**[SMALL BUSINESS COMMITTEE]{.underline}**

**[U.S. HOUSE OF REPRESENTATIVES]{.underline}**

**[Small Business Victories thus far in the 2003 Congressional
Session]{.underline}**

# June 27, 2003

# 

# Dear Colleague,

# 

*Small businesses are a critical part of our economy. They represent
more than 99 percent of all employers, employ 51 percent of
private-sector workers, and provide 51 percent of the private sector
output. While many large companies are "shedding" workers, small
businesses provide two-thirds to three-quarters of the net new jobs.
Clearly, House Republicans recognize that small business is the engine
of job growth in our country and the key to our economic recovery.*

*Promoting job growth continues to be a number one priority. Below is a
brief description of what President George W. Bush and the Republican
Congress have been doing to reduce the tremendous tax and regulatory
burden that hamper small businesses and stifle their growth.*

1\. **Jobs and Growth Reconciliation Act of 2003** (HR 2): on May 28,
President Bush signed HR 2 into law that accelerates the 2001 tax cuts
by speeding up the individual income tax rate reduction from 2006 to
2003 (85 percent of small businesses pay at individual rates);
increasing the "bonus" depreciation from 30 to 50 percent and extending
it until December 2004; and increasing small business expensing from
\$25,000 to \$100,000 until 2005 and also increasing the definition of
small business from \$200,000 of capital purchases to \$400,000 (indexed
for inflation in 2004 and 2005).

2\. **Death Tax Repeal Permanency Act of 2003** (HR 8): on June 18, the
House voted 264 to 163 to completely eliminate the immoral,
business-destroying estate or "death" tax. The 2001 tax cut gradually
phased out the death tax by 2010 but it returns in full force in 2011.
Forty-one Democrats joined all but four Republicans in making it easier
to pass on a family-owned business or farm to the next generation.

3\. **Small Business Health Fairness Act of 2003** (HR 660): on June 19,
the House voted 262 to 162 to create national Association Health Plans
(AHPs), allowing small businesses to band together and purchase health
insurance through national associations at group rates. Thirty-six
Democrats joined all but one Republican in the effort to make health
care affordable for more Americans. Of the 41 million uninsured
Americans, 60 percent work for small businesses that cannot afford to
offer them health care coverage.

4\. **Health Savings Account Availability Act** (HR 2596): on June 26,
the House voted 237 to 191 to further increase the availability of
health care by allowing a tax deduction to uninsured individuals or for
those individuals in health plans with high deductibles (usually those
who own a small business or who work for a small business) for amounts
contributed to a health savings account and to allow unused portions (up
to \$500) to be carried over to the next year.

5\. **Business Checking Freedom Act of 2003** (HR 758): on April 1, the
House unanimously passed legislation to repeal the prohibition on the
payment of interest on commercial demand deposits, increase the number
of inter-account transfers which may be made from business accounts at
depository institutions, and authorize the Board of Governors of the
Federal Reserve System to pay interest on reserves.

6\. **Small Business Access to Credit Act** (S. 141): on February 25,
the President signed into law legislation that led to the removal of a
\$500,000 lending cap in the Small Business Administration's (SBA's)
main business loan guarantee program - the 7(a) program. S. 141 allows
the Office of Management and Budget (OMB) to retroactively apply a more
sophisticated econometric model to calculate what needed to be set aside
to cover potentially bad loans. Correcting this problem freed up an
additional \$3.4 billion in capital for small businesses. Also, on June
3, the SBA applied this new econometric model to loans made under the
Supplemental Terrorist Activity Relief (STAR) loan program, a subset of
the 7(a) program designed to help small businesses deal with the
aftermath of the 9/11 terrorist attacks, between October 1, 2002 and the
end of the program on January 10, 2003. Along with transfers of leftover
funding from the STAR program, this freed up another \$1.4 billion in
lending authority to small businesses.

7\. **Native American Small Business Development Act** (HR 1166): on
March 31, the House voted 378 to 14 to direct more attention within the
Small Business Development Center (SBDC) program (a network of over
1,100 centers across the U.S., usually located in a local community
college, to provide business counseling) to serve the entrepreneurial
needs of Native Americans.

8\. **National Small Business Regulatory Assistance Act of 2003** (HR
205): on April 8, the House voted 417 to 4 to established a regulatory
compliance assistance program within the SBDC network.

9\. **Small Business Advocacy Improvement Act of 2003** (HR 1772): on
June 24, the House unanimously passed legislation to further improve and
enhance the independence of the Office of Advocacy within the SBA. The
main mission of the Office of Advocacy is to insure that regulations are
adopted in such a way as to insure no undue or disproportional impact
falls upon small business. Sometimes, this requires the Chief Counsel of
the Office of Advocacy to take a position different than the rest of the
Executive Branch on behalf of small business. To protect the
independence of the Chief Counsel, HR 1772 creates a separate budgetary
line item to insulate the Office of Advocacy from budgetary pressures
within SBA. To protect against meddling by OMB, HR 1772 allows Congress
to get a "sneak-peak" at the Chief Counsel's budget request at the same
time he/she submits it to OMB.

10\. **Premier Certified Lenders Program Improvement Act of 2003** (HR
923): on June 24, the House voted 416 to 3 to allow Premier Certified
Lenders within the SBA's 504 Certified Development Company (CDC) program
to increase capital that can be used for small business lending. The 504
program, which operates solely on user fees, provides small businesses
with long-term, fixed-rate financing for the purchase of fixed assets
for business expansion purposes. HR 923 would allow frequent or premier
users of the 504 program to use a risk-based approach to calculate their
loan loss reserves, as is done in the private sector. In addition, for
those premier 504 lenders who do not choose a risk-based approach, HR
923 allows them to withdraw from their loan loss reserves such amounts
that are in excess of one percent of their total outstanding loan
balance. Finally, HR 923 contains several provisions to ensure that the
loan loss reserves are still sufficient to protect the interests of the
taxpayer and will not result in higher fees charged to small business
504 loan borrowers.

11\. **Buy American provisions in FY '04 Defense Authorization bill**
(Title VIII, Subtitle B of HR 1588): on May 22, the House passed HR
1588, which contained several enhanced Buy American provisions to assist
our nation's struggling manufacturing base (95 percent of all
manufacturing firms are small- or medium-sized businesses). These
provisions include increasing the amount of U.S. content required in
major DoD purchases through the Buy American Act from 50 to 65 percent;
requiring defense contractors, if purchasing new equipment, to buy
American-made machine tools, dies and industrial molds for major weapons
acquisitions; expanding DoD's domestic sourcing initiative by adding
eight new products to the list of DoD purchases which must be made 100
percent in the United States; and creating a \$100 million Defense
Industrial Base Capabilities Fund to establish capabilities within the
U.S. to produce critical items currently only available for foreign
sources or a limited number of U.S. contractors.

12\. **B-2 visitor visa:** on March 4, the Department of Justice
withdrew their proposed rule that would have changed the automatic
default period for tourist visas from most countries from six months to
30 days. It would have required those wishing to stay longer than 30
days to justify their intentions to a U.S. immigration inspector**.**
Over 939,000 visitors from the affected countries (usually from the
developing world or former East bloc nations) stayed in the U.S. beyond
30 days and contributed \$2.1 billion to the U.S. economy in 2000. Many
in the tourism industry, which is overwhelmingly dominated by small
businesses, feared the foreign visitors simply would not come to the
United States if they had to go through the hassle and uncertainty of
justifying their visits.

*\* For the rest of 2003, Republicans on the House Small Business
Committee will continue to promote legislation that gives small
employers options to deal with the surging cost of health care; make all
of the 2001 tax relief provisions permanent; reauthorize the SBA;
encourage federal agencies to do more business with U.S. small
businesses; and continue to fight burdensome and unnecessary federal
regulations which hamper small business growth.*

Sincerely,

Donald A. Manzullo

Chairman