[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
``LISTENING TO MAIN STREET''
=======================================================================
FIELD HEARING
before the
SUBCOMMITTEE ON WORKFORCE,
EMPOWERMENT, AND GOVERNMENT PROGRAMS
of the
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
NOVEMBER 19, 2001
__________
Serial No. 107-37
__________
Printed for the use of the Committee on Small Business
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COMMITTEE ON SMALL BUSINESS
DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD,
ROSCOE G. BARTLETT, Maryland California
FRANK A. LoBIONDO, New Jersey DANNY K. DAVIS, Illinois
SUE W. KELLY, New York BILL PASCRELL, Jr., New Jersey
STEVE CHABOT, Ohio DONNA M. CHRISTENSEN, Virgin
PATRICK J. TOOMEY, Pennsylvania Islands
JIM DeMINT, South Carolina ROBERT A. BRADY, Pennsylvania
JOHN R. THUNE, South Dakota TOM UDALL, New Mexico
MICHAEL PENCE, Indiana STEPHANIE TUBBS JONES, Ohio
MIKE FERGUSON, New Jersey CHARLES A. GONZALEZ, Texas
DARRELL E. ISSA, California DAVID D. PHELPS, Illinois
SAM GRAVES, Missouri GRACE F. NAPOLITANO, California
EDWARD L. SCHROCK, Virginia BRIAN BAIRD, Washington
FELIX J. GRUCCI, Jr., New York MARK UDALL, Colorado
TODD W. AKIN, Missouri JAMES R. LANGEVIN, Rhode Island
SHELLEY MOORE CAPITO, West Virginia MIKE ROSS, Arkansas
BILL SHUSTER, Pennsylvania BRAD CARSON, Oklahoma
ANIBAL ACEVEDO-VILA, Puerto Rico
Doug Thomas, Staff Director
Phil Eskeland, Deputy Staff Director
Michael Day, Minority Staff Director
------
SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT, AND GOVERNMENT PROGRAMS
JIM DeMINT, South Carolina, Chairman
FRANK A. LoBIONDO, New Jersey JUANITA MILLENDER-McDONALD,
MICHAEL FERGUSON, New Jersey California
FELIX J. GRUCCI, Jr., New York DANNY K. DAVIS, Illinois
DARRELL E. ISSA, California STEPHANIE TUBBS JONES, Ohio
EDWARD L. SCHROCK, Virginia CHARLES A. GONZALEZ, Texas
SHELLEY MOORE CAPITO, West Virginia MIKE ROSS, Arkansas
DONNA M. CHRISTENSEN, Virgin
Islands
Nelson Crowther, Professional Staff
C O N T E N T S
----------
Page
Hearing held on November 19, 2001................................ 1
Witnesses
Cooper, Elliott, Regional Administrator, U.S. Small Business
Administration................................................. 4
Wilson, Donald, President & CEO, Association of Small Business
Development.................................................... 6
Beltram, Richard, Intedge Industries............................. 8
Lennon, June, Senior Partner, Martin & Lennon CPAs............... 10
Hughes, Bob, President, Hughes Development....................... 12
Hammond, Wesley, President, HBJ Home Furnishings................. 13
Appendix
Opening statements:
Manzullo, Hon. Donald........................................ 21
Prepared statements:
Cooper, Elliot............................................... 23
Wilson, Donald............................................... 30
Beltram, Richard............................................. 38
Lennon, June................................................. 42
Hughes, Bob.................................................. 45
Hammond, Wesley.............................................. 47
FIELD HEARING--LISTENING TO MAIN STREET
----------
MONDAY, NOVEMBER 19, 2001
House of Representatives,
Committee on Small Business,
Subcommittee on Workforce, Benefits and
Empowerment,
Washington, DC.
The subcommittee met, pursuant to call, at 11:00 a.m., in
the Spartanburg Chamber of Commerce, 105 North Pine Street,
Spartanburg, South Carolina, Hon. Donald A. Manzullo (chairman
of the committee), presiding.
Chairman Manzullo. We will convene our field hearing for
this full committee of the United States House of
Representatives Committee on Small Business. I just want to
thank you, Congressman, for the opportunity to come down here.
Mr. DeMint. Thank you, Mr. Chairman.
Chairman Manzullo. And share with the folks down here some
of the great things that you've been doing. Let me just share
with you a couple of major bills that Jim has been working.
A good bill is one thing. Getting it through the House is
something else. So it is difficult. Jim is the author of two
bills in particular, H.R. 1923. This is a bill that will allow
small businesses to accumulate the first five years of so-
called profits into a special account. So instead of having to
pay taxes on those first five years, that could be used as a
method of accumulating capital. The businesses actually do pay
a tax, but it would be a deduction of that amount as a
warehouse or a storehouse for future capital.
Since most businesses fail within the first three to five
years, I think it is a tremendous idea. Then Jim's best bill, I
think, is H.R. 3062, which talks about small and medium-size
growing companies' experience as they try to keep up with
demand from expansion. The bill would allow these companies to
make a tax deferment of up to two hundred and fifty thousand
dollars for use as collateral in a special BRIDGE account that
could be used by the company until outside funding becomes
available.
So Jim has spent his time in Congress in trying to find all
types of new and innovative ways so that small businesses could
have access to capital, minimizing the tax responsibility, and
at the same time realizing that there is a very severe credit
crunch going on in the small business industry. Jim has also
done a lot of work on his health care account legislation,
having a fine contribution plan to serve the poor health care
accounts. I just want to tell you that, as a full subcommittee
chairman, the tremendous job that he has been doing in
Washington. He also serves on the Education and Labor
Committee, now known as the committee on--What's it called?
Mr. DeMint. I think it's still Education and Workforce. I
think we've changed the name a couple of times.
Chairman Manzullo. But he takes his experience from that
committee and he brings it over to his subcommittee
chairmanship and does some tremendous policy review on it. So
it's a real pleasure to come down here and share this time with
you. We're here to hear the views of the folks here on the
state of the economy. The economic downturn has affected small
businesses here in South Carolina. Small businesses need help,
so what form should that take? And we have the Regional
Administrator to the SBA here. Is that correct?
Mr. Cooper. Good morning, Mr. Chairman and Congressman
DeMint. On behalf of the Administrator, I want to thank you for
the opportunity for us to participate in this hearing.
Chairman Manzullo. Hang on just a second. What I want to do
is--we can start over here and just move on down to the left.
And the rules are that testimony is about five minutes.
Mr. Cooper. I was told I was first.
Chairman Manzullo. That's fine.
Mr. DeMint. Thank you, Mr. Chairman. It's great to have you
here. You are a real advocate of small business. And the
reason, so you'll know, are the six hundred and twenty thousand
berets made in China are now in warehouses. When he found out
about it, he went wild and made sure that small businesses in
America made those black berets; and the ones that came from
China are going to sit in the warehouse until he can sell them
off with these new calendars. He's a real watchdog for small
business, and he's made a big impact already.
And I want to welcome you to Spartanburg to study some
important issues that relate to small business. Just so you'll
know, Mr. Chairman, Spartanburg and the whole Upstate are
really on the verge of a visionary growth, particularly here in
Spartanburg where they've had a large downtown redevelopment
project called Renaissance Project, that's moving forward,
which will change the face of the Upstate.
We've got some visionary and hard-working people here.
We've got folks from Spartanburg and Greenville, two major
areas of my district, represented here today. We know that
small businesses will be the engine of all that growth. It's
important that we recognize their role. The U.S. economy is now
on a downturn. Consumer confidence is low, and the government
must be particularly sensitive to small businesses.
So the point of what we're doing here today is to listen to
small businesses on America's Main Street, so to speak. It
might be more appropriate to say listen to America's backbone,
because that's really what we're talking about when we're
dealing with small business. Congress is considering a lot of
things right now, a stimulus package that would have impact on
large as well as small business. We're still in the middle of
debating that.
So some of the things you say here today could help guide
that debate. And we need to know how different issues affect
you, how they're affecting you now, and what else that we need
to consider that we might not be thinking about. In addition to
short term, the downturn that we're considering now, we need to
think long term, what legislative, administrative, or
regulatory changes are needed to guarantee that small business
will be a success.
In the Upstate, Mr. Chairman, we are really a showcase of
diversified small businesses. We have many manufacturers,
corporate offices, warehouses, distribution centers, packaging
companies, metalworking and stamping companies. You name it;
we've got the small business here to be represented. We've got
many international firms here. BMW and over a hundred
international companies are represented here in Spartanburg
alone.
In fact, Spartanburg is the highest per capita
international investment county in the country. And so there's
a lot going on here, and we've been referred to as a world
class international trading community, actually by a professor
at Harvard Business School, Rosabeth Moss Kanter. In her book
titled World Class: Thriving Locally in the Global Economy, she
mentions the Spartanburg-Greenville area.
But while we're proud of our large international firms, it
is in fact our small firms that will create most of the new
jobs over the next ten years, just as it has in the last ten
years. Seventy-five percent of the jobs in South Carolina and
around the country have been created by what we refer to as
small companies, and they provide hope and opportunity to many.
Especially minorities and women are the fastest-growing area of
small business owners.
And as I had the chance to experience myself in starting a
small business, that dream of the freedom you have of owning
your own business is a dream that many have and I think we can
help with on our committee; although I will have to say I
didn't have as much freedom once I started as I thought I
would. But that's why we're here, and I want to thank and
introduce our witnesses.
The point today is not to get a huge public crowd to listen
to what we have to say but to get some folks from the different
areas of small business in the Upstate community to give us
their opinions on things that we can include in the official
record and use as reference and resource material as we
consider and push legislation.
So what we say today, what we say verbally and anything you
submit in writing, will be included in the official record so
that it can be used not only by us but all members of the
committee and other committees in our deliberations. Some of
you who have come today are not official witnesses. If you have
comments that you'd like to submit to me in writing, I'll make
sure that I consider it, and I'll do everything I can to have
others consider it too.
Chairman Manzullo. Let's keep open the record for two
weeks. After today, anybody who wants to submit--I mean, not a
tome--brief remarks or something like that. If you could get
them to Mr. DeMint's office, his office could get them to the
committee.
Mr. DeMint. Right. And to communicate to us, the easiest
way now, since we're not receiving any mail in Washington is,
you could go to our Web site, which is www.demint.house.gov;
and you'll find an e-mail location there. You can send us any
comments you have. Let me introduce our witnesses and get
started.
We have Wesley Hammond. I appreciate your being here. He is
president of HBJ Home Furnishings. He has been in the family
business since he was sixteen. He's been president of Southern
Home Furnishings Trade Association. He has been on the board of
this Chamber of Commerce where we're at today. He has spent
seven years in the U.S. Army Reserve as a combat engineer. We
also have Bob Hughes, president of Hughes Development
Corporation. He is chairman of the Greenville Chamber of
Commerce. Is that currently?
Mr. Hughes. Only one more month.
Mr. DeMint. He is also on the board of Furman University
that's in our district. He is the vice chair of the Small Scale
Development Council of Urban Land Institute. I want to thank
you for being here.
We have June Lennon, who is a partner with Martin and
Lennon CPAs. She is a member of the South Carolina Association
of CPAs as well as the American Institute of CPAs. She is a
member of the National Federation of Independent Businesses,
South Carolina Leadership Council.
And we have Rick Beltram, a manufacturer. He is president
of Intedge Industries, a small privately owned manufacturer of
food service equipment here in Spartanburg. He is a third
generation owner. His business has been in business since 1914.
Don Wilson, who is director of government affairs for the
Association of Small Business Development Centers. Prior to
that, he was director of government relations for the National
Tire Dealers and Retreaders Association. And to show that he
does have stamina, he has been chief of staff for three
different congressmen, which I question your wisdom.
Elliot Cooper, who is the district director of the U.S.
Small Business Administration of SouthCarolina since 1991. He
is now acting director of the SBA for this region. And before, he has
been a co-chair of the South Carolina Rural Economic Development
Council.
So, folks, we appreciate your being here. And, as I've
said, your testimony will be in the official record, and we
look forward to hearing from you. And, Mr. Chairman, I'll give
it back to you.
Chairman Manzullo. The rules are five minutes per person.
And when you get to the five minutes, I'll go like this
(indicating). If you go much over that, then the book becomes
airborne.
Jim, did you want to start with Mr. Cooper? Does it make
any difference to you?
Mr. DeMint. No, I'll leave that to you.
Chairman Manzullo. All right. Well, Mr. Cooper, we'll start
with you and record your testimony. I notice this is seven
typed pages. You're not going to try to read it all, are you?
STATEMENT OF ELLIOTT COOPER, ACTING REGIONAL DIRECTOR, U.S.
SMALL BUSINESS ADMINISTRATION
Mr. Cooper. No, sir, I assure you of that. I've always
heard you should be on time, be brief, and be seated. Well, I
was on time, and I'm seated. So I'm sure I'll be brief.
The South Carolina District Office, like most SBA offices
across the country, is working to deliver very innovative ways
to help America's small business community, especially after
the disaster of September 11. Our basic mission still lies in
helping people to get into business, stay in business, and
expand and grow that business. And we think the best way to
tell that story is to give you a couple of examples of what's
gone on in this state, especially in this part of the state.
Take Carol DeShields of DeShields Grading from Woodruff,
South Carolina. She was our Small Business Person of the Year
in the year 2000. And on her own initiative, she told us back
in 1970, if it had not been for an SBA Disaster Loan, she
wouldn't be in business today. We helped her quite a bit at
that time, or the agency did; and she was very appreciative of
that.
As you know, the agency extended its Economic Injury
Development Loan Program to cover areas outside of New York and
Virginia. We have taken those applications. We are not at a
point yet where we can see the numbers being approved, but
we've had over a hundred applications presented in South
Carolina.
We have another economic injury loan program for companies
that have had an impact because one of their key people have
been called to active duty as a reservist or a member of the
National Guard. These two programs, we think, will go a long
way in solving some of the problems created by the disaster of
9/11.
Another program that's been very well received in our
state--in fact, the state of South Carolina is number four in
the country these loans and we are a relatively small state
population-wise--is the Economic Adjustment Program, the CAIP
program, which was part of the NAFTA. We've done over twenty-
four loans, I believe. One company saved about eighty-six
hundred dollars in guaranty fees that were paid by the NADBank,
and another created five new jobs in a rural area. And any time
we can create jobs in a rural area, we feel like we've made a
positive impact to these rural areas.
Another good story of the use of SBA's programs in this
area is Jimmy Bayne of Bayne Machine Works, who thought he'd
faced every business challenge that he could possibly face. He
was the recipient of two 504 loans, and he has taken his
business from a shop in his back yard to a seventy-five
thousand square foot facility that he recently sold and told me
he would never have to work again. He sold a thing called
Thinline Lift Systems. He sold it to an international company,
and he is very appreciative of the SBA and what we were able to
do for him.
Most of our young entrepreneurs think that they can get out
and take over the world after they come out of college. We have
two over at Clemson. Tom Merrit and Mike Pereyo formed a
company called Oobe, Incorporated, and they make sportswear.
They say they would not be in business today had it not been
for the Small Business Development Center at Clemson and also
the SBA LowDoc program. Today, their company is able to meet
the challenges that have been brought to them.
Here in Spartanburg, you may drive by Tate Metalworks. Mr.
Tate started his business in 1972 with a seventeen thousand
dollar SBA loan. Our last check with Mr. Tate indicated that
sales were more than twelve million dollars and he had eighty
employees.
Across the state, you'll find many businesses, like JBE,
Incorporated, that turned to SCORE for counseling. They are
appreciative of what SCORE did for them, and that's another
good example of what we try to do. A minority firm, Carlos
Garcia, president of RCS Corporation, is one of the many small
businesses in the state that has benefited from the 8(a)
program. He started with two employees down at the U.S.
Department of Energy, Savannah River Plant. He now has a
hundred employees, and he credits the 8(a) program with getting
him started in the business and being successful.
There are many small business stories, and I could go on
and on. And especially as Congressman DeMint mentioned, in this
part of the state, it's one of our strongest areas. The
corridor from Charlotte to Atlanta is really anchored by what
goes on in South Carolina around 85. As we continue to do
outreach, we could not do it without people helping us. And a
good example is the Spartanburg Chamber of Commerce.
Chuck Ewart and his staff here have done an outstanding job
to support SBA and its programs. And we find that all over the
state. So we're able to leverage their membership and do things
that we couldn't do with our own limited resources. We feel
like that there are a lot of things that can be done and we
look forward to working with you and the committee and the
Administrator in bringing help to the economy to get it back on
its feet.
[Mr. Cooper's statement may be found in appendix.]
Chairman Manzullo. I appreciate your testimony. Your
members are doing a tremendous job.
The next witness is Donald Wilson.
STATEMENT OF DONALD WILSON, PRESIDENT AND CEO, ASSOCIATION OF
SMALL BUSINESS DEVELOPMENT CENTERS
Mr. Wilson. Mr. Chairman, thank you very much. It's a
pleasure for ASBDC to be represented at this hearing today. As
most of you are aware, the SBDC network is comprised of roughly
a thousand centers around the country, with roughly five
thousand counselors providing management and technical
assistance to small businesses. Counseling, of course, is done
at no charge. The South Carolina SBDC, Mr. John Lenti, the
state director, is here. We're delighted to have him with us.
They have, I believe, if I'm correct----
Chairman Manzullo. Spell his name for the record.
Mr. Wilson. L-e-n-t-i. The host of the SBDC in South
Carolina is the University of South Carolina in Columbia. They
see several thousand small businesses a year and have one of
the best records in terms of long-distance counseling and also
in terms of hours per client. Their average, I believe John has
told me, is six hours per client in their counseling, which is
an outstanding record compared to the programs nationwide.
The program overall, Mr. Chairman, sees roughly six hundred
and fifty thousand small business owners and aspiring
entrepreneurs for at least an hour face to face. Overall, we
probably see about a million and a half. So our counselors have
a very close connection with what's happening on Main Street,
which is the purpose of the hearing today.
Some of the concerns that they have brought to us are
obviously the concerns that you share, the downturning of the
economy. Manufactured orders are down. New orders for
manufactured goods are down sharply. Unemployment is up. I
noticed that South Carolina had the third highest new
unemployment claims for the week ending November 3. The third
quarter, of course, we had an economic downturn. Whether the
fourth quarter will show another downturn and put us
technically into a recession, we don't know. But small
businesses across the country are hurting.
We see frequently the headlines where a large company lays
off say a thousand people, but we don't see the headlines where
thousands and thousands of small businesses are laying off two
or three or four people. And so we're concerned that at times
small businesses get forgotten when a recession comes along,
because the larger firms get the highest headlines.
I want to thank both of you, Mr. Chairman and Congressman
DeMint, for the role that you have played in bringing to the
Congress' attention the needs of small business throughout this
year through your chairmanship. There have been a number of
major bills; 3230, which recently passed the House, would
provide tremendous assistance to small businesses in making
loans more available to small businesses, and also expanding
the range of management and technical assistance that would be
available. We hope that the House will act on that. The
companion measure, S. 1499 in the Senate, has over half the
senators as co-sponsors; and we hope that measure can be pushed
through the Senate and sent to the President before Congress
adjourns, because it would make a tremendous difference in the
small business community throughout the country.
One of the things that's of tremendous concern to small
businesses--they're facing rising costs--and I know is a
concern of both of you gentlemen, is the increased cost of
regulations on small businesses. The Advocate's Office at SBA
just recently released a study that indicates that the cost of
small businesses per employee is almost seven thousand dollars
a year, seven thousand dollars a year per employee, to comply
with regulations; and it's primarily EPA regulations and IRS
regulations.
And, Mr. DeMint, I know that you, Congressman DeMint, have
introduced legislation to have a commission to look at IRS
regulations and seek to simplify them, and we applaud you on
that. The interesting thing about that figure is that's for
businesses under twenty employees. For firms with over five
hundred employees, the cost per employee for regulations is
sixty percent less than that. So there is no question that
regardless of the need for the regulation, it has a much
heavier burden on small businesses; and I know your brother is
a small businessman, Mr. Chairman. I'm sure he's very familiar
with the cost of regulation.
H.R. 203, which Mr. DeMint passed out of your subcommittee
and, with the Chairman's leadership, passed out of the full
committee and then on to the House, would provide a pilot
program for SBDCs to provide regulatory compliance to small
businesses on a twenty-state pilot. We are thrilled that that
legislation is through the House, and we are working very hard
to try to get it through the Senate. And we thank both of you
for the leadership in getting that through. I know that our
clients tell us across the country that that legislation would
make a big difference if we can provide compliance assistance
for small businesses.
I'll also mention a concern that I know is a concern of the
Chairman, the rising cost of healthcare. We see estimates now
that for small businesses, the cost of health care could go up as much
as twenty-five percent next year. That would be a tremendous burden. We
believe that greater attention needs to be placed on methodologies to
help small businesses compete to get pricing that large businesses
through self-employment, or obviously they have greater leverage with
the insurance companies in pricing. But anything which could be done in
that area would be a tremendous help to small businesses.
Chairman Manzullo. You're right at the five minutes.
Mr. Wilson. Thank you very much.
[Mr. Wilson's statement may be found in appendix.]
Chairman Manzullo. Mr. Beltram.
STATEMENT OF RICK S. BELTRAM, PRESIDENT, INTEDGE INDUSTRIES,
INC.
Mr. Beltram. My name is Rick Beltram, and I am president of
Intedge Industries. We've been in business since 1914. I am the
third generation. We moved here from New Jersey in 1988. And
what the first two witnesses have been talking about are the
things that I feel every day.
Thank you for the opportunity to participate in this very
important hearing today. We are fortunate that the U.S.
Congress has come to Spartanburg. We are especially gratified
that our Congressman, Jim DeMint, is a small businessman and
has true empathy for our current dilemma. As we all know, the
fuel for employment and business development is always
concentrated in the small business community. I would like to
specifically focus my brief comments on the manufacturing
segment.
At a recent gathering of textile executives, Mr. Roger
Milliken said that all U.S. manufacturing is under great
stress. This is particularly true for the small firms who
manufacture basic products. This past weekend--and I've
attached a copy of this news article from our local newspaper--
stated that industrial activity has had the longest stretch of
decline since The Great Depression. Our particular firm
manufactures products that service the hospitality industry,
which was weak even before the 9/11 tragedy and has
significantly weakened since. Thus, we have seen contraction
for well over a year already, which is consistent with the news
report. We have seen many other local firms cease business; and
these, unfortunately, cannot be brought back. The empty shells
of factories and lost jobs and economic activity will remain
for a long time, well past the current economic cycle. I urge
you to consider some rescue efforts for those of us that are
still open.
We have made great strides in reducing voluntary costs, and
we have benefited from lower prices of purchased commodities.
However, we cannot control involuntary costs. As one example,
our modification rate for Workers' Compensation insurance has
actually dropped to .75.
However, our premiums still went up with a static payroll.
Payroll taxes, medical premiums, property taxes, and utility
rates cannot be controlled by us, although they are regulated
by the various government entities that can offer rescue plans.
Since we consider our employees like family, we are very
reluctant to use layoffs as our primary relief to cut costs.
Large firms can make wholesale employment reductions and walk
away from a devastated community. We just cannot do that.
Our property taxes here in South Carolina are based on 10.5
percent of assessment, and we have seen locally that some basic
services are only offered if the manufacturing community
remains solvent. And by the way, the 10.5 percent relates to
commercial at six percent and primary homeowners at four
percent. So we pay almost twice what somebody would if they
owned a shopping center. Payroll taxes have consistently risen
as Congress has raised rates and increased employer
contributions to make up for past deficits. In order to get
proper financing, we have been able to obtain SBA guaranteed
loans through GE Capital.
I suggest to you that if the manufacturing base continues
to erode, time will run out on the USA to be able to defend
itself and be self-sufficient for many basic products. We have
all been witnesses to many economic failures in the
manufacturing community in just the past few months,
particularly in the Upstate region.
In the past, South Carolina has performed much better than
the U.S. economy because of our strong work ethic and favorable
political climate. Now is not that time. This region, along
with the rest of the country, needs some very rapid action to a
rapidly deteriorating problem. Our instincts tell us that the
economy is a long way from recovery. We have seen banks and
other vendors become much more cooperative with these
difficulties; but, to date, the government, for the most part,
has sat on the sidelines.
I would suggest the following plan. Since this is a federal
hearing, my concept is focused on what Congress can do.
However, I hope that your actions will be a role model for
state and local governments.
One, An immediate reduction of employers' contribution of
payroll taxes to include FICA and FUTA.
Two, Some amnesty provisions for past-due amounts for all
federal taxes, penalties, and interest to be based on
individual corporate hardships.
Three, Monetary grants to be offered for export marketing.
I recently had a visit from the South Carolina Export
Consortium, and they offer a wonderful program. But we need
government help on that.
Four, Review of the set-aside provisions of GSA and other
government contracting that exclude small businesses that are
not minority owned or are not occupational disability
workshops. I have attached to my brief a recent solicitation
that we did get from GSA.
Number Five, Greater focus on Congressional offices to
liaison with district manufacturers to be sure they are
participating in available government contracts.
Six, Offer subsidies for interest payments for SBA
guaranteed loans; rebates for partial return of SBA origination
fees.
I hope that my brief comments will be of use to passing
legislation that will offer quick help to those many thousands
of business owners who have ceased having restful nights. I can
tell you from personal experience that the past few months have
been the most stressful of my business career. A delay in
action will only offer an irreversible environment. Thank you.
[Mr. Beltram's statement may be found appendix.]
Chairman Manzullo. Thank you very much.
The next witness is June Lennon, senior partner of Martin
and Lennon CPAs.
Ms. Lennon. Good morning, Mr. Chairman.
Chairman Manzullo. Are you representing NFIB here today?
STATEMENT OF JUNE LENNON, SENIOR PARTNER, MARTIN AND LENNON
CPAs, PA, REPRESENTING THE NATIONAL FEDERATION OF INDEPENDENT
BUSINESS (NFIB)
Ms. Lennon. Yes, I am. Good morning, Mr. Chairman and
Congressman DeMint. I am pleased to be here this morning to
express to you the interests of small businesses and the
priorities of the National Federation of Independent Business
in the wake of the attacks in New York and Washington, D.C. As
you know, these attacks have had a distinct impact on the
outlook of business owners nationally, and I believe it is
important for the Congress to enact legislation to stimulate
the economy.
The NFIB Education Foundation measures the state of small
business via the Small Business Economic Trends report. This
monthly survey, which measures the likelihood of new
investments, new hires, and optimism among entrepreneurs,
reveals that the SBET index had fallen to its lowest level
since 1993 and is solid evidence that the terrorist attacks of
September 11 have significantly hurt our national economy and
America's small businesses. In short, the terrorist attacks
have shaken the confidence of entrepreneurs in the American
economy.
As a result, it is imperative that the Congress act to
reduce the burdens facing America's risk-takers, our
entrepreneurs. The tax code is one of the top frustrations
entrepreneurs have with their government. The tax code alone,
with all of its complexities, takes time away from a business
owner's focus on running and expanding his or her business.
With small business owners pessimistic about the future, it
makes sense to relieve some of the impediments in the tax code
that slow economic growth, job creation, and community
development. Let me take a few minutes to outline some of the
ways that this could be done.
Allow small business owners to expense more of the
equipment and vital materials they need to run their
organizations. This will allow additional investments by small
firms to be expensed, therefore enabling those businesses to
expand and create new jobs.
Under the law right now, small businesses can expense up to
twenty-four thousand dollars this year as long as the total
investment is less than two hundred thousand dollars. Both of
these figures are far too low. Mr. Chairman, I know you agree
with me because your legislation, HR 1037, expands Section 179.
I also know that the entire House of Representatives and many
in the Senate want to expand this section. It is the right
thing to do, but we must do it without complexity. Expanding
Section 179 to all assets and taxpayers should be the goal of
the Congress.
The Congress has a temporary tax law in place right now. I
urge Congress to permanently enact the Economic Growth and Tax
Relief Reconciliation Act of 2001 and to accelerate the
benefits of the new law. The benefits of permanently enacting
this tax cut will lead to long-term health for the American
economy, restore consumer confidence, and reduce complexity
associated with the IRC. The President has proposed
accelerating the individual rate reduction in his proposal.
This is the right thing to do because it will bring immediate,
robust growth to the economy.
Personal tax rates on entrepreneurs are critical to
formation of small businesses. Reducing these rates means more
formation of small businesses, because people investing less
than ten thousand dollars create many new businesses. The
primary source of this money is from personal resources.
Thousands of small businesses use vehicles to run their
businesses every day. But once again, the tax code penalizes
businesses because it does not allow a business owner to deduct
the true cost of owning and operating a vehicle. The current
thresholds are too low to enable small businesses to take full
advantage of the depreciation deduction for business vehicles.
They have not kept pace with the actual cost of new cars, light
trucks, and vans, which are used by many businesses to deliver
products, make service or sales calls, or commute between job
sites. Due toheavy mileage, small businesses are often forced
to replace the vehicles much faster than the depreciation life allowed.
Many businesses make money one year and lose money the
next. It is important for businesses to be able to survive
tough times. The Congress has recognized this in the past and
has written a provision in the tax code that allows businesses
to apply for refunds of previous years' taxes in years that
they do not make money. This provision is helpful but not broad
enough. Right now a business owner is only eligible for refunds
on the last two years of taxes collected. This provision should
be expanded to allow for more dollars to be available for
businesses in down years.
Mr. Chairman, NFIB and I could speak much longer on the
problems of the tax code. However, we understand the time
constraints of this hearing. I hope I have been able to provide
you with constructive options that will be germane to the
debate in Washington, DC over the stimulus bill.
In summation, I think it is clear that the tax code is the
largest problem facing small businesses right now. If you
simplify the tax code and avoid placing new mandates and taxes
on America's entrepreneurs, you will produce legislation that
will get our country's economy back on track. If you remember
nothing else from my testimony, I would have you remember just
two words as you work on tax legislation; simple and equitable.
Thank you, Mr. Chairman. I yield back the balance of my time
and will be happy to address any questions you may have.
[Ms. Lennon's statement may be found in appendix.]
Chairman Manzullo. Thank you very much.
Our next witness is Bob Hughes, president of Hughes
Development. I look forward to your testimony.
STATEMENT OF BOB HUGHES, PRESIDENT, HUGHES DEVELOPMENT
Mr. Hughes. Thank you. Mr. Chairman, Congressman DeMint, on
behalf of both myself as a small businessman and the Greater
Greenville Chamber of Commerce, of which I am the volunteer
chair this year, I want to thank you for this opportunity to
discuss small business issues concerning our community.
As the fourth small businessperson in a row to chair our
Chamber of Commerce and one of two thousand small business
members, I guess my presence here reflects the fact that
Greenville is a community that recognizes the values and
contributions of small businesses. We love our big businesses
and celebrate the jobs and investments they provide, but we
know that future big businesses and great innovation will come
from our small businesses. And that will be a reflection of how
we nurture them.
It will certainly come as no surprise that regulations,
federal, state, and local, hit small businesses harder than any
other. Small businesses, by definition, sell fewer units and
therefore have less to amortize the regulatory cost over. Even
if you exempt us from the regulation, we have to pay
professionals to tell us we're exempt. We operate with no
dedicated staff people to watch for and react to new laws and
regulations.
More important than a tax cut to small business would be a
regulatory cut. A regulatory cut would save us money like a tax
cut, but it would also free us up to pay more attention to
growing our business; raising our top line, not just our bottom
line. Congressman DeMint, your capital warehouse idea is a
great idea. Please, no new agency for it though.
Being located in the area with more international
businesses than anywhere else in the nation--Not just per
capita; more international businesses than anywhere else in the
nation--our small businesses are keenly interested in
international markets. Access to these markets through ports,
air and sea, is vital; and your attention to those issues is
welcome. More ways to do business with foreign countries, more
access to foreign small companies, easier paths through the
numerous governmental agencies that operate in this area would
be valuable to our members.
Small businesses don't have enough access to affordable
health insurance, and what is available is on less favorable
terms than to our big business brethren. Costs have gone up too
fast for us to afford good coverage, and we like to be the ones
who care more for our employees. More insurance options for
small businesses and full deductibility for the self-employed
will help level that field. Congressman DeMint, we thank you
also for your work in the health care area. We know you hear
us.
Clemson University is ranked fifth in the nation in
commercialized research; that is, having its university
research actually represented by products sold in the market.
But that is not reflected in our local economy. Those
businesses are somewhere else. We need two things. First, we
need more access to venture capital.
This is, no doubt, partly due to local and state issues.
But if we are really serious about this, an elimination or
sharp reduction in the capital gains tax would provide instant
activity. As I recall, there has never been an instance in U.S.
history when a reduction in the capital gains rate has not
produced higher tax collections. So this will cost the
government nothing, while giving a great return to small
businesses and the economy.
Second, our Chamber has recognized education as the area's
number one economic development priority. This is an especially
important issue for small businesses. Although it may not be a
traditional small business focus, it is the focus of our
business community. We know that where we fund and nurture
education, we will find the innovation capitals of the next
century. The government's stimulus package, we are supportive
of that; but we ask, please don't blow the budget. Deficit
spending will raise interest rates. Interest rates will have a
far larger impact on the economy than for whatever you can do
with the deficit. The government can't fix the economy. Only
people in businesses can do that. The government can make it
only easier or harder, but you can set the field so the teams
can play and play well.
The economic revolutions in our society have come from
small businesses. The current revolution, fueled by the PC,
started in a garage, which interestingly is a direct link to
the last great economic revolution, the automobile, which
either started in a garage or started garages. We appreciate
being here before the committee charged with nurturing the next
great revolution. Anything you can do to lessen the
distractions and burdens on these pioneers of our future will
be repaid many times over. Thank you.
[Mr. Hughes' statement may be found in appendix.]
Chairman Manzullo. Thank you for your testimony. The last
witness is Wesley Hammond, president of HBJ. What does that
stand for?
Mr. Hammond. Hammond Brown Jennings.
Chairman Manzullo. Okay. Home Furnishings. I look forward
to your testimony.
STATEMENT OF WESLEY HAMMOND, PRESIDENT, HBJ HOME FURNISHINGS
Mr. Hammond. Thank you, sir. Thank you, Mr. Chairman,
Congressman DeMint. I didn't know what to expect when I was
told I would be testifying as a witness. I've been in a court
before. I didn't like that too much. It's a little bit like the
fellow from Spartanburg who went to Washington, DC and went to
a really fancy restaurant. He had on his regular work clothes,
and the maitre d' said, sorry, you can't come in without a tie.
So the fellow went back to his car and rambled around to see if
he could find something that looked like a tie. All he found
was a set of jumper cables. So he said, what the heck, and
wrapped the jumper cables around his neck and went back to the
restaurant. The maitre d' looked him over and said, all right,
you can come in, but don't start anything. Small businesses are
always starting things.
I sell a great product that everybody needs, but it's a
purchase that is easily deferred. If your car conks out or your
TV dies or your refrigerator stops cooling, you'll fix them or
replace them pretty quick. But if the old sofa starts looking
kind of shabby, that purchase can often be put off.
So I ride with the economy. So when do average folks buy
new furniture? Usually it's when these four factors coincide.
There is a need; there is a good sale, usually with free
financing; they have enough disposable income to feel okay
about another monthly payment. And according to a survey I
read, couples who earn less than fifty thousand a year have no
disposable income. The fourth thing is, when they feel secure
about their jobs. How secure can any of us feel today when
we've been attacked by a foreign power, seen anthrax come by
mail, heard that the airlines may go broke, seen almost all of
our textile mills close? You get the picture.
In Spartanburg, I thank God for BMW, George Dean Johnson,
Arthur Cleveland, Jimmy Gibbs, Roger Milliken, and for the
amazing resilience of the American people. My business was
started in 1907, and my father's dream was to keep the business
strong enough to pass along to the fourth generation. He
succeeded in that.
I've been fortunate as well. My son and my cousin are
partners. We operate with no bank debt. We pay our suppliers in
a timely manner. We are well respected in our community and in
our industry. And we are typical of thousands of small
businesses throughout America. We survive and sometimes thrive
because we are close to our customers, close to our employees,
and we work very hard. Is the federal government our helper or
our adversary? Sometimes both.
With the inconsistencies of OSHA, with laws that encourage
people to file lawsuits in hopes of personal gain, with
excessive taxes that penalize success, with Robin Hood schemes
that redistribute income and cause resentment in both the giver
and the receiver, with trade agreements that send needed jobs
to other countries to be performed by people who would be
considered slaves in this country, I think the federal
government makes my product more costly and my workdays a lot
longer.
On the other hand, I know that some of the laws I don't
understand lead to important changes that benefit many. And I
know what an economy that doesn't work looks like. I spent
three weeks this summer, before September 11, in the Middle
East. These corrupt and incompetent governments cannot offer
their people hope, so they blame us for their miserable plight.
I am truly blessed to live and work under the best conditions
in the world. So how can the federal government help me and
people like me to be more successful so I can prosper and grow
and create jobs and pay even more taxes? Here are a few
suggestions.
Ease up on the taxes. Everybody should pay some taxes, but
let people keep more of what they work so hard to earn. Unless
they bury it in the back yard, that money is going right into
the economy anyway.
Give us a break on confusing rules and regulations. My
company has two large trucks, and we have the same DOT
regulations to follow as a fleet of a thousand trucks. Why?
Spend our tax dollars wisely. In my business, I constantly
ask myself, is spending this money going to make my business
more efficient? Is it necessary to my survival? Will it add to
my revenues? If the answer is no, I don't do it.
Quit hiding behind the word, nexus, and let the states
collect sales tax on Internet and catalog sales made to their
citizens. Nexus means the business must have a physical
presence in the state for the state to collect sales tax. If
you took all the catalogs that I've gotten in the past months
before Christmas and stacked them up, I believe they would
tower over the largest building in town. That sounds like nexus
to me.
Let the PX system sell necessities to soldiers on active
duty in areas where the same products are not readily
available. The PX system was never meant to be a private
discount department store competing with the private sector.
And, finally, bring us together as a nation of diverse
people. Don't make laws that push us apart.
Today, national security is your number one job. Tell us
how we can help. Tell us the truth. Don't let us lose the
confidence, the generosity, the vitality, and the zest for
living that make the American spirit the wonder and the envy of
the rest of the world.
Thank you for your interest and support.
[Mr. Hammond's statement may be found in appendix.]
Chairman Manzullo. Thank you for your testimony. I just
have a couple of comments, if somebody wants to testify on
them. The inability to find capital, every administration wants
to raise SBDC fees. We go through this nonsense with every
administration, Republican or Democrat, wants to make the SBDCs
in the position where they have to charge consulting fees.
Every year we fight it, and we win; but it comes back again. I
think the reason--and I think you would agree with me--I still
don't think that Washington gets the picture with small
businesses.
The NFIB does a great job. The Chamber of Commerce; Don,
your organization; and, obviously, the SBA. But small
businesses simply do not have the lobbying power. They don't
have the clout. They don't have the sustained ability of the
big businesses. One corporation received a 1.5 billion dollar
forgiveness on a tax. Granted, that comes back down through the
ranks.
But still, the small businesses have really not gotten the
tax breaks that they should have. It's almost embarrassing how
small businesses have had to beg to get a hundred percent
deductibility for health and accident insurance; and I think
it's a disgrace that Congress each year strokes small
businesses, gives them a little bit more, and says, well, next
year, you'll get a hundred percent. My brother and his wife pay
seven hundred dollars a month in health and accident insurance.
Insurance companies don't community rate. There again, they
could community rate. They could treat all small businesses as
one big business and form that giant pool that we've been
trying to do with associated health plans. Unfortunately, that
hasn't gotten through Congress.
So I just want to let you know that you need to continue to
inform Mr. DeMint and stay very close to the SBDCs. The Small
Business Administration has what's called an Office of
Advocacy. It's an in-house law firm that we use constantly with
small businesses for fighting federal regulations. It has been
very efficient, and we always try to get it expanded.
Three years ago, it almost was eliminated because Congress
did not understand its function. So I guess the one question
that I have is, the inability to access capital. I think, Mr.
Hughes--are you a real estate developer?
Mr. Hughes. Yes, sir.
Chairman Manzullo. Have you had any experience in that
line?
Mr. Hughes. In real estate, since September 11, it's an
unwillingness to commit anything going forward until it is sort
of sorted out. I don't face the same kind of problem with
capital because I've got a big piece of collateral to offer,
not a business plan. Where that actually affects me is in my
tenants who can't get capital, so they can't pay the rent. So
the access to capital, and South Carolina is notoriously behind
the other states in venture capital. And, as I said, I believe
some of that is local and state issues.
Chairman Manzullo. Well, not just venture capital. I'm
talking about a line of credit. I sit on the Financial Services
Committee, and we've been seeing bank mergers. There is no need
for the banks to constrict when businesses are not even in
stress. So what do we want to get out of the commercial lending
folks, with the decrease of banks from about ten thousand
nationwide to about six or seven thousand, especially in rural
areas? Has anybody here expressed that?
Mr. Wilson. Mr. Chairman, we're hearing that there is
considerable lack of credit, and apparently bank regulators--
and I'm certainly not an expert in that area, but apparently
bank regulators are leaning on the banks to make sure that
their loan portfolios are sound. And apparently small
businesses are often the first ones that they stop lending to.
Rates are down, but the credit is just not available.
And I noticed the lowering of the ADLI loans and things
that have been done will help, but it's hard for a small
business without significant collateral and so forth at this
point to find the credit that they need. As you know, a great
number of small businesses start up and find their capital on
the credit card.
You can do that when times are extremely good and sales
keep going up and you can pay off the credit card every month.
You can make it. But if you're relying on a credit card and
then the economy turns down, as we've seen, then you're facing
astronomical rates. You realize the number of small businesses,
Mr. Chairman, that have started in the last ten years. They
have never experienced an economic downturn. Those business
owners have never been in a distressing time. And so they had
adapted a certain pattern.
And, once again, so many small businesses use credit cards,
and now they're facing the fact that when they can't make those
payments, they're facing eighteen and twenty-one percent
interest rates. And so small business is facing a credit
crunch. There was an excellent editorial on it in the Wall
Street Journal just about ten days ago that I will share with
your office, and it's a major problem.
Chairman Manzullo. I was faxed a copy of that. A major bank
cut off a line of credit to a business back home, and the
business didn't even want a line of credit. They were in the
home building spree. Sales were up dramatically. They were
remodeling and decorating, and the bank said, well, we're just
going to get out of the commercial lending business. They were
supposed to be your SBA preferred lender. Mr. Cooper, what do
you think about the SBA fees?
Mr. Cooper. My personal opinion is that we've priced
ourselves out of the market.
Chairman Manzullo. Yes, I wish you would convey that to
Washington.
Mr. Cooper. I do it every time I have a chance.
Chairman Manzullo. I have has introduced a bill, HR 3230,
that dramatically decreases the 7(a) and 7(b) fees. The SBA
refuses to take a position on it; and for the life of me, I
just do not understand why the Small Business Administration is
not in favor of lowering the fees, because it's four percent
right off the top of a 7(a) loan.
Mr. Wilson. Mr. Chairman, can I address that?
Chairman Manzullo. Sure.
Mr. Wilson. And I know you've experienced the problem, and
you said it very clearly; that it's regardless of the
administration, Republican or Democrat. And we understand that
a president has to have a consistent policy and that his
agencies and departments have to follow the goals of the
administration. But what is happening is that in administration
after administration, OMB so often with SBA programs----
Chairman Manzullo. What are you referring to?
Mr. Wilson. The Office of Management and Budget. And we're
concerned that the White House at the highest levels, with some
programs, is not aware of what OMB is recommending. I'll be
perfectly candid with you. President Bush has been an outspoken
defender of small business, and I doubt very seriously whether
the President is fully aware that OMB has recommended the fees
on SBDCs and higher fees for SBA loans and so forth.
And what I have yet to understand in my twenty-five years
in Washington since moving there from Asheville, I don't
understand why the OMB doesn't understand where they get their
money from. Small businesses are responsible for fifty-one
percent of our gross domestic product.
The money that is coming into Congress and into the
Treasury in recent years has come because of small business
growth. And if OMB wants to manage that money, they need to
manage it well and realize where those dollars are coming from,
but they continually recommend policies that are impediments to
small businesses. And until somebody changes what is going on
at OMB, I am afraid that we're not going to see the policy
changes that we'd like.
Chairman Manzullo. You understand the problem all too well.
Mr. DeMint. A lot of things I'd like to follow up on. The
capital retention is something that--as a small businessman,
has come up several times today about how absurd it is to take
money through taxes from growing small businesses when that
money could just be plowed back in and create more jobs.
And we have gathered a fair amount of support in the House
and in the Senate, and the Chairman is sponsoring this BRIDGE
Act. We hope we can actually do something with a tax deferral
that results in growth, something that would help rather than
punish. I think what I would like to help on, Mr. Wilson and
Mr. Cooper--and maybe we can discuss it a little bit--is just
this whole regulatory aspect of some comprehensive change
regarding regulations and, again, to try to deal with some of
the absurdities in having to do the same thing with a fleet of
two trucks as you would do with a hundred.
We see those types of absurdities, but I don't see any
comprehensive proposals or legislation that would somehow
correct these things for smaller businesses so that the cost
per capita for a small business employer is not so much higher
than a large business. But we would have to have, I think, a
lot of input from your side.
These hearings help, and I think some of you have gone to
lengths today to list some things that begin to confirm what
we're hearing. The frustration that I feel is, where do you get
comprehensive legislation that pulls a lot of this regulatory
reform in? Because as we look forward to some kind of global
economy where we're looking at putting our small businesses in
the export business to compete with companies all over the
world, we seem to be working at odds back home by making it
harder and harder to do business through our tax codes and
regulations.
Is it something you're considering at the SBA or the Small
Business Association? Is there a white paper on regulations,
something we can use to put together a comprehensive
legislation that doesn't appear to exist now?
Mr. Wilson. The Advocate's Office at SBA has been a
tremendous watchdog for small business. I think agencies are
taking the impact into consideration on small businesses, more
than they were a few years ago; but so many of the regulations
were already in place. We all know the horror stories. You have
to have the beeper on a truck. You put the beeper on the truck
when it's in reverse. Then it exceeded EPA noise standards and
so forth a few years ago, those kinds ofridiculous
contradictions.
One of the real problems was that so many of the folks were
writing the regulations, and Congress writes laws that are very
well intended. And then I think the regulators go beyond what
you gentlemen intended in their zeal and advocacy. And it has
improved in recent years, and the folks from NFIB have been at
the forefront in, I think, advocacy in terms of regulation.
But the folks who write the regulations in the agencies
have almost no familiarity with small businesses, how they
operate; and that's a real problem. They bring in folks who
just have never run a business, met a payroll, and so forth,
the ones who are writing them; and I think that is a real
problem. And also with the regulations, so many different
committees.
It's difficult to get an ombudsman bill to deal with the
regulatory burdens on small businesses; but the numbers that
you're very aware of, they're just staggering. And small
businesses cannot afford a team of attorneys to read the
Federal Register every day, and that's the reason we're hoping
the pilot project that came out of your subcommittee and your
committee, Mr. Chairman, that has now passed the House, that
sets up the pilot for Small Business Development Centers to
provide some compliance assistance, may help. If the
regulations are going to stay, at least you owe the small
businessman information on how you can best comply with them
and the most cost-effective way to comply with them.
Mr. DeMint. One of the things, as you know, that we added
to that bill is not only to help people with small business
regulations, but then the SBA is to get back to us.
Mr. Wilson. Yes, and that was a very important amendment,
and we commend you for that.
Mr. DeMint. So, hopefully, we will actually learn and do
something. It's one thing to know about these things, but to
get them changed is why we're there, Mr. Chairman.
Mr. Wilson. It's very difficult.
Mr. DeMint. I appreciate the specific comments. As all of
you have heard, the others have made comments. Are there any
additional statements?
Mr. Beltram. I'd just like to address something about the
fees and so forth. Since we do have an SBA guaranteed loan, we
are a payer of that huge fee you're talking about, so we
understand what that's all about. And the reason we went that
route rather than conventional banking is that in
manufacturing, our biggest assets are receivables and
inventory, which instantly, by normal banks, get discounted
heavily, because a lot of that is component parts, work in
process, and so forth.
So it dramatically changes our balance sheets after the
conventional banks go and write all that stuff down. So that's
always a problem of obtaining credit, that our true assets can
never be shown on what the banks will look at to make
underwriting decisions.
Mr. DeMint. Anything else? Any other comments?
Mr. Cooper. I would go along with what Don said. I hope the
committee will stay behind that because I think it is a step in
the right direction, to look at the impact of all these
regulations. I just think it's a good start; but, like most
things, we can't let it falter. We've got to stay behind it.
Chairman Manzullo. We appreciate you all coming. Mr.
Cooper, I just want to let you know how much I appreciate your
coming with the rest of the witnesses. The testimony of the
regional SBA directors is oftentimes a lot more particular.
It's totally unpolitical. It's untouched by the Office of
Management and Budget. And your remarks have been extremely
refreshing.
Mr. Cooper. Thank you, sir.
Chairman Manzullo. The new SBA director has to deal with
those OMB people all the time. You have the luxury of being
down here and separated from them. But I know his troubles
also, to try to stay within the President's guidelines and also
trying to help the small businesses at the same time.
Mr. Cooper. We're very impressed with him at the agency.
The first meeting we had with him, he sat and listened to us
for a day and a half.
Chairman Manzullo. He's a good man. We're very much
impressed with him. Let me just throw something out that you
might want to chew on. There is an interesting phenomenon going
on in the automobile industry that proves conclusively what
happens when you have dramatically lowered interest rates.
These rates are at zero, and now one of the companies is going
to have it tomorrow. But the American people have got just a
taste of what it's like to live under low interest rates, and
they like it.
More Ford trucks have been sold this year than any other
year in history. The last quarter was astounding, but the sale
of automobiles was up. And the question is, how long can you go
with zero percent financing? You can go a long period of time,
because we've seen development of this in my own case.
If I could convince my wife, it's the fact that I was never
intending to look at a new car; but I did see a four-wheel
drive pickup truck, club cab, CD player, one that I could put
the Dixie Chicks in. And the color of the truck is the same
color of my hair. And I could buy that for three hundred
dollars a month, and I could see it sitting in my garage with
my brown Lab sitting next to me, sleeping, and going across my
pasture and putting in a trailer the same color as the pickup
truck. But what it's doing is, it's people are rethinking the
way they buy things now with the lower rates of interest.
I would hope, with all due respect, that the banks would
catch on. The banks would make a lot more money, writing a lot
more loans out there at affordable interest rates, with people
being able to make the payments on it. So as far as the
horrible tragedy on 9/11, we're seeing consumers react in many
different ways.
Again, all the statements of the witnesses will be a part
of the record. We will leave the record open for another two
weeks. Anybody who wants to make a statement for the record. Do
you want them to e-mail to you, Jim? Is that the best way?
Mr. DeMint. Well, I think these folks can send additional
statements to my staff. The e-mail is www.demint.house.gov. And
we'll pass all along to the committee.
And thank you. This has been great testimony and a
tremendous help. We appreciate you all taking your time.
[Whereupon, the hearing was concluded at 12:45 p.m.]
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