Democrats avoid Republican trap, reject R&D bill

WASHINGTON (Reuters) - Senate Democrats rejected a bill on Thursday to make a business research tax credit permanent after Republicans tried to attach it to a long-stalled small-business bill.

Democrats rejected the R&D bill on the grounds that it would delay passage of the larger small-business bill, which President Barack Obama is pushing for as part of his efforts to jump-start the economy.

Democrats are eager to pass the small-business bill, which Republicans have delayed for months, to show voters they are working to improve the economy ahead of the November 2 elections. They argued that attaching the R&D measure would cause further delays by forcing it back to the committee level.

Making permanent the research and development tax credit is one of Obama’s signature proposals to jump-start the economy, and enjoys bipartisan support. The federal tax credit is now expired but is typically renewed annually.

“These motions are the way that folks score points, these motions are the way that folks try to embarrass,” Democrat Senate Finance Chairman Max Baucus said.

Most Republicans oppose the small business measure, calling it a bailout because it includes a $30 billion lending fund.

Republicans have blocked most of the Democrats’ job creation bills this year and Democrats are eager to pass the measure before facing voters in November.

Republicans also blocked Democrats’ attempts to extend a broad set of business tax breaks earlier in the year, including the R&D provision.

Reporting by Kim Dixon and Andy Sullivan, editing by Philip Barbara