Update & News
IN THIS EDITION:•Keating on Q1 GDP: Should We Be Talking About the “R” Word? • EPA Finalizes Controversial “WatersRule”•Small Business and the DoL’s Proposed New Definition of “Fiduciary”•Energy & Entrepreneurs: Crude Exports and Trade Policy, Different Paths for the Renewable Portfolio Standard • SBE Council Supports Bipartisan Change to ObamaCare Rule • Vitter: “Flaws Within Federal Procurement System Defraud Small Businesses”• Proposed Blacklisting Guidance and Regulations for Government Contractors Unveiled • ObamaCare Spending Warrants Oversight by Special IG • Business Tips & Trends News Highlights
Keating on Q1 GDP: Should We Be Talking About the “R” Word?
The latest SBE Council Fact of the Weeklooks at the first quarter GDP, with the economy shrinking by 0.7 percent. Chief economist Ray Keating reviews the trend in GDP, and what might lie ahead. He notes that we have suffered through a “lost economy” for a decade-and-a-half now, and the possibility of another recession, given the latest data, is in the mix. Keating concludes, “Whether we want to talk about the ‘R’ word or not, the U.S. economy has been suffering for far too long – especially over the past seven-plus years. A bold, new direction is needed on the policy front, namely, getting government out of the way so entrepreneurship and private investment can flourish.”
EPA Finalizes Controversial “WatersRule”
Despite fierce opposition and concern from the small business community, state and local government officials, and a wide array of industries, the Environmental Protection Agency (EPA) finalizedits controversial “waters rule”(WOTUS) on May 27. Bipartisan concern was also expressed in the Congress during the rulemaking period,including legislation that passed the U.S. House on May 12(supported by SBE Council) requiring the EPA to withdraw the rule.
The EPA ignored its legal obligation under the Regulatory Flexibility Act to assess the rule’s impact on small business.SBE Council President & CEO Karen Kerrigan said,“the agency’s unusual and aggressive campaign to mobilize support for the proposed rule undercuts claims they acted objectively or fairly.” The EPA lobbying campaignwas detailed in theNew York Times. As noted in the article, this is the type of lobbying that “the Justice Department, ina seriesoflegal opinions going back nearly three decades, has told federal agencies that they should not engage in,” yet the EPA has aggressively used its resources and relationships with environmental groups to spearhead the lobbying effort.
The EPA claims the new rule will lead to a permitting process that is “less costly, easier, and faster for businesses and industry.” But Kerrigan said this claim is laughable: “We are not confident these EPA promises will materialize.”
Democrats have joined Republicans in opposition to the EPA rule. In addition to passage of the Regulatory Integrity and Protection Act in the House, a Senate bill(the Federal Water Quality Protection Act)is moving and has bipartisan support.Fourteen states are encouraging Senators to support and pass the bill.
SBE Council’s Center for Regulatory Solutions (CRS) continues to review the final rule,but our initial read findsthat American small businesses are simply getting more of the same crushing regulation with WOTUS that has come to define this Administration: “Along with so many other examples, WOTUS clearly shows that President Obama is not serious about promoting a regulatory process based on transparency, scientific integrity and accountability,”said Kerrigan. She added, “Small businesses have long endured the federal permitting process, which is burdened by litigation, bureaucratic obstruction, delays, and petty mandates.With WOTUS, it will likely grow more complicated, time-consuming, and prone to litigation.”
Small Business and the DoL’s Proposed New Definition of “Fiduciary”
Retirement plans are already expensive and complex enough for small businesses. The high cost and complexity are barriers for small firms that wish to include plans as part of their employee benefits package. A proposed changeby the Department of Labor (DoL) to the definition of “fiduciary”could make these plans more cost prohibitive, risky, and complex for small businesses. The new definition would effectively prohibit the conversations financial advisors have with business owners about their plans (how to select and monitor a plan, and how the plan is performing.) Business owners and entrepreneurs would either have to do this work on their own (more liability and time), or hire and pay an independent consultant to do the work for them (more costs).
In a letter to the DoL about the proposed changes, SBE Council president & CEO Karen Kerrigan urged the department to extend the comment period to allow for detailed analysis of the proposed rule so that the small business community could more effectively assess its impact and provide informed feedback. Kerrigan noted that the rule will have unintended consequences for small businesses, which the DoL must consider before finalizing a new rule.(The DoL extended the comment period, but for only 15 days.)
A survey last year by the U.S. Hispanic Chamber of Commercefound that the rule would cause small businesses to drop plans or put them further out-of-reach for businesses considering plans.
Energy & Entrepreneurs:Crude Exports and Trade Policy, Two Paths for Renewable Portfolio Standards
Crude Exports and Trade Policy:The latest SBE Council Energy & Entrepreneursby chief economist Ray Keating reports on a recent Capitol Hill forum on energy. Keating relays some key points he made during his panel discussion, including the central role that small business plays in the energy business. He spoke about the innovations driven by small firms that have transformed the U.S. into the globe’s energy leader, and noted healthy (and much needed) business creation in the energy sector.
Renewable Portfolio Standards –States vs. Senate Democrats:An Energy & Entrepreneurs analysisby chief economist Ray Keating looks at the very different directions that U.S. Senate Democrats and lawmakers in assorted states are heading on the issue of renewable electricity portfolio standards. In the end, one side is dealing with actual economics, with the other playing a game of wishful thinking.
SBE Council Supports Bipartisan Change to ObamaCare Rule
The Affordable Care Act (ACA) mandates the expansion of the small group market, which takes effect on January 1, 2016. This change will be highly disruptive, raising prices for small to mid-size businesses and limiting plan choices. SBE Council wrote sponsors of the “Protecting Affordable Coverage for Employees Act” in the Senate(S. 1099)and House(H.R. 1624)in support of this legislative solution that will repeal the mandate and provide states with needed flexibility to determine their own group size in accordance with market conditions. The change will help stabilize the market and allow small businesses to maintain existing plans for their employees.
Vitter: “Flaws Within Federal Procurement System Defraud Small Businesses”
U.S. Senator David Vitter (R-La.), Chairman of the Committee on Small Business and Entrepreneurship,sent a letter to SBA Administrator Maria Contreras-Sweetregarding what he sees as discrepancies withinthe recent annual procurement scorecardfor awarding federal contracts to small businesses. The SBA’s report highlights that the U.S. government exceeded its 23% procurement goal for awarding contracts to small business. Vitter asked the SBA to produce a full list of the contractors that were counted towards the small business procurement goal.
“Somewhere within the federal contract procurement process, American small businesses are getting cheated, and I intend to find out how and why this is happening,”said Vitter.“There are undoubtedly serious flaws within the federal procurement process that hurt small businesses, and without transparency, accountability, and cooperation from the Small Business Administration, small businesses will continue to suffer.”
As noted by an Op-ed inThe Hillby American Small Business League president and founder Lloyd Chapman, a recent Public Citizen report found massive problems in the reporting data used by the SBA in their report.
Proposed Blacklisting Guidance and Regulations for Government Contractors Unveiled
Government contractors get ready for more regulation.The Department of Labor has issued new “guidance”on how government contractors should be evaluated on labor violations.The FAR Council has alsoissued a proposed regulationgoverning the implementation of the "blacklisting regulation." The guidance document and FAR regulation are in response to President Obama’sJuly 2014 Executive Order 13673, “Fair Pay and Safe Workplaces.”According to Linda Jackson of Littler: “If finalized in their current form, the rule and guidance would immediately upend the current system of federal contracting by enabling federal agencies to reject a bid or cancel an existing contract – as well as initiate suspension and debarment proceedings – based on labor and employment law violations that a contractor may have already resolved or that have already been adjudicated.”See Jackson’s full analysis here.
The proposed regulation and guidance stand to have a major impact on small businesses, in terms of bidding, compliance and costs. SBE Council will weigh in with DOL and FAR once we have fully reviewed the proposals and received feedback from our members.
Read more about the blacklisting proposals in The Hill newspaper.
ObamaCare Spending Warrants Oversight by Special IG
In the latest SBE Council Cybercolumn, chief economist Ray Keating takes note of a new study highlighting the administrative costs of ObamaCare; points to a measure in Congress that would provide tighter ObamaCare oversight(endorsed by SBE Council); and notes that, in the end, ObamaCare is such a wasteful mess, it needs to be repealed.
Business Tips & Trends News Highlights
If you missed last week’s “How To” articles, educational resources, and business news and success stories curated by SBE Council President & CEO Karen Kerrigan,you can find them here.