Attention Senators! Test results are in. Time to announce who
passed and failed “the Maxine Waters test of political
moderation.”
As I
reported last week, the Jumpstart Our Business Startups (JOBS)
Act was encountering resistance in the Senate even after the
House-passed bill garnered the support of President Obama and the
votes of the most diehard liberals such as Reps. Barney Frank
(D-Mass.) and Maxine Waters (D-Calif.). The bill, which broadens
exemptions for more firms from the most onerous provisions of
Sarbanes-Oxley, Dodd-Frank, and other regulations preventing
entrepreneurs from raising capital, was subject to a last-minute
stampede by those organs of the left to whom regulation is a
religion.
The New York Times, the AFL-CIO, and other
various and sundry elements began railing against this “radical
deregulation” that somehow eluded Obama, Frank, and Waters. AFL-CIO
boss Richard Trumka
assailed a bill supported by everyone from community
banks to family-run businesses such as the
Wegmans supermarket chain for its provisions increasing
flexibility to raise capital as a measure to
“deregulate Wall Street — voiding investor
protections.”
So how many Senate Democrats were swayed by these
objections to a bill with investor protections deemed sufficient by
Maxine Waters? The answer is that they all were. And so was Sen.
Scott Brown (R-Mass.) And on the gutting of one House provision to
allow the pooling of capital online through crowdfunding, 11 Senate
Republicans failed the “Waters test.”
Yes, the JOBS Act finally passed the Senate last Thursday
73-26, with most of the regulatory relief from the House version
intact. And yes, the House
passed the Senate version yesterday
380-41. The bill is on its way to President Obama, who will almost
certainly sign it. This will be the biggest job-creating
accomplishment of his administration, but this achievement is
marred by the fact that his administration laid out much of the red
tape to begin with. (And to be fair, the act also clears barriers
from Sarbanes-Oxley, the red tape of the supposedly deregulatory
George W. Bush era.)
But Brown and the 25 Democrat senators — as well as Joe
Lieberman (I-Conn.) — who voted for the JOBS Act would first vote
against it. Senate Majority Leader Harry Reid (D-Nev.) tried many
ways to frustrate the bill, and attempted to make Republicans pay a
heavy ransom if it did pass. He tried to attach an amendment to
reauthorize the
corporate-welfare dispensing
Export-Import Bank for four years, but that failed to get 60
votes when all Republicans except Brown held fast.
Reid also set a vote for an amendment from Sens. Jack Reed
(D-R.I.), Carl Levin (D-Mich.), and Mary Landrieu (D-La.) that
would have weakened or gutted every measure of regulatory relief in
the House JOBS Act. This bill got
votes from Brown, Lieberman,
and every single Senate Democrat. This includes so-called moderates
like Jon Tester (D-Mont.), who would sing the praises of the House
bill the day after voting to defang it.
To illustrate how radically the Senate moved on the JOBS
Act, it’s useful to recall an incident from the House debate in
early March. In the House, the biggest dispute on the
bill seemed to be who should get credit for the regulatory
relief.
A provision of the JOBS Act, for instance, will save
community banks millions by allowing them to raise money from 2,000
shareholders without becoming a Securities and Exchange
Commission-registered firm subject to the costly mandates of
Sarbanes-Oxley and the proxy provisions of Dodd-Frank (they would
still be subject to many other provisions of the Dodd-Frank
albatross, though). Barney Frank screamed that part of the JOBS Act
was similar to a bill co-sponsored by Rep. Jim Himes (D-Conn.) that
passed the House in November (and which the Democrat-controlled
Senate had never acted on, a fact Frank declined to mention).
Frank’s attack on Rep. Jeb Hensarling (R-Texas) as “hypocritical”
and “dishonest” violated House rules against personal attacks on
fellow members and got him booted from the House floor for a
day.
Yet this was the same provision of the bill that Jack Reed
denounced on the Senate floor for allowing banks to “go dark.” His
amendment, according to the Independent Community Bankers of
America, would actually have subjected more small banks to
SEC red tape, according the Independent
Community Bankers of America.
This amendment fortunately failed but Brown, Democrats,
and 10 other Republicans (you can look at this
vote tally to see who they were) unfortunately were successful
at basically gutting the House’s provisions exempting from SEC red
tape up to $2 million in crowdfunding. As I
told Investor’s Business Daily, the Senate amendment
sponsored by Brown and Jeff Merkley (D-Ore.) subjects crowdfunding
to “mounds of voluminous filings with the SEC” and “imposes
liability for technical mistakes.”
But except for this provision, the rest of the House bill
will arrive on Obama’s desk intact, and likely be signed there. In
addition to raising the shareholder threshold for when a company
must go public and be subject to SEC rules from Sarbanes-Oxley and
Dodd-Frank, the bill creates an “on-ramp” that would delay the most
onerous of these rules for most new firms until five years after
they go public. The legislation reflects the emerging consensus,
from the respected Kauffman Foundation in Kansas City, Mo., to
President Obama’s Council on Jobs and Competitiveness, that
startups and “emerging growth” firms less than five years old
create the bulk of America’s new jobs.
For once, a “jobs act” passed by Congress will at least
pass the truth-in-advertising test, if not the Maxine Waters
test.
