Monday, October 31, 2011

Solyndra’s failure shouldn’t deter government investment in solar power

The Washington Post
October 30, 2011

Throughout our nation’s history, the federal government has played a critical role in scaling new industries and new technologies. From defense to computers and railroads to aviation, government investment has created thriving industries and good careers for generations of Americans.
Today, clean energy technology, including solar, can be one of our nation’s next growth industries if we continue to make sustainable businesses an economic priority.
Despite the collapse of solar panel manufacturer Solyndra, our nation’s early investments in clean energy have begun to pay off. The U.S. solar industry grew 69 percent in 12 months representing the fastest growing industry in the nation. More than 100,000 Americans in all 50 states are employed by solar, more than the coal mining or the U.S. steel production sectors, according to the Solar Foundation.
But just as this industry is beginning to scale, we are seeing a timidity to support this fledgling industry because of the high-profile failure of one company, Solyndra. While we can undoubtedly learn lessons from Solyndra’s bankruptcy, our nation and our policy leaders should see Solyndra’s demise for what it is — a reminder that some companies inevitably fail in growing industries.
From my perspective, I left a 20-year marketing career in the retail apparel industry for a new career with Sungevity, a residential solar company. Like me, many members of our staff transitioned from well-established industries including real estate, retail and finance to bring their experience and skills to help grow this industry and our company. As a result, Sungevity has experienced significant growth, expanding from three Western states — Arizona, California and Colorado — to include Delaware, Maryland, New Jersey, New York and Pennsylvania in our service territory, and multiplying sales by 10 times over the past year. It is this kind of growth and continued momentum that have brought strategic investments from Fortune 50 companies like Lowe’s to our business.
Sungevity’s success story is attributed in part to the government’s role in fostering a supportive climate for sustainable businesses in growth industries. American Sustainable Business Council, a leading advocate for sustainable economic development, argues that a framework of federal policies, investment programs, government loans and tax incentives is often needed to help new businesses grow, create jobs and strengthen American competitiveness.
The semiconductor industry in Northern California illustrates how successful government policies work to establish an effective business climate. During the first 10 years of the semiconductor industry’s formation, the U.S. Department of Defense provided more than half the total revenue to the industry.
By backing this young industry, the government led the way for semiconductor technology to become the industry it is now, and for American companies to take an early lead. While many Americans may not be familiar with the semiconductor industry, most of us know where the industry calls home — Silicon Valley. Silicon Valley would not be the same without those early policy investments.
Our nation’s track record demonstrates incredible success when we support emerging industries. Sungevity’s growing momentum illustrates that individual companies with smart business models can succeed.
Solyndra’s lesson shows us that individual failures should not cloud our industry’s overwhelming success nor weaken our nation’s resolve to support growing industries. Rather, the federal government should build on its record of success and continue investing in the sustainable businesses of the 21st century.
Sherri Pittman is vice president of relationship marketing at Sungevity in Oakland, Calif.
http://www.washingtonpost.com/business/capitalbusiness/solyndras-failure-shouldnt-deter-government-investment-in-solar-power/2011/10/26/gIQA2S5BWM_story.html

Friday, October 28, 2011

Trickle down tax cuts: A broken record

The Hill's Congressional Blog
October 27, 2011

By Lew Prince, managing partner of Vintage Vinyl, an independent music store in St. Louis.   

I’m one of those “job creators” members of Congress profess to admire so much. Thirty-two years ago, my partner and I started a small business with $300 worth of old records and a booth at the local farmers market. We’re now the biggest independent music store in St. Louis and employ 22 people. Our annual revenue is around $2 million. We’re a classic American success story.

Our incomes are typical for small business owners, which means we’re not in the top tax brackets. We’ve always been at or below the 25 percent tax bracket. So we’re trying to figure out how the new tax proposal from Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, is supposed to help small businesses like ours create jobs.

Rep. Camp wants to cut top individual and corporate tax rates from 35 percent to 25 percent. He would reward U.S. multinational corporations that have gamed the system with a 5.25 percent tax rate on U.S. profits they have disguised as “foreign” earnings. All this will be great for gigantic multinational corporations, Wall Street and the fat cats who attend those $1,000-a-plate and up political fundraisers. It will be great for the corporate lobbyists gaming our political system every day.

It won’t help small business, and it won’t help America.

Rep. Camp’s proposal to give massive new tax cuts to America’s largest corporations and wealthiest families comes just as we learn from a Congressional Budget Office report that after-tax inflation-adjusted incomes for the richest one percent of Americans skyrocketed 275 percent between 1979 and 2007.

Chairman Camp wants us to believe that cutting the top rate to 25 percent benefits America’s small business owners. Most small business owners wouldn’t see a penny of tax cuts under this proposal.

And, anyone who thinks lowering my tax rate would affect hiring knows diddlysquat about running a business. I hire more workers if I think I’ll do more business. The costs of finding, hiring and paying new employees are business expenses. They’re deducted up-front from taxable income. Any business paying taxes on these expenses needs to fire their accountant.

The biggest challenge facing my business isn’t the taxes we pay. It’s the decline in customer demand and the continued hollowing out of our middle class, our infrastructure and our economy. It breaks my heart when my customers sell record collections built over a lifetime, to pay their rent, heating bills or medical expenses.

We’ve tried trickle-down tax cuts to create jobs. How’d that work out? Tax-Cutter-in-Chief, George W. Bush, had the worst job creation record since 1939. What trickled down were economic meltdown, foreclosures, unemployment, budget cuts and business closures.

When Congress proposes stimulating the economy with more tax cuts for those who are far ahead of the rest of us, they do nothing to help my customers or my business. When the wealthy get more tax cuts, it transfers the burden of paying for government services to businesses like mine and to my customers, already living paycheck to paycheck.

If members of Congress want to help small business, they should choose policies that actually create jobs. St. Louis, like many cities, laid off teachers, first responders and construction workers – the people who spend money locally, the people we need for a healthy economy. The last thing we need is more cutbacks to pay for more tax cuts at the top.

Job creation today and a brighter future for our kids and grandkids lies in better education, 21st Century infrastructure, universal broadband and renewable energy. How do the advocates of more tax cuts for the affluent expect to compete with emerging economic superpowers if we don’t invest in our nation’s future? Where do they expect money for that investment to come from, if not from those who have profited most from the investment our parents and grandparents made to build the nation they handed us?

Trickle-down economics has been a miserable failure. It delivered economic ruin for many and riches for a few. It hasn’t brought shared prosperity, but driven us further apart. It increased the economic and political power of Wall Street and Big Business over Main Street and small business.

Trickle-down economics is a broken record. It’s time to let it go.

Lew Prince is managing partner of Vintage Vinyl, an independent music store in St. Louis. He is also a member of Business for Shared Prosperity, a national network of forward-thinking business owners and executives.


Source:
http://thehill.com/blogs/congress-blog/economy-a-budget/190277-trickle-down-tax-cuts-a-broken-record

Thursday, October 27, 2011

Going the wrong way...again

A New York Times/CBS news poll out yesterday found that 2/3 of Americans oppose tax cuts for corporations.  And in a clear demonstration of why the same poll found that the public’s approval of Congress is at an all-time low of only 9%, U.S. House Ways and Means Committee Chairman, Dave Camp (R-Michigan) proposed yesterday to cut corporate income tax rates by over 28%. 
Mr. Camp says that his proposal is meant to create jobs.  The only problem is that U.S. multinational corporations are already sitting on trillions of dollars that they could be investing in job creation right now.  So why does Mr. Camp think that piling up more profits for these corporations is going to result in a different outcome (the definition of insanity, don’t you know)?
Instead of making illogical proposals to curry favor with corporate campaign contributors, Mr. Camp would do better to read the James Livingston opinion editorial also in yesterday’s New York Times.  Mr. Livingston is a professor of history at Rutgers and an expert on economic history. 
Mr. Livingston says that “the best-kept secret of the last century” is that “private investment…doesn’t actually drive economic growth.  Consumer debt and government spending do.” 
Mr. Livingston lays out the proof for his conclusion that we need to be promoting consumer and government spending to revive our economy.   That’s what I’ve been saying.

Wednesday, October 26, 2011

Win-win-win-win


Lathran Woodard (Executive Director of the SC Primary Health Care Association) and I made a presentation at the Northwest Regional Primary Care Association yesterday in Seattle. We were asked to talk about an innovative partnership our two organizations had formed 6 years ago to help small businesses find affordable healthcare (not health insurance) for their employees.

Essentially, community health centers (Federally Qualified Health Centers) provide excellent primary healthcare at affordable prices (primarily due to federal subsidies) and small businesses have uninsured workers who need good access to healthcare. Matching small businesses with community health centers isn't insurance and it does not cover hospital or specialist costs, but it does address about 80% of the healthcare needs of the workers.

Lathran and I told the session attendees of our successful pilot project started in 2005 between Midlands Steel and Recycling in Columbia and the Eau Claire and Richland Community Health Centers.

Today that business-to-business effort is still going strong. The workers have access to quality healthcare paid for by employer after a $10 co-pay, the employer is pleased at the low-cost and worker satisfaction and the healthcare centers appreciate the paying clients. It's a win-win-win for Midlands Steel, the employees and the health centers. Other South Carolina businesses (but not enough) have entered into the same agreements with their community health centers.

The question iswill this kind of creative approach be necessary or even allowed in 2014 when all citizens will be required to have health insurance (assuming the Supreme Court doesn't find the individual mandate to be unconstitutional)?

I think that some variation of this approach can still work. The country's community health centers will be needed more than ever come 2014 because of the need for more primary care physicians especially in rural areas. These centers will still offer more affordable services and this time it can be the health insurance companies that can lower premiums by tapping into this network of providers.

Let's see, that would make it a win-win-win-win. 

Tuesday, October 25, 2011

The 1% and 99%


I'm still in Seattle so just a quick note.

I met a self-proclaimed member of the 1%. I told him I had no problem with the wealthy but just wanted corporate dominance in politics and financial matters to end so that small businesses could have a fair shake.

He told me that if that is what the 99% want then he agrees. Being a libertarian he wanted all corporate money out of politics and desired the end to the Federal Reserve (something many of the Occupiers have called for also).

While I'm still not well versed on the latter (he recommended a book for me to read), we had found some common ground. Being willing to have a civil conversation can be so beneficial. Too bad it's not done more in Washington.

Monday, October 24, 2011

Occupy Seattle


I am in Seattle for a few days this week and visited Occupy Seattle on Sunday.  This is my third Occupy event (Columbia and Washington DC being the other two). Below are some pics. Enjoy.
 








Friday, October 21, 2011

The 99% need help

Yesterday the Senate failed to move forward the President’s plan to invest $35 billion in the states to help keep teachers, law enforcement personnel and firefighters from being fired due to budget shortfalls.  The 60 votes were needed to keep the measure alive but all 50 of the GOP Senators voted against it.
So what was the reason for voting against keeping more of these essential workers on the job and thus keeping more money on Main Street for our small businesses? 
The plan would have been funded by a 0.5% increase in taxes on income over $1 million.  That’s not five percent; it’s one half of one percent.   But in spite of 64% of the public agreeing that asking millionaires to pay just a little more to help with jobs, the Senate Republicans said no.  Not only did they say no, they said that they were just protecting 300,000 small business owners having a hard time with cash flow and credit. 
Now, I don’t know if that 300,000 figure is accurate or not.  The real number of taxpayers with some business income and making over $1 million is only 1% according to the Tax Policy Center.  I’ll let someone else do the math.
But using any small business owner making over $1 million a year as an excuse not to help our nation’s economy is a ridiculous and illogical argument.
Any small business owner taking home this kind of massive income is not struggling with cash flow and credit problems.  Period. 
If a small business can afford to pay its owner over $1 million in compensation, that owner can afford to pay a half a penny more in taxes on every dollar over a million to help keep teachers and first responders on the job and more customer demand for the other 99% of small businesses.

Thursday, October 20, 2011

Focus on the Solyndra default distracts from the benefits of solar

The Hill's Congress Blog
10/19/11

By Thomas Alston, solar outreach and policy coordinator for U.S. Rep. Gabrielle Giffords of Arizona 

There is a segment of the U.S. economy that employs more than 100,000 people – and during the past year, employment in that segment grew by more than 6.8 percent.

Compare that to the 0.7 percent growth in the economy as a whole and this is clearly a bright spot in the still-struggling American economy.

That bright spot is the U.S. solar industry. And despite some well-publicized glitches, solar is one of the fastest-growing industries in the nation – and poised to continue growing and supplying more clean power to millions of Americans.

The recent grilling of Solyndra executives before the House Energy and Commerce Committee was a headline-making affair – but it did little to address the real issue: the need to curb America’s dangerous addiction to foreign oil while investing in domestic energy.

What’s been lost in the fixation on Solyndra is the very real progress that the growing solar industry has made in addressing these problems. And it’s happening here in sunny Arizona.

Congresswoman Gabrielle Giffords (D-Ariz.) is a member of the House Committee on Science, Space and Technology and one of the most passionate supporters of solar energy in Congress. She played a key role in obtaining a $1.45 billion federal loan guarantee that enabled construction of Arizona’s largest solar power-generation plants near Gila Bend.

The congresswoman also had solar panels installed on her home in Tucson. She long has recognized the job creation potential associated with solar development. This potential is now coming to fruition.

Just a few weeks ago, Tempe-based First Solar celebrated the development of a new solar manufacturing plant in Mesa. This facility is the size of six Super Walmarts and will create more than 600 jobs.

Why did First Solar choose Arizona? In part, it’s because of the local demand for tens of thousands of solar panels from this factory that will be used by the Agua Fria solar generation facility near Yuma.

This project will be one of the largest of its kind in the world. It is employing hundreds of construction workers – a workforce that has been hit disproportionately hard by the recession. And it is made possible by the same Department of Energy loan guarantee as those made to Solyndra.

Unlike Solyndra, the Agua Fria success story is the norm for these loan guarantee projects – and it isn’t alone. The Abengoa project near Gila Bend and Sempra Energy’s Mesquite project west of Phoenix also are supported by loan guarantees and will create a total of 2,400 jobs. The fact is that the loan guarantee program is creating real high-wage employment opportunities.

It also is important to remember that the Solyndra guarantee represented only a small percentage of the total loan guarantee portfolio. Focusing on one failure at the expense of the entire portfolio ignores the fact that the purpose of the loan guarantee program is for the federal government to buy down the risk inherent in innovative new industries to spur private investment.

Finally, because the federal government owns the assets of companies that default, the Office of Management and Budget expects taxpayers to recoup at least half – and perhaps much more – of the value of the Solyndra loan.

The backlash against the solar industry has not been confined to the federal level. Here in Arizona, there has been a fair amount of criticism aimed at state solar incentive programs.

A typical argument contends that supporting clean energy means “picking winners and losers.” This tired phrase often is code for, “Let’s not do anything.” Inaction is picking a winner, but that winner isn’t America and it’s not Arizona.

Making the most of a competitive advantage is not the same as randomly “picking winners.” Arizona has the land, electrical transmission infrastructure, educated workforce, world-class research institutions and, of course, sunlight needed to make this state not just a solar leader, but an energy leader.

Identifying and capitalizing on comparative advantages is something most governments do. Certainly, the Chinese government has figured it out. It has invested more than $25 billion in solar over the last year alone – and it is paying off.

Those who use a free market argument to call for an end to government support for solar and other clean energy sources should focus the same attention on the billions of tax dollars a year that subsidize old energy sources, such as coal and nuclear.

We have the sun and we have the technology. Now let’s have a fact-based discussion on what it will take to harness the near-limitless solar resource and pull our economy forward.

Thomas Alston is solar outreach and policy coordinator for U.S. Rep. Gabrielle Giffords of Arizona.

Wednesday, October 19, 2011

Romney's bad business idea

With all due respect to my friend SC Treasury Curtis Loftis who is the state chairman of the Mitt Romney campaign, the GOP Presidential candidate has the wrong business approach to the housing and foreclosure crisis.
In a recent interview with the Las Vegas Review Journal, Romney said that the solution to both the housing and foreclosure problems is the same—let home foreclosures “hit the bottom”.  Government should just get out of the way and let the banks foreclose as fast as they can.  According to Romney, investors would then buy up the highly devalued properties and turn them into rental units.  With all the foreclosures out of the way then the housing construction industry would get back on track.
Besides Romney being viewed as cold and uncaring toward all the families he quickly wants to put on the street and the current small investors in rental property he wants to throw under the bus, his approach is a pretty lousy business plan.  
Romney and I both agree that the current supply of housing needs to be stabilized with owners that can pay the mortgages.  Only then will new houses start being built creating the construction jobs we really need to lift the economy.
But Romney’s approach requires that all property values continue to decrease (even for people who continue to live in their homes).   Generations of middle class Americans and those trying to break into that category will never recover the little wealth they’ve accumulated.   As the middle class goes down so will our vibrant small business economy both from a lack of customers and their own foreclosure problems.
Here is a better way to stabilize the housing market.

-2.2 million homes whose owners have received initial foreclosure notices or notices of default but haven't yet been foreclosed on.
-1.9 million properties whose owners are 90 days or more behind on their payments but haven't yet been served with foreclosure notices.
That’s 4.1 million homes that are soon to be put into the foreclosure bucket.  To put that into perspective the official number of all houses for sale in the nation is only 3.5 million.

Romney wants the economy to wait until all these houses are foreclosed on and resold, a process that will take years and a terrible toll on most Americans and even the banks holding the mortgages.
But here is a better business proposal for our country and the banks, one that I’ve blogged about before.
Let’s muscle the private banks and Fannie and Freddie to do everything in their power to keep the current home owners in their homes by letting them refinance at today’s rock bottom rates (no questions asked) and, if necessary, reducing the principle they owe. 
The banks know that the value of their housing portfolios isn’t worth anything near what they claim on their balance sheet.  So let’s stop the charade and force the banks to write down the losses right now.  If they all do it together, it will be alright for all of them. 
We’ll keep 4.1 million families in their homes, stop the slide in real estate values and immediately create demand for new housing.  And it can be done a lot faster than Romney’s prescription. 
The Obama Administration is expected to roll out a plan in the next few days to help homeowners refinance at today’s interest rates.  We’ll see what the plan is but I suspect that it won’t take on the banks and force them to do what really needs to be done. 
The Administration and Congress to start kicking butt.

Tuesday, October 18, 2011

Maybe I'll start drinking coffee

"Banks start to make more loans"
That was the heading of a New York Times Dealbook story today.  But if you’re in the market for a small business loan or line of credit, don’t get your hopes up.
According to the story, “Loan growth is still modest. And it remains heavily weighted toward the strongest corporate and consumer borrowers.”
So while big corporate loans and consumers are finding access to capital easier, small business is still suffering.  The SBA reports that loans to small businesses dropped again in the second quarter although not as much as they have since 2008.
In spite of all the talk by politicians and government officials of how important small businesses are to the recovery of our economy, the rhetoric has been all talk.  Even the most important federal legislation passed to deal with the problem (Small Business Loan Fund) has been undermined by the banks and regulators and just screwed up by the Treasury Department.
What we’re left with is a very frustrated private, non-financial sector trying to come up with ideas to by-pass the government and spur small business growth on its own.    
How about this idea from Starbucks--buy some coffee and make a donation for small business development?
As Joe Nocera writes in his New York Times column today, the Starbucks plan will work like this.

Americans themselves would start lending to small businesses, with Starbucks serving as the middleman. Starbucks would find financial institutions willing to loan to small businesses. Starbucks customers would be able to donate money to the effort when they bought their coffee.
Starbucks did find a partner with Community Development Financial Institutions (CDFIs) in a project to start November 1st.  You will even get a red-white-and-blue wristband with your $5 donation.

“Americans Helping Americans” is the theme.  We sure need something given the failure of our banks, Congress and the Administration on this critical issue.

Monday, October 17, 2011

The Governor's new job

For the second Sunday in a row, The State has given us first hand information regarding Governor Nikki Haley and her administration.  As a result of last week’s story, I formerly requested that the Governor and her economic development team meet with the South Carolina Small Business Chamber’s Board of Directors to discuss developing an agenda for promoting small business economic development.  (I have not received a response from the Governor’s Office as of yesterday.)
Jeff Wilkinson’s story yesterday revealed even more reason for the Small Business Chamber’s Board to meet with the Governor.
The story is about how South Carolina secured a commitment from Continental Tire to build a $500 million manufacturing plant here with an anticipated 1600 workers.   A $31 million infrastructure grant was a key to the deal.  Governor Haley told the reporter that grants for infrastructure were “a function of government”.  Surely this means that she supports the President’s call to create a national infrastructure bank in his American Jobs Act.
But there was even more interesting information about the Governor in the story.
“Haley said she gave company officials her cell phone number, telling them, ‘When you move to this state, I will become an employee of your company. I’m going to do everything I can to make sure you are successful.’”
The Governor also told the reporter, “I know if I can make sure those companies have cash flow and profit margins, they are going to hire more of our people. That is what this is all about: Jobs.”
These comments obviously raise some questions.
Does the Governor see her role as being the “employee” of big corporations?  What about the real job creators, small businesses, that she and every other politician like to pledge their loyalty?  When the interests of big corporations clash with the interests of small business, whose side will she be on?  And what do small businesses have to do for the Governor to say that she is our employee (to say nothing about the rest of our citizenry)?  What is the Governor doing to make sure that the tens of thousands of small businesses in our state have cash flow and profit margins? 
Final question—can I get the Governor’s cell phone number?

Saturday, October 15, 2011

Signs of the times

Here are some signs from Saturday' Occupy Columbia event at the State House.









 Then there was this lonely counter demontrator.  I had to ask a lot of people to tell me what the bottom left image was.  Apparently it stands for anarchy. 


Friday, October 14, 2011

Occupy Wall Street comes to South Carolina

Tomorrow at 9 a.m. at the State House in Columbia, citizens will gather in an Occupy Columbia rally.  The event will go on all day if not beyond.
Yesterday, Occupy Spartanburg took place.   The event inspired an NPR report that tells about the desperate job situation in Spartanburg that reflects what is happening in many Southern cities.  Listen here.

Thursday, October 13, 2011

Millionaire challenge

Tuesday I challenged any real business owner making over $1 million a year to contact me to discuss the proposed millionaire surtax to pay for the President’s American Jobs Act.   (A new NBC News/Wall Street Journal poll shows about 64% public approval for both the surtax and jobs plan). 
The U.S. Chamber, National Federation of Independent Business (NFIB) and the rest of the millionaire defenders club called The Tax Relief Coalition claim that 80% of taxpayers making over a million a year are “business owners”.   Since there are 4500 South Carolina taxpayers with this kind of income, that would mean that there are 3600 “business owners” making $1 million a year.  Surely one of these people could accept my challenge.
As of today, no one has contacted me and now I know why.  The numbers from the Coalition are phony (what a surprise).  According to the Tax Policy Center only 1 percent of taxpayers reporting any business income make over $1 million a year. 

So there are really only about 45 South Carolinians who could accept my challenge.  And I’m willing to bet that few if any of these 45 actually run a small business.  The rest are passive investors not Main Street business folks.

Never-the-less, the fear mongering on how increasing taxes on the very wealthy will hurt small businesses continues.  An analysis that debunks all the funny math in these arguments can be found in a piece by Zach Carter and Sam Stein in today’s Huffington Post.  Check it out.   

Wednesday, October 12, 2011

Small businesses failed once again

The news story below is a sad tale of how partisan politics, lack of administrative focus and regulatory slowness turned what should have been a boost for small business into a failed effort.  Nobody supported the Small Business Lending Fund more than I did.  I even participated in a press conference at the Capitol with U.S. Senators to push for passage of the Small Business Jobs Act that included the Fund. 

Lack of demand was not the reason for the Fund’s failure.  There was plenty of demand for small business loans when the idea was first presented by President Obama in January of 2010.  But Republicans in Congress with the support of the US Chamber, big banks and even the NFIB delayed passage of the bill for months while loading it up with too many limiting-bank qualifications.  Then Treasury didn't move fast enough with the regulations. 

But there is still demand out there for small business loans.  We just need a better and FASTER delivery system—and less partisan politics.
----------------------------------------------------------------
Slate
October 11, 2011

Take Our Free Money, Please!
Why Obama’s $30 billion small-business loan program has flopped.

What happened to Obama's plan to help small businesses?
When the recovery started to flag in 2010, the Obama White House and Congressional Democrats attempted to pass a series of stimulus bills. A $150 billion, spending-heavy jobs package became $17.5 billion in tax cuts. Proposals for aid for the unemployed and the extension of Recovery Act programs faltered. But one bill that did pass was the Small Business Jobs Act, a law designed to funnel cheap money to small businesses.
The signature portion of the bill was the Small Business Lending Fund, a $30-billion pool of money for small banks meant to facilitate lending to small businesses. Little, local companies, the White House had long held, were the “engine” of the recovery and the creators of job growth. Help them, and you’d help the economy get back to growing.
Reading Treasury Department’s recent reports on the Small Business Lending Fund, you might think it had actually worked. “Billions of dollars in SBLF funds are now being put to use in communities all across the nation, spurring small business growth and job creation,” Deputy Secretary of the Treasury Neal Wolin said in a press release last month. The investment “is good for our economy and good for America’s small businesses.”
Treasury’s sunny spin aside, the program has largely flopped. It expired at the end of September having disbursed not $30 billion, or $15 billion, or even $5 billion. The SBLF is returning $26 billion to the government’s coffers. According to the Treasury Department, just 933 out of the country’s 7,700 or so community banks applied to the program. They requested just $12 billion in loans. And one-third of that sum got approved.
What happened? Well, first off, community banking organizations and small banks themselves argue that Treasury and the Federal Reserve made the program’s requirements too stringent and that they were too slow to get it off the ground. Treasury only started approving applications in early July, three months before the program’s expiration date.
The Independent Community Bankers of America lobbying group, for instance, sent repeated public letters to Treasury, asking it to clarify and loosen requirements and speed the application process. In September, with the program’s sunset in sight, it wrote: “[We] again implore Treasury and all the bank regulators to do everything in their power to ensure all SBLF applicants’ concerns are addressed … We urge Treasury to respond expeditiously to the community banks that still have questions and concerns … [W]e ask that Treasury take a hard second look.” In its defense, Treasury says that many of the community banks’ applications just did not pass muster: The banks could not prove they could make required dividend payments, or they already had missed a Treasury payment, or they were on a problem-bank list.
More troubling, the $4 billion in loans the government did make might not really help small businesses anyway. A Wall Street Journal analysis of Treasury data found that about half of the banks that took cash from the fund used some of it to pay back the Troubled Asset Relief Program. Rather than giving money to the restaurant around the corner or the startup in your neighbor’s garage, the banks gave it right back to Uncle Sam, bettering their balance sheets but doing little to spur business expansion or job growth. The Chamber of Commerce howled, branding the program little better than a bailout for small banks.
But there is another reason the program faltered—and might never have been able to succeed in the first place. Small businesses need credit to grow, to acquire equipment and hire workers to make sure more and more customers come in. But if small businesses don’t really believe that those customers are going to come in, well, they tend not to want to take on any debt. At some point, the problem isn’t a lack of credit. It’s an economy-wide lack of demand.
Have we hit that point? Almost certainly, and we’ve been there for years. According to the National Federation of Independent Business, the small business lobbying group, company owners routinely cite a lack of sales as the biggest problem for their business, more so than onerous regulatory requirements, high taxes, or trouble getting loans.
At a congressional hearing last week, Rep. Nydia Velazquez, D-N.Y., therefore argued that the whole program was misguided, “[wasting] today’s resources on yesterday’s problems.” In response, Treasury Secretary Timothy Geithner admitted, “We’re a little surprised by the take up” but maintained the program was “well targeted.”
In a way, they both right. Small businesses could use loans, and Treasury should be taking on risk and bending over backwards to make sure small banks are throwing free money at them. But that free money through the back door is no substitute for a flood of customers through your front door.

Tuesday, October 11, 2011

Millionaire defenders club

A procedural vote this week, possibly even today, in the US Senate will determine if President Obama’s American Jobs Act even gets to be debated on the Senate floor.  The bill doesn’t have a chance of passing the Senate because it, as most legislation now, can’t get the 60 votes needed to overcome a GOP filibuster.
The bill is projected to create 1.9 million jobs.  Like it or hate it, it’s still a concrete proposal to do something about the lack of new jobs.  The American public deserves a legislative debate and vote. 
The Senate Democrats changed the funding for the jobs bill to a surtax of 5.6% of any income over $1 million to attract more votes.  As an example, that would be an extra $5,600 in taxes for someone making $1.1 million.  
I predicted this move a while ago simply because it will resonate with most voters regardless of political persuasion.
But not so for the defenders of millionaires.  There is actually a new organization called The Tax Relief Coalition that apparently thinks that people making over a million a year pay too much tax.   The U.S. Chamber of Commerce and the National Federation of Independent Business (NFIB) are members of the millionaire defender club.
The Coalition claims that 80% of the 2007 taxpayers reporting more than a million dollars in income were “business owners”. 
I’ve talked about this sleight of hand statistics before when the issue was people making more than $250,000 a year.  With a million dollar income benchmark, it is even more true that the vast, vast, vast majority of these folks are only claiming some income from a business investment (they don’t run the business) or are hedge fund managers, K Street lobbyists, or some other very successful professionals.  They’re not Main Street business owners.
In South Carolina there are 4500 taxpayers reporting over a million dollars in income.  If the Coalition is correct, then there should be 3600 “business owners” in this income category. 
I challenge just one of these “business owners” making over a million a year to contact me to discuss this issue.  Just one.   Please!!!!

Monday, October 10, 2011

Letter to Governor Nikki Haley

October 10, 2011

The Honorable Nikki Haley
Governor
State House
Columbia, SC

Dear Governor Haley,

In an interview reported in The State yesterday you indicated your desire to revise the South Carolina tax code.  Specifically you mentioned that one of the goals of this process would be to phase out the corporate income tax in an effort to encourage companies to locate in our state.

As you know, the vast majority of small businesses in South Carolina are not organized for tax purposes as C-Corporations.  Consequently, the Mom and Pop businesses you are quoted as saying we “need to be helping” will not be directly helped by reducing or eliminating the corporate income tax.

We at the South Carolina Small Business Chamber of Commerce would like to work with you in developing a small business agenda to promote economic growth and job creation.  Our Board of Directors would like to meet you and your economic development team to discuss this issue. 

Given that the legislative session will start in just three months, a prompt reply to our request for a meeting is essential.

Sincerely,

Frank Knapp, Jr.
President & CEO

Friday, October 7, 2011

ASBC & OccupyDC

Sorry for the lack of personal posts this week.  I was in DC Wednesday and Thursday for the American Sustainable Business Council annual meeting.  I’ve been honored to serve as Vice Chair of the Board. 
We had some great meetings the first day hearing from representatives from the EPA and the President’s economic team.  That night there was an elaborate reception for ASBC at the home of John Jameson, an old friend.
Thursday started off with presentations from Irasema Garza, Chief of Staff to Department of Labor Secretary Hilda Solis, and Deputy Secretary of the Department of Agriculture Kathleen Merrigan.  Then the ASBC folks were off for a day to visit 30 Congressional offices.
But it wasn’t all work for me.  I squeezed in some time to join the OccupyDC rally at Freedom Square just blocks from the Capital.  It was a big crowd, full of energy and rage against corporate greed.  Here is how Public Citizen describes the Occupy movement.
It’s no mystery why the Occupy Wall Street and related protests are capturing the country’s attention. Americans are furious about the state of our nation, and they’re right to be. Millions of people are out of work because of Wall Street’s recklessness. Millions more have been thrown out of their homes for the same reason. Meanwhile, the federal government fails to take obvious steps to address these problems because of the outsized influence of the very Wall Street firms and giant corporations that caused our economic problems. The country is past due for a mass protest movement demanding justice.
Occupy is a growing movement and one that every small business owner needs to learn about and even support.  The message is all about creating jobs and maintaining a strong middle class.  In small business speak—that means creating the customers we desperately need

Thursday, October 6, 2011

POLL: Small Businesses Support Strong National Standards to Increase Energy Innovation, Prosperity for Small Firms


Small Business Majority: Small business owners don’t believe the anti-regulatory hype

Washington, D.C. – Small business owners support strong national standards to increase energy innovation, according to a new national opinion poll of 1,200 small business owners released today by Small Business Majority. The poll, conducted by Greenberg Quinlan Rosner Research, found that 87 percent of small business owners agree that “improving innovation and energy efficiency are good ways to increase prosperity for small businesses.” It also found strong support for higher mileage standards for passenger vehicles and the Environmental Protection Agency’s regulation of greenhouse gas emissions from power plants, refineries and other major emitters.

“Small businesses understand that to survive in this tough economy they need to innovate, and that strong energy efficiency standards will assist them in doing so by helping them save money in their own business and creating new market opportunities,” said John Arensmeyer, founder and CEO of Small Business Majority. “Right now, helping small businesses grow and put Americans back to work should be the number one priority.”

When asked about the biggest challenges facing their small businesses, only 13 percent identified “government regulations” as their top concern. Instead, 43 percent of business owners said the rising costs of doing business—including the cost of fuel, electricity, heating and cooling costs—was a top concern and 46 percent cited uncertainty about the economy.

"Small businesses owners get that stronger standards translates into more jobs and a boost to our struggling economy: a win-win for everyone. As the former chairman of the small business committee, I know that small businesses are the drivers of our economy, and we'd be wise to listen to our primary job creators," said Senator John Kerry.

Small business owners also overwhelmingly support EPA regulation of carbon emissions. By a 3:1 margin, small business owners across the nation support the EPA regulating carbon emissions that cause climate change.

Support is also high in states with large manufacturing sectors like Michigan (73 percent) and Ohio (75 percent) of small business owner’s supportive of the EPA regulating carbon emissions. The supportive trend continued in other oversampled states of California (71 percent) and Minnesota (73 percent).

“EPA regulation of carbon emissions would directly affect my business by encouraging investments in renewable energy,” said Stefanie Penn Spear, president of Expedite Renewable Energy in Chagrin Falls, Ohio. “In addition, the economic uncertainty small business owners experience today would decline, since regulation of carbon emissions would stabilize the market place, and entrepreneurs would have concrete goals for the future and begin to innovate accordingly.”

On the issue of passenger vehicle fuel efficiency, Small Business Majority finds that 87 percent of small business owners overwhelmingly support adopting strong standards now, and 80 percent support requiring the auto industry to increase mileage to 60 mpg by 2025.

In July, President Obama announced an agreement with automakers to adopt a federal 54.5 mpg standards by the year 2025. “Higher fuel standards would allow me to expand my business immediately and they would boost my employees’ spending power as consumers,” said Jonathan Tobias, owner of Michigan Green Cabs in Ann Arbor, Michigan. “In my industry, employees pay fuel prices for the vehicles I supply. If I could give drivers 60 mpg cars, they'd be lining up to work for me since they'd net more pay than they would elsewhere.”

Small business owners say stronger gas mileage standards will help American automakers innovate, improve efficiency and compete in the global economy; 73 percent of poll respondents believe the federal government should do more to make American car companies innovate and 71 percent believe American car companies do not innovate enough.
Other findings from the poll include:

Small business owners recognize the value of energy efficiency, clean energy and cutting waste.
  • 68 percent of small business owners have installed energy-saving measures such as energy efficient light bulbs, appliances, windows and insulation.
  • 78 percent recycle.
  • 12 percent have bought hybrid, electric, or alternative fuel vehicles.