-capita education funds doled out in the stimulus package. The package was ratified by the Senate of which Harry Reid is the Majority Leader! Nevadans should reflect on what Harry Reid has done for them latley. "Not much", "not a thing", "more harm than good" come to mind. FOLLOW THE MONEY wrote on February 18, 2009 04:34 PM: THE ONLY THING THAT THIS BILL STIMULATED WAS REID'S BANK ACCOUNT!!! KA-CHING! Welfare Plan wrote on February 18, 2009 03:49 PM: Be sure we give money to the most dysfunctional (keep 'em fed, housed, medicated), and not the best and brightest. This will stimulate the economy. AxMan wrote on February 18, 2009 03:45 PM: An illogical quote from Sen. Reid: "One provision of the bill that Obama signed into law Tuesday allows businesses to cancel debts without incurring income taxes on any money that is not repaid to a borrower". Perhaps he meant a BORROWER will not have income tax on the money not repaid to LENDER. a conservative wrote on February 18, 2009 03:43 PM: 1, The American people elect a black president with a total of 42 days experience as a U S Senator from the most politically corrupt state and city in America whose governor is ousted from office. The President's first official act is to close Gitmo and make sure terrorists civil rights are not violated. Announce withdrawal from Iraq, then announcing he is sending 17,000 more of our soldiers into Afghanistan. 2, The U.S. Congress rushes to confirm a black Attorney General, Eric Holder, whose law firm we later find out represents seventeen Gitmo Terrorists. 3, The CIA Boss, Leon Penetta with absolutely no experience, has a daughter Linda we find out, that is a true radical anti-American activist who is a supporter of all the Anti-American regimes in the western hemisphere. 4. We got the most corrupt female in America as Secretary of State; bought and paid for. 5. We got a Tax Cheat for Treasury Secretary who files his own taxes. 6. A Commerce Secretary nominee who withdrew due to corruption charges. 7. A Tax cheat nominee for Chief Performance Officer who withdrew under charges. 8. A Labor Sec'y nominee who withdrew under charges of unethical conduct. 9. A Sec'y HHS nominee who withdrew under charges of cheating on his taxes. 10. Now a “stimulus” that will create an estimated 300,000 jobs for illegals that should go to Americans. America is being run by the modern-day Three Stooges ~ Barrack, Nancy, and Harry ~ and they are still trying to define stimulus. really wrote on February 18, 2009 03:28 PM: I am not holding my breath to see if this bailout works....I would be dead a long time if I did.... Jimmy J wrote on February 18, 2009 03:14 PM: This selective outrage at the spending in the stimulus would be laughable if it wasnt so hypocritical. Maybe this thing will work, maybe it won't. But for those who supported the insanity in Iraq (which those same 'grandchildren will be paying for for decades) to be so angry at spending, in America, is pathetic. Here's a number you wont see referenced on the RJ opinion pages or business section.. http://www.nationalpriorities.org/costofwar_home dennis1944 wrote on February 18, 2009 11:38 AM: REID OUT! Read All Comments