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Week Ending April 29, 2005
House Resolution 22 expressing the sense of the House of Representatives that American small businesses are entitled to a Small Business Bill of Rights.
BRIEF
The Resolution calls upon Congress to establish the Small Business Bill of Rights (SBBR) as a blueprint to follow when concerning itself with policy regarding small businesses. Among the Rights to be established are; “to join together to purchase affordable employee health insurance; tax laws that allow such businesses to survive; and (to) be free from frivolous lawsuits and restrictive regulations and paperwork.”
Opposition to the bill holds that there are elements important to small businesses that are not in the bill. They include “access to capital, a federal marketplace that did not shut out small businesses, improved minority federal contracting programs, and that Social Security reform was on the mind of many entrepreneurs, among other issues.”
The bill is reportedly a forerunner to another bill that will provide for group health insurance among small businesses.
Sponsor: Representative Rick Keller (R-FL-8th)
Vote: A motion to recommit the bill failed 188 to 222 (April 26, 2005) (RC 140) Bill PASSED House by voice vote (April 26, 2005).
Cost to the taxpayers: No discernible cost. The Resolution suggests, not authorizes or funds, the SBBR.
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MORE INFORMATION
DISSENTING VIEWS
ADPOPTED AMENDMENT AND ADDITIONAL RIGHTS
In its effort to promote economic expansion, Congress has continually attempted to identify those barriers that inhibit business growth in the United States. A primary concern of Congress and the Small Business Committee has been identifying the needs of the small business sector that has an economic record of creating 75% of all new jobs.
H. Res. 22, referred to as `The Small Business Bill of Rights,' was originally offered as a resolution of the commitment of the House of Representatives to remove obstacles facing small firms and create an economic environment that fosters growth. The author of the legislation, Representative Keller, noted that he had met with twenty small business owners in his Congressional District who expressed what they thought were the top concerns of small businesses. The opinions of these business owners were the primary basis for the Bill of Rights found in the resolution. While these business owners expressed a number of concerns that are common to other business owners in America, their opinions did not reflect all the concerns of the broad sector of small firms across the United States.
At a Small Business Committee hearing on the resolution on March 8, 2005, it became clear that not only were the provisions in the resolution not necessarily the top priorities for all firms across the country, but that the resolution failed to include a number of provisions that would represent the needs of the various industries and different types of small businesses. Witnesses talked about the needs for access to capital, a federal marketplace that did not shut out small businesses, improved minority federal contracting programs, and that Social Security reform was on the mind of many entrepreneurs, among other issues. At previous hearings not related to the resolution, other issues facing small businesses had also been brought to the committee's attention. The resolution also failed to provide for a commitment to minority owned businesses and addressing their unique needs. These were but a few of the issues that made the resolution incomplete.
Due to these findings, a markup with potential amendments was necessary to ensure that a Small Business Bill of Rights resolution would represent the cross-section of the diverse nature of small businesses in the United States. Unfortunately, the manner in which the markup occurred prevented this legislation from being improved to provide for a `Bill of Rights' that small businesses deserve. As a result, the resolution being discharged from the committee fails on a number of levels to include important provisions that affect nearly all or a significant portion of small businesses.
The most disturbing aspect of why these provisions were not included in the resolution is the process in which this bill is being discharged from the Committee. On April 7, 2005, the House Small Business Committee held a markup on the resolution. Prior to the markup, Members of the Committee submitted a number of amendments to be considered. This was not intended to be an exclusive list of amendments, but ones that would likely be brought up. These were amendments to strengthen the resolution by including changes that had been discussed by multiple business owners who had come before the House Small Business Committee in the past, including the hearing that examined H. Res. 22.
Rather than allowing for a full and open debate of the amendments, the Chairman immediately ruled at the start of the markup that any Member offering an amendment would only have four minutes to advocate his or her amendment, as opposed to allowing a full and open discussion. Despite objections from Members who wished to have a full and open debate on the resolution, the Chairman and members of his party in the committee voted that debate would be limited. This was despite the fact that Members intended to offer a number of amendments to improve the bill and make it reflective of the small business community as a whole.
Not only did the Chairman cut debate on the five amendments that were considered, the Chairman ruled to cut off debate with pending amendments and a majority supported this motion. This unprecedented move prevented debate on at least two other amendments that were pending. These were amendments that would have strengthened the resolution to ensure all the needs of small businesses were a primary concern of the House of Representatives.
As a result, the manner in which the markup was conducted has prevented proper consideration of the resolution. Not only did the markup prevent adequate debate of amendments offered, but it allowed for the adoption of an amendment to the Small Business Bill of Rights that could arguably do more harm than good for small businesses.
The resolution fails to be complete on a number of levels. It not only fails to address many issues that are important to small businesses, but in some cases it offers solutions that entrepreneurs do not view as the primary or best way to solve these problems.
The resolution recognizes that the issue of health care is a large concern for small businesses. In fact, for most small businesses in America it is often their number one issue. The resolution is shortsighted in its approach to this issue, as it offers only one solution to this problem. H. Res. 22 provides that small businesses should have `the right to join together to purchase affordable health insurance.' This is a clear reference to the Association Health Plan (AHP) legislation that has been introduced in the House and Senate, but has not been enacted into law.
Many in the small business community support the AHP legislation, but there is clearly not unanimous agreement on its passage as the solution to the health care problem for small businesses. As noted in the majority views, the resolution is supposed to represent priorities with broad support from the small business community if it is to be included within the Bill of Rights section. Additionally, even proponents of AHPs recognize that
broader health care reform is necessary to bring down health insurance costs for small businesses. To identify only one solution to the health care problem reveals how this resolution is shortsighted in many ways and does not recognize the severity of the problem of affordable health care for small businesses.
Sections three and four of the Small Business Bill of Rights in the resolution are concerns for small businesses, but the language does not offer anything in terms of substance. It is clear that no one wants `frivolous lawsuits' or `unnecessary, restrictive regulations' and Congress should be doing something about them. There is one hundred percent support within the small business community to eliminate these problems. However, the language in the resolution appears to be a veiled reference at the debates that are going on in Congress related to these issues and insinuating that some in Congress are working to maintain these `restrictive regulations' or `frivolous lawsuits.' A more effective approach would be to recognize that there must be a balance between protecting public policy concerns (i.e. environment, safety) and ensuring small firms are not subject to unwarranted regulations. Instead, the resolution only recognizes the obvious.
Additionally, when it comes to top priorities of small businesses, lawsuits are not necessarily on the top of many small business concerns. The National Small Business Association did not mention the issue in its top ten items at the hearing on H. Res. 22; National Federation of Independent Business (NFIB) in their latest list (2004) of small business `Problems and Priorities' ranked lawsuits 64th out of a list of 75 named problem areas; and the representative from the Small Business and Entrepreneurship Council spent only two short paragraphs discussing lawsuits in her written testimony on H. Res. 22.
In contrast, the resolution failed to include a number of important provisions to small businesses. It is for this reason that a number of amendments were offered, or attempted to be offered, to ensure an adequate and representative Small Business Bill of Rights. While there was one amendment that was adopted, the bill being discharged remains problematic due to the process in which these amendments were considered, as discussed below.
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The one amendment that was adopted by the Committee in the April 7, 2005 markup did nothing to strengthen the resolution. It merely served to touch on broad issue areas, but did nothing to strengthen the `Bill of Rights' of small businesses. Rep. Keller offered an amendment to H. Res. 22 at the markup that was adopted by a voice vote. The amendment made several additions to the preamble and to the `rights' section. The amendment does not address other issues of importance to small businesses, namely the importance of minority business development and the role entrepreneurs play in economic development. As a result, the majority has cherry-picked the legislation's priorities, choosing to ignore such issues of importance to the nation's minority and low-income individuals. In addition, the amendment does not recognize the impact that Social Security reform proposals would have on small businesses.
Specifically, the amendment adds language noting the complexity of the tax code and the tendency of the tax code to discriminate against small businesses. In addition, the amendment adds general language noting the importance of affordable energy sources and small businesses' need for capital and credit. Finally, the amendment states that contract bundling has dried up opportunities for small business owners.
In the section detailing small business rights, the amendment added the following rights:
The right to relief from high energy costs, to be accomplished by reducing the nation's reliance on imported sources of energy, and encouraging environmentally-sound domestic production and energy conservation.
The right to equal treatment, as compared to large businesses, when seeking access to start-up and expansion capital and credit.
The right to open access to the government procurement marketplace through the breaking up of large contracts to give small business owners a fair opportunity to compete for federal contracts.
While the `rights' for energy and contracting issues are specific, the `right' for the access to capital issue is vague and ambiguous. Large businesses access capital differently than small businesses do, oftentimes through the issuance of corporate bonds, a loan syndication, or asset securitization. Conversely, small businesses typically rely on loans from local lenders, credit cards, or borrowing from family and friends. It would be highly inefficient and overly complex to expect small businesses to access capital through Wall Street mechanisms, as larger businesses do. Instead, small businesses need affordable business loans that they can access in their local communities. These are just a few examples of why that even with the amendment, the resolution is incomplete.
This amendment that was adopted could also actually weaken small businesses ability to access the federal marketplace. With the change, the resolution would put Congress on record recognizing that contract bundling is an acceptable practice in certain situations. The Keller amendment attributes the practice by federal agencies of `unsound' contract bundling to the diminishing number of small business contracting opportunities. There is substantial concern that the Keller amendment may have the result of encouraging the bundling of contracts and weakening existing small business protections.
The Committee has historically been strongly in favor of efforts to increase small business participation in the federal marketplace. Recognizing that contract bundling is one of the most significant barriers eliminating small business opportunities, the Committee has held numerous hearings over the past 10 years, as well as proposed and reviewed legislative solutions to this problem.
The language contained in the Keller amendment on this issue has the effect of lessening the Committee's previously strong advocacy for increased small business participation,
by implying that not all contract bundling is harmful to small firms. This position is not only contrary to the position of the Committee over the years, but is also in contravention of the President's contract bundling initiative.
The language in the Keller amendment states that there shall be no `unsound' contract bundling. Advocates of harmful contract bundling will interpret such language to show that there are situations where there is sound contract bundling--in other words--it is good public policy in certain situations to bundle federal contracts. Such an addition to the Bill of Rights could put the House of Representatives as favoring certain types of contract bundling.
This is in stark contrast to the current public policy goals of Congress. It has always been the position by Congress that contracts should not be bundled. It is the reason that there is a twenty three percent contracting goal for small businesses. This goal was created as a device to end the practice.
As such, Members attempted to amend the resolution and the Keller amendment but were stymied by the process that the resolution was considered.
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