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Obama's role in Md. governor's race remains unclear as O'Malley visits White House

There's little wrong in Maryland that needs fixing, believes Gov. Martin O'Malley, at Oxon Hill High School.
There's little wrong in Maryland that needs fixing, believes Gov. Martin O'Malley, at Oxon Hill High School. (Bill O'leary)

With Democratic incumbent governors in Iowa, Illinois, Ohio, Wisconsin and elsewhere facing tough reelection bids, the strategist said, Maryland could be the difference between Democrats waking up on Nov. 3 and having retained or lost a majority of governorships held by incumbents.

"It's the Alamo," the strategist said. "If Maryland goes, it would be an incredibly bad night for Democrats."

The first infusions last week of national money from the Republican Governors Association - and a quick answer from the Democratic Governors Association - suggests both parties consider Maryland to be that, and potentially more.

Unseating O'Malley would be a coup for Republicans. With the exception of Ehrlich's first term, Democrats have controlled the governor's mansion for the past four decades.

More than that, it could also be an opportunity for the right to take out O'Malley before he can assume a larger role next year heading into 2012. If reelected, O'Malley is next in line to become chairman of the Democratic Governors Association, where he has been vice chairman and fundraiser for two years.

If nothing else, O'Malley's trip to the White House will set the stage for a statewide tour this week to talk up his administration's efforts in helping to pass the small business-lending bill.

Programs created or expanded under O'Malley in Maryland, and under outgoing Gov. Jennifer Granholm (D) in Michigan, served as models for parts of the small business-lending bill.

The $1.5 billion State Small Business Credit Initiative expands a measure O'Malley and Maryland's Democratically controlled legislature funded in the spring. That measure uses a modest pot of $10 million to build on long-standing loan guarantee programs that exist in most states. Maryland's expansion allows the state to guarantee fractions of loans for small-business owners who don't have enough collateral to qualify for the full amount they seek.

A half-dozen loans worth about $3.5 million have been settled since the spring in Maryland with help of the guarantees. One for $400,000 to renovate a mini-mart was approved in Prince George's County.

Maryland state business Secretary Christian S. Johansson testified before Congress in support of the measure, saying it would help additional small business owners get over the finish line in securing loans that have become harder to qualify for.

According to his office, O'Malley also personally lobbied the White House and Treasury Secretary Timothy F. Geithner to include the state guarantees, and Johansson's staff worked directly with the administration to draft the portion of the bill. In Maryland, it could add about $23 million to the $10 million the governor and legislature already set aside.

But the modest number of loans the guarantees have helped and skepticism from many in the banking industry might limit the effectiveness of the program. Bank executives say their customers don't want loans, even at low interest rates, because the sluggish economy has chilled expansion plans. Some say the federal money isn't worth it because they fear it will come with too much regulatory oversight.

Also, 91 percent of small-business owners surveyed in August by the National Federation of Independent Business (NFIB) said all their credit needs were being met. Only 4 percent cited a lack of financing as their top business problem. Plans for capital spending are at a 35-year low, according to the survey.

The Associated Press contributed to this report.

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