Opinion Polling Shows Small Business Owners Support Ending Government Subsidies to Oil and Gas Companies

Small Business Majority releases opinion polling showing small business owners strongly support eliminating subsidies to oil and gas companies, even if it means an increase in gas prices

March 29, 2012

Small business owners strongly support ending government subsidies to gas and oil companies, with 73 percent agreeing tax breaks for oil and gas companies should be eliminated and 60 percent supporting the idea even if it means a small increase in gas prices, according to opinion polling released today by Small Business Majority.

 

The polling, which was conducted over the past week in six states (Ohio, Michigan, Pennsylvania, Colorado, Virginia and Nevada), comes on the heels of a statement President Obama made in the White House Rose Garden Thursday urging Congress to end tax breaks to the largest oil companies. Despite this strong support, the Senate failed to pass a bill that would do just that in a 51-47 vote Thursday. The majority of senators stood with small businesses to end subsidies, however a 60-vote majority was needed to pass the bill.

 

“Large oil and gas companies have been and continue to post record profits, while our primary job creators are struggling to stay afloat,” said John Arensmeyer, founder and CEO of Small Business Majority. “Instead of providing tax breaks to these large firms we should be focusing on measures that will directly benefit small businesses competing in a modern, innovative, clean energy-based 21^st Century economy. Lawmakers need to start listening to what small business owners are saying and act accordingly.”

 

Additional findings include:

• 41 percent strongly favor eliminating subsidies, while only 10 percent strongly oppose
• 32 percent strongly favor eliminating subsidies even if it means an increase in gas prices, while only 18 percent strongly oppose

For more information on the poll, visit http://www.smallbusinessmajority.org/small-business-research/clean-energy/

Round three...reality sets in

Now the waiting begins…Oh, and the PR efforts continue in an effort to influence the final decision.

The Supreme Court had its hearings, all sides had their say, and the reality sets in.

But it’s not the reality for all Americans that the Affordable Care Act come July might be intact, altered or gone entirely. 

No, the reality setting in is the one on the Justices themselves.  The consequences of their decision are weighing very heavily on them.  Yesterday’s flippant comment by Paul Clement, attorney for the plaintiff states, surely raised the Justices anxiety over their decision.   “It won’t be a big deal”, said Clement, for Congress to simply re-pass the Affordable Care Act (ACA) minus the parts the Court might rule to be unconstitutional causing the whole law to be thrown out.

This polarized Congress is not going to easily fix anything. 

If the ACA goes, there is no hope for ever having affordable health care for individuals or small businesses.  Americans with pre-existing conditions will never be able to have individual coverage.  Policyholders who get very ill will continue to have healthcare coverage cancelled or their premiums skyrocket.  More small businesses will drop this employee benefit.  Seniors will again start paying more when they hit the donut hole.  Young adults will be thrown off their parents healthcare policies.  No healthcare CO-OPs will be created to compete with private health insurance companies.  They’ll be more and more uninsured Americans shifting healthcare costs to those who do have insurance until the system implodes completely.

Rep. Gerald Connolly of Virginia is absolutely correct.  If the Court strikes down the individual mandate, “you go back to the law of the jungle in America.”

That is the reality weighing heavily on the Justices.  They can let the work of Congress stand or return the country to the jungle ruled by the insurance industry.  There are no other options.

Round two

The media reported that the government’s attorney, Solicitor General Donald Verrilli Jr., had a tough day yesterday arguing in front of the Supreme Court that the Affordable Care Act’s individual mandate was constitutional.  His opening remarks were apparently not as coherent as they should have been and he consequently sustained some very negative questions from the Justices.

Former Solicitor General Paul Clement, arguing for the 26 plaintiff states against the mandate, is reported to have done quite well in his arguments.  However, predicting the outcome based on questions from the Justices is apparently not a science experts caution.

But there was another attorney presenting to the Court yesterday who news reports have barely mentioned if at all—Michael Carvin who is representing the National Federation of Independent Business.  How did he do?

Here is how Elizabeth Wydra, Chief Counsel for the Constitutional Accountability Center, who was in the Chamber described Mr. Carvin’s performance in a radio interview with me yesterday afternoon.

“He was very bombastic almost to the point where I think it was not really your typical Supreme Court behavior.   There is a sense of decorum there.  This isn’t Bill O’Reilly.  This is the Supreme Court of the United States.  I think that might have actually have turned off some of the Justices like Justice Kennedy and Chief Justice Roberts.”

We can only hope.

You can hear yesterday’s entire interview with Ms. Wydra here.  She will again be my radio guest today at 5:25 EST and you can hear it live here.

Round one

So you didn’t get one of the approximately 170 seats in the Supreme Court for yesterday’s opening hearing on the Affordable Care Act (ACA).  Well, I didn’t either but I did get to talk to someone who was in the Chamber.

Elizabeth Wydra is the chief counsel for the Constitutional Accountability Center.  She practices before the Supreme Court and was seated in in the exclusive Well of the Court restricted to members of the Supreme Court bar. 

I talked with Ms. Wydra on my radio show yesterday afternoon.  You can hear her take on Monday’s proceeding here.  She’ll be back on my show today at 5:44 EST to give her timely assessment of the arguments on the constitutionality of the individual mandate and which side she thinks scored the best points. 

So what do Ms. Wydra’s fellow Supreme Court-practicing attorneys and former Supreme Court clerks think will be the final Court ruling?  A poll released yesterday showed that almost 75% agreed that the Court would make a ruling this year and not wait until 2015 (yesterday’ issue).  The good news for ACA supporters is that 65% thought that Supreme Court would uphold the constitutionality of the individual mandate and 81% said that the Medicaid expansion (Wednesday’s issue) would also be upheld. 

You can listen to my interview with Ms. Wydra live by clicking here.

NFIB continues the fraud

The National Federation of Independent Business (NFIB) is basking in the media attention as being one of the plaintiffs against the Affordable Care Act.  The Supreme Court starts hearing the case today.  (Yesterday the New York Times did an excellent short summary of what will happen during each of the three days.)

Today I received a press release from the NFIB listing their individual plaintiff’s in this case.  These include 2 small business owners, an unemployed worker and a retired person.  Since the NFIB purports to be the nation’s leading small-business association, I thought it would be interesting to learn more about the 2 small-business owners they secured for their lawsuit.

One is David Klemencic, who owns Ellenboro Floors in Ellenboro, West Virginia.  I called his business number and got to talk to his mother.  According to her, Ellenboro Floors doesn’t have any employees.

I also called Dana Grimes, who owns Premier Renovations in Greenwich, New York, but only got his answering machine.  His business does not have a website but I found a Better Business Bureau report that shows that the company is a sole proprietorship that does roofing and light carpentry.  There was no mention of how many employees Mr. Grimes has if any.

The NFIB claims to have hundreds of thousands of members yet these are the only business-owner plaintiffs they could find for the lawsuit???

Maybe the NFIB, as I have said before, isn’t really representing the interests of small businesses.  Certainly they aren’t representing the interests of Mike Roach.

Mike Roach, owner of Paloma Clothing in Portland, Ore, and a 36-year member of the NFIB, said he welcomes healthcare reform to help shoulder the costs of healthcare. "The costs have been crushing us. If nothing was done about healthcare costs, we’d either have to cut benefits or lay off some of our employees — neither of which we want to do. The fact of the matter is the new law has already started helping us. We'll likely get more than $7,000 back this year from the small business tax credits.”  CNBC (March 26, 2012)

I bet the NFIB never asked Mike Roach to join the lawsuit.

Happy B-Day ACA and Success in U.S. Senate

The Affordable Care Act turns 2 today (read my op.ed here) while we all wait for the Supreme Court hearing on the constitutionality of the individual mandate to start next week.  More on that on Monday.

Yesterday was a big and surprising victory in the U.S. Senate.  The CROWDFUND Act that we, the American Sustainable Business Council and other organizations were supporting was successfully amended onto the JOBS Act.  Thanks to all who contacted your Senators in this important effort to help small and mid-size businesses have more access to capital without throwing the doors open to fraud and abuse.

Cracking down on China’s unfair trade

The argument that “free” trade will create more jobs here in the U.S. stands in stark contrast to the facts.  Since the 2001 trade deal with China we’ve lost 6 million manufacturing jobs here at home.

The calls for “fair” trade are growing.  Our manufacturers find it almost impossible to compete with foreign manufacturers that freely pollute and pay only dollars per day to workers toiling in substandard  conditions.  These foreign manufacturers are often subsidized by their governments in violation of World Trade Organization rules. 

Former South Carolina Senator Fritz Hollings wrote a great opinion editorial in 2010--“Wake up, American, or lose the trade war--that is a must read to understand the importance of fighting and winning trade wars instead of retreating as the U.S. does. 

In his State of the Union address this year President Obama called for tougher trade enforcement to give our manufacturers a more level playing field to compete.   I expressed my hope that he meant what he said and that we should support him.

This week the Obama Administration’s Department of Commerce announced that new tariffs were coming for Chinese solar panels.  The story from The Hill is below. 

Let’s hope there is more of this willingness to fight for our manufacturers to come.

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The Hill
March 21, 2012

US imposes tariffs on Chinese solar imports

By Andrew Restuccia - 03/20/12 03:46 PM ET

The Commerce Department said Tuesday it will impose tariffs on Chinese solar panels imported into the United States.

In a preliminary decision, the department found China is unfairly subsidizing certain solar panels. As a result, the department ordered U.S. Customs and Border Protection to impose tariffs of 2.90 to 4.73 percent in the form of cash deposits or bonds on Chinese solar panels imported into the United States.

The finding is a major victory for a group of U.S. solar panel manufacturers that alleges China is flooding the U.S. market with underpriced solar panels and subsidizing its solar industry in a way that violates World Trade Organization rules.

The companies filed a petition with the Commerce Department and the International Trade Commission last year requesting the tariffs.

“Today’s announcement affirms what U.S. manufacturers have long known: Chinese manufacturers have received unfair and WTO-illegal subsidies,” said Steve Ostrenga, CEO of Helios Solar Works in Milwaukee, Wis., in a statement. Ostrenga is a member of the Coalition for American Solar Manufacturing, which supports imposing tariffs on Chinese solar imports.

“We appreciate the Commerce Department’s hard work in bringing these subsidies to light, and we look forward to addressing all of China’s unfair trade practices in the solar industry,” he said.

The trade case has caused a rift in the solar industry, with power generators and others who have benefited from low-price panels raising concerns that the petition will drive up costs.

But Rhone Resch, president of the Solar Energy Industries Association, a solar industry trade group, said in a statement that the tariffs will likely not have a “material impact on the U.S. market.”

SEIA, pointing to the decision, called on companies to launch “global and regional dialogues on trade and competitiveness and the role of government in encouraging development of the global solar energy industry.”

The Commerce Department said Tuesday it will make a final decision on the tariffs in June. The International Trade Commission will then need to finalize its finding that Chinese solar imports harm the U.S. solar industry before a final order can be issued. An ITC decision is expected in July.

The Commerce Department is separately weighing whether China is flooding the U.S. market with underpriced solar panels. The department will make its preliminary determination on May 17.

http://thehill.com/blogs/e2-wire/e2-wire/217091-us-imposes-tariffs-on-chinese-solar-imports

Small business deceived on E-Verify mandate

Last June Governor Haley convinced House and Senate Republicans that the new immigration law they wanted to pass just had to have a mandatory E-Verify provision because of a recent Supreme Court decision.  According to the Governor’s interpretation of that decision, only the federal E-Verify data base could be used to determine a person’s citizenship status.  Since the immigration bill would prohibit South Carolina businesses from hiring undocumented workers, E-Verify then must be performed on every new hire in the state.  That provision was put into the bill that passed.

In the debate on the bill we were told that every business in South Carolina would be required to use E-Verify.  No exceptions.  Our efforts to exclude our state’s smallest businesses were said to be unconstitutional.  ALL BUSINESSES MUST USE E-VERIFY OR FACE THE POSSIBILITY OF LOSING THEIR BUSINESS LICENSES.

All of this was untrue.

I first learned of the intentional loopholes in the new law back in December.  Since then I’ve tried to find legislators willing to support new legislation that would either exempt small businesses with less than 25 employees from the E-Verify mandate or to put the burden on the Department of Motor Vehicles to do the E-Verify and put the results on drivers licenses or other official state ID.  We even had legislation drafted.  I couldn’t find any takers.

Now the media has picked up on the story starting with a front-page piece in The State this past Sunday, followed by some national Hispanic press and then today’s story in the Free Times.

A new data-based report came out this week ranking South Carolina among the worst states on transparency, accountability and anti-corruption.  Read the news stories on this E-Verify deception and you decide if the new report is accurate. 

Webinar: Affordable Care Act Benefits for Small Business

The Affordable Care Act signed into law two years ago this Friday continues to inspire controversy and misinformation for small-business owners.  What exactly are the benefits and requirements for small businesses will be addressed in a free webinar sponsored by the South Carolina Small Business Chamber of Commerce (SCSBCC).  The webinar will be held from 5:00 to 6:00 PM, Wednesday March 21^st. 

Small-business owners are encouraged to participate in the webinar and hear from the SCSBCC President and CEO, Frank Knapp Jr., who will provide information on health insurance tax credits and an affordable high risk pool for people with pre-existing conditions.  Mr. Knapp will also discuss new features in the Affordable Care Act to be rolled out as well as proposed changes to the law. 

Joining Mr. Knapp will be Lee Long of Gibson & Associates, an independent insurance agency headquartered in Columbia.  Mr. Long will share information about a new small business health plan offered through the SCSBCC.   The health plan was created by Carolina Care Plan specifically for South Carolina small businesses.  The benefit-rich plan has proved to be very competitive offering up to double-digit reductions in premiums for many small businesses.

The webinar is free.  To register small businesses should contact Sheila Starkey at Sheila@scsbc.org to receive the link to the webinar.

ACTION ALERT!!!

Access to Capital vote on Tuesday
Tell Graham and DeMint to do it the right way

The U.S. Senate will vote tomorrow (March 20^th) on legislation to create another path for small businesses to access capital.  The Small Business Chamber has supported the idea of allowing limited investments in small businesses with relatively low caps on total investments sought.  This is called “crowdfunding”.  In exchange for limited investment caps, the Security and Exchange Commission’s (SEC) normal requirements would be reduced to eliminate much of the cost and time for compliance that prohibits most small businesses from accessing investment capital.

However, “crowdfunding” legislation done properly is a careful balance between reducing investor risk through low investment caps and thus lowering SEC oversight.  We have worked with a bi-partisan group of Senators to achieve this balance.   Unfortunately, the U.S. House has passed and sent to the Senate legislation (JOBS Act) that includes a “crowdfunding” provision that throws this careful balance out the window and will bring the greed and fraud on Wall Street that gave us the Great Recession to Main Street investments.  

Senator Mary Landrieu of Louisiana has characterizes the vote tomorrow this way.  ““There's a right way to get capital in the hands of small businesses and a wrong way.  If we take the wrong path and fall off of a cliff, we are going to ruin our chances to get this done.” 

Please contact S.C. Senators Graham and DeMint quickly.  Below are two easy ways to do this.  Your message should be twofold:

Vote YES for cloture on Reed-Landrieu-Levin’s Substitute Amendment to the JOBS Act.

If Reed-Landrieu-Levin fails, Vote NO for cloture on the House Bill (H.R. 3606)

The first vote would substitute the Senate INVEST Act that includes our crowdfunding provision for the JOBS Act.  The latter vote will insure more debate and amendments to the JOBS Act so that we “don’t fall off of a cliff”.

Send your message to our Senators in an email letter provided by the American Sustainable Business Council.  Click here to send email.

Or call both our Senators and give the above message.

Senator Jim DeMint 
202-224-6121

Senator  Lindsey Graham 
202-224-5972

Thanks for your help.

Crowdfunding Proposal Hits Snag

By Eliza Newlin Carney
Roll Call Staff
March 15, 2012, Midnight

As the Senate prepares to take up the House-passed Jumpstart Our Business Startups Act, a popular proposal to free up capital through “crowdfunding” has pitted consumer advocates against entrepreneurs.

The idea behind crowdfunding is simple: Instead of going to a bank for loan, a startup or small company seeking capital makes an “open call” to a community of potential small donors who pool their resources, typically on the Internet.

President Barack Obama touted the power of crowdfunding in his American Jobs Act last year and in his legislative agenda last month. Support for the concept has come from such strange bedfellows as Silicon Valley executives, artistic nonprofits, the U.S. Chamber of Commerce and associations representing self-employed, female, minority and small-business owners.

The recession “has been terribly difficult for small businesses,” said Frank Knapp Jr., president and CEO of the South Carolina Small Business Chamber of Commerce. “The loans have dried up dramatically, both for outright loans or for lines of credit. The financial institutions are gun shy now of making ‘risky’ loans.”

Knapp’s group belongs to the American Sustainable Business Council, an association that promotes corporate and social responsibility and that is pushing for crowdfunding proposals on Capitol Hill.

The broad appeal of crowdfunding helps explain why the House passed the JOBS Act by a generous 390-23 margin last week. In addition to clearing the way for crowdfunding over the Internet, that bill includes several other measures aimed at boosting small businesses and entrepreneurs.

These include measures that would relax Securities and Exchange Commission regulations on a new class of “emerging-growth companies” and for companies seeking to go public and to solicit capital through ads. Obama has signaled support for the legislation, and Senate Majority Leader Harry Reid (D-Nev.) was expected to take up the House version of the JOBS Act today and open it to amendments.

But consumer advocates, watchdog groups and some economists are raising alarms. Taken together, the JOBS Act’s various provisions represent a dramatic rollback of financial regulations that date back to the Great Depression, they argue. It would reverse protections enacted with the Dodd-Frank financial reforms, some warn.

“We’re all for channeling capital to small businesses,” said Marcus Stanley, policy director of Americans for Financial Reform. “At the same time, we have banks for a reason, as opposed to people standing on the street corner taking shares in companies. So you’ve got to strike a balance.”

Columbia University law professor John Coffee Jr. testified on Capitol Hill in December that rolling back SEC registration and disclosure requirements for companies seeking crowdfunding invites what’s known as “boiler room” fraud, in which scam artists create phantom companies and solicit investors by phone, email and other means.

Even some advocates of crowdfunding warn that the JOBS Act should not become a vehicle for throwing out too many SEC regulations. “We’re concerned about deregulating the process too much,” Knapp said. “For those who want to raise a great deal of money, there have to be safeguards for the consumer.”

The American Sustainable Business Council wrote to Senate leaders Wednesday to endorse an alternative crowdfunding bill introduced by Sen. Jeff Merkley (D-Ore.). Co-sponsored by Sens. Michael Bennet (D-Colo.), Scott Brown (R-Mass.) and Mary Landrieu (D-La.), the bill includes tougher rules than those in the House JOBS Act, such as stronger disclosure rules and a registration requirement for Internet crowdfunding sites.

The Merkley bill is said to have the blessing of such heavyweights as Google and YouTube. AOL co-founder Steve Case also praised crowdfunding this week in an interview with CEO Wire. Merkley is expected to push his approach as a JOBS Act amendment when the Senate takes up the bill.

Crowdfunding will let “small investors to pool their resources to fund promising new ventures,” he said in a statement. “At the same time, this bill protects those investors and sets fair rules of the road.”
The question for eager entrepreneurs is whether other more sweeping deregulations in the JOBS Act prove too controversial for the Senate — and the president — to swallow.

Original Article

Access to capital through crowdfunding

This week I’m off to DC to join David Levine, co-founder and director of the American Sustainable Business Council, in a media tour for the ASBC (I serve as vice-chair of the organization).  We will be doing a few other things including have discussions with the Americans for Financial Reform and hopefully some Congressional staff on the issue of crowdfunding.

I first mentioned crowdfunding as a potential tool for small businesses and entrepreneurs to have access to capital way back on November 17, 2010.  At that time only a few organizations, including the ASBC and the SC Small Business Chamber of Commerce (SCSBCC), were aggressively supporting changing SEC regulations to allow crowdfunding and we thought it was a long shot.  My have things changed.

First President Obama announced his support and instructed the SEC to seriously consider it.  Then the House overwhelmingly passed a version of crowdfunding.   Then bills were introduced in the Senate.  The House just recently passed more legislation including crowdfunding again and this week there may be action in the Senate.

But with all this relatively rapid action there is the distinct possibility that the original crowdfunding concept to really help small business will be lost as Congress and special interest groups expand the concept well beyond the initial idea.  The ASBC and SCSBCC will be working in DC this week to protect our small business interests.

The ASBC has posted on their website (also below) a good overview of how crowdfunding can help small business.  I’ll keep you informed of actions on the Hill.

Crowdfunding: Accessing Capital for Small Business

Given the challenges small businesses and entrepreneurs face in raising capital to help them grow and compete, the crowdfunding concept is a viable solution. Crowdfunding, especially in the context of community-based financing of local projects, has the potential when done correctly to be a very useful tool in opening up access to capital for business. Crowdfunding simply put is raising investment funding in small increments from a large number of people often through Internet marketing.

Current Securities and Exchange Commission (SEC) rules make this type of small dollar investments cost prohibitive due to registration and reporting requirements at both the state and federal level. Since 2010, ASBC has been one of the earliest supporters of crowdfunding as a vehicle for small business to gain access to capital. ASBC has worked on Capitol Hill to insure that the interests of locally-owned small businesses and entrepreneurs are properly served in the development of crowdfunding legislation.

Legislation is moving through Congress that would create a Crowdfunding exemption to the SEC regulations. The House passed the McHenry bill, the Entrepreneur Access to Capital Act (HR. 2930), with an overwhelming bipartisan majority. In the Senate, two bills are pending: Democratizing Access to Capital Act (S.1791) by Sen. Scott Brown (MA) and the CROWDFUND Act (S.1970) by Sen. Jeff Merkley (OR). We applaud the work of both senators.

It is vitally important for any crowdfunding legislation to allow small businesses to pursue maximum investments of $100 or slightly higher from individuals with an aggregate cap on total capital raised in the range of $100,000. Low individual investor limits combined with aggregate caps promote community-based economic support for local businesses while keeping potential investor losses and fraud risks relatively low; these limits allow relatively light SEC oversight.

We understand the argument for making intermediaries optional, since many small business owners and investors are not tech-savvy and may not be comfortable investing via an unfamiliar third-party platform. However, further work is needed to ensure sufficient investor protections without requiring an intermediary. We support strong and enforceable investor protections that won’t unnecessarily restrict the flow of capital within local communities and to local projects.

Because individual state laws on investments pose an obstacle to crowdfunding, the federal law should override state regulations.

For more information, or to get involved in the working group that manages this campaign, please contact us.

Small businesses do it again on jobs

Small businesses once again led the charge in creating new jobs in February.  According to the Bureau of Labor Statistics, 227,000 new jobs were created last month, higher than what economists had anticipated and following 243,000 being added in January.  This is third month in a row of over 200,000 new jobs being added to business payrolls.

Small businesses (1-49 employees) according to the ADP National Employment Report were the number one job creators once again, being responsible for 50% of all new nonfarm private sector jobs.  Medium size businesses (50-499 employees) added 40.7% of the new jobs and big business (over 499 employees) only added 9.3%. 

While all business size categories added jobs, small businesses added 9% more jobs that they did in January.   In spite of the inability to access capital for growth, small businesses are getting the job done.  Just think what we could do if more credit and capital were available to us.

Procurement codes need small-business bulldogs

State Senator Jake Knotts of Lexington County, South Carolina, is angry. 

Recently a school district in his county gave the contract to build a new school to a big Chinese general contractor that had the low bid.  Senator Knotts shares the outrage of many of his constituents.  While a local architectural firm is being hired to draw the plans and supervise construction, only one other in-county business is being brought on board the project.  The rest of the construction services appear to be going to U.S. businesses outside the county and state.   

But the main concern for the Senator is the Chinese general contractor, and rightfully so.  We can expect to see the steel, concrete, furniture and other goods needed for the contract being imported from Chinese manufacturers.  Millions of local tax dollars will flow back to China draining much needed cash from our local, state and national economies. 

Senator Knotts, who has a reputation as a legislative bulldog, wants to change the procurement code to give locally-owned businesses an advantage in the bidding process for government construction contracts.

For many years, the South Carolina Small Business Chamber of Commerce was concerned about the State procurement code, not because of China, but because we did not feel that in-state small businesses were getting their fair share of contract work.  After many years of lobbying, in 2009 the Small Business Chamber of Commerce (co-founded by Senator Knotts), the state’s General Assembly passed legislation that increases the chances that South Carolina small businesses will receive more state government contracts for their goods and services.  However, this procurement change did not apply to construction contracts, which have traditionally been solely based on low bid.

But the problem for small-locally owned businesses in government contracts isn’t just a local and state issue.  The largest government purchaser of goods and services, the United States federal government, is also a concern.

According to the American Small Business League (ASBL) Congress passed the Small Business Act in 1953 that set a goal of awarding 23% of all federal contracts to small businesses each year.  Sounds good doesn’t it.

So what small businesses have been the beneficiaries of this Congressional effort?  ASBL looked at the data from the Federal Procurement Data System and found these “small business” federal contractors in FY 2011:

Apple-IBM-Microsoft-Chevron-Shell-Sony-Siemens-Toyota-Coca Cola-Wells Fargo-Bank of America-Citigroup-General Electric-PepsiCo-Ford Motors-Home Depot-Xerox-JP Morgan Chase-Ernst & Young-PriceWaterhouse Cooper-Raytheon-Hewlett Packard-Panasonic-CVS-Verizon-Time Warner-Boeing-Disney-Comcast-Lockheed Martin-AT&T-Rolls Royce-British Aerospace-General Dynamics

ASBL says that these big businesses get away with being counted as small business contractors by the federal government and every year they siphon off billions of tax dollars intended for real small businesses “due to fraud, abuse and loopholes”.  ASBL lays the blame for this outrage primarily on the U.S. Small Business Administration and Department of Justice, for failing to enforce procurement laws; and on outdated carve-outs for special interests.

This problem has apparently existed for years with calls for Congress to act not having much success. 

Sounds like small businesses need a bulldog in Congress on this procurement issue.  How about it, Senator Knotts???

Expanding healthcare to more childen....finally!

Congratulation to South Carolina Governor Nikki Haley and state Health and Human Services Director Tony Keck.  Their proposal to add an additional $29 million in the Medicaid budget for children’s healthcare appears to be a done deal both in the House and Senate.  This is a dramatic turnaround from the Mark Sanford administration.

Back in 2007 the South Carolina Small Business Chamber, S.C. Appleseed Legal Justice Center, S.C. Fair Share and AARP-SC were fighting to increase the cigarette tax in an effort to generate funding for a program to help make health insurance more affordable for small businesses and to expand the number of children eligible for Medicaid from those in families of  up to 150% of poverty to up to 200% of poverty.  The latter proposal survived and the General Assembly put about $29 million in the budget to provide healthcare services for an additional 70,000 to 100,000 children.

Governor Sanford then vetoed that part of the budget but we were successful in having that veto overridden.  The story should have ended there…but it didn’t.

The Sanford administration and his HHS director actively worked against adding these children to the Medicaid program by refusing obvious measure to let parents know about the program and throwing every roadblock they could in front of parents and organizations who tried to have the newly eligible children enrolled in the program.  Who knows where the millions set aside for the program went but it certainly wasn’t used as intended by the Legislature.

For 5 years these children went without the Medicaid for which by state law they were legally eligible. For 5 years the uncompensated healthcare these children did receive helped push insurance premiums up on individuals and small businesses.  For 5 years the working parents of these children were less productive on the job because of sick children whose illnesses could have been preventive with proper healthcare.  All of this because Governor Sanford and his Director of HHS knew better that the General Assembly and caring more about shrinking government instead of the health of our needy children and health insurance costs for the rest of us.

But while Governor Haley, Tony Keck and the Legislature appear to be all on board with funding and implementing this Medicaid expansion, they should drop their rhetoric that they are doing it because of the new federal health care law, the Affordable Care Act. 

There was no “ObamaCare” back in 2007.  This Medicaid expansion program for children was passed by a Republican House and Senate.  It is the law.  State officials need to stop blaming President Obama for a worthwhile healthcare program that we worked for and our South Carolina Legislature passed 5 years ago. 

Groundhog says....

The economy is getting better.  I don’t have to rely on the monthly jobs reports, the next being this Friday, to tell me that.  I can just look at my fax machine.

Prior to the Great Recession, I would receive probably 1 or 2 unsolicited faxes a day promoting vacations, loans, insurance, etc.  When the economy went into the tank, that all stopped.  Those hawking these mostly shady offers weren’t getting a return on their investment.  The gullible or desperate couldn’t be enticed with these “too good to be true” offers.

But several months ago I started getting one of these fax offers a week.  Then more recently two would come in per week. 

This morning I had two great opportunities waiting for me on my fax, one for affordable life insurance and the other for health insurance.  The economy is picking up speed. 

Want another grass roots economic indicator?  Yesterday I was talking to a guy who works in the rent-to-own car business.  He told me that he now has to recover about 5 cars a month from customers not paying.  Last year he was having twice as many cars recovered. 

I’ll let the experts give us their economic forecasts.  But my “groundhog” indicators are predicting an earlier than expected economic recovery.

Help for retirement planning

Here’s a startling statistic.  One in three small-business owners aren’t prepared for retirement.  USA TODAY reported last week that the American College surveyed small-business owners and found that about a third of the owners “do not have a personal or business-sponsored retirement plan such as a 401(k), a SEP IRA or deferred annuity. 

We might be an optimistic lot but this isn’t good.  We will stop working someday (or at least slow down).  So your income from the business will also stop or slow down.  And if you’re counting on financing your retirement from selling your business, ask the owners who tried that over the last 4 years. 

One of the reasons small-business owners aren’t prepared according to Gary Kushner, CEO of a human resources consulting firm, is that setting up a 401(k) for the owner (and employees) is a big challenge that most owners don’t feel they have the knowledge and time to do.

If you’re a small-business owner in South Carolina, the Small Business Chamber is riding to the rescue. 

Within the next few weeks we will have a new member benefit plan that will let small businesses join a 401(k) Multiple Employer Plan that will offer the employer and employees a menu of over 40 brand name money market funds.  By combining with other small businesses through the Small Business Chamber’s 401(k) Plan our members will find reduced set up, recordkeeping and administrative service charges.  Our members will save $200 up front and another $200 every year of the plan.  Plus, a professional will make setting up a plan simple. 

If our members are only interested in a solo 401(k), our program through Complete Investment Management and plan administrator My Benefits, LLC, can help there also.

If you can’t wait to find out more, email me at sbchamber@scsbc.org and we’ll be in touch. 

Owing a small business is truly an opportunity to dramatically improve your own personal wealth.  Don’t throw it all away from a lack of planning, saving and investing.

Look who pays less in taxes than Buffett and Romney

The Hill's Congress Blog

By Scott Klinger, tax policy director, Business for Shared Prosperity

03/01/12 03:12 PM ET

Corporations pay a lower effective tax rate than Warren Buffett and Mitt Romney, but you wouldn’t know it from all the complaints that our corporate tax rate puts our country at a competitive disadvantage. Last year, U.S. corporations paid just 12.1 percent of their earnings in federal corporate income taxes. Buffett’s tax rate is 17.4 percent; Romney’s reported 2010 tax rate was 13.9 percent.

The corporate tax system is riddled with loopholes and subsidies that do create competitive problems, but not the ones CEOs are talking about. Our broken tax system blesses U.S. multinational corporations with lots of loopholes that enable them to pay less in taxes than Main Street businesses. It allows large companies, even those in the same industry, to pay vastly different tax rates. It has starved our government of revenue, adding to the pressure for deep budget cutbacks rather than the investments needed to rebuild our crumbling infrastructure, educate our children and support the innovation needed for economic success.

President Obama has called for corporate tax reform that is “revenue neutral” – using any revenues gained from closing loopholes and ending subsidies to pay for lowering the statutory corporate tax rate and extending or introducing other tax breaks. The problem with “revenue neutral” tax reform is that it locks in the corporate share of our government’s bills at historically low levels. Tax reform that results in GE paying more and Wal-Mart paying less is not a step forward.

Contrary to common perception, U.S. corporations pay far less toward the cost of public services and infrastructure than they did in decades past, and less than foreign competitors pay in their countries today. In the 1950s, corporate federal income taxes accounted for nearly one-third of federal government revenue; in 2011, corporate taxes accounted for less than 8 percent.
U.S corporate profits account for more than 10 percent of GDP, a 50-year high. Federal corporate income taxes collected as a percent of GDP are at a 50-year low.

U.S. corporate tax revenues as a percent of national GDP are lower than all but one industrialized country – Iceland. U.S. corporate taxes accounted for 1.2 percent of U.S. GDP in 2009, compared to 2.3 percent among the 26 industrialized nations of the Organization for Economic Cooperation and Development (OECD) that collect and report tax data.

Meanwhile, U.S. multinational corporations are reporting record levels of profits to shareholders. And their balance sheets are loaded with record levels of cash – more than $2 trillion at last count.

President Obama's tax framework addresses important issues such as curtailing the abuse of offshore tax havens, but the devil is in the details. For example, a proposed minimum global tax could reduce the incentive of U.S. multinationals to disguise domestic profits and shift them to low or no-tax corporate tax havens around the world. But if the rate, now unspecified, is set too low it could become a permanent tax break for U.S. multinational corporations whose accountants are expert at assigning expenses to the domestic side of the ledger for U.S. tax deductions while assigning profits to the “foreign” side. And it doesn’t take a large rate gap between the corporate tax rate and a minimum global tax to produce large tax savings for corporations with revenues in the billions.

One way Congress could address closing loopholes right now is through the Cut Unjustified Tax Loopholes Act introduced by Senators Carl Levin of Michigan and Kent Conrad of North Dakota. It would crack down on offshore tax haven abuses and close tax loopholes that encourage corporations to move jobs abroad.

The challenge of corporate taxes and competitiveness is not that rates are too high, but loopholes, preferences and subsidies make corporate tax collections far too low. Rather than focusing on revenue neutral corporate tax reform which locks in corporate tax revenues at bargain-basement levels, President Obama would be wiser to insist that all profitable U.S. corporations – big and small – are expected to pay their fair share of taxes.

Big businesses want all the benefits of government spending – from government contracts, a publicly educated workforce, transportation networks and courts to enforce property rights, to scientific research they are happy to commercialize, and bailouts in the billions. Their increasing unwillingness to pay for the public services and infrastructure that underpin our economy is the real threat to America’s competitiveness.

Click here for original article

Scott Klinger is tax policy director of Business for Shared Prosperity, a national network of business owners, executives and investors.

Crocodile tears of insurance industry

The crocodile tears were flowing at yesterday’s South Carolina Senate Banking and Insurance Subcommittee that was hearing two bills supported by the South Carolina Small Business Chamber of Commerce (SCSBCC). 

One bill, S.31, would simply require all proposed workers’ compensation loss cost rate adjustments (increases and decreases) to be subject to a hearing before a judge if the States’ Consumer Advocate and organizations like the SCSBCC want to challenge the proposals.  The current law appears to deny such transparency if an aggregate rate decrease is requested.  But a recent Court of Appeals ruling shot that SC Department of Insurance (DOI) interpretation down.  S.31 would codify the Court of Appeals ruling.

The other bill, H.3111, would simply require all workers’ compensation insurance companies selling policies in the state to put the latest loss cost and loss cost multiplier rates approved by the state into effect within 120 days.  Presently there is no requirement to do so.

As logical as these bills are, the lobbyists for the insurance companies were there to tell the Senators and a crowded room how over-regulated workers’ compensation had become.  We were told that it is such a difficult and time consuming process for the companies to defend the rate adjustment proposals compiled by their rating organization, the National Council on Compensation Insurance (NCCI). 

The best regulation for this insurance to guarantee the lowest premiums for businesses, they said, was for competition to run free.  And, they suggested, if we have to have any regulation of the insurance industry, it should be after a rate adjustment has been put in place—a system called file and use.  Only then could the Consumer Advocate challenge the new rates in court.

Oh, and one insurance lobbyist expressed concern for the DOI saying that the department couldn’t possibly respond quickly enough to individual company rate changes and meet the 120 day implementation schedule in H.3111.

This last objection died quickly when the DOI testified that they saw no problem meeting the required deadlines.  DOI was obviously not going to be a part of that insurance industry charade.

When I testified in support of S.31, I addressed the insurance lobbyists’ objections and suggestions.

Here are the facts.  Around 2002 the South Carolina General Assembly deregulated the loss cost multiplier, the part of the premium calculation consisting of profit and all other insurance company expenses except for the actual claim payments (loss cost).  The Legislature was told at that time that this deregulation would keep premiums down because of free market competition.  Sound familiar?

But of course, that didn’t happen.  The loss cost multiplier for all companies grew dramatically after that adding over $200 million in excess premiums to the system according to estimates of one influential state Senator, Glenn McConnell, after the SCSBCC brought the problem to his attention.  In 2007, the law was changed to re-regulate the loss cost multiplier, which then started coming down for all companies along with premiums.  Pretending that competition resulting from deregulation of the workers’ compensation insurance industry, or of any insurance for that matter, doesn’t protect the consumers from winking and nodding greed.  Case closed.

But as for the industry’s complaint that defending proposed rate adjustments in court is too hard and time-consuming for them, I have a suggestion—only ask for rate adjustments you can justify with the data and it will be less likely to end up in a court fight.

In 2005, the NNCCI proposed an average 32.9% increase in workers’ compensation insurance loss cost rates. The SCSBCC went to Court with the state’s Consumer Advocate to fight this increase and propose only a 12.7% increase. The SCSBCC was the only business organization to fight the big increase in court. On Oct. 3, 2006, the Court issued an order supporting much of the position of the SCSBCC and Consumer Advocate.  The Court ordered only an 18.4% increase, a 44% reduction from the industry proposed hike.

In December 2007, NCCI once again requested an increase in workers’ compensation loss costs of an average of 23.7%. And once again, the SCSBCC was the only business organization to intervene to oppose the increase. In May 2008, NCCI, the Consumer Advocate and the SCSBCC reached an agreement with NCCI and DOI for a 9.8% increase thus saving at least $130 million in premiums for small businesses.

The workers’ compensation insurance industry has an atrocious track record on rate increase requests. A file and use system the industry also proposes would simply let companies lock in excessive rates and force the Consumer Advocate to claw them back ­– a process that would take months. It is a terrible idea for small businesses.

But surely there is no need for the Consumer Advocate and organizations like the SCSBCC to intervene in a proposed rate reduction.  Oh, yes there is.

After the colossal failure of the 2005 and 2007 giant rate hike requests, NCCI proposed an average rate decrease of 0.3 percent in 2009.  But an average means that some individual classes went own and other went up—in this case almost half of the individual rates went up.  SCSBCC and the Consumer Advocate should have had the right to intervene in this proposed average decrease not only to challenge the individual rate increases within the filing but also the proposed decreases.  Based on our 2005 and 2007 experiences, we fully expect that the decreases should have been greater—we just didn’t have the opportunity to demonstrate this in the court.  S.31 corrects this problem.

The Senators on the subcommittee gave S.31 and H.3111 favorable reports and sent them to the full committee where the fight against the insurance industry and their tears will resume.