What the Democrats in Congress Ought to Do

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The GOP get absurd amounts of support from small business owners, considering how often the GOP ideas are actually just pro-big-corporate and anti-small-business.

But the image of the parties is there and needs fixing. To help with that, here's an idea I just sent to Congressman Kurt Schrader, who is on the Small Business subcommittee.

If the Democrats grab hold of this, they will have a great issue to run on in November, and the GOP will be totally unable to oppose it without looking completely unprincipled (I know, I know, but they don't like to have it made so obvious . . . )

Idea 1

This is a proposal for a small business financing improvement that could be a signature initiative for Democrats and help lots of people here in the jobless "recovery."

1) Allow anyone starting a new small business to tap their 401(k)/IRA/457/403b retirement funds to fund the small business or to serve as security for an SBA loan.

2) Allow the funds to be withdrawn or pledged as security for a small business development loan without tax penalty and with state and federal tax deferred until the business has been established for three years.

3) After three years, either (a) the money is replaced in the fund(s) and no tax consequence occurs; or (b) 20% of the total withdrawn has to be declared as regular income for the next five years.

That's the main idea and I can't see any downside to Democrats here whatsoever -- it's a pro-small business idea, it would help workers left unemployed by job cuts, and it doesn't require any federal outlay.

Idea 2

Allow anyone who is unemployed to make mortgage payments from their retirement accounts without the 10% penalties -- that is, they have to declare the distributions as regular income in the year that it's used, but people shouldn't have to pay a tax penalty for using retirement assets to preserve their ownership of their #1 retirement asset, their home.