Friday, March 27, 2009

News from Ranking Member Sam Graves and Committee Republicans:
• Ranking Member Graves on the floor of the House of Representatives this week speaking out against President Obama’s proposed budget and increasing taxes on small businesses. 
• Rep. Thompson on the floor of the House of Representatives against President Obama’s proposed budget and taxing small businesses.
• Rep. Thompson speaks to Washington Dateline Radio on “Obama’s Wall Street Plan, Budget Priorities and the Future of Small Businesses.”  Listen here.

• The House Republican Small Business Committee has a YouTube site up and running!  Check out video news feeds at: http://www.youtube.com/user/SmallBizRepublicans or just click here. 

Must-Reads from the Week:
• Los Angeles Times: Obama's SBA lending plan not seen as cure-all
• Forbes: Small Business, Big World
• MSNBC, The Big Money: Small biz and the tax man
• St. Joseph News-Press (MO): Graves criticizes budget as damaging to small business

Administration and the SBA:
• Treasury Secretary Geithner unveiled his plan to create a public-private program to purchase bad assets on banks’ balance sheets.  This Public Private Investment Program will leverage up to $100 billion of TARP funds to encourage private investment funds to purchase up to $1 trillion worth of troubled loans and securities.  The purpose of this plan is to encourage lending from financial institutions and improve access to capital for small businesses; however, concerns have been raised over the true cost to the taxpayer. 

Review of House Activity:
• On Thursday Republican leadership introduced an alternative to President Obama’s $3.6 trillion FY10 budget plan which is expected on the House floor next week.  The Republican alternative curbs spending, creates jobs, lowers taxes, and controls the debt.  More details of the plan can be found at the Republican Leaders’ website.  This Republican alternative came after the House Democrats passed a FY10 budget from committee on a party line vote of 24-15.   

• On Wednesday the House passed an omnibus lands bill that will now be sent on to the President for signature.  This legislation sets aside more than 2 million acres of land as wilderness and 100 miles of wild and scenic rivers.  Republican opposition stemmed from concerns that this legislation would impede environmentally friendly oil and gas production.   

• The House considered under a rule, H.R. 1404 the Federal Land Assistance, Management and Enhancement Act, better known as the FLAME Act.  This legislation, which passed by voice vote last Congress, would create a fund that would be made available to the Secretary of Interior and Agriculture to combat catastrophic wildfire suppression.  This money would be separate from what is annually appropriated for wildfire related activities. 

Legislation and Letters Circulating Around the House:

(If you would like to publicize your small business effort in Congress, please email Paul J. Sass at Paul.Sass@mail.house.gov)

• Rep. Graves Seeks Cosponsors for H. Res 232, Commending the Toys for Tots Fight Against Illiteracy.  For over 60 years, Toys for Tots has collected toy donations for underprivileged children. Beginning in March 2008, Toys for Tots expanded beyond toy donations to taking on the challenge of rising illiteracy rates.  With the help of small businesses like The UPS Store and Mail Boxes Etc., the Toys for Tots Literacy Program was formed to help economically disadvantaged children to succeed in academics by providing them direct access to resources that enhance their ability to read and to communicate effectively.  H.Res 232 recognizes and commends the Toys for Tots Literacy Program’s efforts and accomplishments.  If you wish to become a cosponsor of this legislation, please contact Paul Sass or call 5-7041.

Review of Senate Activity:
• Senator Arlen Specter (R-PA) earlier in the week announced his intention to oppose “Card Check” legislation if it comes before the Senate for a vote.  This strikes a major blow to groups seeking to advance this initiative as Specter was seen as pivotal in reaching the 60 votes necessary to pass the legislation.  Prospects to reach 60 are looking bleak, but groups supporting this legislation are reluctant to accept defeat.  Proponents of “Card Check” legislation need the support of at least one Republican to invoke cloture and move this legislation towards passage in the Senate. 

• The Senate Committee on Small Business and Entrepreneurship held a hearing this week on President Obama’s budget for the Small Business Administration (SBA).  According to Chairwoman Mary Landrieu’s press release, “President Obama’s budget calls for an increased level of funding for the SBA over the last Administration on top of the $730 million appropriated to the agency in the American Recovery and Reinvestment Act.”  Ranking Member Snowe had the following to say in response to the hearing, “The Administration’s approximate figure of $700 million – while a vast improvement to recent requests – still does not rectify the funding cuts of the last eight years, when accounting for inflation. The SBA’s core programs created or retained almost 2 million jobs in 2008 alone, they should be funded at the $880 million level our Committee has recommended. We must spare no expense in providing small businesses with the tools and resources they require to lead us out of this devastating recession.”

• The Senate passed legislation on Thursday to expand national and community services programs by a vote of 79-19.  H.R. 1388, the Generations Invigorating Volunteerism and Education Act, is expected to be signed by the President. 

 House Small Business Committee hearing summary this week:
• On Wednesday, March 25, 2009, the Small Business Committee met for the purposes of reviewing the Small Business Administration's (SBA) Historically Underutilized Business Zone, or HUBZone program and for other purposes.  Witnesses included:
o Acting Administrator, the Hon. Darryl Hairston
o Mr. William Shear, Director, U.S. Government Accountability Office, Financial Markets and Community Investment
o Mr. Gregory Kutz, Managing Director, Forensics Audits & Special Investigations, U.S. Government Accountability Office

The hearing provided a progress report on how the SBA was responding to a GAO investigation released in June 2008 that provided recommendations on how to improve the HUBZone program.  In addition, the GAO highlighted a follow-up report that expanded its initial investigation beyond Washington D.C. to select cities in Alabama, Texas, and California, which found that waste and fraud is more widespread in the program than originally expected.  Ranking Member Graves was extremely disappointed to learn that the SBA has made little progress in implementing the GAO recommendations from June 2008 and that the SBA seems to have little control and ability to make improvements nation-wide. 
 
The SBA noted that they have made developments in several areas related to the GAO’s recommendations including adding new criteria to the self certification process, conducting more site visits, and updating HUBZone maps.  However, Ranking Member Graves felt these developments were severely inadequate and agreed with the assessments made by the GAO that substantial work remains for incorporating a fraud prevention system that includes effective fraud controls consisting of:
• Front-end controls at the application stage;
• Fraud detection and monitoring of firms already in the program:
• The aggressive pursuit and prosecution of individuals committing fraud. 

Another hearing on the program is anticipated later this Congress. 

 • On March 26th, 2009, the Subcommittee on Oversight and Investigations held a hearing titled “Expanding Equity Investment in Small Business.”  Witness included Ms. Pamela Hendrickson, Chief Operating Officer of The Riverside Company in New York, NY; testifying on behalf of the National Venture Capital Association, Mr. P. Sherrill Neff, Founding Partner of Quaker BioVentures in Philadelphia, PA; testifying on behalf of the Biotechnology Industry Association, Mr. Tom Walker, President & CEO of I2e in Oklahoma City, OK; Ms. Catherine Mott, Founder & CEO of Blue Tree Capital Group, LLC in Wexford, PA; testifying on behalf of the Angel Capital Association, Mr. John May, Founder & Managing partner of the New Vantage Group in Vienna, VA; and Mr. Patrick Dalton, President and COO of the Apollo Investment Corporation in New York, NY.

The hearing examined the difficulties of the private equity investment industry in light of current economic conditions.  Due to the recession, venture and angel capitalists, private equity investors, and business development centers are seeing their ability to invest in small burgeoning companies limited.  Because of this ongoing turmoil, businesses--and especially smaller businesses--are finding it difficult to raise capital from either banks or the stock market.  Falling public exchanges have a double impact on companies seeking financing—not only devaluing private stock holdings, but also wiping out vast amounts of equity investment capital.  When private investors see their portfolios shrink, they become more conservative.  Money that might have gone into early-stage, private investments is headed to safer harbors like CDs, mutual funds, and bonds.  Nearly every witness testified cited tax policy as their main concern in the future success of their companies.  The witnesses said that President Obama’s proposed tax increases on capital gains create great uncertainty for their current and future investments, thereby limiting their options for investment.  For more information on this hearing, please contact Joe Hartz at (202) 225-5821.

Other Small Business off the Hill:
• The National Small Business Association unveiled its new initiative, Health Reform Today.  The program is aimed at improving quality and access to healthcare for small businesses.

Looking Forward:
House Small Business Committee hearings next week:
• Full Committee Hearing, April 1, 2009, 1:00PM entitled, “IRS Oversight: Are Tax Compliance Costs Slowing the Economic Recovery?” 2360 Rayburn House Office Building
• Subcommittee on Rural Development, Entrepreneurship and Trade Hearing, April 2, 2009, 10:00AM, entitled, “Legislative Initiatives to Modernize SBA’s Entrepreneurial Development Programs,”  2360 Rayburn House Office Building

Senate Small Business and Entrepreneurship Committee hearing next week:
• Full Committee Hearing, April 1, 2009, 9:30AM entitled, “Confirmation Hearing of Karen Gordon Mills as Administrator of the Small Business Administration,” 428-A Russell Senate Office Building