SBA Administrator McMahon makes first appearance before a Congressional committee

By Jennifer White, WIPP Government Relations

Small Business Administration Administrator Linda McMahon talked about her plans for the agency during her first official hearing with the House Small Business Committee on April 5. From the start, Administrator McMahon made clear that her goal is to raise the profile of the agency, in hopes of renewing the spirit of entrepreneurship in America.

“Becoming administrator has been a lot like assuming the position of CEO – trying to evaluate employees and practices and figuring out what’s working and what’s not. My first town hall address was to let folks know that I want this to be the best SBA that’s ever been,” said McMahon.

Throughout the hearing, committee members showed interest in working with the administrator and addressed hard-hitting topics for WIPP – including access to capital, healthcare, tax reform, and regulations. Below are highlights:

  • Access to capital
    • In response to inquiries on improving access to capital for women, McMahon said one of her main focuses would be to ensure that more women apply for loans. McMahon plans on providing counseling to women entrepreneurs creating a business plan. She also said she believes SBA can work to increase the number of women in lending positions when asked about the lack of Small Business Investment Company (SBIC) investments to women-owned firms. SBICs are licensed by the SBA to supply small businesses with both equity and debt financing. Increasing women in lending positions is a point highlighted in the WIPP Economic Blueprint.
  • Healthcare
    • The administrator supports the creation of association plans across state lines offered to small businesses, which WIPP supports. McMahon, referring to HR 1101, which recently passed the House, believes this change to the healthcare market would reduce premiums for small business owners.
  • Tax reform
    • Administrator McMahon wants small businesses to receive similar tax treatment as large businesses, another position WIPP outlines in its Economic Blueprint.
  • Regulations
    • The administrator supports reforming regulations to reduce the burden and costs placed on small businesses. She believes the first step is to look at what regulations are really necessary and go from there. WIPP cites the need for reliable policies and regulations in the Economic Blueprint, as well.

Only two months into her position, the administrator is in the early stages of making the progress she wants to. But, between her enthusiasm for the positions outlined here and the committee’s readiness to work with the administration, it is certain there will be lots to watch for in the coming year.

To watch the full hearing and read Administrator McMahon’s written testimony, click here.

The confusion surrounding the federal budget debate

By Ann Sullivan, WIPP Chief Advocate

Recently, WIPP’s President Jane Campbell and I gave a webinar on the federal budget process, which attempted to explain all of the moving parts in the federal budget, including what it means to businesses and the organizations they support. Below I have laid out the steps in the process as simply as possible.

Immediate action item

  1. The funding for Fiscal Year (FY)17 ends on April 28, 2017, therefore Congress must act on or before that date to keep funding the government for the remainder of FY17, which ends on September 30, 2017. FY17 has been funded through a Continuing Resolution (CR), meaning that FY17 has been funded at FY16 levels. While under a CR, federal agencies cannot award grants or initiate new program starts.

Funding options for FY17

(a) A Continuing Resolution until the Fiscal Year ends, or

(b) An “omnibus” appropriations bill to fund the rest of the year. Omnibus simply means putting the 10 remaining agency appropriations into one big bill. The Defense Department and the Veterans Affairs Department bill were signed into law, so there are 10 agencies remaining.

The president can request supplemental appropriations in the current fiscal year, which is exactly what President Trump did in March. He requested $30 billion more for FY17 funding for defense and homeland security. Congress will decide whether or not to honor his request, which would be rolled into the FY17 Omnibus bill.

Longer-term action items

  1. Funding for FY18—which starts October 1, 2017. The House Appropriations Committee is responsible for starting the funding process, and revenue bills must start in the House. The committee is just now starting hearings on funding programs, and subcommittees of this committee have responsibility for certain federal agencies. For example, the Treasury and SBA are funded by the Financial Services and General Government Subcommittee. The three-part process is as follows: Subcommittees act first, the full Appropriations Committee considers, and then the bills go to the House floor for action.
  2. Raising the debt ceiling will be required sometime this fall. Why does that matter? If it is not raised, the federal government defaults on its debt, which would send ripples through the global economy.
  3. The FY18 Budget Resolution provides a high-level set of budget numbers that appropriators work against. Much like your own budget, the federal budget is anticipated spending, not what is actually spent (appropriations). Ideally, the Congress should agree on a resolution before it does appropriations, but that does not seem likely.

The interplay between the president’s proposed budget for FY18 (yes, there will be two: 1) a blueprint released in March and 2) a more detailed budget in May) and appropriations is worth an explanation. What we all learned in civics class, “the president proposes and the Congress appropriates,” sets the tone. The media frequently forgets to include this fact in their coverage of the budget, suggesting that the president has the sole power to determine the budget. In fact, he does not. He can only use his bully pulpit to ask for funding priorities. Generally speaking, the Congress, especially if it is from the same party as the president, tries to accommodate his requests. Side noteI say “he” because there has never been a “she.”

In his proposed budget, President Trump suggested cutting many programs that have powerful constituencies, causing widespread alarm among recipients of these programs. While this is certainly a wake-up call for many, the real alarm bells should be directed at the appropriators.

Which leads me to WIPP’s strategy with respect to FY18 funding of programs that support women entrepreneurs. We have concentrated on the appropriators and will continue to urge support. Members on the House Appropriations Subcommittees are the first line of defense and later, the full Appropriations Committee. After finishing with the House, we will turn our attention to the Senate Appropriations Committee. The last stop is floor action.

All told, the season to advocate on behalf of appropriations started in March, and will continue through the rest of the year. The Congress will continue to engage constituents with respect to budget decisions. On April 7, Congress will begin a two-week recess. Legislators will be in their home districts and conducting meetings. Echoing WIPP’s funding requests would be much appreciated. If you are a government contractor, consider voicing the need for stability in the federal budget.  If you support local nonprofit organizations, take a look at federal support dollars and speak up.

The time is now.

Rock, Paper, Sciss… Paper, Paper, Paper

By Jennifer White, WIPP Government Relations

The House Small Business Committee wants to know: are burdens on small businesses from paperwork being reduced by the Paperwork Reduction Act? According to Sam Batkins, the director of regulatory policy at American Action Forum, the short answer is they are not.

The Paperwork Reduction Act (PRA) was designed to reduce the total amount of paperwork the federal government imposes on private businesses and citizens. In order to achieve this goal, it imposes procedural requirements on agencies that wish to collect information from the public. However, between the sheer volume of instructions that accompany some paperwork, and the lack of resources at various agencies, it doesn’t seem to be working.

Look, for example, at the Internal Revenue Service. According to Frank Cania, founder and president of driven HR, the IRS is responsible for more paperwork than any other agency. “Small businesses fall into a cycle of having to file new forms every time an honest mistake is made in order to avoid IRS fines,” said Mr. Cania, who testified on behalf of Society for Human Resource Management.

For perspective on how time consuming and complex some of the documents can be, he explained to the committee that while an I-9 Form is only two pages long, the instructions are 15 pages long, and the instruction manual is “a slim 69 pages long.”

According to Sally Katzen, professor at NYU Law and senior advisor at Podesta Group, another key related issue with an agency like the IRS is that lack of resources to help individuals with compliance. “Used to, you could call and get someone to answer on the third ring,” she said. “Now, given the cuts to the IRS, the waiting period is well over two hours if you bother to stay on the phone. They’ve had to give up almost all of their assistance with compliance.”

When asked by the committee what Congress can do to make it better, Ms. Katzen answered that the key is investing in resources. “Somebody has to talk to somebody if you want the system to work. You need to put in the resources to enable that to happen.”

It is important for agencies to be able to collect information because it not only aids government decision making, but is often redistributed to the public which some find critical for making business decisions. However, there has to be a way to reduce the volume of paperwork. “There is only so much agencies can do. Only Congress can change the statutory requirements,” Ms. Katzen concluded.

To see the written testimony and witness list from the hearing, click here.

March Madness: A Policy Version—The Elite Eight

By Ann Sullivan, WIPP Chief Advocate

For many years, my son Matt and I watched March Madness together (that was until he moved to Los Angeles). Not only are many of the games squeakers, I love the upsets and Cinderella teams that emerge during the tournament. Half of the fun is filling out the brackets and guessing which teams will move forward.

So, in honor of March madness, we bring you March policy madness. We have created a policy bracket of the issues we expect will make it past the first round of Congressional action. Just for fun.

WIPP Works Bracket March 2017.png 

Here’s an explanation of the Policy Brackets:

Upper Left: Healthcare vs. Border Wall

President Trump’s Executive Actions have identified both repeal of Obamacare and the potential construction of a border wall. Congressional attention is focused on repealing and or replacing the Affordable Care Act.

Healthcare wins this round.

Upper Left: Regulatory Reform vs. FY2018 Appropriations

Congress is hungry to take back policy-making power from the Executive Branch and has found a sweet spot—rolling back regulations—a move President Trump agrees with. He has already signed legislation repealing a Department of Interior rule and is expected to sign more repeals in the coming months.

On the other hand, appropriations is a long and cumbersome process. To get started, on Fiscal Year 2018 appropriations, President Trump needs to share a budget outline with Congress expected next month, and both the House and Senate Appropriations Committees will need to pass all 11 appropriations bills by the end of September. This is a process that has not occurred in over 20 years.

Regulatory reform wins this round.

Lower Left: Trade vs. Supreme Court Nominee

President Trump has indicated that reforming trade policy is a high priority.  But revamping global trade deals into bilateral negotiations will prove to be complicated. The Supreme Court vacancy, on the other hand, has been top of mind. Some Senate Democrats have privately conceded that they expect Neil Gorsuch to be confirmed, taking the place of Antonin Scalia.

The bracket goes to Supreme Court nominee Neil Gorsuch.

Lower Left: Debt Ceiling v. Government Shutdown

Toward the end of the summer, the Treasury Department will have exhausted all “extraordinary measures” to continue paying the government’s bills. Once again, Congress will need to raise the debt ceiling. This close-to-annual exercise used to be non-controversial. But not anymore. This is an opportunity for Congress to discuss fiscal policy.

Another opportunity to discuss fiscal policy is the expiration of the Continuing Resolution on April 28th. In the past, government shutdowns have been threatened/executed, putting continued funding of the government at risk. Given that both Houses of Congress and the president are from the same party, it doesn’t seem likely that shutting down the government is an option. That being said, crazier things have happened in Washington.

Due to timing, debt ceiling wins by a single foul shot.

Upper Right: Taxes vs. Immigration

Tax reform, a priority of both the president and the Congress, is long overdue. In fact, comprehensive tax reform has not been successful since 1986. But don’t look for action overnight. Congressional Republicans are suggesting it will be undertaken sometime this fall.

On the other hand, immigration is even more contentious and bipartisan reform plans were last successful in 1996 under President Clinton. Since then, although there have been many efforts, reform has been elusive.

Tax wins this round.

Upper Right: Defense Spending vs. Infrastructure

Appropriators are currently preparing a special supplemental funding bill for the Defense Department and President Trump announced he would like to add $54 billion to the defense budget. The infrastructure bill hasn’t gained as much traction as the rhetoric about its importance.

Defense spending wins this round.

Lower right: FY17 Omnibus Appropriations vs. NDAA

The National Defense Authorization Act has a 55-year history of being signed into law each year. It is considered in Congress a “must pass” bill. Omnibus appropriations that combine multiple appropriations into a single bill have a spotty record at best. While Omnibus appropriations passed in Fiscal Year 2016, it is still unclear how the rest of FY17 will be funded. Because no one is quite sure, we declare NDAA the winner.

NDAA wins this round.

Lower right: Spending Cuts vs. Elimination of a Federal Agency

President Trump made a campaign promise to significantly decrease agency spending and is expected to propose major cuts in the FY2018 budget. Although eliminating agencies is possible, it is easier to starve an agency than eliminate it altogether.

Spending cuts win this round.

The Elite Eight issues that we predict will prevail to the next round in Washington are:

  • Regulatory Reform
  • Healthcare
  • Supreme Court Appointment
  • Debt Ceiling
  • Tax
  • Defense spending
  • NDAA
  • Spending Cuts

In Washington policy circles, representing women-owned businesses is often like rooting for the underdog. Women across the country who have joined our voice often end up winning the policy fight even though they are dismissed in the “first round.” But collectively, we can end up being the winners who bring home the victory. Not just for us, but for those who have come before us and those that are coming behind us.

Which issues do you think will score over the coming month? Tweet at us @WIPPWeDecide #DCelite8 with your predictions for the Final Policy Four.

Executive Order Bonanza has Implications for Business

By Ann Sullivan, WIPP Chief Advocate

President Trump will complete only his third full week on Friday and has already left a lasting mark on how small businesses and government itself work with 20 Executive Orders. Through a series of presidential actions, Mr. Trump has touched on topics ranging from Immigration to healthcare. It’s time we took a deeper dive into what’s come down the pipeline and how it affects the small business community. Read the blog here.

The domestic policy action that was signed in the presence of a number of small businesses, is the “Two-for-One” Executive Order.

Here’s the rundown. The Executive Order has two parts – one aimed at Fiscal Year 2017 and one for Fiscal Year 2018:

  • FY17: “1 in and 2 out.” If a federal agency proposes a new regulation, it must recommend two regulations to the Office of Management and Budget (OMB) to be terminated. OMB, not the agency will have the final word on which regulations are eliminated.
  • FY18 and subsequent fiscal years: Agencies are ordered to offset costs of new regulations and the OMB is ordered to create a budget that limits how much a new regulation can rise.

On its face, this Executive Order spells relief for lenders and small businesses but there are a raft of unknowns still to be resolved. One question is when this directive will be implemented. For example, the administration’s OMB Director-designate Congressman Mick Mulvaney is undergoing a tough confirmation process and the timeline for his confirmation by the full Senate is still unclear.

Executive Orders generally provide broad guidelines rather than detailed plans on its execution. Questions to be answered are: What actually constitutes a “regulation?” Is it simply a single rule or a whole host of interwoven regulations that, together, provide guidance for an agency on an individual program or policy? What constitutes a “cost?” Will the benefit in a cost-benefit analysis be considered or will the analysis include only the cost? OMB is stocked with experts so we anticipate much more clarity on this as soon as the OMB director is confirmed.

Now, on to more straightforward presidential actions regarding President Trump’s infrastructure plans. One such action expedites environmental review and approval for high priority infrastructure projects and gives any Cabinet member or governor the unilateral ability to designate a project as “high priority” thus shortening the approval process, laid out in the NEPA law. He’s also issued a “Build the Wall” action which orders the Department of Homeland Security to begin building a wall along the U.S. and Mexico border using existing funds. It also authorizes the hiring of 5,000 new border agents. Congress will have to appropriate additional funds for completion because the current budget does not have funding for this project.

Additionally, there were two more Executive Orders issued almost immediately upon President Trump’s inauguration. One of the first actions signed by President Trump was an Executive Order that begins the process of repealing Obamacare. While it does not directly repeal the law, it directs federal agencies to give states, insurance companies and consumers maximum flexibility in complying with Obamacare until such a time as it is repealed. Full repeal and/or replace is going to take an act of Congress which has been openly wrangling with itself on whether to repeal, repeal and replace, or to “repair” the existing law. Regardless, this presidential action starts the ball rolling with respect to repeal of Obamacare while Congress considers its course of action.

The other significant action taken by the president instituted a federal agency-wide hiring freeze on all existing and open positions with exceptions for national security, military, and public safety.  The president intends this as a stopgap and allows agencies to reallocate to prevent public safety and national security from being adversely affected. The kicker, however, is that the memorandum explicitly prevents the hiring of outside contractors to prevent the circumvention of the spirit of the order. Given the number of waivers and exceptions allowed, it’s not altogether clear how this will work in practice, but it certainly lays down a marker that the president is serious about reining in the growth of the federal government.

Finally, on Feb. 3, the president signed two Executive Orders aimed at decreasing regulations for the financial industry; the first calling for a review and the scaling back of existing financial laws, including Dodd-Frank, and the second halting the implementation of the Department of Labor’s (DOL) fiduciary rule, which was set to go into effect this April.

Dodd-Frank, enacted after the 2008 meltdown, was responsible for creating more stringent rules regarding bank capitalization, increasing compliance and reporting standards for banks, introducing stricter mortgage requirements, creating the Financial Stability Oversight Council and the Consumer Financial Protection Bureau, and curbing excessive risk-taking and the existence of too-big-to-fail institutions on Wall Street. Mr. Trump’s action on Dodd-Frank requires regulators to produce a study on financial rules within 120 days—appearing as more of a demand for a review than a complete dismantling of the law.

The fiduciary rule was intended to prevent consumers from receiving conflicted advice when it comes to retirement savings. The president’s order calls for the DOL to examine the rule to determine whether it may lead to the unintended consequence of making it more difficult for advisors to provide financial advice to their clients. However, embraced by much of the financial industry, this order is expected to move quickly compared to the order on Dodd-Frank.

These Executive Actions have the potential to clear the way for even greater gains by women-owned small business moving forward. As we reach for new heights in 2017, WIPP will be fully engaged with the Congress and administration to ensure that burdensome regulations harming the growth of women-owned small business are eliminated and we continue to be the robust engine powering the small business economy.

Reimagining Health Care

By Ann Sullivan, WIPP Chief Advocate

Affordability, predictability, and flexibility were three themes reiterated at the Feb. 7 hearing held by the House Committee on Small Business entitled “Reimagining the Health Care Marketplace for America’s Small Business.” It was held for the purpose of taking a look at the current marketplace and its recent difficulties, and to explore options to improve access, affordability, and consistency.

While no clear legislative path has yet been paved, many facts, figures, and ideas were floated around regarding how to ensure that small business is not an afterthought in the revamping of the healthcare system. Solutions presented and discussed at the hearing included tax credits for small business, across state line coverage, and Health Savings Accounts and Health Reimbursement Arrangements.

Here is more about the items discussed.

  • Tax credits for the self-employed: As the Tax Code currently stands, self-employed individuals are restricted from deducting their health insurance premiums. Small, self-employed business owners end up paying more for health insurance because their premiums are not treated the same for taxes as other businesses.

Leveling the playing field by giving these small businesses tax credits would improve affordability for small business owners, as well as expand the pool of coverage, according to Keith Hall of the National Association of the Self-Employed (NASE).

  • Across state line coverage: The number of insurers participating in the marketplace varies widely from state to state, as do the number of coverage plans. The lack of competition among insurers in the current exchanges decreases pressure to keep costs down.

Mr. Hall of the NASE believes that allowing for the sale of health insurance across state lines will boost competition, driving costs down. In order for this to happen, Congress will have to enact a health plan that will modify the existing law that inhibits the sale of health insurance across state lines.

  • Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs): A provision of a law signed into Congress last session allows small employers with fewer than 50 full-time employees that do not offer a group health plan to fund employee HRAs to pay for qualified out-of-pocket medical expenses and for non-group plan health insurance premiums, including plans purchased on the public health care exchanges.

Allowing small businesses to offer a bare bones plan and HSAs would allow individuals to decide the best choice for themselves and their families, according to Tom Secor of Durable Corporation, who testified on behalf of the National Small Business Association (NSBA).

This hearing was the first of a continuing series that will take place on the discussion of healthcare repeal and replacement. To read full written testimony from each witness here.

10 Things You Should Know From the Linda McMahon Hearing

By Ann Sullivan, WIPP Chief Advocate

On Jan. 24, the Senate Small Business Committee held a hearing on the confirmation of Linda McMahon (former WWE CEO), to become Administrator of the Small Business Administration (SBA). Here are the 10 things you should know about her hearing:

  1. SBA is still part of the cabinet—President Obama elevated the position of SBA Administrator to cabinet level. President Trump is sticking with that change.
  2. Existing programs are safe…for now—When questioned by numerous senators on specific program commitments, McMahon repeatedly said that if the program is working then it should be continued.
  3. She will go to bat for small business in the executive branch—McMahon sees herself as the small business advocate within the executive branch, and will go to other agencies and make sure that more federal contracting opportunities are provided to small businesses.
  4. She will work to expand the 5% contracting goal for women—Senator Duckworth (IL), asked about the 5% goal, and McMahon expressed support for women entrepreneurs, broadly, “I have been very forthcoming in wanting women entrepreneurship to grow. And I will continue to support that, it is very near and dear to my heart.”
  5. She has a history working with Veterans—According to McMahon, WWE was always concerned about veterans and how to help create jobs for them. Senator Cardin (MD) discussed the Veterans Institute for Procurement (VIP) program and noted its impact and high performance.
  6. Look for an emphasis on mentoring—Given McMahon’s background in business mentoring, she may focus on programs that incorporate mentorship. As co-founder of Women’s Leadership LIVE, McMahon’s organization educates entrepreneurs about all facets of starting and expanding their business.
  7. She wants to help free small businesses from burdensome regulations—While many senators asked questions about regulatory burdens on small businesses, Senator Ernst brought up the PROVE It Act—legislation passed out of committee last session that empowers the SBA Office of Advocacy to require agencies to analyze rules for their small business impact.
  8. Speaking of advocacy—McMahon expressed support for expanding the independent SBA Office of Advocacy to ensure that the voice of small business is heard on federal regulations.
  9. She wants small businesses to participate in anticipated Infrastructure projects—When asked about promoting fair opportunities for small businesses to compete for work in the highly anticipated infrastructure plan, McMahon stated that small business participation was a given.
  10. Streamlining cumbersome federal contracting—McMahon expressed support for streamlining the alphabet soup of federal websites and databases like SAM and FBO.

This was a conciliatory confirmation hearing. Given the contentious nature of other confirmation hearings, it was unknown what tone McMahon’s hearing would take. But the hearing went well. Senators were polite and McMahon was responsive to concerns. With so much partisanship in Washington, it was positive to see McMahon’s interest in working with the committee—both sides.

Senate Begins Process to Repeal Obamacare

By Ann Sullivan, WIPP Chief Advocate

The 115th Congress is already at work and taking votes that impact women business owners. The Senate voted 51 to 48 early Thursday to approve a budget resolution that instructs Congressional committees to begin work on legislation repealing major portions of the Affordable Care Act.

Senator Rand Paul was the lone Republican “no” vote and Republicans defeated Democratic amendments defending popular portions of the ACA, including expanded Medicaid and Medicare and allowing kids to stay on their parents’ insurance until they’re 26.

The House is expected to take up the resolution this week, though debate may extend into the weekend.

WIPP will work with Congress to ensure that whatever changes are implemented address accessibility and affordability—issues that have plagued the small business market.

WIPP will stay on top of legislative developments like this in 2017 to make sure you have the latest information you need.

Regulatory Race to the Finish

By Debbie Kobrin, WIPP Government Relations

173414-425x283-government_regulationsWith the party conventions right around the corner, and a few months to a new President, you might think the current administration would be slowing down. But things are moving in the opposite direction. The Administration is churning out plenty of new contracting rules, and shows no signs of stopping anytime.

In June, SBA finalized a new subcontracting rule which will help WOSBs with subcontracting requirements, by easing the “50 percent rule” to allow a WOSB to do less than 50 percent of the work on a contract, as long as the WOSB subcontracts to other WOSBs. The rule also shifts the limitations on subcontracting from requiring a prime to perform at least 50 percent of the labor on the contract, to requiring a prime perform at least 50 percent of the dollar amount of the contract. The rule also contains changes to subcontracting plans, roles for Procurement Center Representatives (PCR), Joint Ventures and more.

Also last month,  the GSA finalized a new regulation requiring contractors to report transaction or task order level data on goods and services to GSA. Under the transactional data rule, businesses are required to tell GSA what federal agencies purchase through GSA. This rule applies to GSA contracts including the Federal Supply Schedule (FSS) and Government-wide Acquisition Contracts (GWAC).

Last week, the FAR Council finalized a rule strengthening subcontracting regulations by finalizing the “ list us, use us” requiring for prime contractors to make a good faith effort to utilize small subcontractors to the same degree as listed in the bid or proposal. WIPP has supported this change for a number of years, and testified on its value to women business owners. The rule also requires prime contractors to assign NAICS codes to subcontracts, and restricts prime contractors from prohibiting a subcontractor from discussing payment issues with the contracting officer.

In addition to what we have seen over the past several months, SBA is expected to release a new Mentor-Protégé Program for all-small-businesses any day now. The SBA is also expected to work on rules associated with lower-tier subcontracting credit, WOSB certification, and the WBC program.

The FAR Council continues to work through its back-log and plans to release new rules that include creating a government-wide definition for consolidation and bundling, providing subcontractors with additional payment protections, and implementing the Department of Labor Fair Pay, Safe Workplaces Executive Order.

As we enter the home stretch of the Obama Administration, there is a clear impetus to do as much as possible over the next several months. As new information about rules becomes available, WIPP is committed to keeping you informed.

 Let us know what you think about Regulations by taking We Decide 2016 Quick Poll.

Are Regulations Discouraging Entrepreneurship?

By: Jake Clabaugh, WIPP Government Relations

Is the federal regulatory process stacked against entrepreneurs? The Joint Economic Committee sought to answer this question during a hearing entitled “Encouraging Entrepreneurship: Building Business, Not Bureaucracy.” The Committee’s Vice-Chair, Pat Tiberi (R-OH) opened the hearing with this direct question to witnesses: Is the thicket of government bureaucracy strangling private initiative?

Before taking on the Vice-Chair’s question, the witnesses began by framing the landscape. Entrepreneurship – the birth of new firms – has been trending downward since President Jimmy Carter’s Administration in the 1970’s. Dr. Tim Kane, a Research Fellow at Stanford University’s Hoover Institution, highlighted the decline in the number of startup firms from 16% of total firms in the U.S. in 1977 to just 8% today.

Despite the decline in overall start-ups, National Women’s Business Council (NWBC) Chair Carla Harris lauded the growth in women-owned businesses. Since 2002, the number of women-owned firms has leaped from 6.5 million to 10 million. Women are creating businesses at 2 -1/2 times the national average. The progress made by women business owners provided a bright spot in otherwise gloomy testimony on the outlook for entrepreneurs.

When the witnesses were asked what regulations were causing the most headaches, the Affordable Care Act (ACA) was the most commonly cited culprit. Specifically, the ACA defines a full-time employee as an individual working thirty hours a week instead of the traditional forty. This definition determines whether a business is exempt from the employer mandate. The witnesses echoed the experiences of many WIPP members who have found the thirty-hour workweek definition detrimental.

To tackle this and other regulatory challenges, WIPP partnered with the National Association of Manufacturers, Small Business & Entrepreneurship Council and International Franchise Association to launch Rethink Red Tape.  As part of this initiative, WIPP will be calling on policymakers to produce better, fairer rules. In the opinion of the Joint Economic Committee and WIPP Members alike, regulatory reform will be a win for entrepreneurship.