By: Josh Boak
October 18, 2011 12:20 PM EDT

As President Barack Obama takes his case for a multi-billion dollar jobs package on the road, Treasury Secretary Tim Geithner on Tuesday made the pitch to Capitol Hill.

But he hit a wall of Republican skepticism at a hearing of the Senate Committee on Small Business and Entrepreneurship.

“Your job is to craft the economic policy of this country and, at this point, it isn’t working,” scolded Sen. Olympia Snowe (R-Maine). “What is missing is the key ingredient of leadership. … There is no tempo of urgency.”

Unemployment remains a frustratingly high 9.1 percent more than three years after the financial meltdown, while millions of Americans are coping with long-term joblessness that erodes the potential of the entire economy to grow.

Both Snowe and Geithner acknowledged that Republicans and Democrats should come together to energize the recovery, but the hearing exposed a deep ideological fissure about the nature of the problem that has prevented cooperation.

The administration views the fundamental obstacle as a lack of demand from companies and consumers, while GOP lawmakers say that tax and regulatory burdens have stifled the recovery.

Small businesses are reluctant to hire unless they find additional sales, Geithner told the committee.

“In every poll, they say their overwhelming challenge is they don’t see enough demand and growth for their products,” he said.

The $447 billion jobs package unveiled last month by Obama - the president was campaigning for it Tuesday in North Carolina - would push cash into the economy to make up for the absence of demand. Payroll tax holidays for employees and employers, construction spending, and aid to state and local governments should pick up the economic slack, the administration reasons.

“Don’t lose sight of the near-term imperative,” Geithner said. “We have to focus on things that have traction right now.”

But GOP lawmakers pushed back against the notion that temporary tax breaks and other short-term policies are enough to change consumer behavior. For them, the unknowns emerging from government programs are the primary hindrance.

“It’s the lack of regulatory and tax certainty,” said Sen. Scott Brown (R-Mass.) “This is the number one thing, the wet blanket over their efforts to create jobs.”

The conversation became heated enough that committee chairwoman Sen. Mary Landrieu (D-La.) reminded her colleagues that they “do not have oversight of regulatory reform.”

The Treasury Department launched a blog campaign this week arguing that substantial banking reforms in Dodd-Frank have not hurt the economy, but instead have established the kinds of protections that can prevent a repeat of the 2008 financial crisis.

Republicans on the House Financial Services Committee responded by posting on its site concerns from 15 community bankers about drowning in regulatory paperwork.

“What we have to understand is we’re already overburdened with regulation,” said Greg Ohlendorf, president of First Community Bank and Trust in Illinois. “We have significant numbers of regs that we need to comply with today, and it seems like just one more isn’t going to change the deck a whole lot, but the consistent piling on of additional regulation is very, very stunning. It’s punishing.”

Geithner told the committee that some small banks feel as though they’re under pressure from examiners to excessively tighten their lending standards, making them less likely to issue loans.

But, he added, “It’s very hard to know whether that’s justified or not.”

Tax rates have fallen for small businesses under Obama, Geithner said. Republicans countered that there needs to be a lasting tax overhaul that lowers corporate rates and broadens the base.

The administration also supports the reform, but Geithner said it can’t be accomplished in the brief two-month timeframe of the supercommittee responsible for cutting budget deficits by at least $1.2 trillion over the next decade.

The Monday hearing was about the $30 billion Small Business Lending Fund, a one-year program hampered by a nine-month approval process that only managed to provide banks with $4 billion.

Shortcomings in that program and the questionable results from the $787 billion stimulus package enacted by Obama two years ago have damaged the administration’s credibility with many Republicans they might have to work with.

“There have been too many faulty assumptions and miscalculations,” Snowe said. “The burden has been borne by the unemployed.”