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46 820 PDF 2009

THE STATE OF THE SMALL BUSINESS ECONOMY 

AND IDENTIFYING POLICIES TO PROMOTE 

ECONOMIC RECOVERY 

MEETING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

MEETING HELD 

JANUARY 14, 2009 

Small Business Committee Document Number 111-001 

Available via the GPO Website: http://www.access.gpo.gov/congress/house 


Congress.#13
HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

SAM GRAVES, Missouri Ranking Member 

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KAREN HAAS, Minority Staff Director 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 1 

Graves, Hon. Sam .................................................................................................... 2 

WITNESSES 

Allison, Mr. Ted, President and CEO of the St. Joseph Area Chamber of 

Commerce, St. Joseph, MO ................................................................................. 3 

Ehmann, Mr. Tim, Senior Project Manager, O’Connell Electric, Victor, NY 

On behalf of the National Electrical Contractors Association .......................... 5 

Massie, Mr. Steve, CEO, Jack L. Massie Contractor Inc., Williamsburg, VA 

On behalf of Associated General Contractors of America ................................. 7 

Therrien, Mr. Robert W., President, The Melason Co. Inc., Keene, NH On 

behalf of the National Roofing Contractors Association ................................... 9 

Dorfman, Ms. Margot, CEO, US Women’s Chamber of Commerce ..................... 24 

Merski, Mr. Paul, Senior Vice President and Chief Economist, Independent 

Community Bankers of America ......................................................................... 26 

Roth, Mr. Alan, Senior Executive Vice President, US Telecom Association ....... 28 

Seiffert, Mr. Grant, President, TIA ........................................................................ 30 

APPENDIX 

Statements for the Records: 

Clarke, Hon. Yvette. ................................................................................................ 37 

National Steering Committee, 25x’25 Alliance ..................................................... 41 

Carpenter, Mr. Dave, President and CEO, J.D. Carpenter Companies. On 

Behalf of the National Association of Convenience Stores ............................... 48 

Ehmann, Mr. Tim, O’Connell Electric, Victory, NY On Behalf of the National 

Electrical Contractors Association ...................................................................... 56 

U.S. Chamber of Commerce .................................................................................... 69 

Prepared Statements: 

Allison, Mr. Ted, President and CEO of the St. Joseph Area Chamber of 

Commerce, St. Joseph, MO ................................................................................. 79 

Ehmann, Mr. Tim, Senior Project Manager, O’Connell Electric, Victor, NY 

On behalf of the National Electrical Contractors Association .......................... 82 

Massie, Mr. Steve, CEO, Jack L. Massie Contractor Inc., Williamsburg, VA 

On behalf of Associated General Contractors of America ................................. 87 

Therrien, Mr. Robert W., President, The Melason Co. Inc., Keene, NH On 

behalf of the National Roofing Contractors Association ................................... 92 

Dorfman, Ms. Margot, CEO, US Women’s Chamber of Commerce ..................... 97 

Merski, Mr. Paul, Senior Vice President and Chief Economist, Independent 

Community Bankers of America ......................................................................... 100 

Roth, Mr. Alan, Senior Executive Vice President, US Telecom Association ....... 112 

Seiffert, Mr. Grant, President, TIA ........................................................................ 124 

(III) 

(1) 

THE STATE OF THE SMALL BUSINESS 

ECONOMY AND IDENTIFYING POLICIES TO 

PROMOTE ECONOMIC RECOVERY 

Wednesday, January 14, 2009 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:06 a.m., in Room 

2360, Rayburn House Office Building, Hon. Nydia M. Vela ́zquez 

[Chair of the Committee] Presiding. 

Present: Representatives Vela ́zquez, Clarke, Kirkpatrick, 

Dahlkemper, Moore, Schrader, Schock, Graves and Luetkemeyer. 

Chairwoman VELA ́ ZQUEZ. Good morning. I call this forum to 

order. 

Last month, the National Bureau of Economics made it official. 

The country is in a recession, and it has been for over a year now. 

Of course, most Americans already knew this. From plunging consumer confidence to soaring unemployment, the signs were and 

continue to be everywhere. In December alone, we lost a half million jobs, bringing last year’s job loss to a 63-year high. 

Work has already begun to turn the economy around. The end 

goal of this recovery effort should be growth and job creation, two 

areas in which small businesses excel. After all, small firms are the 

engine of our economy. They not only create 80 percent of all new 

jobs, but they also represent 99 percent of American businesses. 

Today, however, they are struggling to play their traditional role 

of economic catalyst. 

In this morning’s forum, we will look for ways in which small 

firms can assume that role once again. We will also discuss the 

current economic climate and the roadblocks it has created for our 

country’s entrepreneurs. 

From the local tech to the mom and pop restaurant down the 

street, small businesses are suffering everywhere. Many have been 

forced to close up shop all together. 

At a hearing in November, this Committee met Thomas Franke, 

an entrepreneur whose 83-year-old family business had managed to 

ride out the Great Depression but was unable to endure the current downturn. In November, his business closed its doors for good. 

All across the country entrepreneurs like Franke are struggling 

to secure the capital they need to survive. According to the Federal 

Reserve Senior Loan Officer Survey, 75 percent of commercial 

banks have tightened lending standards to small firms. On top of 

2 

that, 90 percent of respondents said that they have upped the cost 

of small business credit lines. 

During past downturns, small businesses have managed to survive on loans from the Small Business Administration, but today 

even those loans are disappearing, with lending down almost 60 

percent since last year. As funding dries up, many entrepreneurs 

are taking desperate measures, from maxing out credit cards to 

draining 401(k)s. 

It doesn’t have to be this way. The resources of the SBA loan program could be leveraged to help break the financing logjam. Our 

Nation should use targeted tax incentives to increase investments, 

generate cash flow and encourage small firms to hire workers. Tax 

policies can also help spur innovation and encourage investors to 

put resources behind promising startups. 

If we have learned anything in the last year, it is that there is 

no single silver bullet fix for our financial woes. With that said, we 

also know that if we are going to bring our economy back on track 

we are going to have to start with the fundamentals. That means 

job creation and economic growth. 

As the backbone of the American industry, small businesses can 

help accomplish both. But before small firms can revive the economy, they will need to survive the recession. In today’s forum, we 

will look for ways to ensure that they do both so that they can play 

their historic role as economic catalyst. 

I am delighted everyone could join us for this discussion and I 

look forward to your input on this issue. 

Now I would like to yield and welcome the new ranking member 

of the minority side, our colleague, Sam Graves. I look forward to 

working with you. As you all know, we had a great relationship 

with the previous ranking member. I have really enjoyed the work 

that we have done in the past on the 7(a) and SBIR programs, and 

I look forward to two productive years. 

Mr. GRAVES. Thank you, Madam Chair. I, too, look forward to 

two productive years and intend to conduct myself exactly the same 

way as Representative Chabot did and thank you for holding this 

roundtable. I think it will be a positive and active working relationship between the chairwoman and I and the Committee as we 

move forward in a very bipartisan manner to address the vital 

issues facing small businesses. So thank you very much for your 

opening. 

During the past few months, Congress and the American public 

have heard that it is important to stimulate the economy but almost nothing about what America’s small businesses need. As larger enterprises lay off workers, small businesses will help to fill that 

gap, either through the hiring of new employees or the creation of 

new enterprises. I hope this hearing will correct that oversight. 

In developing an economic stimulus package, I am heartened by 

the President-elect’s willingness to hear new ideas and consider 

elements of the economic stimulus package—reconsider elements of 

that package. I would expect that he understands the importance 

of small business in the economy and seriously considers the suggestions offered at today’s event. 

Any stimulus package that helps small businesses must include 

significant tax cuts. In many ways, tax cuts will provide small busiVerDate Aug 31 2005 15:54 Mar 05, 2009 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\46820T.TXT DARIEN
3 

ness owners with more liquid assets that enable them to allocate 

resources in the manner most designed to grow their businesses. 

Whatever we may think of the wisdom, as far as the wisdom of 

the Federal Government is, it is small business owners that have 

the real expertise in creating growth in the American economy. 

That capacity should be fostered through the appropriate tax cuts. 

Support for tax cuts does not mean that infrastructure investments should be ignored. There is little doubt that an appropriate 

investment by the Federal Government and infrastructure can provide jobs to unemployed Americans. However, I would caution that 

any such program carefully consider the long-term economic benefits as well as the short-term gains. 

Investment that has long-term benefits should receive priority 

over projects that are simply designed to increase employment on 

a temporary basis. For example, projects to reduce reliance on imported oil or to increase broadband access throughout America 

should have a higher priority than projects that are designed simply to get a piece of the pie. 

I am looking forward to hearing from our witnesses about what 

infrastructure investments and tax policies will have both shortterm and long-term payoffs. Again, I want to thank the chairwoman for convening this important event; and I hope that leaders 

of the House and Senate seriously review what has been discussed 

here today in the further development of a stimulus package and 

spark real economic growth. 

Again, thank you, Madam Chair, and I yield back. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Now I would like to welcome all the members of the panel, especially Mr. Ted Allison. 

We will apply the 5-minute rule. You are watching the clock 

there. It will tell you when your 5 minutes are up. 

Mr. Ted Allison is President and CEO of the St. Joseph Area 

Chamber of Commerce in Missouri. With over 1,000 members, the 

St. Joseph Area Chamber of Commerce works to create an environment that allows businesses to succeed in this community. 

Welcome. 

STATEMENT OF TED ALLISON, PRESIDENT AND CEO, ST. JOSEPH AREA CHAMBER OF COMMERCE, ST. JOSEPH, MISSOURI 

Mr. ALLISON. Thank you. It is truly an honor for me to be here 

and give testimony on behalf of the business community of St. Joseph, Missouri, a small MSA of about 125,000 people in northwest 

Missouri. As is in most local economies, small businesses in St. Joseph represent the vast majority of private sector employment. 

Ladies and gentlemen, 93.5 percent of net employment growth in 

the United States from 1989 to 2005 was created by small businesses. The small business sector employs more scientists and engineers than the large business and higher education sectors. Small 

businesses are also far more productive, as they generate five times 

more patents per research and development dollar than big businesses and 20 times more than universities. 

While 80 percent of the registered voters in America agree that 

our government should encourage more entrepreneurship, public 

4 

policy continues to give a disproportionate preference to the big 

business sector. The small businesses sector delivers a higher yield 

for dollar of public investment than big business and offers the 

greatest potential for rapid economic recovery and growth in quality jobs. 

Immediate action from Congress is imperative. Therefore, I hereby submit the following recommendations for your consideration 

that I feel would stimulate rapid economic recovery for the small 

business sector: 

One, increase the current 2.5 percent set aside allocation for Federal research and development funding to 5 percent for Small Business Innovation and Research grants, what we often call SBIRs. 

Two, encourage the development of local angel capital networks 

by establishing a 20 percent tax credit for individual investors participating in the deployment of angel capital funds. 

Three, establish a 20 percent tax credit to encourage private contributions to qualified nonprofit or publicly owned business incubators. 

Four, improve access to market research data, training programs 

and SBIRs by substantially increasing the Federal funding to put 

more SBDC counselors in the field. 

Number five, provide additional funding toward entrepreneurial 

education programs for local school districts, colleges and universities. 

Six, encourage growth of college accredited internships by providing tax credits to sponsoring small businesses. 

Number seven, reduce excessive regulatory standards for small 

businesses by exempting them from Section 404 of the SarbanesOxley Act. 

Number eight, take aggressive action to reduce the cost of health 

care insurance and provide a 20 percent tax credit to insure individuals and employers contributing to employee health care coverage. 

Nine, improve the availability and reduce the cost of fully developed building sites in publicly owned or 501(c)(3) non-profit business parks by increasing funding for EDA grants towards infrastructure. 

Ten, improve access to commercial loans by increasing the government guaranteed percentage on SBA 7(a), reduce qualification 

standards, eliminate loan fees, and incrementally forgive the SBA 

portion of 504 loans for each quality job created that provides 

health care benefits to its employees. 

Eleven, enhance credit access for entrepreneurs through the expansion of local revolving loan fund programs funded through EDA 

grants by lowering the local match requirement. 

Number twelve, increase the tax credit for dependent children to 

$2,000 and extend the credit to age 21 if the child is a full-time 

college or technical training student, provided the parents are contributing at least half of their college expenses. 

Thirteen, reduce tax rates for small businesses with gross receipts of less than $2.5 million. 

Fourteen, exempt the first $30,000 of small businesses net earnings from self-employment tax. 

Fifteen, reduce or eliminate the corporate capital gains tax. 

5 

And, sixteen, extend bonus depreciation, increase section 179 expansion provisions, and adopt a temporary investment tax credit. 

Again, I thank you for this opportunity; and I welcome any remarks or questions you may have. 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Allison. 

[The statement of Mr. Allison is included in the appendix at page 

79.] 

Chairwoman VELA ́ ZQUEZ. Our next witness is Mr. Tim Ehmann. 

He is the Senior Project Manager for O’Connell Electric in Victor, 

New York. Founded in 1911, O’ Connell Electric is a full service regional contractor serving the diverse electrical needs of a wide 

range of clients. 

Mr. Ehmann is testifying on behalf the National Electrical Contractors Association. NECA provides service to the $130 billion 

electrical construction industry across the United States. 

Welcome. 

STATEMENT OF TIM EHMANN, SENIOR PROJECT MANAGER, 

O’CONNELL ELECTRIC, VICTOR, NEW YORK, ON BEHALF OF 

THE NATIONAL ELECTRICAL CONTRACTORS ASSOCIATION 

Mr. EHMANN. Madam Chair, Ranking Member Graves, members 

of the Small Business Committee, thank you for the opportunity to 

appear before you today. It is an honor and privilege to appear before a Committee that has tremendous impact on my business and 

the thousands of electrical contractors who operate as small businesses. 

I am Timothy Ehmann, representing O’Connell Electric of Victor, 

New York, which has been in business since 1911 and is a member 

of the National Electrical Contractors Association. I am a senior 

project manager specializing in emerging electrical construction 

markets, including renewable energy technologies like wind power, 

converting landfill gas into electric power and solar photovoltaic. I 

also work in the natural gas and utility security industry. 

NECA is the nationally recognized voice of the $130 billion electrical contracting industry that brings power, light and communications technologies to buildings, communities and homes across the 

U.S. NECA’s 119 local chapters advance the industry through advocacy, education, research and standards developments. 

I am thrilled at the opportunity to speak regarding the upcoming 

economic stimulus legislation that will soon be deliberated before 

Congress. My testimony will focus on two elements that need to be 

included in the upcoming legislation. 

Green jobs. President-elect Obama’s $1 trillion stimulus plan emphasizes significant investment in transportation and infrastructure, including roads, bridges and dams. NECA supports these infrastructure projects that will help spur economic growth and create jobs. NECA also believes the emphasis must be placed on investment in buildings such as our schools, hospitals and public facilities through investment in green energy construction and high 

performance buildings. We therefore seek provisions that would require the construction and retrofitting of energy efficient buildings. 

From the proper installation and maintenance of wind turbines 

to light rail and mass transit systems, O’Connell Electric is playing 

6 

an increasingly important role in the building of the new American 

infrastructure. 

The size and scope of electrical contracting businesses has fundamentally expanded over the past several years, thanks largely to 

Federal and State tax incentives. O’Connell Electric and hundreds, 

if not thousands, of other NECA contractors have made renewable 

energy an integral part of their business strategy. In turn, this has 

facilitated job creation, contributed to the construction of more energy efficient buildings and moved our Nation towards energy independence. 

Electrical contractors support numerous other industries through 

our work—solar panel manufacturers, software developers and inventory managers—and we must hire additional personnel to perform both the pre-construction work and the actual building 

projects. 

The green job creation for construction of alternative energy 

sources such as wind farms is immense. Over the course of the last 

5 years, O’ Connell has become increasingly involved in the construction and maintenance of large wind energy generation fields 

throughout New York State. Our revenues from clean energy technologies has gone from about $1 million to more than $20 million, 

which represents more than 25 percent of our total revenues. Such 

an increase in revenues can contribute to job creation. The influx 

of renewable energy projects has allowed O’Connell to hire 50 new 

employees. 

O’Connell Electric’s experience is not unique. It is a shared experience among NECA contractors. Due to the increased demand for 

personnel equipped with the skills to install and maintain these 

new technologies, the growth of the solar and wind industries, for 

example, has triggered increased investment in research and development, manufacturing and distribution. 

I am encouraged by the economic stimulus proposal that President-elect Obama has begun to lay out, which could create as many 

as 2 to 3 million green jobs. The electrical contracting industry 

would stand to benefit from several of the provisions being mentioned, including group re-lamping and installation of updated energy efficient heating and cooling systems for the Federal Government. 

Federal tax incentives provide the necessary offset to a capital 

investment that clean and renewable energy technology require to 

be constructed and utilized. 

The economic stimulus legislation is not only an opportunity to 

stop the economic contraction our Nation is facing but also the opportunity to create confidence and long-term sustainability of the 

renewables market. We therefore ask for the extension of Federal 

incentives for renewable energy sources. These extensions would 

provide necessary predictability in a marketplace that often suffers 

from projects being delayed or put on hold because of the temporary nature of the renewable energy tax incentives. 

Another key policy that would provide predictability within the 

market would be an increase and expansion of the production tax 

credit, which incentivizes the generation of energy through clean, 

renewable resources like wind power and solar. 

7 

The credit crunch has put funding sources at risk for many clean 

energy projects. Consequently, we support the expansion of the 

Clean Renewable Energy Bond Program, which provides financial 

incentives for investment by consumer-owned utilities in new renewable electrical generation facilities. 

Madam Chair, I have witnessed firsthand the effects of what 

happens to jobs, to business growth and to the economy when these 

incentives are suspended or reduced. If the cost of market entry is 

not addressed and the investments are not made to incentivize the 

renewable energy markets, I assure you that the electrical contracting industry as well as numerous other industries will become 

stagnant or contract, creating job loss and reduce business revenues. It is absolutely critical to fund and expand Federal programs 

for a renewable energy market. They are the vehicle to create economic stimulus and provide our Nation with a chance to build a 

new energy economy. 

Thank you, Madam Chair. On behalf of O’Connell Electric and 

the National Electrical Contractors Association, I appreciate the 

opportunity to appear before this Committee. 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Ehmann. 

[The statement of Mr. Ehmann is included in the appendix at 

page 82.] 

Chairwoman VELA ́ ZQUEZ. Our next witness is Mr. Steve Massie. 

Mr. Massie is the President of Jack L. Massie Contractor, Inc. in 

Virginia. Massie Contractor provides a full range of services in 

every step of the construction process. 

Mr. Massie is here to testify on behalf of the Associated General 

Contractors of America. AGC represents more than 32,000 leading 

firms in the industry, including general contractors, specialty contractors and service providers and suppliers. 

Welcome, sir. 

STATEMENT OF STEVE L. MASSIE, CEO, JACK L. MASSIE CONTRACTOR, INC., WILLIAMSBURG, VIRGINIA, ON BEHALF OF 

ASSOCIATED GENERAL CONTRACTORS OF AMERICA 

Mr. MASSIE. Thank you, Madam Chair and Ranking Member 

Graves, for this opportunity to testify. I am here testifying today 

on behalf of the Associated General Contractors of America, better 

known as AGC. 

My name is Steve Massie. I am CEO of Jack L. Massie Contractor of Williamsburg, Virginia. We specialize in highway site 

and utility construction. I am also the immediate past President of 

the Associated General Contractors of the America. 

AGC’s members are comprised of a diverse group of general contractors, specialty contractors, suppliers and providers that engage 

in all areas of commercial construction. In a strong economy, the 

construction industry employs more than 7 million people and annually represents more than $1 trillion in economic activity. Today, 

however, construction companies and our employees are suffering 

as the economy continues to deteriorate. Contractors are terminating employees. 

Our company has already reduced our work hours by 33 percent. 

A further reduction to 50 percent will take place today while I am 

up here; and the next step, unfortunately, for us would be layoffs. 

8 

AGC supports construction as a economic stimulus both through 

enhanced construction spending and through construction tax incentives. Nonresidential construction employment peaked in January of 2007 and has steadily decreased over the last 24 months. 

AGC’s Chief Economist reports that an additional layoff of construction personnel ranging from 10 to 15 percent nationwide is 

possible if the economy does not turn around. He also estimates 

that every $1 billion invested in infrastructure projects would create over 28,500 jobs, add $3.4 billion to the gross domestic product 

and about $1.1 billion to personal earnings. 

An infusion of Federal infrastructure funding would have a direct 

stimulus effect by providing opportunities for contractors to compete for work. Once projects are awarded, firms will be able to put 

people on the project in approximately 30 days. 

A recent survey showed of AGC members showed that every type 

of construction market has seen a downturn. Seventy-two percent 

of respondents have laid employees off in the past 6 to 12 months. 

Sixty-five percent anticipate laying off employees in the next 6 to 

12 months. 

However, 85 percent would defer layoffs or hire additional workers if States received Federal stimulus. Seventy-three percent 

would purchase new equipment if markets improved. I know these 

statistics hold true for our company. 

The study also shows that there is available workforce capacity 

to build these projects, and once the money begins to flow workers 

will quickly be put to work. 

Additional Federal infrastructure funding will improve our economic efficiency and make our country more competitive. In Virginia, Governor Tim Kaine has stated that Virginia has, and I 

quote, more than a billion dollars in ready to go bridge, highway, 

rail, transit, port and airport projects that have been through appropriate local, regional and State planning processes and that can 

be under contract within 180 days. 

Tax provisions should also be a part of this debate. AGC believes 

Congress should extend expensing, depreciation, energy efficiency 

and worker training tax policies to create additional incentives to 

invest in America. One provision that is of particular concern to 

AGC is the repeal of the 3 percent withholding on Federal, State 

and local contracts. 

Without action by the 111th Congress, firms that receive contracts with funds derived from the economic recovery package 

would ultimately face a Federal tax withholding requirement that 

exceeds the average net revenue on construction projects. The provision is unnecessary because the performance bonds required for 

Federal work ensure tax compliance. AGC urges Congress to include a repeal of the 3 percent tax withholding law in the upcoming 

economic recovery package. 

The country needs your help. The current shortfall in infrastructure investment provides a unique opportunity. With material capacity, readily available labor and a backlog of deferred projects, 

the construction industry stands ready to build now. Increases in 

infrastructure investment can put people to work quickly and will 

have a direct, immediate and dramatic impact on the economy. 

9 

Again, thank you very much, Madam Chairman, for the opportunity to testify today for AGC. 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Massie. 

[The statement of Mr. Massie is included in the appendix at page 

87.] 

Chairwoman VELA ́ ZQUEZ. Our next witness is Mr. Robert W. 

Therrien. He is the President of the Melanson Co., Inc., a roofing 

contractor in Keene, New Hampshire. Mr. Therrien is a member 

and serves as President of the National Roofing Contractors Association with approximately 4,000 members. NRCA is the trade association that represents professional roofing contractors worldwide. 

Welcome. 

STATEMENT OF ROBERT W. THERRIEN, JR., PRESIDENT, THE 

MELANSON CO., INC., KEENE, NEW HAMPSHIRE, ON BEHALF 

OF THE NATIONAL ROOFING CONTRACTORS ASSOCIATION 

Mr. THERRIEN. Thank you Madam, Chairwoman and members of 

the Committee. Thank you for the opportunity to testify on behalf 

of the National Roofing Contractors Association. 

I am Rob Therrien, President of the Melanson Company, a roofing contractor based in Keene, New Hampshire; and I now serve 

as President of the National Roofing Contractors Association. 

The roofing industry is uniquely positioned to play a significant 

role in quickly stimulating economic growth and job creation across 

this Nation. However, the Tax Code contains an obstacle that is 

limiting economic activity in the emerging green building sector. 

Congress can address this problem by including the Green Roofing Energy Efficiency Tax Act, or GREETA, in the economic stimulus legislation now being considered. This investment in the 

emerging green economy will immediately help jump-start our 

economy. 

By accelerating demand for green roofing systems, GREETA will 

create 40,000 new jobs in the manufacturing and construction industry; add $1 billion in taxable annual revenue to the economy; 

reduce the U.S. energy consumption by 13.3 million kilowatt hours 

annually; cut carbon dioxide emissions by 20 million pounds per 

year; and save small business millions of dollars through a simpler 

and more equitable system of taxation and lower energy costs. 

GREETA amends the Internal Revenue Code to provide a 20- 

year tax depreciation schedule for commercial roof systems that 

meet specific energy efficiency standards. Passage of GREETA is 

necessary because between 1981 and 1993 the depreciation schedule for non-residential property was increased from 15 years to 39 

years. However, the current 39-year depreciation schedule is not a 

realistic measure of the average life expectancy of a commercial 

roof, which is about 17 years. 

The large disparity between a 39-year depreciation schedule and 

17-year average life span of a commercial roof serves as a major 

disincentive to building owners to replace their failing roofs. A 

building owner who replaces a roof before 39 years have elapsed 

may have to continue to depreciate for tax purposes, even though 

their roof no longer exists. As a result, many building owners 

choose not to only do piecemeal repairs, most often with outdated 

10 

technology, but they do this rather than replace their failing roof 

in its entirety with new, energy efficient materials. This problem 

is slowing the adoption of more advanced energy efficient roofs. 

GREETA will rectify this situation by reducing the tax depreciation schedule for commercial roof systems from 39 years to 20 years 

on roofs that meet benchmark energy efficiency standards. Enactment of this legislation will accelerate the adoption of energy efficient commercial roof systems by eliminating the disincentive in 

the Tax Code for building owners to install such systems. 

Enactment of GREETA would also benefit millions of small business owners by eliminating the need to depreciate more than one 

roof in instances where the roof must be replaced before the 39- 

year depreciation schedule has been completed. 

Given the many economic as well as environmental benefits of 

GREETA, this legislation enjoys strong support among business 

groups as well as organized labor. 

NRCA greatly appreciates your support, Madam Chairwoman. As 

a co-sponsor of GREETA, it looks forward to working with you and 

other members to enact this legislation into law. 

A related short-term incentive to increase employment in the 

commercial roofing sector could be to provide a 50 percent bonus 

depreciation for energy efficient roof replacements. This would permit an owner to deduct 50 percent of the adjusted basis of the 

qualified roof replacement placed into service in the years of 2009 

and 2010. This would provide a greater incentive for building owners to initiate energy efficient roof replacements in the economic 

downturn, and I would say also supports funding for green infrastructure improvements in our Nation’s building sector and in the 

economic stimulus legislation you are looking at. 

We believe that current trends towards the adoption of green 

buildings are keen drivers in the economic growth of our industry. 

We are working to maximize economic, environmental and energy 

conservation benefits of green buildings. 

Roof services, for example, across this Nation offer an economic, 

ready to use platform for the production of renewable solar energy. 

The U.S. Right now possesses 225 billion square feet of stable roof 

surface among its existing commercial and residential buildings. If 

only one-third of this area could be used for solar energy production through photovoltaic systems, our roofs would generate over 

50,000 megawatts of power annually, or approximately 8 percent of 

our current generating capacity. 

In conclusion, including GREETA for funding for green infrastructure improvements in the economic stimulus legislation will 

immediately create more jobs and more green collar jobs while also 

benefiting the environment and conserving energy. Again, thank 

you for this opportunity to testify today. I would be pleased to answer any questions the members of the Committee may have. 

[The statement of Mr. Therrien is included in the appendix at 

page 92.] 

Chairwoman VELA ́ ZQUEZ. I would like to address my first question to Mr. Massie. 

A massive stimulus bill is going to require increasing a budget deficit that is already over $1 trillion. This requires careful assessment of what policies will generate the largest bang for the buck. 

11 

For your business, in terms of your own perspective, can you tell 

us about those initiatives? Whether they be tax or infrastructure, 

which will generate the most jobs? 

Mr. MASSIE. I need to be careful that that is not a completely 

self-serving answer. 

When I talk to the people at home, the people that work for us, 

everybody likes the idea if you reduce their taxes they have more 

money to spend, but it won’t do any good if they don’t have a job 

making money in the first place. And, quite frankly, we are right 

at 170 employees right now, and they are smart people, they have 

a lot of common sense and see what is going on in our area. 

There is a competitor of ours for 30-some years who is gone. That 

company no longer exists. And the typical worker in our industry 

absolutely loves a 60-hour week. They kind of base their life on 

working that many hours at that level of income. We cut our workweek by 33 percent about 2 months ago. Today, while I am here, 

we did cut it to 50 percent; and we have not laid people off as of 

yet. And there is some work that we have gotten in the last month 

and a half, but it is all little jobs, nothing big. And the people see 

it and, quite frankly, the employees are scared. So the idea of being 

able to put people to work where they know they can come every 

single day and be able to create income within themselves is very, 

very important to them. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Mr. MASSIE. I think that is the best way I can answer that. 

Chairwoman VELA ́ ZQUEZ. Would any other members of the panel 

like to comment on that question? 

Mr. ALLISON. I would like to commend the gentleman. I think his 

statement that people first have to be employed before they can 

pay taxes—quite frankly, I think a great majority of Americans 

don’t mind paying their fair share of taxes. They just like to know 

where it is going. Of course, we could argue all day long about we 

would like to pay lower taxes, but, again, the important thing is 

just to be among the living and employed and having that great opportunity to be a taxpayer. 

I think what we are experiencing at this point in our local economies is a problem of confidence, consumer confidence and confidence among the business community. You have people that, as 

we speak, are juggling issues and trying to make decisions that will 

affect many people’s lives. So I just implore you to act boldly and 

quickly because time is of the essence. Every day that goes by, 

more damage is being done. 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Allison. 

Mr. Ehmann, last year, Congress passed legislation extending 

the renewable energy tax credit for electricity generation. This 

year, however, many key incentives are set to expire. How would 

extending this renewable energy programs act as a stimulus in 

moving our economy forward? 

Mr. EHMANN. A perfect example of what that yearly production 

credit does to the large wind industry, we have experienced it. It 

is a yearly issue; and, of course, you extended it until 2009. What 

that is doing right now is a construction process in a large wind 

firm is a 10- to 12-month construction period. The development of 

that project could be 2 years before that. 

12 

The overall problem with that is the utility interconnect is usually a 14-month process. Where actually all those numbers put into 

the equation with a definite end date of the production tax credit 

ending each year adds severe instability to a normal construction 

project. It is an unnatural curve when people can’t make the decision right now to say, okay, can we get—with all these lengths in 

our schedule, can we get them done by December 31st? 

And as of this date right now, you would be hard pressed to have 

any project moving forward. As a matter of fact, of the 15 projects 

that I know of in the northeastern United States, I think there are 

only two committing to get under way right now. 

It isn’t just giving us another year. It is more like give us 2 years 

or 3-year pieces. Then you have an economic smoother curve and 

let a project develop. Instead of a project being crimped into such 

a short period of time where you have an unnatural amount of 

overtime and trucking and economic issues that need time to be addressed and are all forced into a short window—you have people 

putting up wind turbines in the evenings under light, as soon as 

the day gets shorter; and there is a big rush to get them done by 

December 31st. And by some time in November, oh, the production 

tax credit—and everybody can relax. But they can’t relax. They 

have already committed. 

So it is making a very unnatural construction curve. We are 

doing it and setting records and unbelievable hurdles are being 

made over, but there are sacrifices. It could be environmental, it 

could be safety, or it could be trucking. 

Chairwoman VELA ́ ZQUEZ. What about cost? 

Mr. EHMANN. Costs are incredibly higher. That is the whole 

thing. From January to March you are trying to economize a job, 

and then June through December you are just spending like a— 

Chairwoman VELA ́ ZQUEZ. Okay, thank you, Mr. Ehmann. 

Mr. Therrien, Congress is facing a number of competing proposals, and we want to select, of course, the ones that promote energy conservation most effectively. How would shortening the depreciation schedule for green roof systems accelerate innovation 

and demand for energy efficient commercial roofs? 

Mr. THERRIEN. There are several ways that we have the opportunity to do that. One of the interesting scenarios that we have is 

the industry is poised and ready. We already have extremely efficient insulations that we can utilize. We have reflective roof systems which help with the heat island effect. Vegetative roof systems are continuing to grow and develop a sector of our industry. 

Solar roof systems continue. As I said, we have a platform for solar 

that is unmatched and ready to go to work. Also, there are opportunities for wind up on our roofs. 

One of the interesting things we find about this legislation is the 

industry is ready to go. Ninety-five percent of the products that are 

used and brought to the project are developed in the United States. 

So when we go to work as contractors, our manufacturers and supply chain go to work, too. We are ready to put boots on the roof, 

quite frankly. We have the opportunity to go to work immediately 

with no delay. 

As many of the gentlemen here noted today, we are in a slow 

time naturally because of the time of year in my region in the 

13 

Northeast. But the economy itself has slowed our workloads back, 

and we don’t have the same workloads that we have seen in the 

past. So, therefore, we do have the opportunity to get more guys 

back on the roofs, get them to work and give them an opportunity 

to earn a decent wage and income. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Mr. Graves. 

Mr. GRAVES. Thank you, Madam Chair. 

My question, I guess, is for everybody. I don’t know. It is kind 

of a tough one. 

I am struggling with what we are seeing in the country today. 

Because it is a very vicious cycle. People are conserving, and they 

are trying to get by. They are worried about losing their jobs, so 

they are spending less. So that means manufacturers are selling 

less, which means they are not expanding. Which means people in 

your business, if you are a contractor, you are not building or helping them build for expansion. Then you lay off people or whatever 

the case may be because you are not building. Manufacturers lay 

off people, and then people lose their jobs, and then they are not 

paying taxes. And it just goes around and around and around. 

Mr. Allison, as head of a chamber in a city, you are seeing it with 

small businesses. How much of this is almost like a self-fulfilling 

prophecy? We continue to be told, day after day after day, how bad 

the economy is and how bad it is going to get. And so people continue to conserve and continue to hold back with the idea that, my 

gosh, I may lose my job next week or in a month. And all that does 

is again make it even worse and make it even worse. 

Now we are talking about the government coming up with a 

stimulus package and providing all of the jobs. Does the government create jobs or is it small business that creates job? I am trying to figure out what is the best way to do this. 

You touched on green roofs, bonus depreciation for green roofs. 

Maybe we should expand it for anything, trying to get manufacturers or whoever is in business out there to expand, maybe take that 

leap of faith. We know this thing is going to turn around eventually, sooner or later. It always does. It is cycles. If we give them 

all the tax opportunities that we possibly can to expand their business, which will obviously put contractors to work to add that new 

equipment, to update their equipment, to change out all of those 

trucks and try to get new trucks, whatever it takes—should we be 

looking at this in a huge, broad spectrum and get those businesses 

and manufacturers to expand? 

Again, I am not so sure that government—I don’t think government creates jobs. I think the private sector creates jobs. That is 

where job creation is. I am curious. You can address—and I would 

like to hear from each one of you. You can address how much of 

this is just continuing to be battered on the radio and TV about 

how bad it is and how much worse it is going to get. And how much 

of a role does that continue to push us into the government spending? 

The chairwoman pointed out, rightly so, there has been a lot of 

money spent, a tremendous amount of money spent; and it adds to 

the deficit which was already there. How much farther can we go? 

When is enough, enough? 

14 

I would just be curious from each of you. Mr. Allison, you first. 

Mr. ALLISON. Congressman Graves, I appreciate the opportunity 

to address that. 

I agree government should not be the primary creator of quality 

jobs. Obviously, you need great people working in government; and 

we appreciate their dedication. However, the private sector is what 

makes that possible. What we have going on right now is a crisis 

in not only access to capital, not only a problem with our energy 

sector, a consumer confidence crisis. We can go on and on. 

Let’s not forget really what this great country has been most 

known for throughout history is creativity, it is innovation capacity, 

it is entrepreneurial spirit; and that still exists, that still exists. 

There are people out there today in laboratories all across America 

that have products they are trying to bring forward. They often 

have laboratory incubator environments around them. They have 

assistance from a myriad of different resources. However, just look 

at public policy. 2.5 percent of Federal R&D dollars are going to 

SBIR grants. What about the other 97.5 percent? 

As I said earlier, small businesses—in particular those with 

SBIR grants—are far more productive in obtaining patents for new 

products and bringing those to market than big business and/or 

universities. If I had to pick from the 16 components that I have 

recommended today, I would say that that is probably the first 

starting point. Because if you do, if you raise that to even 5 percent, that still leaves big business and universities, the other 95 

percent. Then I think we have taken a major leap in assisting the 

entrepreneurs in bringing their products to market. And if they do 

and they are successful and the percentage of success is very high, 

then they are going to be building buildings, they are going to be 

buying equipment and employing people in quality jobs with health 

care benefits. Aren’t those the goals we are trying to pursue? 

I just think too often we have neglected the golden goose here. 

Nothing against big business. Obviously, we have great challenges 

with the auto industries and aerospace and so forth. We must 

maintain those industries. But Main Street cannot be forgotten. 

We have people as we speak that are waiting to see what Congress and the new administration are going to do. And if you want 

to know what the real vacuum has been, it is leadership. They are 

waiting for a signal. So I ask you to give them that signal. Thank 

you. 

Mr. GRAVES. Mr. Ehmann. 

Mr. EHMANN. I believe along with large wind we are very involved in residential photovoltaic, solar electric and solar hot 

water; and small wind is another one of our things that we supply. 

And what you are saying, what I see the government has is the capacity with the incentives to push that industry. That industry is 

being taken advantage of. Solar electric is being taken advantage 

of today; and through the incentives, both Federal and State levels, 

they are working. The people are generating electricity. Reducing 

their cost of electricity is their goal. They, therefore, have more 

money in their pocket. That is their incentive. And their incentive 

is not only just to do something green, but it is also as a return 

in their pocketbook. 

15 

Both the solar hot water and the small wind, those are not 

incentivized as well. The problem with that is it is a little bit more 

out of the residential guy’s pocket, a little longer payback. It is 

harder to jump that hurdle. If you can incentivize those any 

much—better than they could—they are viable products. 

People want their dependence, their electric bills less. They want 

their heating bills less. And those are your working class people. 

And what it does is it creates jobs for me as an installer. It creates 

jobs for our salespeople. It creates jobs for maintenance people. Because all of these are electrical generating devices. They are generating at the house level. They will need maintenance in the future. 

It isn’t that you will install it and go away. You will have a 

maintenance plan and go back after 2 years. You have to maintain 

your systems and make sure they are operating and make sure the 

grid connection is maintained and make sure the electric grid is 

safe. Everybody has the potential to back-feed the electric grid. So 

it just creates more and more jobs. And that is working well. 

Mr. GRAVES. Mr. Massie. 

Mr. MASSIE. I am going to answer a little bit different. 

My clients—I work for the Federal, State and local governments; 

and we also work for private investment. On the private side, what 

we see our clients doing is, one, they have to be able to get money. 

What is the credit market and is money available that they can afford? 

Right now, they are doing two things. They are waiting to be 

able to get the money, and they are also waiting to see what you 

are going to do. What is going to be the pattern of the new administration in this Congress? And how long is it going to take them 

to become comfortable that, yes, I see a path that they are headed 

on, and I feel comfortable that they are going to stay on that path, 

so that they don’t get in trouble again by starting to borrow money 

and starting to go back to work, getting comfortable and then all 

of a sudden there is a change in direction and, oh, no, we are back 

in trouble again. 

We had one project that we were working on where the owner 

went bankrupt. It just came to a screeching halt. We have other 

projects where they didn’t go bankrupt, but we came in to work one 

day and they said, go home. So the private sector is very, very 

leery and they want access to money on terms that they can make 

money. And, right now, they can’t and they are waiting for direction before they start going back to work again. 

From the local, State and Federal Governments, they just don’t 

have any money to spend. So, from that perspective, yes, it will 

take money to get back to building the projects, whether they are 

buildings or highways or whatever they may be. From an infrastructure standpoint, it will not happen until money is available to 

do it. 

So my answer for you is both. From a private point, it is still getting back to the government and what are the policies and the regulations that they are going to have to adhere to. But they have 

to have a level of comfort that this administration and this 111th 

Congress is heading in a direction, and they are going to stay in 

that direction. You can’t be all over the board with everything. 

16 

Our line of work, we work around the weather. What is the 

weather, today, tomorrow and the next day? We have gotten to 

where we can handle that. What absolutely bamboozles us is what 

is going to come out of Washington and predicting what that’s 

going to be on the long term. Because we make huge investments 

on capital, whether it is the owner or us. 

Right now, we are going through a renewal of equipment, had 

been doing it for the past 4 years where we are getting more efficient and more environmentally friendly equipment. We stopped. 

We still have a list that we are working on, but we quit because 

we don’t know where things are going. 

Chairwoman VELA ́ ZQUEZ. I am going to have—Mr. Therrien, do 

you want to make a brief comment? 

Mr. THERRIEN. I will attempt that, yes. 

Quite frankly, I agree the legislation is a slight tweaking of our 

current tax policies. It is not making something go away that exists 

now. It is shortens it and puts guys to work. It gives us an opportunity to stay within a realistic time line and scale. But the depreciation if it is retarding spending on new energy efficient roofs. 

That is not putting my guys to work, and that is what we are looking to do with that legislation. 

I will also echo some comments about the 3 percent withholding 

and the fact that that truly is a net income of most construction 

firms in this country, I believe. So, basically, you are taking that 

off the table for our ability to have the needed capital to go to 

work. It does affect our overall income, which affects our loan and 

our ability in our lines of credit as well as our bonding. 

I don’t think there are many State and local groups that are very 

happy about the prospect of having to collect this and do the processing work associated with it. So I am hopeful that some slight 

tweaks in the depreciation schedule would do a great step forward 

to helping our industry continue to grow and prosper. 

Chairwoman VELA ́ ZQUEZ. Your time has expired. 

I will recognize the gentleman from Oregon, the Fifth Congressional District, Mr. Schrader, for 5 minutes. 

Mr. SCHRADER. Thank you very much, Madam Chair. 

Only Mr. Allison referred to the Small Business Association in a 

somewhat oblique manner and their role in the recovery and stimulus package. I am curious—this is the Committee on Small Business—if any of you would see an enhanced role for the Small Business Administration in terms of perhaps providing the loans that 

Mr. Massie is talking about, some of the cash flow that is out 

there, so it can go to small business and not just business in general. 

Mr. ALLISON. Well, sir, let me first explain I comment a lot about 

the SBA programs because I get exposed to them probably more 

frequently than the other colleagues here. But, as I said earlier, 

you have an environment right now where so many small businesses need assistance. 

We have an SBDC counselor in our chamber office, and we are 

very fortunate to have this brilliant young lady, but the fact is she 

is overbooked, she is underfunded, stretched too thin. It is one of 

my recommendations this morning for Federal funding to make it 

possible to put more SBDC people out in the field along with the 

17 

action of moving from 2.5 percent of the set aside of Federal research and development funds to 5 percent. That is a giant leap, 

but you have still left the other 95 percent with big business and 

universities. 

I think if you look at the facts, small business has delivered the 

results: Five times more patents issued for public funds per dollar 

of public funds than big businesses, 20 times more patents than 

universities. 

I think the SBDC is an avenue that can be pursued quickly to 

get some rapid results. EDA as well. EDA is in the practice of offering grants to communities. One that I was experienced with several 

years ago, they provided monies for infrastructure in the development of a new local business park that was primarily designed for 

small businesses. Today, that business park is relatively full, with 

thriving new businesses with new rooftops. 

So, in my view, I think that much of what we could do isn’t— 

we are not talking about a lot of money here. Federal dollars are 

already being put out there in research and development. I am 

talking about changing the allocation ratio a little bit. Put a little 

more into where you get more results. 

Thank you. 

Mr. SCHRADER. Could the others comment? 

Mr. EHMANN. Yes. Even though O’Connell Electric and the solar 

electric business in New York State—we are a large electrical contractor, but 35 out of the 40 NYCERTA-approved installers out 

there are one, two and five-man shops. I do know them. I do know 

individually friends who are doing the same business we are. What 

happens when this downturn or incentive runs out and they only 

have three or four jobs lined up that are essentially 2 months 

worth of work? They pull back. They don’t expand. 

At O’ Connell, we are able to reallocate our forces to another division. Small businesses aren’t able to do that. They just have their 

normal employees, and then they don’t want to lay them off, so 

they stretch out their jobs and eventually don’t reinvest. So I see 

them not buying a new truck or a new way to do their work better 

because they don’t have the work booked for the next 3 months, 4 

months. 

So they are holding back. They are definitely holding back and 

trying not to lay off their people. They are working a little less efficiently. Whereas if they had some work booked, they would be buying some new technologies and keeping their 8 and 10 and sometimes 12 people working. 

Mr. MASSIE. I think anything that we look into will help. You are 

going to have to study what is the best way to do it. The small 

businesses are fantastic, okay? I am one. Okay? And we do invest 

in new technology. What we have found by doing it, we have an 

advantage over larger companies that we compete with and we can 

do work cheaper, faster and just as long as we take advantage of 

it, but to take advantage of it has got to be there and we have to 

have the money to be able to do it. 

Mr. THERRIEN. I think the SBA is a good vehicle to run things 

through. I mean, I think if you can allow small businesses such as 

mine or any others to have the ability to access loans, short-term 

loans, to get through the timeline of the projects, whether they are 

18 

working with anybody at this panel or any of our other brothers 

in the construction industry, it is a good deal. And I think that that 

is an opportunity that affords us a way or a vehicle to get that 

money to these small businesses. 

Chairwoman VELA ́ ZQUEZ. Time has expired. The gentleman from 

Missouri, Mr. Luetkemeyer. 

Mr. LUETKEMEYER. I have one question for Mr. Therrien. You 

made a comment during your testimony and you quoted a figure 

of 8 percent savings with regards to energy, that if we put a solar 

system on every roof or on a third of the roofs in the country. Can 

you tell me how you came up with the figure? Is it total daylight 

exposure for that period, average daylight exposure for everybody 

in the country, part of the country? Just give me some background. 

Mr. THERRIEN. I believe those figures were from the Center for 

Environmental Innovation in Roofing. They are the ones that provided the figures in the background. Some of the other figures that 

I have also cited were from a Ducker study done by the National 

Roofing Contractors through their Alliance for Progress Group. It 

is part of our foundation and they did a Ducker study back in 2003, 

which also cited many of the job creations, as well as the areas of 

savings that would be—that were used. And that is included in the 

Ducker study that we have. 

Mr. LUETKEMEYER. Can I get a copy of that study because that 

is a great figure? It certainly shows the ability to conserve and to 

look at alternative sources. But if your figure is every—a third of 

the roofs with 100 percent of daylight for 24 hours, I— 

Mr. THERRIEN. I think these are realistic with— 

Mr. LUETKEMEYER. We need to have some idea of how you came 

up with those figures. 

Mr. THERRIEN. I know in the Ducker study, for instance, some 

of the things they looked at was also the difference in the amount 

of return. Monies wise, it is completely different in Phoenix, Arizona, than it is in Keene, New Hampshire, because the sunlight, 

the daylight and the amount of available light, cloud days and everything else are taken into effect. So they did have a flowing chart 

looking at the country and that type of demographic because it is 

a reality of how sun hits this country. 

Mr. LUETKEMEYER. As you point out, I think the alternatives 

look at different—should be looked at in different areas. I mean, 

wind in certain areas, solar in other areas. Whatever we can do. 

If I could get ahold of that study, that would be great. I would appreciate it. 

Mr. THERRIEN. I would be happy to get it to you. 

Mr. LUETKEMEYER. I yield back the balance of my time, Madam 

Chairman. 

Chairwoman VELA ́ ZQUEZ. Thank you. The gentleman from Kansas, Mr. Moore. 

Mr. MOORE. Thank you, Madam Chair. Small businesses in this 

country have been particularly hard hit by the freeze in the credit 

markets because without access to credit, particularly short-term 

credit, most small businesses have a difficult time maintaining current operations. This seems to be exactly the time that the Small 

Business Administration should be able to be there to ensure that 

businesses have access to credit. But the amount banks have 

19 

loaned through SBA’s general business loan guarantee program 

has fallen substantially over the past year. My question to any of 

the panel members is what steps do you believe Congress and the 

Small Business Administration can take to ensure that viable 

small businesses have access to the credit they need to maintain 

operations or make capital investments? Any of you have thoughts 

about that? 

Yes, sir, Mr. Allison. 

Mr. ALLISON. Yes. I would like to refer back to Item 10 in my 

recommendations, referring to the SBA 7(a) and 504 programs. I 

agree that right when we need them the most, that access to commercial credit has fallen off. Not that—you know, you could blame 

any one particular thing, but this is a great concern. 

Mr. MOORE. Certainly. 

Mr. ALLISON. Main Street needs SBA lending and frankly commercial banks, because of the current shift towards more regulation, more scrutiny, which we can certainly understand given 

where we have been over the last year in the financial market, but 

let us not overreact and take it all out on the small business sector. 

And really this is what I see is probably one of the greatest problems in the capital end of the problem, is you have got local banks 

that are sitting on money, even with SBA taking the majority of 

the risk. However, I do recommend that SBA take a greater percentage of the underwriting of these loans in this—in at least the 

interim period and that we think in terms of lowering qualification 

standards, that we exempt fees, anything we can do to streamline 

it and make money more accessible and quickly. 

Mr. MOORE. Any of the other panel members have a comment? 

Mr. THERRIEN. I have a quick one. Our line of credit fortunately 

because of our fiscal year we wound up renewing it before everything got to a really bad place and I finished my year end at the 

end of October. So my bankers quite frankly even made statements 

that thank God you are renewing your line of credit right now because it could change if we are looking at this in the first quarter 

or the middle of next year and it could be altogether different next 

year. So I think unfortunately small business isn’t getting a direct 

line of the bailout monies. And so anything we can do to help allow 

our lenders the ability to give us needed lines of credit to continue 

to operate our business would be very valuable. 

Mr. MASSIE. We did the exact same thing. We had our line of 

credit set up just prior to all of this. So that part is good. 

Mr. MOORE. Very good. 

Mr. MASSIE. But just to yield time, I have to agree with what has 

been said so far. 

Mr. MOORE. Thank you, sir. Thank you, Madam Chair. 

Chairwoman VELA ́ ZQUEZ. Thank you. The gentleman from Illinois, Mr. Schock. No questions. Ms. Clarke. Ms. Dahlkemper. 

Mrs. DAHLKEMPER. Thank you, Madam Chairwoman. Mr. 

Ehmann, I wanted to ask you a question regarding renewable energy tax credits. As I talked to people during the campaign, many 

expressed big concern on the time. And you talked 2 to 3 years. But 

I have actually heard that most people in these industries actually 

look at something further out than that in terms of a length of time 

20 

where we would really be able to have the benefit and see these 

industries really flourish and grow. Could you just address that? 

Mr. EHMANN. I think 2 years would be anything better than one. 

But I think the number is 5 to be personally—because product development or project development in these large wind farms right 

around our area in western New York, they are a 3-year, 4-year— 

from inception, from out there handshaking with the communities. 

The communities ramp up and they ramp up for these projects. 

They get excited, they get mad, they get everything. They ramp up 

to this thing. And everybody from all the suppliers, the truckers, 

the gravel people, everybody ramps up to this, and then all the 

sudden time frames. And if somebody misses a time frame and— 

or if some—a developer who is looking at different sites throughout 

the United States, if one can’t be built in a time frame, they will 

just resort to another: It really falls off of that community that 

loses out, the community that built themselves up and then it is 

just a decision, a checkmark didn’t fit their box and they—they are 

off the table. But having a nice, smooth, you know, curve of the 

production—of the tax credit not being there, limit being there, 

would, you know, let these people make decisions, make supplies 

available, make good decisions and not be forced to be behind the 

eight ball. And so longer periods are—it helps with the communities and the financial people. 

Mrs. DAHLKEMPER. And, Mr. Therrien, maybe you can address 

this because this actually has more to do with solar in terms of 

those I talked to. Competitively in a global world—actually I think 

we are falling behind, because other countries have put out tax 

credits up to 12 years, 20 years out. So the development of these 

products are such that—some of our manufacturers are actually 

moving overseas for product development because of those incentives. Maybe if you could address that? 

Mr. THERRIEN. We are seeing that. One of the interesting things 

was this past fall we got invited by Performance Roof Systems. It 

is a company that is based—has operations in Kansas City for the 

U.S. and they also produce over in Belgium. And the tax incentives 

that they have enjoyed using their DERBIWHITE product, which 

is a reflective roof in conjunction with FINFILM solar panels in 

both Belgium and France, they basically can’t keep up with the demand for it because the incentives there and the return on investment—we saw some spectacular projects where it was Belgium’s 

largest telecommunications television station. Did their whole roof 

entirely in panels in a solar project to reduce the demand on the 

community for electricity, and it is working for them, even in an 

environment in Europe which has many of the same cloud cover 

issues that we have here within the United States and the like. It 

is not a northern—northern Europe is still very much like the— 

from D.C. north in this country, and yet the projects still work for 

them and we are seeing that development. 

Mrs. DAHLKEMPER. I appreciate that. I just think it is time for 

some bold action in this area and I think further tax credits would 

actually help us to get there. 

Chairwoman VELA ́ ZQUEZ. Ms. Clarke. 

Ms. CLARKE. Thank you very much, Madam Chairwoman, and to 

Ranking Member Graves. I am honored to serve with you once 

21 

again in the 111th Congress. Let me start by just congratulating 

you, Madam Chair, on becoming chairperson of the Congressional 

Hispanic Caucus. If you conduct the caucus in the same way and 

manner that you have conducted your hearings in this committee, 

I have no doubt that you will be successful and accomplish many 

great things. 

Now to the concern that brings us all here today. Small businesses from the construction to the financial services industry are 

daily facing enormous challenges. They continue to suffer from 

what many say is one of the worst recessions this country has ever 

experienced. So it is imperative that our government plays a critical role in assisting our Nation’s small businesses, which will create jobs and especially for the unemployed and working poor in 

urban communities and communities across our country. As we all 

know, President Bush failed to implement the SBA’s women’s procurement program, but the administration was quick in its demand 

for $700 billion to bail out the so-called financial giants of Wall 

Street. So I urge my clients to move with swiftness to help small 

business that will help stimulate and sustain our communities and, 

by extension, our economy. It is my hope that the second economic 

stimulus package adequately addresses our Nation’s small businesses and addresses, establishes and reinforces objectives that ensure minority and women-owned businesses will fully participate in 

contracting opportunities created by the infrastructure improvement plan and economic recovery plan. 

My first question is to Mr. Robert Therrien and to Mr. Steve 

Massie. It is almost definitive that the second economic stimulus 

package, Congress will target infrastructure improvement projects. 

It appears that this will be extremely favorable towards the construction industry, which is suffering from this economic downturn. 

Balancing the need for small business productivity, hiring and retention of dedicated workforce is truly a challenge. We are trying 

essentially to develop a win-win-win economic policy that is critical 

to the future prosperity of our civil society. Do you support pre-apprenticeship programs in your sector to benefit disadvantaged 

workers, especially if these programs are targeted towards green 

jobs, and do you know of any successful pre-apprenticeship programs that benefit disadvantaged workers that can be used as a 

model? And please explain the difference between a pre-apprenticeship program and apprenticeship program. 

And just so you know, I am from Brooklyn, New York and that 

is why I come from this perspective. Thank you. 

Mr. THERRIEN. I know that I am not very astute with the preapprenticeship or apprenticeship programs per se that come 

through the organized labor. I am an open shop contractor. And I 

know we do have our own training protocols and procedures. I will 

quite frankly tell you up until recent time, we would take anybody 

that will walk through the door, had a pulse and could pass a drug 

test and just about put them to work. So that is where we were 

in New Hampshire and Vermont where I operate out of, had very 

low unemployment rates and still enjoy relatively low unemployment rates fortunately. But we sit there and we work hard to train 

our people and retain our people. 

22 

One of the biggest things we work on is not just system installations in the products that we install, one of the first things we do 

is spend the first day with them working solely on safety. Because 

one of the things we do run into in our industry especially is when 

we do have an accident and it is a fall especially, it is a significant 

issue. And the result is not a good product. So safety is paramount 

importance to our country. We work hard to train in that and then 

we work with training with the systems at hand. While I don’t understand these programs exactly, training is very important. One 

of the things that our association has done is actually started to 

put training programs online. Roofing 101, basic roofing program 

of just getting people to understand roofing, is actually online now 

so our workers can do this on their own time. We bring them in 

on rain days and the like, when it is snowing out and it gives us 

the opportunity to help train our guys. We have got reach programs which are energy efficiency programs. There is a section on 

vegetative roofs, on solar roofs and the like that you can take online through the association to better understand what it is that is 

demanded of you in our industry. 

Mrs. DAHLKEMPER. Thank you. 

Chairwoman VELA ́ ZQUEZ. Time expired. 

Mr. Westmoreland. 

Mr. WESTMORELAND. Thank you, Madam Chairwoman, and I 

want to thank you for having this important hearing. Coming from 

a construction background, I understand what is happening in the 

economy right now. 

Mr. Massie, how many projects would you say that you might 

have where you are ready to go to work and people cannot get financing? 

Mr. MASSIE. Well, half a dozen. 

Mr. WESTMORELAND. So from what we have seen originally, we 

were told that our credit was in a major accident on the expressway and it had all the lanes blocked with business loans, car loans, 

student loans, backed up in the traffic, and this $350 billion or 

$700 billion was supposed to clear that out of the way to allow this 

credit to flow. What I have seen in my district and what I have 

heard all over the State of Georgia and throughout the construction 

industry is that this credit is not flowing as of yet, even though we 

spent $350 billion so far with the main objective of that to make 

sure that there is credit out there to keep especially small business 

going. Was that your understanding of what this was supposed to 

accomplish? 

Mr. MASSIE. Yes, sir. 

Mr. WESTMORELAND. Mr. Ehmann, I wanted to ask you a question. I have read your testimony here and you talked about that 

your company over the last 5 years, I guess with green technology, 

had gone from 1 million to $20 million in revenue. And you talked 

about adding 50 new employees. Is this—the 50 new employees 

over a 5-year period, a 1-year period? 

Mr. EHMANN. In the past 5 years, we have probably added across 

New York State 7 to 10 new office personnel that are strictly 

project managers, estimators and salespeople across our three offices in New York, and the balance of those projects are the technicians that are in the field and those are permanent employees. And 

23 

those technicians that we have trained specifically for large wind, 

solar power interconnection, utility interconnection and those are— 

the luxury we have with those other 40 employees is we share 

them in our other— 

Mr. WESTMORELAND. I understand. But is 50 over a 5-year period; is that correct? 

Mr. EHMANN. 50 permanent. When you are in construction— 

when you need 40 electricians on one project, we just don’t get 

those journeymen electricians— 

Mr. WESTMORELAND. What is your total full-time employment? 

Mr. EHMANN. About 500. 

Mr. WESTMORELAND. I understand. Let me ask you this. How 

many people would you say are actively employed on a single wind 

farm or one of these wind farms that you were talking about? 

Mr. EHMANN. Electricians I just finished—and just last week I 

was at a finish-up project meeting and we had four major subcontractors on the project. The project made the North American 

Wind Power Magazine as a model project. It was in western New 

York. And one thing that doesn’t make the paper is our safety report at the beginning of the onset of meeting and basically we report our craft hours and before the four subcontractors, craft manpower hours was over 220,000 man-hours performed from May 1st 

to December 31st of last year on one project. Those are craftsmen 

working on the job. It doesn’t include engineering or— 

Mr. WESTMORELAND. About how many people would you say that 

was? 

Mr. EHMANN. There were probably over 2—over 200 people for 

1,000 hours a piece. Half a year— 

Mr. WESTMORELAND. We are going to have to start a lot of wind 

farms to employ 2 or 3 million people on some of these green 

projects. How much on one of these wind farms, just out of curiosity, what is the cost per kilowatt hour of electricity generated 

versus a coal plant or a hydro plant? 

Mr. EHMANN. I cannot answer that for you specifically, but I can 

get you that information as testimony backup. 

[The information is included in the appendix at page 56.] 

Mr. WESTMORELAND. If you will do that. And last, Mr. Allison, 

down with the Chamber, one of the things—we had the Chamber 

calling us about the stimulus package, asking us to do it. Not the 

stimulus, but the bailout originally. A lot of my Chamber members 

are coming back and saying I don’t know if this was a good idea 

or not because we haven’t gotten any relief from the credit. What 

is the Chamber of Commerce doing as far as putting your 2 cents 

into the release of the other 350 billion and some ideas that you 

might have for what that money really and truly needs to be doing? 

Mr. ALLISON. Well, sir, I can only speak for my own Chamber of 

Commerce in St. Joseph, Missouri. And obviously no disrespect to 

the U.S. Chamber or the Missouri Chamber of Commerce. But on 

Main Street, we get it, that this is something we have to do. The 

patient is on the table and in intensive care. So we need to take 

some action that we wouldn’t otherwise take, hoping at some point 

we will get him off the table and back out there. So there is no 

question, we are going to have to take aggressive action. I think 

the question is, can we do it, learning from recent experiences. And 

24 

I didn’t fly here today in a private corporate jet, nor did any of my 

colleagues. We work day to day with average people that as I said 

before, they don’t mind paying their taxes. They are just thankful 

to be employed and hoping that things are going to work out. 

As I have already asked, I think that if we look at the facts, 

small business delivers. Time and time again there has been studies done that shows that per dollar of public investment at every 

level of government, small business brings a much greater return 

on desired outcome. And I have outlined some ideas here and my 

colleagues have that I just ask that you work with the incoming 

administration to get their attention that it is not all big business. 

This country was built on small business and will continue to be 

so, and I think that there are steps we can take without spending 

more money. As I said earlier, changing the allocation percentage 

on Federal research and development dollars from 2 1/2 to 5 percent, if you just spent the same R&D dollars that you have in previous years, you have at least put more of that towards an area 

where you are going to get a lot more results. I mean, there are 

some steps that can be taken to help ignite this thing. 

Chairwoman VELA ́ ZQUEZ. Time is expired. We are going to have 

a second panel and there is going to be some votes coming up. I 

just would like to take this opportunity to thank you all for being 

here this morning and let me just say that we agree with you. We 

conducted two hearings regarding the bailout of the TARP money 

and made it very clear to the administration that we understood 

that the $350 billion will not have the effect of trickling down to 

help small businesses facing the credit crunch that they are facing 

today. But in this coming week, we are going to be setting up the 

parameters for the remaining of the TARP money. 

And let me say that this committee is run in a bipartisan manner. I really believe that there is no Republican or Democratic approach when it comes to small business issues. But that doesn’t 

mean that we will not disagree sometimes. I found myself this 

morning agreeing with Mr. Westmoreland regarding the credit 

crunch that small businesses are facing. And Mr. Graves, let me 

just say that for the first time in 8 years, I really agree with Mr. 

Cheney when he said that Reagan proved deficits don’t matter. 

This is a monumental economic crisis that requires a monumental response, and it might mean growing the deficit. To all of 

you, thank you very much. You are excused. 

I call on the second panel to please take your seats. The committee is called to order. 

Our first witness on the second panel is Ms. Margot Dorfman. 

Ms. Dorfman is the founder and CEO of the U.S. Women’s Chamber of Commerce. Ms. Dorfman has an extensive background in 

business, business ownership, publishing and nonprofit leadership. 

The U.S. Women’s Chamber of Commerce is the leading national 

voice advancing economic opportunities for women in America. 

Welcome. 

STATEMENT OF MARGOT DORFMAN, FOUNDER, CEO, U.S. 

WOMEN’S CHAMBER OF COMMERCE 

Ms. DORFMAN. Chairwoman Vela ́zquez, Ranking Member Graves, 

members of the committee, thank you again for the opportunity to 

25 

speak on behalf of America’s small business owners at this important time. The future of America small businesses are in your 

hands. Through your earnest work towards the promotion of economic recovery, you will profoundly influence the future of millions 

of small businesses and their employees and their families and 

communities. Literally, the future of the American dream is in your 

hands today. 

We all know too well the challenging economic times we are in 

and the need to act swiftly, strongly and with focused precision to 

bring about economic recovery. Time is of the essence for Congress 

and the incoming administration to act. Consumer spending is 

down. Many of the States, cities and counties have budget shortfalls which will cause local government spending to decline. Unemployment is up, business lending is in a free fall, commodities and 

health care costs are rising and business margins are declining. To 

promote an economic recovery, we encourage you to consider policies and investments that will energize consumer, business and 

government spending, jump start lending, and return liquidity to 

the lending markets, and bring down the cost of doing business. 

The Small Business Administration and targeted small business 

policies can have a great impact in these areas. 

First, I ask you to support targeted small business spending as 

we leverage investments in infrastructure, new energy technology 

and health technology. It is vitally important that we ensure an appropriate percentage of these investments be made with small businesses. It has been discussed that a sizeable amount of the investment in our economic recovery will come through the funding of 

State and local government infrastructure needs. This committee 

should assure that these funds at both Federal and local levels require the Federal mandated 23 percent participation by small business and that all socioeconomic goals be met without exception. 

Next, as small business lending is in a free fall, it will require 

very strong action to stop. Loan volume has dropped dramatically, 

thanks in large part to the collapse of the secondary market for 

small business loans. And this free fall has brought about other 

negatives as well. We strongly recommend that the SBA act as a 

catalyst, disburse small business lending. The SBA should directly 

process small business loans and, when necessary, provide high 

government guarantees. Let the SBA fully process and close loans, 

providing the loan as an asset for purchase by the bank. We recommend that funds allocated towards unfreezing secondary markets include appropriate requirements for inclusion of small business lending. There must be secondary market participation so that 

lenders can sell portions of these assets to make new funds available for additional loans. The SBA should also establish programs 

and guarantees to bolster confidence in the secondary markets so 

as to encourage investor participation and increased liquidity. To 

further drive liquidity and prevent against the potential of rising 

default, the SBA should be able to engage in refinancing and underwriting, enabling lenders and borrowers to leverage this option 

to save the loan relationship and prevent default or bankruptcy. 

The SBA should also relax the rules on refinancing and be able 

to raise their guarantee so as to bring greater elasticity and save 

loan relationships. For example, many small business owners have 

26 

turned to credit cards to cover their cash flow shortfalls and in 

many instances the equity in their home that was leveraged to establish a loan may have declined. 

We also recommend that the SBA relax some of the rules that 

add cost and delays to securing a loan like life insurance requirements and job creation requirements. 

The final area of attention should be bringing down the cost of 

doing business. We recommend a combination of tools be used to 

decrease the cost of doing business generally and decrease the cost 

associated with keeping employees. We support the reduction in 

short-term suspension of payroll tax, the abolishment of self-employee tax on health insurance, giving small businesses the ability 

and incentives to form their own health insurance groups, and extending the net operating cost carry back rules for longer terms. 

In closing, I ask you to act now. As we watch the falling business 

lending statistics and the climbing unemployment numbers, I can 

assure you that the next fatality will be marked by a declining 

number of small businesses and increased number of business and 

personal bankruptcies. The majority of the recommendations I have 

outlined today are short-term positions aimed at getting small 

business lending moving quickly, improving small business cash 

flows, and assuring that the one-time big investment in infrastructure includes small businesses. 

As you complete the work on legislation to spur on economic recovery, please save the broader strategic moves for later. For now, 

just focus on specific steps to help small businesses get moving 

back into a positive direction. Thank you. 

[The statement of Ms. Dorfman is included in the appendix at 

page 97.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Ms. Dorfman. I welcome 

Mr. Paul Merski, who is the Senior Vice President and Chief Economist for the Independent Community Bankers Association. Before 

joining ICBA in 1999, he was the top policy adviser to Senator 

Connie Mack and served as the Chief Economist of the Joint Economic Committee of Congress. ICBA represents community banks 

of all sizes and charter types throughout the United States. 

Welcome. 

STATEMENT OF PAUL MERSKI, SENIOR VICE PRESIDENT, 

CHIEF ECONOMIST, INDEPENDENT COMMUNITY BANKERS 

OF AMERICA 

Mr. MERSKI. Chairwoman Vela ́zquez, Ranking Member Graves, 

and members of the committee, I am pleased to present the ICBA’s 

views on the small business economy and on recommendations to 

promote an economic recovery. ICBA represents 5,000 community 

banks throughout our country, and community banks are independently owned and specialize in small business relationship banking. 

Notably half of all small business loans under $100,000 are made 

by community banks. Forty-eight percent of small businesses get 

their financing from community banks with 1 billion and under in 

assets. 

Today our small businesses are facing the most difficult economic 

conditions in decades and accessing credit is getting more problematic due to the turmoil in the credit markets. The National FederaVerDate Aug 31 2005 15:54 Mar 05, 2009 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\46820T.TXT DARIEN
27 

tion of Independent Business Index of Small Business Optimism 

has dropped to its lowest level since it began in 1986. Additionally, 

the free fall in SBA lending is cause for alarm and immediate action. Therefore, fiscal policies focused on restoring consumer confidence, broad credit availability, a robust housing market and job 

growth are all vital to an economic recovery. 

We all know that many of our Nation’s largest lenders and 

money center banks tripped up on subprime lending, toxic investments and now they are the ones pulling in their lending, writing 

down losses, and rebuilding their capital. However, there is another story out there. Thousands of community banks represent 

that other side of the financial story. Community banks rely on relationships in their communities, not on relationships with investment banks or hedge funds. Community bankers actually live and 

work in their communities that they serve and they certainly do 

not put their customers in loan products that they cannot possibly 

repay. 

While community banks did not cause the current turmoil, they 

are very well-positioned and willing to help get our economy back 

on track. To complement the aggressive monetary policy easing, 

ICBA recommends additional fiscal incentives, including individual 

and small business tax relief, enhanced home buyer tax credit, expanding SBA programs and Subchapter S tax reforms. 

Additionally, we really need to address our fair value accounting 

system and improve community banks’ access to the TARP and 

TALF programs that this committee has worked hard on. 

SBA lending programs are vital. SBA lending should serve as a 

counterbalance during these challenging credit times for small 

businesses. Unfortunately, what we see is a dramatic drop in the 

dollar amount and number of small business loans being made. 

While the typical commercial small business loan has a maturity 

of 1 to 3 years, SBA 7(a) loans typically average 12 or more years 

in maturity. This lowers the entrepreneur’s monthly loan payments 

and frees up needed cash flow to start or grow the small business. 

ICBA recommends immediately offering a super SBA loan program for 1 year as an economic stimulus to help small businesses 

access the capital they need. This could be an expedited 7(a) loan 

program with a 95 percent guarantee for small business loans up 

to 500,000. 

The vicious downward cycle in the housing sector must also be 

broken. Extending the $7,500 first-time home buyer tax credit and 

removing the repayment provision will help jump-start home sales, 

stabilize home prices, and address foreclosures. 

ICBA also recommends an immediate increase in the annual 

limit on tax-exempt municipal bonds from 10 million to 50 million. 

This would create greater low cost funding for local projects such 

as school construction, water treatment plants and other municipality projects. 

Chairwoman Velazquez, ICBA greatly appreciates your efforts to 

work with the Treasury and the Federal Reserve in successfully 

launching the TALF program. By providing liquidity to issuers of 

consumer asset backed paper, the Federal Reserve facility will enable more institutions to increase their lending. 

28 

ICBA also appreciates the Small Business Committee’s attention 

to the TARP capital purchase program. Community banks are very 

concerned that 3,000 financial institutions still do not have access 

to the capital purchase program. 

In conclusion, community banks did not cause this financial crisis, but we certainly will be there to help ensure our Nation’s small 

businesses will have the access to credit that they need. 

I appreciate the opportunity to testify. Thank you. 

[The statement of Mr. Merski is included in the appendix at page 

100.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Merski. 

Our next witness is Mr. Alan Roth. He is the Senior Vice President of USTelecom. Prior to joining USTelecom, he was a former 

Staff Director and Chief Counsel to the House Energy and Commerce Committee. Welcome back. 

USTelecom is the premier broadband trade association representing service providers and suppliers for the telecom industry. 

Welcome. 

STATEMENT OF ALAN ROTH, SENIOR EXECUTIVE VICE 

PRESIDENT, USTELECOM ASSOCIATION 

Mr. ROTH. Thank you, Madam Chairwoman. Madam Chairwoman, Ranking Member Graves, members of the committee, as 

you said, the USTelecom Association is the Nation’s leading 

broadband industry trade group, representing service providers, 

manufacturers, and suppliers of advanced communications, applications and entertainment. We appreciate the opportunity to share 

with you our perspectives on the emerging American reinvestment 

and recovery plan, and on what policy approaches in that package 

can encourage the deployment and adoption of broadband and thus 

provide consumers with its many life enhancing benefits while 

stimulating job creation and the growth of small businesses. 

And, Madam Chairwoman, like you and Ms. Clarke, I come from 

Brooklyn, New York, and my mother grew up in your district. So 

I especially appreciate the opportunity to appear here today before 

you. 

You are no doubt familiar with our two largest members, Verizon 

and AT&T. But we are also proud to count many more midsized 

companies and hundreds of small ones in our membership ranks. 

Indeed, the vast majority of the companies we represent are rural 

providers. They are generally small businesses serving small communities. Collectively they are at the forefront of building America’s broadband infrastructure, and they are united by a shared determination to deliver innovative voice, video and data services to 

their customers, including in turn the small business customers 

they serve, a commitment we know this committee shares. 

Page 2 of my written testimony includes three stories from a remote community in the Pacific Northwest that illustrate how 

broadband can be used to start or grow small businesses anywhere 

in America. I encourage you to study those examples more closely 

because they explain why broadband has emerged as an essential 

driver in 21st century American life. 

Like the telephone networks, electrical grids and pipelines of the 

20th century, broadband is now propelling forward virtually every 

29 

category of the U.S. economy. Achieving the objective of universally 

accessible broadband—an objective we support—requires policies 

that encourage vigorous investment in the sophistication and capacity of the Nation’s broadband networks, as well as innovative 

public-private partnerships to reach every pocket of our geographically vast Nation. We are delighted that policymakers in both 

branches and on both sides of the aisle have recognized the importance of broadband to the Nation’s economic health. 

Let me hasten to note that as an industry, we are not asking 

Congress for financial help to fund our ongoing operations or to 

execute our business plans, which do call for the continued investment of very substantial sums in broadband buildout. But in response to the interest the President-elect and leading Members of 

Congress have shown in using the economic recovery package to 

stimulate increased broadband deployment and adoption, particularly in unserved areas of the country that are sparsely populated 

and hardest to reach, we have developed a series of ideas and approaches calculated to accomplish those desired ends. 

First, we encourage the 111th Congress to fund two of the 110th 

Congress’ major accomplishments, the Broadband Data Improvement Act, commonly known as Broadband Mapping bill, and the 

Rural Utilities Service Broadband Loan Program, which was significantly reformed in the 2008 Farm bill. 

Next, some of our member companies, particularly those in areas 

where the population density is very low so that the cost of buildout and operations are conversely very high, have suggested the 

creation of a one-time grant program to assist in the cost of initial 

deployment to unserved areas for which reliance on private capital 

alone cannot suffice. 

In the tax area, a refundable consumer tax credit of up to $30 

per month per household to offset the cost of broadband subscriptions for low-income, unemployed, and rural Americans would expand opportunities for those individuals who currently are least 

likely to be connected to the Internet. An investment tax credit targeted to incentivize more, and more rapid, broadband deployment 

will also help to increase the availability of affordable broadband 

to small businesses and residential consumers across the country. 

And extending the bonus depreciation provision that expired on December 31st would encourage companies to accelerate their capex 

plans, including broadband deployment projects. 

Broadband and small business are each an essential building 

block in our economy. If we want those businesses and their communities to thrive, we must ensure that broadband’s many benefits, such as better health care, education, and a cleaner environment, are made accessible to all Americans. 

So whether you adopt the specific ideas we have set forth or look 

at proposals being suggested by others, we hope you will incorporate three basic principles into your consideration. First, maintain an economic and regulatory climate that continues to encourage private sector investment in broadband infrastructure; second, 

look carefully at the consumer side of the equation by addressing 

barriers to broadband adoption; and, third, make sure broadband 

deployment policies are focused on remaining unserved, underserved and high cost areas. Adherence to those principles will conVerDate Aug 31 2005 15:54 Mar 05, 2009 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\46820T.TXT DARIEN
30 

tribute to both the short-term recovery and long-term prosperity we 

all seek. 

We thank you for your invitation and your consideration of our 

views. 

[The statement of Mr. Roth is included in the appendix at page 

112.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Roth. 

Our next witness is Mr. Grant Seiffert. He is the President of the 

Telecommunications Industry Association. Mr. Seiffert oversees the 

policy standards, trade show, and marketing efforts for TIA. TIA 

is the leading trade association representing the global information 

and communications technology industry. 

Thank you. 

STATEMENT OF GRANT SEIFFERT, PRESIDENT, 

TELECOMMUNICATIONS INDUSTRY ASSOCIATION 

Mr. SEIFFERT. Thank you, Madam Chairwoman and Ranking 

Member Graves, and other members of the committee. TIA represents over 500 companies in the information communications 

technology industry through standards development, advocacy, 

business opportunities, trade shows, and marketing intelligence, 

and for over 80 years we have enhanced the business environment. 

Today our members’ products and services empower consumers in 

every industry in marketing, including health care, education, security, public safety, transportation, the government, the military, 

the environment, and entertainment. 

And in these difficult economic times, TIA has looked closely at 

the ICT industry to see how the member companies can facilitate 

a rapid recovery and promote the continuing expansion of the Nation’s information communications infrastructure. TIA hopes to 

support Congress in the creation of policies that deliver on the 

promise of broadband technology for the American people. Information communications technology is vital to our Nation’s economy 

and society. Whether ICT has an impact on both large and small 

businesses is indisputable. The sum of all other industry segments 

in consumer activities which ICT affects, however, is often underrated and perhaps immeasurable. 

According to the U.S. Department of Commerce’s Bureau of Economic Analysis, the ICT industry accounted for 4 percent of GDP 

in 2007, and accounted for over 20 percent of real GDP growth in 

that year. Thus, the significant slowdown we have experienced in 

this industry may have a meaningful effect on the health of the 

overall U.S. economy in the economic recovery. Without directed 

measures to combat this slowdown, real GDP growth and productivity will be negatively impacted. 

The economic crisis has had a debilitating impact on the sector’s 

growth and survival. TIA’s membership is made up of approximately 80 percent of small and medium-sized businesses. Start-ups 

and garage inventors are the life blood of our industry. Innovation 

that results from high risk endeavors many times leads to the 

household names we have become familiar with over the years. 

However, the current economic crisis is contributing to the crippling of this essential part of the innovation cycle, making it difVerDate Aug 31 2005 15:54 Mar 05, 2009 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\46820T.TXT DARIEN
31 

ficult, if not impossible, for these groundbreaking technologies to be 

realized. 

According to the National Venture Capital Association, in all of 

2008 there were just six companies that have gone public and compared to that with several hundred of the many, many the past 

several years. These numbers illustrate the unwillingness of otherwise independent inventors to take personal financial risks in an 

uncertain marketplace. The significant pan-industry downturn has 

threatened the promising economic opportunities of the industry. 

Under these market conditions, investors will not continue to support increased broadband infrastructure buildout, yet the United 

States cannot afford to sit idle while other countries continue to 

strive ahead in deploying widespread broadband networks. 

Our Nation’s near and long-term economic welfare, jobs and leadership all depend on the continuous success of broadband deployment. Broadband deployment and other industry growth relies in 

part on the government’s next steps. 

There are early actions the government can take to change this 

course. First, do no harm, and let me personally thank you again 

for your work in the committee’s work on Sarbanes-Oxley and how 

it has impacted small businesses. Second, including broadband incentives in the stimulus package will lead to job growth and have 

a direct impact on the continuing impact of our Nation’s economy. 

We call on this committee to support broadband incentives in the 

stimulus package currently being considered. 

TIA’s proposal outlines the types of deployment adoption, supply 

and demand side incentives that should be included in a package 

to most effectively achieve the goal providing broadband to all 

Americans. It is important to note that jobs will be created from 

such a plan. An estimate put forth by the Communications Workers of America indicated that for every $5 billion invested in 

broadband, it would create 97,500 direct jobs and 2.5 million jobs 

throughout the economy in the near term. 

TIA, representing the communications manufacturers, suppliers 

of all broadband platforms, believes that the full panoply of 

broadband technologies will be needed to ensure universal deployment in America. 

Other groups have called for direct grants for rural broadband 

deployments. TIA agrees and would suggest a $25 billion grant program for the deployment of broadband infrastructure in unserved 

areas. The grant program would be a technology neutral opportunity for interested providers to bid for partial subsidies to provide broadband service at minimal speeds and appropriate capabilities. 

We would also ask that there be an expensing provision in investment tax credits for both wireless and wireline networks allowing for greater incentives for the deployment of high capacity networks. 

Congress should also consider that it will stimulate the demand 

for broadband. It is indisputable that broadband provides a host of 

benefits to communities, especially rural communities. To that end, 

the stimulus package should include measures that would help 

drive broadband demand, including vouchers for loaning to Americans, including both adults and students so that they may purVerDate Aug 31 2005 15:54 Mar 05, 2009 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\46820T.TXT DARIEN
32 

chase laptops and mobile handsets. A tax credit for small and medium-sized businesses who purchase or upgrade their PCs, laptops, 

mobile handsets, broadband equipment services also should be implemented. 

In conclusion, it is without question that broadband is an accelerator for our economic development, providing significant benefits 

for many industries. Without broadband access, work or productivity increases—will not increase. Jobs are created and wages will 

grow. Broadband enables operators to offer more services to consumers for less, creating added efficiencies in both time and money. 

And in addition, related industries grow with the continued deployment of broadband. As broadband penetrates and rates increase, 

there will be a resulting demand for more advanced computer and 

home networking equipment. 

In the near term including broadband deployment and adoption 

incentives and public safety networking equipment will have a direct impact on the recovery of the ICT industry. We applaud Congress’ position and, of course, we also like to recognize Presidentelect Obama’s desire to include infrastructure funding in the economic stimulus legislation and encourage Congress to place a priority on the deployment of the most critical 21st century infrastructure, broadband technology. 

And I would like to thank you for the time this morning. 

[The statement of Mr. Seiffert is included in the appendix at 

page 124.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Seiffert. Mr. Merski, if 

I may, I would like to address my first question to you. 

We have heard many small financial firms express concerns that 

the Fed’s TALF would not be adequate or timely enough to resolve 

issues in the SBA secondary market. Can you discuss the continuing need to address the secondary market issues for SBA 

loans? 

Mr. MERSKI. Thank you, Madam Chair. That is an excellent 

question that gets at the point of concern for many small business 

lenders, the fact that the secondary market for many small business loans and consumer loans is completely frozen, and your efforts to bring in the Federal Reserve, bring in the Treasury Department to address those have had some very positive results with the 

Federal Reserve and Treasury working to start this new TALF program. But you are absolutely correct that it needs to be structured 

in a way that works for the SBA loan poolers, structured in a way 

that works to help open the secondary market for consumer loans, 

credit card businesses and small business lending. So we are continuing to work with the Federal Reserve and the Treasury Department to make that work, and we will continue to call upon you and 

this committee to make sure that is a robust program and works 

as you intended it to work. We have yet to see the final implementation of that program, and the number one concern we have from 

lenders is that the secondary market for their loans is frozen. So 

they can’t sell off their loans on their books now and create new 

loans. And that has to be addressed. So we appreciate your help 

on that. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

33 

Mr. Roth, broadband connectivity can be a critical economic driver. Small firms rely on broadband to expand their markets and become more competitive. To what extent could broadband-related 

dollars translate into immediate jobs for American workers, and 

more importantly, how long will it take? Months, years? 

Mr. ROTH. Thank you, Madam Chairwoman. With regard to our 

suggestion of one-time grants for broadband buildout, particularly 

to unserved areas, there is a positive side to having lots of old infrastructure and old telephone lines out there. And that is that our 

companies already have the rights-of-way, they already have the 

conduits, they already have the basic building blocks in place. So 

they could put a lot of people to work quickly, digging trenches, 

laying new lines, upgrading existing equipment and employing 

salespeople to serve new customers. So in that respect, in terms of 

new service to unserved areas, we think there actually is great potential there for broadband grant programs. 

There is also an RUS, or Rural Utilities Service, telecom loan 

program that I spoke about in my testimony. Our understanding 

is that in the last go-around, in the fiscal year 2008 go-around, that 

program was oversubscribed by $250 million, showing that there is 

a great deal of interest among smaller companies that are eligible 

for those loans seeking assistance that RUS was not able to provide. A relatively small amount of money, about a half million dollars in appropriations, could underwrite about another $250 million 

in loan authority and fulfill all of those pending requests, which 

could come forth very, very quickly. 

Chairwoman VELA ́ ZQUEZ. Thank you. Mr. Seiffert, would you like 

to comment? 

Mr. SEIFFERT. I absolutely agree fully. I mean, there are lots of— 

well, let me just start with saying given the fact that in 2008, 

180,000 employees in our sector lost their jobs. So if the grants and 

different programs were to stimulate broadband investment in new 

infrastructure buildout you have a lot of people ready to go back 

to work. I absolutely agree with Mr. Roth and his assessment. 

Chairwoman VELA ́ ZQUEZ. When it comes to broadband access, 

policy incentives can play an important role in encouraging deployment, a public-private partnership come from a rapid and extensive 

deployment. Can you talk to us about why further incentives and 

funds are necessary, even though the private market is generating 

demand for broadband? 

Mr. SEIFFERT. Sure. And it goes back to the issue of unserved 

communities and communities that the economics don’t work as 

well in the larger market. And so a public-private partnership is 

one way to get around the market conditions and make sure that 

companies can get a return on that investment. And so we support 

that. 

Chairwoman VELA ́ ZQUEZ. Mr. Graves. No questions. Mr. 

Schrader. 

Mr. SCHRADER. Question for Ms. Dorfman. I am trying to follow 

up on Bart’s comments. In my State oftentimes there is a lot of lip 

service paid to limited minorities and small businesses and their 

access to some of the larger construction grants and/or opportunities like the stimulus. And they never really happen. Is there a better way that you or the Women’s Chamber has come upon that we 

34 

should be using to deliver funds to make sure that there is adequate representation by women and minority small business? 

Ms. DORFMAN. Thank you. What we have found is that women 

have really relied heavily on SBA lending because they often aren’t 

able to access traditional loans, and so putting the money into the 

SBA lending programs and making sure that they do have access 

to those programs would be the first, I think, way to get into the 

money into their hands. 

Mr. SCHRADER. Thank you very much. 

Chairwoman VELA ́ ZQUEZ. Ms. Clarke? 

Ms. CLARKE. I think you took my question, Mr. Schrader, but I 

will try. Ms. Dorfman, I just want to thank you for testifying today 

because I believe the U.S. Women’s Chamber of Commerce is a 

great organization and is always in the forefront of fighting for 

women-owned businesses. 

On October 28th of 2008, you had testified before this committee 

that Congress should take legislative action to help restore the flow 

of credit and capital to small business owners as soon as possible. 

In particular, you mentioned that the SBA should relax the rules 

on credit worthiness and job creation requirements. Can you give 

us a little bit more insight into—and give us some guidance as to 

how we can achieve this? 

Ms. DORFMAN. Sure. Thank you very much. What we see out 

there is that—I mentioned the credit cards—small businesses, 

women-owned firms in particular, rely heavily on using their credit 

cards when they have a shortfall of funding. Additionally, when we 

look at the housing market, the loans that have been given to them 

have relied on their equity in their home or, if they are looking to 

get a new loan, it always attaches their home to it. So the equity 

that might have been there in the past won’t be there now. 

So those are some of the issues. If we can allow some of the SBA 

funding to be used for maybe the credit card debt that they have 

already taken out, which in the past has not been the case, doing 

some of those innovative funding for the loans, I think that would 

ease the pain greatly. 

Ms. CLARKE. Can you just quickly speak to the job creation requirement? 

Ms. DORFMAN. Sure. Right now what we are seeing is our members are struggling to keep their doors open and keep the employees that they already have. If you were to say we will give you 

some money, but you have to hire—and I think there is something 

out there about a $3,000 and then you get—but you need to hire 

somebody if we have that. And we are talking about a job that 

might be $50,000 for an employee. That doesn’t even cut it and 

they are struggling to keep their doors open. It doesn’t make a lot 

of sense right now. 

Ms. CLARKE. So would you then think or say that if we 

incentivized employee retention— 

Ms. DORFMAN. Yes. 

Ms. CLARKE. —that would help at least to just sort of stabilize 

things, and were the SBA able to do some sort of refinancing— 

Ms. DORFMAN. Yes. 

Ms. CLARKE. —for those businesses, this that would be a helpful 

tool. 

35 

Ms. DORFMAN. Absolutely. That would be great. Thank you. 

Ms. CLARKE. Thank you, Madam Chair. 

Chairwoman VELA ́ ZQUEZ. Mr. Merski, I would like to ask you a 

last question, since we are going to be dealing with the TARP reform on Financial Services where I serve. 

Although this recession started from the collapse of the mortgage 

lending, recent economic indicators have raised significant fears 

about witnesses in other types of financing, particularly commercial real estate and consumer credit. Do you believe that efforts 

such as the Treasury’s capital purchase plan or the Fed’s TALF 

will be adequate to help small banks weather the extended economic downturn if credit defaults continue to spread? 

Mr. MERSKI. That is a very good question. And the programs— 

the capital purchase program and the TALF that you were instrumental in jump-starting are going to help, but the banking sector 

has already written off about $700 billion in real estate value that 

they will not be paid back on. So if you think about the economics 

of it, about 60 percent of all small business lending is backed up 

by some sort of real estate collateral. And, as we pointed out in our 

testimony, unless you stem this decline in real estate values, 

whether it is commercial real estate or individual’s homes, the financial credit crisis and economic crisis is going to continue to get 

worse, not better. 

So as the Congress is looking at fiscal stimulus plans to match 

what the Federal Reserve has done on cutting interest rates to 

nearly zero, additional policies have to be put in place to stem the 

tide of declining real estate values, because that is what the collateral is for many small business loans. And also the fact that, until 

this real estate is stabilized, banks are going to have a very difficult time of lending more. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Mr. Seiffert, the availability of broadband can be broken down 

into two groups, areas with access and areas where high-speed access is not yet affordable or reliable. While it is clear we should be 

reaching underserved markets, can you discuss the importance of 

high-speed Internet and how does improving it generate economic 

opportunities? 

Mr. SEIFFERT. Well, for starters, any consumer business, higher 

speed improves experience. It makes everything real time and creates efficiencies across the board. 

We still as a country have to focus on our national broadband 

strategy and create incentives to upgrade our current infrastructure to next-generation broadband infrastructure and through the 

recommendations we have suggested through expensing and direct 

tax cuts. We believe that will stimulate that investment for these 

next-generation broadband networks for all consumers as well as 

small, medium and large businesses. We should not be satisfied 

with the current state of our broadband infrastructure. 

Chairwoman VELA ́ ZQUEZ. Well, we have to go to the floor, but let 

me thank all of you for your willingness to be here this morning. 

And I don’t have to remind you that, in all the discussion about 

this economic downturn, people need to understand that small 

businesses must have a seat at the table. If we want to get this 

economy back on track again, we need to create jobs. Those jobs 

36 

will be created by small businesses. So we are going to make this 

forum today part of a report that will be provided to the Democratic leadership and the new Members of Congress. 

So thank you again, and I look forward to working with you, and 

this forum is now adjourned. 

[Whereupon, at 12:10 p.m., the forum was adjourned.] 

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