Is Congress broken? Startup Act shows what can work.

Much of the time, Congress is, well, Congress. Gridlocked, combative, dysfunctional are only three of the adjectives that might be routinely applied.

But some days, like Tuesday, there is a hint of a different institution – you might call it the Voltaire Congress, refusing to let the perfect be the enemy of the good.

That phrase, borrowed loosely from the 18th century French philosopher, leads to legislation like the Startup 2.0 Act, unveiled Tuesday.

The bill is not perfect. It does not deal with America's most pressing legislative issues, such as the looming budget "sequester" or the expiration of the Bush tax cuts, nor is it a magic bullet for the American economy. But the act has sponsors on both sides of the aisle who say it is attempting something good – making life easier for startup businesses by easing immigration rules for highly skilled workers, paring back some regulations, and changing taxes.

"What I would encourage is that we not take the attitude or the approach that unless we do everything, we don't do anything," Sen. Jerry Moran (R) of Kansas, one of the bill's sponsors, told reporters at a press conference.

The goal of the Startup Act is not to resuscitate the economy in one fell swoop. But rather to water the green shoots of future economic growth, sponsors say.

"You can't cut and tax your way alone out of this challenge around the debt if you don't have the third leg of the stool, which is growing the economy," Sen. Mark Warner (D) of Virginia, an other sponsor, told reporters.

The legislation provides a window into how Congress can sometimes take the grand issues that are vexing it – from immigration to tax reform – and attenuate them into a more palatable and passable form.

The Startup 2.0 Act builds on the Jumpstart Our Business Startups (JOBS) Act, which also eased regulations on a number of small businesses. That legislation rocketed through the House of Representatives but faced spirited opposition from a handful of Democratic senators who said it weakened investor protections. However, the bill's momentum – and President Obama's endorsement of the measure – prevailed. Mr. Obama signed it into law in April.

The JOBS Act "was hotly debated on the [Senate] floor, but with presidential leadership and with active sponsorship of the leadership of the House and Senate, we were able to move forward some genuinely good ideas about capital access," said Sen. Chris Coons (D) of Delaware, one of the Startup Act's sponsors. 

He argued that the Startup Act could follow a similar path, despite some concern about the immigration reforms. "Even in the midst of a hotly contested presidential election we can find some consensus that moves pieces of immigration reform forward," he said. "Obviously not all of [immigration reform] but important pieces so that we don't miss another year or two or three in the global competition for talent."

Senator Warner said the bill had "a pretty good shot" in an interview with CNN, while Senator Moran said "80 percent" of Congress would be in favor of the bill's immigration provisions.

The bill will also likely benefit from political cover from both parties' presidential candidates. Some of its provisions stem from recommendations made by President Obama's jobs council, while likely GOP nominee Mitt Romney has found its principles "appealing," according to Moran.

Of course, the Startup Act, even if it passes, would hardly herald the end of hyperpartisanship on Capitol Hill. But it is a potential reminder that, when the conditions are right, members of both parties are far from giving up on good.

"There are plenty of things for Republicans and Democrats to debate about, that's why we have elections," said Sen. Marco Rubio (R) of Florida, a rising GOP star and co-sponsor of the legislation. "On the things we agree on, we should do 'em."

Startup Act in brief

According to a press release from Warner's office, the Startup Act would:

• Creates a new visa so US-educated foreign students who graduate with a master’s or PhD in science, technology, engineering, or mathematics, can receive a green card and stay in this country. It also creates an Entrepreneur’s Visa for legal immigrants so they can remain in the United States, launch businesses, and create jobs, and eliminates the per-country caps for employment-based immigrant visas.
• Makes permanent the exemption of capital gains taxes on the sale of startup stock held for at least five years, so investors can provide financial stability at a critical juncture of firm growth. It also would create a targeted research-and-development tax credit for startups less than five years old and with less than $5 million in annual receipts. This R&D credit is designed to allow startups to offset employee taxes, freeing up resources to help young companies expand and create jobs.
• Uses existing federal R&D funding to better support university initiatives designed to bring cutting-edge R&D to the marketplace more quickly, where it can propel economic growth.
• Requires government agencies to conduct a cost-benefit analysis of proposed “major rules” with an economic impact of $100 million or more. This new requirement will help determine the potential impact of proposed regulations on the formation and growth of new businesses.
• Directs the US Department of Commerce to assess state and local policies that aid in the development of new businesses.