Friday, March 6, 2009

News from Ranking Member Sam Graves and Committee Republicans:
• Ranking Member Graves in the St. Joe News
• Congressman Luetkemeyer weekly column highlights small businesses and the newly proposed budget
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Must-Reads from the Week:
• Phoenix Business Journal: Phoenix small business owners criticize Obama tax hike, dispute $250,000 is ‘rich’
• Business First of Columbus: SBA delays limit on goodwill financing
• Fox Business: 'Mr. Beef' Tells Washington of Small-Business Woes, The owner of a well-known Chicago restaurant tells Congress about the challenges he faces getting access to credit. 

Administration and the SBA:
• President Obama’s budget, released last week, is continuing to take fire from conservatives around Capitol Hill.  With major shifts in health care, energy, and tax policy, business owners can only assume that they will have to pay for the brunt of these changes.  Given the calls in the budget for a variety of new federal programs, revenue has to increase.  Growth in the economy will fill some of this gap.  However, the greater portion of that will come from increasing taxes on small businesses.  This deprives small businesses of needed funds at just the time when they should be using those funds to invest in their businesses not in paying down the debt of the federal government.  Increasing taxes on small businesses seems highly counterintuitive if the object is to have those businesses lead America's economic recovery.  Expensive government does not necessarily translate into sound government.  Obama’s budget will not provide small businesses with increased access to capital, reduce their regulatory burdens, improve their access to government contracting opportunities or provide them with a means to obtain affordable health care for themselves and their employees.  Despite rhetoric of the importance of small business, the FY 2010 budget does not recognize the centrality of small business to America's economic recovery.  Instead, it seeks to impose greater burdens on their ability to expand their businesses and create the new jobs to replace those being lost by large businesses.  
 
• President Obama ordered new guidelines for contracting with the federal government earlier in the week.  His plan is to review all existing contracts by July 1 with all new guidelines by September 30.  President Obama claims that these proposed changes could save the federal government $40 billion.  President Obama took aim at waste, fraud, and abuse that has become all too common with federal contracting.  Office of Management and Budget Director Peter R. Orzsag will be drafting the new guidelines with the intention to maximize competition, limit outsourcing, and open up new opportunities for small businesses.   

• The SBA has moved forward on changing the standard operating procedure for goodwill financing despite serious concerns from Ranking Member Graves that this change will further limit a small business’s access to capital.  Goodwill is the value of a business that can't be accounted for through physical things like assets in a warehouse.  It's the brains and cash flow of a company or intangible assets.  The change, which took affect March 1st , will limit goodwill financing to 50 percent of the loan amount or a maximum of $250,000, and loans exceeding the limit will be considered on a case by case basis.  This change is effective through August 1st at which point the SBA will reevaluate their decision.  The timing of this change is very concerning to the small business community considering how access to capital is a major problem plus these changes were self admittedly made with insufficient data regarding these types of loans.  The Small Business Committee is looking to address this situation in the near future…stay tuned. 

• An overhaul is expected at the SBA from President Obama’s nomination of Karen G. Mills.  Mills background includes a mix of corporate, venture capital and entrepreneurial credentials.  Her confirmation is expected in the near future from the Senate.  

Legislation and Letters Circulating Around the House:
• Ranking Member Graves Seeks Cosponsors for H.R. 664, the Economic Stimulus Enhancement and Tax Relief Permanency Act

If the purpose of a government stimulus is to create the conditions for long-term and sustainable economic growth, then having an expiration date on tax relief is a lot like a subprime mortgage loan:  the business or borrower benefits from lower initial payments or taxes at the consequence of facing much higher payments or taxes in the future.  These “payment shocks” then make certain investments and activities unprofitable and ultimately unsustainable.  Permanent tax relief will help begin the process of restoring confidence in our economy as businesses and individuals will be more likely to make much needed investments in new plants, equipment and personnel today if they don’t fear that the tax benefits that make such investments profitable and sustainable won’t expire in the near future.  The Economic Stimulus Enhancement and Tax Relief Permanency Act would permanently extend all of the tax relief passed into law in 2001 and 2003.  If you would like to cosponsor H.R. 664, the Economic Stimulus and Tax Relief Permanency Act, I encourage you to contact Mark Ratto at mark.ratto@mail.house.gov.  

• Reps. Shadegg and Bartlett Seek Co-sponsors to Help American Manufacturers and Small Businesses

Reps. Shadegg and Bartlett seek co-sponsors for H.R. 968, legislation that is designed to help American manufacturers and small businesses comply with the Consumer Product Safety Modernization Act.  This bill will delay the regulations for six months; allow small manufacturers to use the testing and certification that their component suppliers have done to certify that the components do not contain an impressible amount of lead; exempt thrift stores, yard sales, consignment shops, and other re-sellers from the prohibitions in the Act; and require the Consumer Product Safety Commission to provide small businesses with a compliance guide.  Due to the confusion and uncertainty in the small business community, it is crucial that the regulations be delayed so that the small businesses that are the heart of this nation are not forced to close their doors.  Please contact Randi Meyers in Rep. Shadegg’s office at 5-3361 or Sallie Taylor in Rep. Bartlett’s office at 5-2721 to cosponsor.

Review of House Floor Activity:
• The one major bill brought before the U.S. House of Representatives this week was H.R. 1106, the Helping Families Save Their Homes Act of 2009.  This legislation passed on Thursday with a vote of 234-191.  The main thrust of this legislation is to allow bankruptcy judges to modify the mortgages of financially strapped homeowners.  Concerns over this provision are that it will unnecessarily raise interest rates on responsible borrowers and actually encourage homeowners into bankruptcy rather than it being an option of last resort.  Although helping homeowners is worthy, raising interest rates will have a much broader impact on the economy, particularly for future homebuyers and small businesses.    

Review of Senate Floor Activity:
• The Senate appeared to be a vote short of invoking cloture on the FY09 Omnibus bill, postponing final passage until next week.  With a continuing resolution set to expire on midnight tonight another extension will have to be passed.  The Senate’s failure to pass the FY09 Omnibus demonstrates the delicate balance of power and highlights the need for GOP support to move legislation. 

Small Business Committee hearing summary this week:
On March 4, 2009, the House Committee on Small Business held a hearing titled The State of the Renewable Fuels Industry in the Current Economy.  Testimony was offered by Mr. Nathan Kimpel, President and Chief Operating Officer of New Energy Corp. in South Bend IN; Mr. John Howe, Vice President of Public Affairs of the Verenium Corporation in Cambridge, MA; Mr. Manning Feraci, Vice President of Federal Affairs of the National Biodiesel Board; Mr. Ron Litterer, Chairman of the National Corn Growers Association in Greene, IA; and testifying on behalf of the Missouri Soybean Association, Mr. Brooks Hurst, a member of the Board of Directors of  The Paseo-Cargill Biofuels Plant in Tarkio, MO. 

The hearing examined the difficulties of our nation’s renewable fuels industry in light of the current economic conditions.  The hearing focused solely on ethanol, biodiesel, and cellulosic ethanol.  Each of the witnesses stressed in their testimony that Congress must continue to support the renewable fuels industry in an effort to keep it competitive with other sources of energy.  Additionally, each of the witnesses expressed the difficulties production plants are experiencing in the current credit crisis, with construction of several plants being halted and that existing plants are lying idle or shutting down completely due to the unavailability of credit to continue.  Several of the witnesses also urged Congress to put pressure on the Obama Administration to enact regulations implementing the Renewable Fuel Standard provisions contained in the Energy Independence and Security Act of 2007 to provide additional support for the nation’s biofuels producers.  For more information about the hearing, please feel free to contact Joe Hartz at (202) 225-5821.  
    
Other Small Business off the Hill:
• U.S. Chamber Announces 2009 Blue Ribbon Small Business Award Winners
Fifty-six businesses across the country receive the reward. 

• The National Association of Manufacturers Launches its Skills Certification System
Its program will focus on education and training for those seeking jobs in the manufacturing industry.

Looking Forward:
House Small Business Committee Hearings next week:
• Subcommittee on Regulations and Healthcare Hearing, March 11, 2009, 10:00AM entitled, “Impact of Food Recalls on Small Businesses,” 2360 Rayburn House Office Building

• Subcommittee on Contracting and Technology Hearing, March 12, 2009, 10:00AM entitled, “Ensuring Stimulus Contracts for Small and Veteran-owned Businesses,” 2360 Rayburn House Office Building