• January Jobs Data Spurs Hope as Well as Scrutiny Regarding Economy's Potential

• Chairman Graves Holds Hearing on "The State of American Small Businesses"

• White House Unveils Start-Up Legislative Agenda: Crowdfund Investing Legislation Included

• Cybercolumn: Sarkozy, France and Strange Tax Ideas

• Technology & Entrepreneurs: Opportunity vs. Piracy Online

• Capital & Credit Watch: Obama on Capital Gains Taxes

• Energy & Entrepreneurs: Natural Gas, Markets and Government in Pennsylvania

• U.S. House Repeals Expensive and "Unworkable" Provision of ObamaCare

• Some Key Numbers from Last Week


• Technology & Entrepreneurs: IP Protection and Megaupload Case

• Capital & Credit Watch: The Fed's Downbeat Economic Assessment

• Small Business Urges Senate Banking Committee to Secure Commitment from CFPB Regarding its Small Business Obligations Under Dodd-Frank

• Small Business Federal Government Procurement Bills Introduced

• Immigration Laws in the States

The January employment data reported by the U.S. Bureau of Labor Statistics (BLS) showed signs of improvement in the nation's jobs picture.  In a response to the report, SBE Council Chief Economist Raymond Keating observed, "The resiliency of U.S. businesses and entrepreneurs was on full display in the latest jobs numbers. No matter which survey is chosen - the establishment (or payroll) survey or the household survey - the jobs story for January was good."

The household survey, which better captures startup and small business activity, was particularly strong. After factoring out population adjustments that the BLS puts into effect in January, compared to December, January employment was up by a robust 631,000, which was the biggest leap since November 2007.

"Just imagine what U.S. entrepreneurs, business and investors could be accomplishing if policymaking was shifted in a pro-growth direction of permanent and substantive tax and regulatory relief, less government spending, an aggressive free trade agenda, and sound monetary policy focused on price stability," added Keating.

House Small Business Committee Chairman Sam Graves (R-MO) shared that sentiment: "Today's jobs report is certainly good news, but so much more could be done to revive the economy and get Americans back on the job faster. According to the non-partisan Congressional Budget Office report released this week, unless we change course, economic growth will remain sluggish and unemployment will continue to hover near an unacceptable 8 percent."

Chairman Graves pointed to policy deficiencies that were discussed at a February 1 committee hearing, "The Path to Job Creation," which SBE Council participated in. The Chairman noted: "In our Wednesday hearing on the state of the American small business, we heard that unnecessarily burdensome regulations, complex tax structures, inconsistent credit, and the federal debt are creating a poor environment for their companies to create jobs. Unfortunately, these issues aren't being addressed by this White House. The U.S. Tax Code is now nearly 70,000 pages and growing. There were approximately 4,430 changes to the tax code from 2001 through 2010, an average of more than one a day. This week, we learned that our nation's deficit will rise to $1.08 trillion in 2012, the fourth consecutive year of trillion-dollar deficits. Small business owners still say that federal regulations are their greatest burden.

Graves said removing these obstacles should be "the number one priority." He noted that House Republicans have sent more than 30 bipartisan jobs bills to the Senate, where 27 of them still await consideration. "It is time for Senate Majority Leader Harry Reid to act," said Graves.

SBE Council agrees, and we are urging the Senate to act on legislation that will provide regulatory accountability and relief, fix the costly Affordable Care Act, provide capital access (crowdfund investing and other reforms to fix outdated SEC regulations), and encourage domestic energy development and production.  

House Small Business Committee Chairman Sam Graves (R-MO) held a hearing on February 1, to examine obstacles to small business job creation and economic growth in an effort to tackle the most egregious impediments.  SBE Council member Mike Fredrich, President of MCM Composites, LLC, testified at the hearing. He joined several economic scholars and experts on the panel.

House Small Business Committee staff put together this highlight video on the hearing, which includes comments and remarks by Fredrich.

A review of the hearing (written by House Speaker John Boehner's office) notes consensus around key issues to encourage job creation and economic stability.  SBE Council's Fredrich was quoted on spending and the federal debt: "The greatest risk to our future prosperity is our federal debt -- funded and unfunded.  Please understand that the current level of federal spending and debt accumulation is not sustainable.  Small business owners know this, and that is why they are most concerned about this issue. A recent survey released by SBE Council and the Financial Services Forum in November found that small business owners believed that changes to federal fiscal policy would be the most single most effective strategy to encourage hiring and to get the economy back on track..."

Dr. Dennis Jacobe, Chief Economist at Gallup, recommended a one-year moratorium on regulations.  Dr. Martin Neil Baily, Senior Fellow and the Bernard L. Schwartz Chair at the Brookings Institution recommended a ten-year plan to balance the budget. "If the President and Congress were to agree on such a plan, it would greatly enhance consumer confidence, business confidence and the stability of markets," said Schwartz.  Fredrich also discussed the effects of Dodd-Frank, ObamaCare and actions by the Federal Reserve that were generating uncertainty and real costs for business.

Regarding these issues, Chairman Graves said: "There is no doubt that the lack of certainty in burdensome regulatory requirements and complex tax structures coming from Washington continues to be an impediment for growth and job creation for small business owners. This must change sooner rather than later if we want to see economic growth and Americans back on the job."

For related hearing documents, click here.

In the SBE Council Fact of the Week, chief economist Ray Keating takes a deeper look into January's data.

For the one-year anniversary of President Obama's "Start-Up America" initiative, the White House unveiled a legislative agenda to help small businesses.  The agenda includes a push for passage of crowdfund investing legislation, zero capital gains taxes for investments in certain small businesses (C corps), extension of investment incentives, a doubling of expense write offs for startups, and payroll tax credits for hiring, among other provisions  SBE Council Chief Economist Ray Keating provided feedback about the agenda in this FoxBusiness news piece.

House Republicans responded by pointing to close to 30 bills they have passed. Many pieces of legislation are being blocked in, or moving slowly through, the Senate.  This is certainly the case with crowdfunding legislation where the "Entrepreneurs Access to Capital Act," H.R. 2930, passed 407-17 in early November 2011.  It is currently bottlenecked in the Senate, where the legislation is also becoming more restrictive and regulatory in nature (read this Forbes.com piece for a good analysis.)  

Congressman Patrick McHenry (author of H.R. 2930) recently discussed where the Senate is going with his proposal in this Crowdsourcing.org interview.  He talks about Senate alternatives and why they fall short of creating effective and efficient crowdfunding markets. He urges listeners to advance the debate and demonstrate the power of crowdfunding by leveraging that power within the legislative process.


The latest SBE Council Cybercolumn by chief economist Ray Keating looks at new tax proposals from French President Nicolas Sarkozy. Is anyone really surprised that these will overwhelmingly work against entrepreneurship and economic growth?


In an SBE Council Technology & Entrepreneurs analysis, chief economist Ray Keating looks at a new study noting the expanding opportunities and choices in the realm of entertainment. But contrary to the message being communicated by the group publishing this report, this, of course, does not mean that entrepreneurs, businesses, independent artists and consumers do not suffer due to online piracy.


The latest proposal on aiding small business from the White House is examined in the latest SBE Council Capital & Credit Watch. Chief economist Ray Keating is left wondering if President Obama is confused or playing politics on capital gains taxes.


The latest SBE Council Energy & Entrepreneurs analysis looks at what's going on in terms of market signals and government policies regarding natural gas production in Pennsylvania's Marcellus Shale region. Regarding policies being considered, it's a mixed story for energy production, investment and jobs.


On February 1, the U.S. House passed H.R. 1173 by a vote of 267-159. The legislation specifically repeals the unsustainable Community Living Assistance Services and Supports Act (CLASS Act), a long-term care entitlement program enacted as part of the ObamaCare bill. Senator Kent Conrad called CLASS a "Ponzi scheme of the first order." The repeal legislation passed the House 267-159, and now awaits Senate action.

SBE Council joined key business allies in support of H.R. 1173. As we noted in our letter to all House members urging passage of the legislation: "...the Administration's Chief Medicare Actuary acknowledged the ‘very serious risk that the problem of adverse selection will make the CLASS program unsustainable.' More recently, Health and Human Services Secretary Kathleen Sebelius seemed to acquiesce to the reality that CLASS is unworkable as constructed when she cancelled the department's implementation effort and told the Congress, ‘Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time.'"

Incredibly, 159 members of the House still opposed passage, and President Obama is fighting for its retention.


23:  Number of Right to Work States. On February 1, 2012, Governor Mitch Daniels of Indiana signed a bill into law, making Indiana the 23rd state in the country, and first since 2001, to become a Right to Work state. Being a Right to Work state is a positive measurement for SBE Council's Small Business Survival Index, which ranks the states on their small business policy environments. Indiana currently ranks 20th on the Index. The state has enacted solid reforms over the past several years to make it a more attractive place to start, grow and invest in a business.

$1.08 trillion:  The latest Congressional Budget Office (CBO) report published on January 31, predicted the budget deficit will reach $1.08 trillion in 2012.  The deficit was $1.4 trillion in 2009, $1.3 trillion in 2010 and $1.3 trillion in 2011. The largest deficit recorded before that was $458 billion in 2008.

8.9%:  The end of year unemployment rate for 2012 predicted by CBO in the same report.

2.2%:  CBO's prediction for GDP growth in 2012 (1% in 2013).

30%:  "The amount of money the federal government takes out of the U.S. economy in taxes will increase by more than 30 percent between 2012 and 2014," according to the same CBO report.

8.3%: January 2012 unemployment rate, according to the U.S. Department of Labor, Bureau of Labor Statistics.


What's the government's case against Megaupload.com all about? In the latest SBE Council Technology & Entrepreneurs analysis, chief economist Ray Keating explains that various governments around the world, including the U.S., are doing what they should, i.e., protecting intellectual property.


The latest statement from the FOMC is examined in an SBE Council Capital & Credit Watch. Most notable was the Fed's downbeat assessment on where the economy might be headed.


On January 31, the Senate Banking Committee held a hearing with new Consumer Financial Protection Bureau (CFPB) head Richard Cordray.  A letter signed by SBE Council and other small business groups reminded Senate Banking Committee members about the important protections in the Dodd-Frank bill. As noted by the groups in the letter: "These important small business provisions provide a process for the CFPB to be mindful of the impact of new regulations on small businesses."

During passage of Dodd-Frank, an amendment authored by Senators Olympia Snowe (R-Maine) and Senator Mark Pryor (D-Arkansas) puts a process into place to require the CFPB to consider the impact of costly regulations on small businesses.  As the letter points out these two important provisions:

• Require the CFPB to publicly consider how rules will impact the cost of credit for small firms.

• Require the CFPB to conduct Small Business Advocacy Review ("SBAR") panels on rules that will impact small businesses.

The letter made clear that the CFPB needs to fully scrutinize these new regulations, particularly ones that impact the cost and availability of capital and credit as small businesses continue to struggle in this area.

In his recent appearance before the House Committee on Oversight and Reform, Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs, Richard Cordray recognized the importance of the small business provisions within Dodd-Frank and committed specifically to convening a panel on the TILA/RESPA mortgage disclosure merger this year. "We ask your committee to ensure the commitment of the CFPB to implement Section 1100 G of Dodd-Frank translates into a rulemaking process that is protective of small business interests," requested the groups in the letter.


House Small Business Committee Chairman Sam Graves (R-MO) introduced legislation on January 31 that will provide more contracting opportunities for small firms, and reform federal contracting policy. The GET Small Business Contracting Act of 2012 will increase the federal government goal for small business contracting percentage from 23 percent to 25 percent, and the Small Business Advocate Act of 2012 will empower the Office of Small and Disadvantaged Business Utilization (OSDBU) at all federal agencies to better advocate on behalf of small businesses in the contracting process.

GET Small Business Contracting (Government Efficiency through Small Business Contracting) Act of 2012:

• Raises the small business contracting goal from the current 23 percent to 25 percent. Raising the goal by 2 percent means a substantial amount of new business for small businesses - about $11 billion worth. The Obama administration missed that target by over 3 percent in FY 2010- that's nearly $20 billion that small businesses missed out on. According to early data, it appears the administration missed the 23 percent target by a larger amount in FY 2011.

• The legislation holds top agencies accountable for meeting the small business goals by withholding the senior agency officials' bonuses if the small business goals aren't met.

The legislation also ensures opportunities for small businesses as subcontractors, with a goal of awarding 40 percent of all subcontracted dollars to small businesses, an increase from the current goal of 35.9 percent.

Small Business Advocate Act of 2012 (SPAA): The goal of the Office of Small and Disadvantaged Business Utilization (OSDBU) is to promote the maximum practicable utilization of small businesses in federal contracting at each agency, both at the prime and subcontract level. The legislation makes it easier for the OSDBU to advocate for small business contracts, focus on acquisition assistance, and fight insourcing and unjustified contract bundling.  This legislation elevates their position to a senior acquisition leader in the agency and prohibits them from holding any other position so they can concentrate on their advocacy responsibilities.                      

Mulvaney Introduces Legislation To Protect Small Business Contractors: Small Business Subcommittee on Contracting and Workforce Chairman Mick Mulvaney (R-SC) introduced legislation on February 2 that will help protect small business contractors and bring more transparency and accountability to federal procurement. The Subcontracting Transparency And Reliability (STAR) Act of 2012 will ensure that federal contracting opportunities actually help legitimate small businesses and gives small contractors a voice when their work is being unfairly insourced.

Details of the STAR Act of 2012 include:

• The legislation makes it easier to crack down on deceptive large businesses hiding behind small businesses, and simultaneously makes it easier for legitimate small businesses to comply with limitations by tracking price rather than cost.

• Allows for more small businesses to team with other small businesses to compete for federal contracts.

• Makes it easier to catch bad actors and ensures real subcontracting opportunities for small businesses by easing the detection and punishment of large businesses that fail to file the mandatory reports on the use of small business subcontractors.

• Adds transparency to insourcing (the process by which the government takes work currently awarded through private sector competition and converts it to work performed by federal employees) by requiring agencies to publish their insourcing processes and gives small business contractors standing to challenge insourcing decisions in court.  


With Congress deadlocked and still unable to act on immigration, state lawmakers across the country are moving on legislation that will have an impact on small employers.  As of February 1, immigration-related bills of interest to employers are circulating in 18 states - E-Verify requirements, new penalties for hiring unauthorized immigrants, Arizona-like policing laws, guest worker proposals and more.

ImmigrationWorks has prepared a preview of the 2012 state legislative sessions. Just weeks into the session, it's too soon to predict outcomes. But these are some states to watch in the weeks and months ahead.

Click here to read IW's STATE WATCH LIST: Immigration Enforcement in the 2012 Legislative Sessions.