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Washington Watch - March 21, 2012

Wednesday, March 21, 2012

Survey: Micro-Businesses Still Waiting For Economic Improvement

The nation’s smallest businesses are still feeling negative effects of the economic downturn, including cash flow issues for business and family, according to a new survey by the NASE. Three-quarters of the self-employed and micro-businesses owners say their company provides the main source of income in their household. 

“Sadly, our survey re-enforces the idea that economic recovery is slow going and that 70% of survey respondents believe that current state of the economy has either shown no improvement or has worsened in the last 12 months,” stated Katie Vlietstra, Director of Government Affairs for NASE. “It is also evident from our survey that our members are perplexed at what they perceive as little action by Congress to put forth common sense ideas to address key issues related to the self-employed and micro-business community. For example, a permanent health insurance deduction, individual tax reform, and access to capital - three things that could significantly and positively impact the nation’s economy.”

When asked what their business experienced in the last 12 months, respondents said that they had to refrain from making improvements or growing, have experienced a significant decrease in sales and/or revenue, and had to utilize personal savings or retirement savings to address cash flow issues.
The self-employed and micro-businesses personal finances are often intertwined with their business finances. Survey respondents said their family has been affected in the following ways in the past 12 months: increase in credit card debt, utilization of personal savings or retirement savings, difficulty affording basic needs, like housing, utilities and food.

Eighty-one percent said they were not planning to hire full-time or part-time workers this year. When asked why, the top reason was that they had no need for additional help. Being unable to pay for the salary of an additional worker and being concerned about the current uncertainty in the economy were two other popular reasons respondents said they would not hire workers this year. 

Of those that are hiring, 63% would be looking for part-time employees. 

Read the rest of the results here.

House GOP Unveils 2013 Budget Outline

The following are the main bullet points for the GOP 2013 budget proposal:

  • Cut federal debt by $3 trillion over the next 10 years, cut spending by $5 trillion over the same time period
  • Protection for defense spending cuts, in that the defense budget would be set at $554 billion (similar to 2012 budget request)
  • Revamp Medicare to vouchers for premiums, would allow recipients the option to remain under traditional Medicare program
  • $1.028 trillion discretionary spending limit for defense and domestic programs
  • Pare down the income tax system

Read an opinion piece about the proposal and authored by Rep. Ryan, R-Wis., here

JOBS Act Hits Partisan Snag

Efforts to pass H.R. 3606, the bi-partisan JOBS Act, in the U.S. Senate has hit an interesting political pothole. A partisan effort to challenge a key component of the Act and the addition of an amendment to reauthorize the Export-Import Bank has stalled this very popular and widely supported package of bills. 

At the heart of the debate is the original crowdfunding language in H.R. 3606 and concerns by advocacy groups that the language did not include enough consumer protections and creates an environment for fraud. A bi-partisan group of senators introduced alternate language that would, among other things, require greater reporting requirements for companies utilizing crowdfunding investing and a lower maximum amount of capital eligible to be raised by crowdfunding. However, groups supporting the original language counter that the alternate language would stifle and suppress crowdfunding investing at a critical time for our nation’s entrepreneurs and small businesses.   

Access to capital continues to be the single greatest challenge for small business owners and in a recent NASE member poll, nearly 48% of respondents indicated that they have had to utilize personal or retirement savings to keep their households afloat.    

Yet, finding the happy medium seems to elude Senate leaders on how to ensure crowdfunding investing remains a unique, viable source of capital while ensuring consumer safeguards. Ultimately, Congressional insiders believe that the alternative language proposed will be defeated in the Senate, but at what cost? For some this is another example of the disconnect between Congress and the American entrepreneur who is genuine in their attempts to create and grow a business without unnecessary federal regulations.  

On Tuesday, the Senate rejected the amendment to extend the borrowing limit of the Export-Import Bank. At this point, the bill will likely head to President Obama's desk without this measure.

Washington Watch Online

Visit NASE Advocacy to view archived editions of Washington Watch. While you’re there, read the latest updates from the Washington, D.C. office, write your Congressperson, and find out how you can join the fight for micro-business.