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65–196 2011

PUTTING AMERICANS BACK TO WORK: THE 

STATE OF THE SMALL BUSINESS ECONOMY 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD 

FEBRUARY 16, 2011 

Small Business Committee Document Number 111–059 

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


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(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

ROSCOE BARTLETT, Maryland 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

CHUCK FLEISCHMANN, Tennessee 

JEFF LANDRY, Louisiana 

JAIME HERRERA BEUTLER, Washington 

ALLEN WEST, Florida 

RENEE ELLMERS, North Carolina 

JOE WALSH, Illinois 

LOU BARLETTA, Pennsylvania 

RICHARD HANNA, New York 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

MARK CRITZ, Pennsylvania 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

JUDY CHU, California 

DAVID CICILLINE, Rhode Island 

CEDRIC RICHMOND, Louisiana 

GARY PETERS, Michigan 

BILL OWENS, New York 

BILL KEATING, Massachusetts 

LORI SALLEY, Staff Director 

PAUL SASS, Staff Director 

BARRY PINELES, General Counsel 

MICHAEL DAY, Minority Staff Directory 


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C O N T E N T S 

Opening Statements: 

Graves, Hon. Sam ............................................................................................. 1 

Vela ́zquez, Hon. Nydia M. ............................................................................... 2 

WITNESSES 

Frank, Ms. Terry, Owner, Nature’s Marketplace, Oak Ridge, TN ...................... 21 

Kolditz, Ms. Dixie, Owner, Open-Box Creations, Cathlament, WA .................... 35 

Phelan, Mr. William, President and Co-Founder, PayNet, Inc., Skokie, IL ....... 4 

Feinberg, Mr. Bill, President, Allied Kitchen and Bath, Ft. Lauderdale, FL. 

On behalf of the U.S. Chamber of Commerce .................................................... 26 

APPENDIX 

Prepared Statements: 

Frank, Ms. Terry, Owner, Nature’s Marketplace, Oak Ridge, TN ............... 23 

Kolditz, Ms. Dixie, Owner, Open-Box Creations, Cathlament, WA ............. 38 

Phelan, Mr. William, President and Co-Founder, PayNet, Inc., Skokie, 

IL .................................................................................................................... 7 

Feinberg, Mr. Bill, President, Allied Kitchen and Bath, Ft. Lauderdale, 

FL. On behalf of the U.S. Chamber of Commerce ...................................... 29 

Statements for the Record: 

Associated Builders and Contractors, Inc. ..................................................... 60 


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PUTTING AMERICANS BACK TO WORK: 

THE STATE OF THE SMALL BUSINESS 

ECONOMY 

WEDNESDAY, FEBRUARY 16, 2011 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 1:03 p.m., in Room 

2360, Rayburn House Office Building. Hon. Sam Graves [chairman 

of the Committee] presiding. 

Present: Representatives Graves, Coffman, Ellmers, Herrera 

Beutler, Fleischmann, Landry, Tipton, Walsh, West, Vela ́zquez, 

Clarke, Cicilline, and Richmond. 

Chairman GRAVES. I will call this hearing to order. 

We obviously have a series of votes that just started and it is 

going to take a little bit of time to get through those. What I 

thought we would do is myself and the ranking member will give 

our opening statements and we will recess for the period of time 

that we have our votes and then we will come back and take the 

testimony from the witnesses. But I want to thank everybody for 

being here today, particularly the witnesses. Obviously, you have 

come from a long way and I appreciate that very much. And today 

we are going to be listening to testimony on specific tax, regulatory 

and health care policies that inhibit job creation and economic 

growth. 

Running small businesses in a prosperous economic time is hard 

enough, but during an economic downturn entrepreneurs face even 

more challenges. When meeting Friday’s payroll becomes the most 

pressing concern, it is unlikely that small business owners can 

dedicate the necessary time and resources to expanding their businesses and creating jobs. Even though there have been recent signs 

that our economy is starting to improve, our recovery from this recession remains erratic at best. As we have said many times before, 

small businesses need certainty to plan for not only the next day 

but also for the next month and the next year. 

The National Small Business Association recently released its 

2010 Year-End Economic Report in which small business owners 

ranked the top issues that they believe Congress and the administration should address. Traditional issues like lowering the tax 

burden, reigning in health care costs and reducing the regulatory 

burden still reign supreme, outpaced only by the demand that Congress and the administration take the steps to reduce the national 

deficit. 


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Let us take a moment to talk about one of small business owners’ 

longtime concerns, the sheer magnitude and complexity of the tax 

code. Entrepreneurs, many of whom have limited resources, are 

forced to spend their time attempting to comply with the tax obligations instead of growing their businesses. According to the IRS 

itself, today’s tax code has ballooned to 3.8 million words. That is 

nearly three times larger than it was in 2001. Small business owners have long been concerned about the costs involved in providing 

quality health care coverage for their employees, and for the last 

10 years job-based health insurance costs have substantially outpaced inflation and wage increases. The Kaiser Family Foundation 

reports that the average cost of a family premium for employersponsored health insurance increased 114 percent between 2000 

and 2010. Only 68 percent of businesses with fewer than 200 employees were able to afford or offer these health care benefits in 

2010, and the outlook is even worse for the smallest firms that employ three to nine people. Only 59 percent of those firms were able 

to afford benefits. 

And since the new health care law passed last year, I have heard 

from countless small business owners in my district and right here 

in this Committee room that not only will this new law fail to provide them with health care benefits for their employees, but it will 

cost them or could put them out of business. 

As we try to encourage a lasting economic recovery, we must also 

address the problems that small businesses face due to harmful 

federal regulation. According to the SBA’s Office of Advocacy, the 

annual cost of federal regulation in the United States increased to 

more than $1.7 trillion in 2008. And the Office of Advocacy also reports that small businesses face an annual regulatory cost of over 

$10,000 per employee, which is 36 percent higher than the cost facing larger firms. As more federal regulations are created daily, it 

has become next to impossible for small business owners to keep 

track of the associated costs and paperwork. Recognizing our economy and rekindling the American spirit of entrepreneurship must 

be the central focus of the 2012 Congress. Small business owners 

who create the majority of new jobs need a government that will 

work with them and not against them to put our nation back on 

the path to prosperity. 

My colleagues on the House Small Business Committee and I are 

listening to the concerns out there and are ready to get to work to 

put an end to the devastating uncertainty that has plagued entrepreneurs for far too long. So again I appreciate everybody being 

here. I look forward to your testimony. I will now turn to the ranking member for her opening statement. 

Ms. VELA ́ ZQUEZ. Thank you, Chairman Graves. 

Since the financial crisis, this Committee has been closely following the health of the small business sector. This has included 

holding hearings here and throughout the country, as well as addressing the problems we found through legislation. Now the economy has begun to grow again and the recovery is on the way. However, it is clear that there is a long way to go and we are still 

struggling on many fronts. This hearing will help us understand 

how much the small business economy has changed and what, if 

anything, we should do here in Congress to address it. 


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This recovery started in mid-2009, and according to the Federal 

Reserve appears to now be strengthening. GDP has grown for six 

consecutive quarters and exceeds the 2007 end of year pick. Today, 

the U.S. economy is larger than ever, and consumer spending was 

growing at an annual rate of 4.4 percent for the last quarter of 

2010. As a result, many small businesses are more optimistic than 

they have been in a long time. This newfound confidence is seen 

in the most recent NFIB Optimism Index, which is at its highest 

point since December 2007. 

Surveys by NSBA and Gallop also show that small business confidence was increasing. Small firms are also finding easier credit 

conditions as confirmed by both the Federal Reserve and the Thomson-Reuters PayNet Small Business Lending Index, which we will 

hear about today. This is a very positive development since small 

businesses have been all but locked out of the capital markets for 

a long time. This positive news is tempered by the challenges we 

see in the labor market. With losses of more than eight million jobs 

in 2008 and 2009, the four consecutive months of positive job creation we have seen are simply not enough. The unemployment rate 

has declined significantly but we are still not seeing the level of 

employment gains we need to achieve a full recovery. 

According to research, small firms have shed jobs at a more rapid 

pace than larger firms. In addition, they have chosen not to add 

employees even though they need it citing the uncertainty they face 

about sales revenues and cash flows as the top reasons for not 

doing so. This issue, job creation, is the most important facing Congress today and small businesses are instrumental to the solution. 

Responsible for generating 64 percent of net new jobs over the last 

15 years, small firms have typically driven employment gains after 

recessionary periods. We saw this in the early 1990s and again in 

2001. It is important that while we seek to encourage entrepreneurship of all types, we focus on businesses that tend to dramatically increase job creation. These are high growth firms, typically 

undertaking a market opportunity rather than out of necessity. 

Such firms need plentiful capital, the ability to access a highly 

skilled workforce, and a business environment conducive to risk 

taking. They can grow in size rapidly and in doing so can add tens 

or even hundreds of employees in the course of months. 

With that said, small businesses of all sizes and stripes remain 

absolutely critical to our economic health. During today’s proceedings I am looking forward to hearing both anecdotal accounts 

as well as empirical evidence about the state of the economy and 

its impact on small firms. By doing so this Committee can identify 

the bright spots, as well as where entrepreneurs are facing the 

greatest challenges. As a result, we will be better informed as we 

try to tailor policy solutions regarding these problems. 

In advance of the testimony I also want to thank all the witnesses who travel here today for both their participation and insight into this important topic. And with that I yield back. Thank 

you, Mr. Chairman. 

Chairman GRAVES. We will go ahead and recess for whatever 

amount of time it takes to go through the votes and we will be back 

right after that. Again, I apologize for the inconvenience. We do not 


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always know when votes are going to be so the Committee is in recess for however long it takes. 

[Recess.] 

Chairman GRAVES. We will call this hearing back to order. And 

I would like to explain the light system. When you give your testimony you have got five minutes and the light will be green. When 

you are down to one minute left it will go yellow and then red 

when time is up. If you go over a little bit I am not going to break 

anybody’s arm but we want to try to keep it to five minutes. 

And now I will turn to the ranking member to introduce our first 

witness. 

STATEMENTS OF WILLIAM PHELAN, PRESIDENT, PAYNET; 

TERRY FRANK, OWNER, NATURE’S MARKETPLACE; WILLIAM 

FEINBERG, PRESIDENT, ALLIED KITCHEN AND BATH; DIXIE 

KOLDITZ, OWNER, OPEN-BOX CREATIONS 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Our first witness is Mr. William Phelan. He is president and cofounder of PayNet, a provider of risk management tools and market insight to the commercial credit industry. As president, Mr. 

Phelan has grown PayNet into a firm with the largest collection of 

commercial loans and leases encompassing more than 17 million 

contracts worth $100 billion in loan value. Under his direction, Mr. 

Phelan overseas the sales, marketing, analytics, and information 

technology functions of the business. Welcome. 

STATEMENT OF WILLIAM PHELAN 

Mr. PHELAN. Thank you. Good afternoon, Mr. Chairman, members of the Committee. Thank you for that introduction. 

PayNet is based in Skokie, Illinois. I appreciate the opportunity 

to speak today on behalf of PayNet, which provides the information 

that the Congresswoman alluded to. My role today is to help you 

with insights into the state of the small business economy with 

quantifiable data, trends, and analysis. 

As you alluded to, PayNet has the largest database of small business loans in the country at this point. Access to this small business credit information increases access to capital for small businesses. It spurs economic growth, jobs, and it significantly reduces 

the cost of doing business. 

I think the perplexing aspect of the small business economy is 

not its importance to the U.S. economy. The perplexing aspect is 

how little we know about small business. Limited information 

hinders the ability of bodies such as this Committee to create policies that can help small businesses. I applaud your efforts to better 

understand the small business economy. In doing so, to create policies that promote small business. 

The Thomson-Reuters PayNet Small Business Lending Index 

measures new borrowing activity on millions of U.S. small companies and it serves as a leading economic indicator. The index declined from a peak of 131 in January 2007 to 66 by May of 2009. 

This is a fall of approximately 50 percent. This index allows us to 

calculate the demand for credit by factoring in credit approval 

rates. When we do that, we can see that the credit approval rates, 

in other words the demand for credit from small businesses, actuVerDate Mar 15 2010 20:51 Mar 31, 2011 Jkt 065196 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 E:\HR\OC\A196.XXX A196

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ally fell during that same timeframe. It fell from an index of 176 

down to 103 by May of 2009. There certainly are cases of small 

businesses being cut off by their bank, but from just a pure demand standpoint it appears like the credit applications have declined during that timeframe based on the data that PayNet has. 

For the broader small business economy, it is clear that lower applications are this indication of falling demand for credit. At the 

same time, the banking system’s reserves were expanding by a factor of 1,800 percent. Even though businesses are beginning to borrow more and are finding it easier to pay their bills, small business 

owners are not yet ready to declare victory over the recession. The 

index as of December 2010 confirms the recovery in small businesses is gaining and it is starting to get on solid financial footing. 

The construction industry increased more than any other sector 

last month as those companies began to borrow more money. The 

transportation, health care, and farms all expanded borrowings 

during that same timeframe. Surprisingly, the professional services 

companies that we track showed borrowings were flat over that 

timeframe. 

The sobering facts about the economy remain before us. We have 

high unemployment. We have improving but still very low consumer confidence. We have modest income growth. Another sobering fact. The index is still six percent below its 2005 levels when 

it began. So we are still below at this point the level that the index 

was at in 2005. And that was six years ago. 

Most small businesses are dependent upon domestic demand and 

they often lack the resources to deal with trade barriers and tariffs, 

and they are shut out of the booming growth in emerging economies. This 20 percent uptick that we reported last month in the 

index may prove to be illusory as well. In speaking anecdotally 

with a major seller of equipment, we found that much of the buying 

was to replace old worn out equipment, rather than to invest in 

growth. 

Additionally, many of these companies took advantage of the 

year-end tax credit to realize that benefit for their organizations. 

When you consider the effects of the recession, the small business 

owner’s survival is a testimony to the resilience and their grit. 

Their demand for their products and services in many cases 

cratered. The regulations increased. Uncertainty abounded and 

payment terms extended to beyond 60 days. Yet the small business 

owner managed to not only stay afloat but to reach solid financial 

footing. Loan delinquencies are down to 2.45 percent. These are 

levels not seen since 2006. Loan delinquencies have decreased 43 

percent over the last year for small business loans, and that is the 

largest year over year decrease on record. 

I think transition is the best way to describe the small business 

economy. Rising regulatory costs, high taxes, technological change, 

an increased competition are small businesses to seek more efficient and sustainable ways to do business. We are seeing a definitive recovery start to emerge in small businesses. However, market 

conditions, such as these regulatory costs, health insurance regulations, fewer markets for products. These present challenges to 

growth and even survival still for small businesses. The recession 

has forced many small businesses to get leaner and smarter. They 


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have introduced technology to cut costs, to increase productivity, 

but unfortunately, that is resulted in fewer jobs. The trick will be 

to help these unemployed workers acquire skills for the jobs of the 

future. 

Unknown future costs for regulations, health care and taxes 

heightened the uncertainty for the small businesses. Cash hoarding 

is the best indicator of the uncertainty that small businesses are 

feeling right now. Businesses are building cash to levels not seen 

since 1963. They are doing that rather than spending, borrowing, 

and hiring employees. Removing that uncertainty where it exists 

will go far towards encouraging businesses to spend, borrow, or 

hire, which in the long run will assist to create jobs and further 

economic growth. 

Thank you, Mr. Chairman , and members of the Committee for 

the opportunity to address you today. I offer to present further 

analysis and data for your use if you so wish. 

[The statement of Mr. Phelan follows:] 


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Chairman GRAVES. Thank you, Mr. Phelan. Next I will turn to 

or yield to the gentleman from Tennessee for the introduction of his 

witnesses. 

Mr. FLEISCHMANN. Our next witness today is Ms. Terry Frank. 

Ms. Frank is the owner of Nature’s Marketplace in Oakridge, Tennessee. Ms. Frank is a graduate of Middle Tennessee State University and is also a current board member of the Anderson County 

Economic Development Association. Ms. Frank took a bold step and 

opened her own small business in 1993. Ever since that time she 

has faced the problem millions of hardworking Americans face 

every year. Oppressive taxation and regulations that threaten the 

livelihood of small business owners. 

Ms. Frank’s perspective on small business issues is more than 

welcome, and we thank you for taking time out of your busy schedule to come be with us today. Ms. Frank. 

STATEMENT OF TERRY FRANK 

Ms. FRANK. Thank you. Chairman Graves, Representative 

Vela ́zquez, Representative Fleischmann, members of the Committee, thank you for the opportunity to testify. 

Nearly 20 years ago my husband and I sought the American 

dream of owning our own business. With very little capital we 

opened a produce market and eventually expanded into a busy 

market with gifts and an eatery where we prepared sandwiches 

and soups and baked deserts. 

We love our small business and the blessings of home ownership 

it has afforded us, not to mention that we were able to raise our 

three sons alongside us, much to the amusement and fondness of 

many customers. My oldest son is now attending College at the 

University of the South at Sewanee on Presidential Scholarship. 

Our second son has been accepted to Yale, and our youngest son 

is a fifth grader at St. Mary’s School in Oakridge. 

Our customers and our employees have taken part in the shaping of these fine young men. One of my favorite quotes is from Patrick Henry, ‘‘I have but one lamp by which my feet are guided, and 

that is the lamp of experience.’’ My experience of owning our own 

business has been one of great commitment, numerous sacrifices, 

and the foregoing of many pleasures for the opposability of feature 

reward. Many of those experiences have been rewarding; others 

frustrating. I often wonder if it is not easier to just work for someone else than it is to navigate the tax code. 

Engaging in commerce should allow for the simple reporting of 

profit or income. It should be so simple that any producer should 

be able to be a good citizen and comply with the law. But as it 

stands, even with a college degree, I have been utterly lost on 

many occasions. The tax code is a maze of fiddles. A game for those 

who seek to find the loopholes for the sophisticated to work various 

formulas in order to pay less to Uncle Sam. 

Until four years ago I performed all of our taxes myself with a 

tax program until I finally relented and started paying a CPA. 

Time is money and money is time, and the U.S. Government robs 

the small business community and its own coffers of potential revenue by eating up hours of time in bookkeeping, reporting, and 

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sidering can be a full-time job itself. The 1099 requirement that 

you discussed in this Committee here last week would only add to 

that nightmare. 

The tax code should be so simple that it actually serves as an 

incentive to bringing more people into the ranks of small business. 

Instead, it stands as an intimidating obstacle. My husband and I 

depend on a network of other small businesses to produce our 

goods. Every element of our business network shares a sense that 

we are viewed as, well by government as cows to be milked. We 

sense that we viewed as exploiters of people. I speak not just for 

myself. I discussed my testimony with many friends. Our profits, 

if we have any, are not windfalls. They are produced by our hard 

work. Our risk taking and ingenuity. Profits are not something 

nasty to be punished and taken and given to someone else. 

The small business community and the great middle class of 

which it is part currently are carrying more than their fair share 

of the tax load. Congress should not remove dollars from the economy and reinject them in a so-called stimulus game of picking the 

winners. Small businesses should be allowed to keep more of what 

we earn. When we do, we give our economy and the federal tax coffers a better return on our investment and we can provide more 

jobs to others. 

I will close by calling for a simple solution to growing the small 

business community. Truly reform the tax code. Do not micromanage us and let us keep more of our hard earned profits. But 

specifically, I call for a far better tax code. The Fair Tax HR–25 

taxes consumption instead of earned income so it does not punish 

initiative. A flat tax sounds simpler but the fine print could wind 

up hurting small business if we cannot deduct our operating costs. 

Federal policy itself promotes distrust and resentment. It puts we, 

the people, against government and neighbor against neighbor as 

a prevailing sense of unfairness festers and then divides us. 

We need a stable dollar and tax and monetary policy that does 

not intentionally hurt small business. Monetary policy of the Federal Reserve purposely manipulates the dollar’s value and interest 

rates. Such policy has served to dry up lines of credit and loans to 

small businesses of my friends and even to me personally. Small 

businesses cannot thrive and provide general prosperity so long as 

it is oppressed by federal policies designed to serve the interest of 

Wall Street financiers. We need cheap and affordable energy in the 

operation of our businesses and most importantly, we need the stability that comes with an end to micromanagement of small business. There can be no growth when business owners like me are 

constantly fearing what lies around the corner. 

Thank you for hearing my views today. 

[The statement of Terry Frank follows:] 


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Chairman GRAVES. Thank you very much, Ms. Frank. I will next 

turn to the Gentleman from Florida, Mr. West, for the introduction 

of his witness. 

Mr. WEST. Thank you, Mr. Chairman and Madam Ranking Member. 

Our next witness is Mr. William Feinberg, president of Allied 

Kitchen and Bath in Fort Lauderdale, Florida. He founded his company along with his brother Joe in 1984. Bill is currently a member 

of several industry trade associations, including the National 

Kitchen and Bath Association, and he serves on the Board of Directors of the Fort Lauderdale Chamber of Commerce. Mr. Feinberg 

is testifying on behalf of the United States Chamber of Commerce 

today, the world’s largest business federation representing the interests of more than three million nationwide businesses, as well 

as state and local chambers and industry associations. 

Welcome, Mr. Feinberg. You have five minutes to present your 

testimony. 

STATEMENT OF WILLIAM FEINBERG 

Mr. FEINBERG. Thank you. Chairman Graves, Ranking Member 

Vela ́zquez, and distinguished members of the Committee, thank 

you for asking me to testify before you today on the state of the 

small business in our nation with a specific focus on the issue of 

health care. My name is Bill Feinberg and I am president of Allied 

Kitchen and Bath, which is located in Fort Lauderdale, Florida. I 

am here to speak to you today on behalf of the U.S. Chamber of 

Commerce. 

In 1984, my brother Joe and I founded Allied Kitchen and Bath 

in Fort Lauderdale, Florida. Our two other brothers, David and 

Rob, also joined and worked for the company, making it truly a 

family business. We take great pride in having earned an outstanding reputation in our community. In early 2007, my brother 

and I pursued our dream to expand our company. We obtained financing which enabled us to tear down our old facility and build 

a new two-story, first-class, 15,000 square foot showroom. We literally invested not only our life savings but also our reputation. At 

times we wondered whether we could survive. 

We are continually optimistic about the future but this is not to 

say that things are easy or that we are achieving the level of financial stability and security which we had anticipated prior to this 

economic downturn. We know that achieving our goal of exceptional customer service and satisfaction is only possible through 

our staff members. In fact, many of our staff have been with our 

firm for more than 15 years now. At this time, I have 35 full-time 

employees, as well as a few part-time employees and others that 

we use on a subcontract basis. At the peak of my business we employed about 45 people. 

With the severe economic downturn, especially in the building 

sector in Florida, we tried our best not to lay off anyone. Myself 

and brother as co-owners personally sacrificed everything. We cut 

our inventory, we tightened our belts in every way, trying to meet 

cash flow needs while waiting for business to pick up and consumer 

confidence to return. Ultimately, we were forced to lay off people. 

To be blunt, it has been a struggle, and at times we have been 


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hanging on just by a thread. I believe things are slowly getting better, but even as the economy seems to inch toward recovery, businesses like mine have to worry about new laws, new regulations, 

new challenges created for us by Congress. 

Allied is a very good business on a sound financial footing but 

we are not flush with cash. As far as health care and health insurance goes, we continue to believe, as we always have, that offering 

health insurance to our employees is a valuable benefit. It is also 

critical to obtaining new employees and retaining the existing ones 

that we have. Right now Allied offers a Blue Cross Blue Shield 

PPO plan to all of our employees. We pay 50 percent of the premium. Every year we pay more and more money but we get less 

coverage. Last year we got a 20 percent premium increase. This 

year it would have been worse. We were able to keep our increase 

to 20 percent by raising the plan deductible from $500 to $1,500 

per person. I would like to keep offering health insurance to my 

employees, and I would like Allied to continue to grow and be able 

to create jobs and prosper. However, with the new health care law 

it is making it much harder for us. I know that some of our premium increases are due to the new rules in the health care law. 

We have less leeway in how we can control costs by changing plan 

design and it makes it harder to afford insurance. 

I am hopeful that in the next few years Allied will grow again 

and be in a position to have 50 employees at a minimum but I 

know that in 2014 the new employer mandate starts. The mandates says an employer with 50 or more employees must offer government-approved health insurance or pay steep fines. Is this the 

message Congress meant to send to businesses like mine? Would 

not incentives, rather than penalties, have been a better way forward? Unfortunately, there is no way I will be able to hire a 50th 

employee once this mandate kicks in, at least as I understand it. 

Hey, I am just a kitchen guy. Apparently, if I have 50 or more employees and I do offer health insurance I will face steep fines because of the complicated formula in the new law that lets the employees opt out of our health insurance plan, receive a government 

subsidy, and fine the company $3,000 each time this happens. How 

can this make any sense? It simply does not. The uncertainty 

caused by just the employer mandate alone can hardly be emphasized enough. I hope Congress will repair this provision as soon as 

possible regardless of the plans to repeal the full health care law. 

I was hoping that health care reform would mean more competition, lower costs, better quality care. I do not see how the health 

care law will achieve any of that though. Plenty of common sense 

ideas that would help small businesses like mine were just left out. 

The law did not include the meaningful medical liability reform. It 

does not give Allied the opportunity to buy health insurance from 

companies outside Florida and it does not allow Allied to freely 

band together with other small businesses to get better rates on insurance or form reinsurance pools. It does not even fix the problem 

of cost shifting where low payments by Medicare or Medicaid providers translates to a higher insurance cost for small businesses. 

I hope this Congress will take a serious look at the policy changes 

and help lower health care costs for businesses like Allied so it can 

keep offering the benefits our employees so value. 


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In conclusion, we are hopeful that we have weathered the worse 

of this economic storm. We are cautiously optimistic about the future. That being said, this uncertainty being generated in Washington, D.C. by a dizzying array of unanswered questions about 

health care, taxes, energy, and regulations impacts our decisions 

and hampers our ability to effectively plan for the future. We need 

answers. We need clarity. Perhaps most importantly we need these 

issues to be resolved in a manner that encourages entrepreneurism, investment, and job creation. I am a business owner and the 

livelihood of my employees and their families depends on the decisions I make. I say this similarly. The decisions that you make as 

members of Congress have a direct impact on my business and my 

employees. I hope that you would ask that you continually be 

mindful of this reality as you consider the weighty issues facing our 

nation. Please, invest in small business and help us. Work with us, 

not against us. And we will create the jobs necessary to put Americans back to work. 

Thank you for this opportunity to testify, and I will look forward 

to your questions. 

[The statement of William Feinberg follows:] 


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Chairman GRAVES. Thank you. And I will now yield to the 

Gentlelady from Washington, Ms. Herrera Beutler. 

Ms. HERRERA BEUTLER. Thank you, Mr. Chairman. 

And it is my honor today to introduce to you all Dixie Kolditz. 

She and her husband, who is in the back corner with their little 

one asleep, co-own two businesses, Open-Box Creations, a wholesale home de ́cor company, and also an agency that provides care 

for developmentally disabled adults. Dixie is here today to talk specifically about Open-Box Creations, which is located in the small 

town of Cathlamet, which is in the middle of my district in southwest Washington, the region I represent. 

I was meeting with employers across my district a few weeks ago 

and had the pleasure of reconnecting with Dixie and her husband 

on that trip. And to me she represents all that is great about 

America and the American dream, and she is going to tell you 

about that. She was raised in South Africa, came to the United 

States to attend college, and it was there that she majored in public relations and journalism, and also met her husband and future 

business partner, Ross. She came to the U.S. in ’95 and became an 

American citizen in 2004, and is now the mother of seven children 

and the owner of two businesses that employ more than 150 people. Only in America. Now Dixie is facing a set of challenges that 

make it extremely difficult to continue as a small business owner, 

and rather than have me recount those challenges to you I am 

going to turn it over to an expert witness who knows firsthand the 

difficulties that small businesses are facing today. 

STATEMENT OF DIXIE KOLDITZ 

Ms. KOLDITZ. Thank you, Mr. Chairman and members of the 

Committee. 

I am going to talk about regulations. And we deal with this when 

we bring in our containers, which is our shipments that come in 

from Thailand. Our products are handmade, the flowers and the 

vases. And what happens is when the containers come in they get 

delayed by Customs. And that becomes really hard because it adds 

more fees to what we are bringing in. And so what we found—so 

I am going to just read some of the stuff that we have that has 

been happening. I will relate this with the container that we just 

recently received. 

Most of our containers when they come in we fill out an ISF 

form, which is an Import Security Filing form. And this form, it 

just tells everything that is on the container. And what happens is 

now Customs requires that we file this form before the container 

leaves the country of origin. Now this becomes really hard because 

the shipping company cannot give us the information two to three 

days before the container leaves. And we understand that Homeland Security is very important. However, before the economy took 

a downturn, our containers were not scanned as often as they are 

right now. And we have agreed that the Customs’ scans and inspections were indeed random. Now all our shipments are scanned or 

inspected at our expense every single time. It feels like a government moneymaking scheme. The fees are higher than our labor 

cost to load and unload. It seems that because they are not footing 

the bill they do not care how long it takes and they can even use 


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whatever facility that is convenient to them, even if it means taking containers that have been trucked to Portland, Oregon, our 

home shipping port from San Francisco, back to San Francisco and 

then back to Portland to be scanned. This just adds more fees. Why 

do we then have to pay for their inefficiencies. There has to be 

ways that they can be accountable to us or share the expenses. 

Maybe then they will work faster, efficiently, and cost effectively. 

When we receive the shipment, normally I pay about $350 when 

they scan my product every single time; $150 of it for the delays 

and $150 of it that goes to Customs for them scanning it. Now my 

bill was about $822, which is a little bit double, almost triple what 

I have paid before. With the ISF form, if we do not fill—the new 

rule that they just enacted is that if we do not fill this we will be 

penalized about $5,000 which is a lot of money for most of us. And 

like I said, we cannot control how we can get the information from 

the shipping companies. So when they add these things it just adds 

more and more things that we have to deal with. Also, when we 

bring in our containers, most of our product, like I said, they are 

handmade. It is something that is not produced in the U.S. We now 

have to pay duties and this is done through the general—it is 

called the GSP, which is the Generalized System Preference. Now, 

with the GSP, this is something that the government started a couple of years, in 1976, to help developing countries so that they can 

be able to sell their products to the U.S. Now with this system, now 

all of our products we now have to pay duties when we never used 

to pay duties. I had to pay over $800 on our products and I have 

got several containers that are coming in. And when they do this 

it just adds more and more fees. I am not complaining about the 

fees, it is just the fact that we are getting fees from all different 

directions, and the more fees you add, the more I cannot make 

profit. And if I can make a profit I can employ more people, which 

is really, really hard. And I know that the generalized system is 

being worked on so that it can be renewed, but if it is not renewed 

it is now a new tax. It might not be called a tax but I think it is. 

One of the other things is, if you put less regulations, what that 

does is that it gives a company like mine, a small business, to be 

able to work with a big company. We now have an opportunity that 

we get to work with Costco, which one of my friends called Costly. 

It is like David working with Goliath. Now, if you add more regulation, I cannot have that opportunity. What we now have is that I 

can sell my products through Costco instead of them. You know 

how everybody says that the big company kicks out the mom and 

pop shops? Now they are bringing us in which helps us so that we 

can hire more people and they also can employ more people. So this 

is a system where we are now working together. We are having a 

mutually beneficial system. 

So I say do not regulate us. Do not overregulate us. Give us some 

rules. We expect some rules, and we are fine with having a few 

rules here and there so that we can all work together. But the 

more you get into giving us so many rules, you are taking away 

our opportunities to give. And I also think that we have also been 

vilified. We are being told that we want to make profits all the 

time. Profits, there is nothing wrong about having profits. That is 


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part of the American dream, is that we can reach, we can achieve 

anything, and at the same time create jobs. 

So I say less regulation. Give us the opportunity so that we can 

partner with you and create more jobs. I am thankful for this opportunity and I hope that I was able to give you some information 

that could be useful. Thank you. 

[The statement of Dixie Kolditz follows:] 


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Chairman GRAVES. Thank you very much. Now we will move to 

questions, which I have a question for Mr. Phelan. You mentioned 

the credit market is thawing a little bit. I am just curious where 

you are seeing the majority of that—small banks, larger banks, 

lending institutions? And I would also be particularly interested in 

where you are seeing that directed—lines of credit or is it more on 

new business startups, that sort of thing? 

Mr. PHELAN. So the question is are we seeing the credit approval 

rates increase in different types of institutions, whether it is a 

bank or independent finance business, a large bank or a small 

bank. 

Chairman GRAVES. Where are you seeing it most, large banks or 

small? 

Mr. PHELAN. Yeah. Yeah. And I think we—to be honest with you 

on the data side, we have not drilled into the data to that kind of 

degree of specificity to be able to tell you that. We can tell you that 

most of the data that we collect, on the credit approval side, is from 

the larger institutions. And so I think it is representative more of 

the larger institutions that where we are seeing just the credit approval rates increase from a very low point in May of 2009 to not 

quite to pre-recessionary levels but it has certainly gotten much 

closer to where it was before the recession. 

Chairman GRAVES. Are you seeing that more—we were hearing 

a lot about lines of credit being, you know, either banks were requiring more equity for the same line of credit or they are just reducing their line of credit for the same equity that they had put 

up. Are you seeing that loosening up just a little bit? 

Mr. PHELAN. Again, I apologize. We have not studied in that kind 

of depth. We could do that for you if that is something you are interested in. We do know overall though that the credit applications 

are increasing. The credit approval rates are increasing. But I do 

not have—I was not prepared with that kind of depth of detail. I 

could provide that to you at some further point. 

Chairman GRAVES. If you could I would appreciate it. 

Mr. PHELAN. Sure. I could do that. 

Chairman GRAVES. I know we have a lot of questions out there 

so I will go ahead and turn to the ranking member. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Mr. Phelan, you noted that the Small Business Lending Index 

has increased 20 percent between December 2009 and December 

2010. What do you attribute that to? 

Mr. PHELAN. Well, the approval rates have increased so we know 

that there is more credit being granted and we can see that in the 

data, so that’s one aspect of it. We really see three drivers as the 

reason for the change year over year. One is we think the economy 

is getting a little bit better. It is not certainly completely healed 

but we do see elements of the economy improving. Secondly, at 

some point some of this property plant and equipment just wears 

out and you have to replace it so there is replacement investment 

going on. Then thirdly, I think companies were taking advantage 

of some of the year-end tax credits that were available. So it’s really a combination of those three where there is some investment 

growth occurring, there is replacement investment just to replace 

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tainly some taking advantage of year-end type opportunities in the 

tax structure. 

Ms. VELA ́ ZQUEZ. What about the federal stimulus? Did it play 

any positive role? 

Mr. PHELAN. We have no way to track exactly what credit is 

being attributed to the stimulus and as you can imagine that would 

be a very complicated project. I can tell you though that the construction companies, we’ve seen certainly some improvement in 

their borrowing patterns and that was probably the largest jump 

that we saw last month in December was among construction companies. 

Ms. VELA ́ ZQUEZ. The housing tax credit was included, $7,500, and then increased to $8,000, will that have any impact on the construction side for first-time buyers? 

Mr. PHELAN. I really can’t answer that question with that kind 

of specificity, but I can tell you in the data that we have seen construction companies start to borrow more money and become more 

active. 

Ms. VELA ́ ZQUEZ. Much of the turmoil in the economy can be tied 

to the decline in real estate prices and real estate represents the 

single largest source of collateral for small-business lending loans. 

Do you believe that the declines in real estate prices are continuing 

to hamper business lending? 

Mr. PHELAN. Again I have anecdotal information on that. I don’t 

have data-driven information at my fingertips, but I think that certainly any kind of collateral that is being used to secure a loan 

would certainly impact the degree to which the financing available. 

There is no question about it. But I do not have empirical data to 

tell us whether it’s gone down 20 percent or 10 percent or whatever 

the number is. 

Ms. VELA ́ ZQUEZ. Mr. Feinberg, we have spent a lot of time talking about health care reform and insurance companies used to be 

able to cap benefits meaning that once that cap was reached, individuals will be forced to pay their medical bills themselves. As 

someone who employs over 100 employees—— 

Mr. FEINBERG. No, no, no, 35. 

Ms. VELA ́ ZQUEZ. Thirty-five. And you provide health insurance? 

Mr. FEINBERG. Yes. 

Ms. VELA ́ ZQUEZ. Should insurance companies be able to cut off 

benefits if an employee of yours gets extremely ill and goes over 

their cap even though you are paying for their health insurance? 

Mr. FEINBERG. I can’t say whether or not the insurance company 

should do that and I think as a small-business owner I’m—— 

Ms. VELA ́ ZQUEZ. No, my question is do you think it is fair that 

you the employer pays health insurance for your employees and if 

it is fair that once that employee reaches the cap imposed by the 

insurance company that the benefits will be cut off where you are 

the one paying the insurance? 

Mr. FEINBERG. I don’t think that is fair and I think that it’s important that as an employer that we are offered incentives. 

Ms. VELA ́ ZQUEZ. So we agree. 

Mr. FEINBERG. I don’t know that we agree, but I know that I’m 

not an expert. 

Ms. VELA ́ ZQUEZ. That it is not fair. 


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Mr. FEINBERG. I am not an expert on health care and I think it 

is up to you the lawmakers to decide. And I’m not saying that the 

bill needs to be repealed completely either. There are good parts of 

the bill and there are also bad parts. As a business owner my job 

is to grow my business. That is what I am looking to do, create jobs 

and grow my business. I cannot possibly grow my business if I 

have all these mandates put on me. 

Ms. VELA ́ ZQUEZ. My question if I were fair or not once a person 

gets sick and reaches the cap of those benefits that the insurance 

company even though you are paying those benefits, that they will 

cut it off. Ms. Kolditz, in this Committee we have worked in a bipartisan way to deal with the issue of regulatory burden on small 

businesses and we do know the burden that it imposes on small 

businesses and many entrepreneurs simply do not have access to 

the complying resources that their larger competitors do. 

Ms. KOLDITZ. Yes. 

Ms. VELA ́ ZQUEZ. There is a national network of small-business 

development centers across the country and I know you’re from 

Florida. 

Ms. KOLDITZ. Washington State. 

Ms. VELA ́ ZQUEZ. Washington State, and I’m sure that in Washington State there are small-business development centers. Have 

you had any contact with those small-business development centers 

that provide technical assistance? 

Ms. KOLDITZ. No, not yet. 

Ms. VELA ́ ZQUEZ. That is a network created by the Small Business 

Administration and it would be great for you to check on those 

services that they provide so that they could help you sometimes 

deal with the issue of regulatory compliance. 

Ms. KOLDITZ. Right. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Chairman GRAVES. Mr. West, questions? 

Mr. WEST. Thank you, Mr. Chairman. On a positive note I’d like 

to ask the panel have there been instances where the Federal Government has been a good partner in helping you to expand your 

businesses outside of accessing capital? Anyone? Ferris Buehler? 

Anyone? 

Ms. FRANK. I will just say that I don’t really want help from Government. I think that is the point. I know Ms. Vela ́zquez addressed 

Dixie saying have you gone to the outreach center or the community—that is my story. I do not want any help. I want to contribute, I want to be a good citizen, I want to raise my family. That 

is not what Government should be about. There are a very few 

things I think Government should be about, national security, our 

roads, prisons, a very few limited things and I think Government 

has grown so much that that should not be the mindset of every 

business or elected official that ask your Government for help. I do 

not want help. 

Mr. FEINBERG. I think I also agree with Ms. Frank. I am a businessman. That is what I do best. I know how to work with my company and create jobs for the people around me. The more restrictions that are out on my company the less that I am able to operate. We already have so many regulations and laws that restrict 


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us. The mandates are just adding more to this. I know that as a 

business person I can create jobs. 

Mr. WEST. Can you give examples of some of these regulations 

or mandates that you are addressing? 

Mr. FEINBERG. With health care alone if I reach 50 employees 

that will stop me in my tracks from growing my business. There 

is no way that I can possibly hire more employees knowing that I 

will either face steep fines or have to pay these high rates or have 

to pay insurance for 50 employees. My job as a business person is 

to grow my company and the more that I see the Government get 

involved and regulate me the less I am able to do. The saying one 

size does not fit all is so true. It does not. I know how to do kitchens and bath remodeling. Let me do what I do best. I know how 

to create jobs in my community. I was on my way when the economy was strong. Now with the economy coming back, I think it 

could be done. I think that we are on a positive note right now 

where the economy is coming back and I do believe it is going to 

come back strong. But again allow me to do it the way that I think 

that I can grow my business. 

Ms. KOLDITZ. Actually I agree with that. One of the things that 

we deal with like I said is customs. One of the things is they just 

bill us. I cannot go to anybody and say why do I have this bill. I 

am just stuck with the bill. And when I speak with some of my colleagues and I ask them, even before I came here I called a couple 

of them to just find out how do you deal with this, they do not. 

That is just how it is is what everybody said which is really, really 

horrible, that you just give me a bill and just say pay $800 and I 

do not care, I just want you to pay for it and I have to pay for it 

because I want my product and I want to be able to run my business. And to respond to Ms. Vela ́zquez, we started this business 

without any assistance. We have been doing this for a while. And 

I think the fact that we are employing 150 employees means that 

we got to do this on our own two feet. We have been doing this for 

a while and most of us have started businesses and we are doing 

it. We are your partners. We are the ones that you should be saying what can we do? Right now you’re just putting bills and putting 

things in front of us. Take them away. I was saying to somebody 

it is like having kids. You have one child and you watch them like 

a hawk. By the time you have the seventh they can eat a stone 

that is iron. It is fine. Do the same thing. Just watch us and let 

us go and just see what you can do. You are still there to protect 

us. You are still there to guide us. But give us a little bit of space. 

Right now it feels like there is just too much love. 

Mr. WEST. Thank you, Mr. Chairman. I yield back. 

Chairman GRAVES. Mr. Cicilline. 

Mr. CICILLINE. Thank you, Mr. Chairman and thank you to the 

witnesses. I think we are all very interested in what we can do to 

make small business grow and to create more jobs. So I am interested in specifics because I understand the sort of feeling that you 

may have or some other businesses have of being overregulated 

and overburdened, but to be helpful in terms of how to address 

that, we sort of need to understand what the specifics are. I want 

to ask first Mr. Feinberg you talked about health insurance. You 


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are not currently required by the new legislation to provide health 

insurance but you do. 

Mr. FEINBERG. That is correct. 

Mr. CICILLINE. I presume you do that because you have decided 

that it is valuable to have employees who are healthy and well and 

can be more productive. 

Mr. FEINBERG. My employees are my partners. In other words, 

that is what grows my business. 

Mr. CICILLINE. And probably the most important asset in your 

business. 

Mr. FEINBERG. Absolutely. Without a doubt. 

Mr. CICILLINE. Do you think it is a good idea to actually be sure 

that we have a system in place that provides affordable health care 

to small businesses? 

Mr. FEINBERG. I cannot say whether or not. As a business owner 

I look at what is going to grow my business and knowing that I 

have to provide insurance, that limits me. It does not give me the 

flexibility as a business owner that I think is required to grow my 

business. 

Mr. CICILLINE. Though you have elected to provide health insurance without being required to? 

Mr. FEINBERG. But I provided—I pay 50 percent of my employees, but they can also opt out. 

Mr. CICILLINE. Has someone discussed with you the availability 

of the tax credit that you will be entitled to if you go beyond 50 

employees? Are you familiar with that? 

Mr. FEINBERG. No, I’m not familiar with it. And like I said, I am 

just a businessman. 

Mr. CICILLINE. The reason I asked that is because I think that 

it’s important that we also, that the SBA or whoever the relevant 

Federal agencies are, share that information with small businesses 

because the tax credit is designed to help small business and make 

the providing of health care affordable. So I think that is an important responsibility that we have to be sure small businesses get 

that information. Ms. Kolditz, thank you for being here. You are in 

the import business? 

Ms. KOLDITZ. Yes, I am. 

Mr. CICILLINE. The products that you are shipping here are made 

in? 

Ms. KOLDITZ. They are made in Thailand. 

Mr. CICILLINE. Of course when I was hearing your testimony 

about the difficulties of getting those containers here, the first 

thing I thought of is one of my passions. How do we find out how 

we can make whatever you are importing here in America made by 

American workers in American businesses. Is that something you 

have explored? 

Ms. KOLDITZ. Yes, we have. 

Mr. CICILLINE. Buying those products here from American companies that are employing Americans? 

Ms. KOLDITZ. The thing is our product, the material does not 

grow here naturally. It grows in Thailand in abundance and we 

have been looking at things that we can try to find here. Most of 

the things that you try to buy here are more expensive and that 

is one of the problems. And one of the things that raises the costs 


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is the fact that there is a rule that you have to pay your employees 

a certain amount of money. You are already regulated with how 

much you have to pay people so it makes it harder on what you 

can do. I get most of our florists locally to try to create something 

out of what we already have. Like what we are selling to Costco 

are predone arrangements. I have them done here in the U.S. so 

I get the raw material out of another company and I employ people 

here in the U.S. so that they can create what I now have. So not 

only are we now providing employment for people overseas, we are 

also providing people here with work. 

Mr. CICILLINE. I would ask any of the witnesses, that if you do 

not have particulars that you can suggest today, I would love for 

you to share them with the Committee, if you could identify specifically what sorts of regulations or burdens that you have encountered that you think we ought to look at. I think in a bipartisan 

way this Committee has been very serious about reducing regulation and making it easier for small businesses to grow, and any 

specifics that you might be able to provide to me or to members of 

the Committee of things we should be looking at, I know I would 

appreciate very much and I really appreciate your being here to 

share testimony today. 

Chairman GRAVES. Mr. Fleischmann. 

Mr. FLEISCHMANN. Thank you. Thank you, Mr. Chairman. Ms. 

Frank, thank you for your testimony and witnesses thank you for 

your testimony. Outstanding. Ms. Frank, you mentioned in your 

testimony a preference for a fair tax or a flat tax. Could you please 

tell us how a national sales tax or a flat tax would possibly be more 

preferable than the current tax companies as a small-business 

owner? 

Ms. FRANK. I like a fair tax of course in conjunction with the repeal of the Sixteenth Amendment. I did not finish the other part 

of the Patrick Henry quote which is ‘‘History is how I judge the future.’’ In history I have seen one tax eliminated in favor of a new 

tax and then lo and behold a few years later with the crisis we get 

both of them back. So that is kind of my disclaimer on the fair tax. 

I like the idea of a fair tax because I have done my taxes and it 

is a nightmare. It becomes a game of what you know and even 

what your accountant knows. Sometimes your accountant is wrong, 

sometimes your account does not have all the information, sometimes as the last year I went he told me ‘‘Things are changing 

daily. We need to wait a couple of weeks.’’ I think now there are 

even some deadlines that have been forward. You could not instantly file because of changes that were taking place. But the best 

part about the fair tax is it taxes consumption instead of production, consumption instead of initiative and I really like that. I have 

a good friend who lives in California, Wayne Jett. He is an economist. He calls it the trillion-dollar sure thing because it immediately eliminates $300-plus-billion in compliance costs. It immediately eliminates I think $300 or $345 billion in unpaid or uncollectable taxes. It does away with the bureaucracy. It does so 

many things that free people up. It also removes taxes on payroll, 

you name it across the board. I think you already have in place retailers like me who are already collecting sales tax. And I need to 

address the poverty issue as well. For folks who are below that 


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poverty level, they would actually get a rebate that is equivalent 

to money that would be spent there. I could go on and on and on, 

Congressman Fleischmann, about the benefits of the fair tax, but 

what I like is that it does not punish and you only have to pay as 

much tax as you want to buy and I see it as a benefit in that regard. 

Mr. FLEISCHMANN. Thank you, Ms. Frank. Mr. Chairman, I yield 

back. 

Chairman GRAVES. Ms. Clarke. 

Ms. CLARKE. Thank you very much, Chairman Graves and to 

Ranking Member Vela ́zquez, and thank you to each of you witnesses here today. As you know, our nation’s small businesses will 

dictate how robust our economic recovery will be and that is something we all agree upon. The SBA is reporting an increase in lending through their 7(a) Loan Program with the bulk of those loans 

being equal to $1 million or more. Also the Thomson Reuters 

PayNet Small Business Lending Index recently released a report 

indicating that fewer companies are falling behind on their existing 

loan payments. This could provide incentive for lenders to free up 

capital they might otherwise hold onto to protect against defaults. 

While this is promising news, job creation as a lagging indicator 

during an economic recovery does not fully reflect the improving 

health of our economy. I do not believe as some do that all taxes 

are regulations are inherently bad. Regulations are usually implemented as a response to or to prevent malfeasance by bad actors. 

However, when well-intended regulatory policy creates unnecessary 

bureaucracy and tax policy related to those Government inefficiencies and adversely affect the ability of small businesses to invest 

and grow, I support the review and if necessary the revision or 

elimination of these policies. So I want to just ask the entire panel, 

quite a bit has been made of the term regulatory uncertainty especially with regard to why the economy has not rebounded more rapidly. My question is, as opposed to being used as a blanket term, 

what exactly does regulatory uncertainty mean to you and your 

small business and we’ll just start with you, sir. Mr. Feinberg. 

Mr. FEINBERG. Thank you. With so many regulations, I guess it 

just impacts the decisions that I make and the ability to plan for 

my future. With so many restrictions put on me there is no flexibility and with so many regulations I cannot grow my business as 

I need to. I have Government telling me how to do it. 

Ms. CLARKE. Have you been able to identify specifically where 

those obstacles are? I am sure you face them one on top of the 

other according to your description. I am just wondering if you 

could be a bit more specific. I know it may feel overwhelming to 

you, but it is that specificity that we need that actually gets us 

where we need to be. 

Mr. FEINBERG. Sure. I have so many local regulations put on me. 

As a general contracting firm, I cannot tell you how difficult it is 

every day dealing with the permitting process and regulations in 

our cities, in our counties, in our state, the laws that are mandated 

with the new Lead Act. There are so many regulations in particular that just keep me from doing what I do best. 

Ms. CLARKE. You are saying it is sort of a compounded situation 

because there are of course your local regulations which I am sure 


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based on wherever your jurisdiction is are meant to effect concerns 

there. And then there is the state that has its own regulatory processes and then there is the Federal. So you are saying it is the 

compounding of all of this that makes it difficult for you and that 

creates this environment of regulatory uncertainty? 

Mr. FEINBERG. It is total uncertainty. There is no clarity in any 

of the regulations. 

Ms. CLARKE. Let me go on to our next panelist and see what that 

means to you. 

Ms. KOLDITZ. I agree with regulations. I think there has to be 

some sort of regulation in some stuff. I will give an example. We 

have an arrangement that we just put in a box and you just have 

to open it and put it in a vase and that is it. And we had a customer who bought that arrangement, did not take it out the rubber 

band and put it in their vase. And because it was sitting that way 

they had to return it and there was something wrong with it. We 

went home and we were sitting and we were thinking now we have 

to come up with something to make it easy. So it is now the rule 

in our little company that we have to have a card that tells the person you have to cut the rubber band before you put it inside there. 

You would think this is very basic and I think that is how the Government works, is if somebody makes a mistake, it does not matter 

what it is, we are just going to put a rule for everybody because 

we now have to do this. And so that is why I was saying with 

Costco as one of the people that we are now working with, for the 

small business this is a great opportunity but we know there are 

going to be regulations and the more regulations you—for the big 

guys they have more things. They have lawyers, they have everything and they are going to look and say there might be something 

maybe we do not want to have the small guys inside our stores 

anymore. So those are the uncertainties that we are talking about, 

is the fact that there are so many little things that keep adding up, 

adding up, adding up that you are taking away opportunity which 

means you are taking away the jobs that we are supposed to create. So I say before we do a regulation or before you do a regulation, think about it in terms of the big guys and the little guys and 

write it in such a way that it can be simple. We do not all have 

to have a rubber band on that thing because we know we can cut 

it off. 

Ms. FRANK. I do not believe so much in regulation, period. I 

think we need general rules of the road, that we cannot all drive 

at 60 miles per hour in different directions, we have to have stop 

signs, yield signs and I think that is the mentality that Congress 

should have, just general rules of the road instead of, for instance, 

hiring more IRS agents and Department of the Treasury workers, 

we need more DOJ workers to ferret out corruption, to deal with 

people who are operating outside of the law in our system. As far 

as regulation, there are probably a ton of laws that I violate myself 

not even knowing and when I talk to other friends, we are a smallbusiness network, we are all of the mindset that a lot of the regulations are intended to pick a target. If you happen to be the wrong 

guy or you are speaking the wrong message, then those regulations 

can be used against you and so a lot of people operate outside 

them. And I think the regulations should be so easy to understand 


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and figure out that it is natural to follow the law. They just keep 

piling up and maybe what I am regulated for is not the same as 

Dixie or Mr. Feinberg, but all together it serves as a downward 

force on the economy. 

Ms. CLARKE. Thank you, Ms. Frank. 

Ms. FRANK. Thank you. 

Ms. CLARKE. My time is back and I yield back. Thank you, Mr. 

Chair. 

Chairman GRAVES. Mr. Walsh. 

Mr. WALSH. Thank you, Mr. Chairman. Thank you, Mr. Chairman and thank you, Ranking Member Vela ́zquez. Amen to the four 

of you. Thank you so much for being here. Amen. You all and the 

folks you represent are the heart and soul of this country. What 

you do will keep this country going. Like so many of my freshman 

colleagues, there was not a day that went by during my campaign 

last year where I did not hear from hundreds of small businessmen 

and women who had just had it, who were scared, who were frustrated, who were uncertain. So I think most of us here in Washington have no clue as to what you go through. My Democratic colleagues keep asking for specific regulations and fees. That might 

be a good idea. That might teach us something. I would encourage 

you all if you got examples of specific regulations and fees, throw 

them at us. This body needs to be educated. We need to understand 

what small businessmen and women are going through. Let me 

just fire a quick question at each of you. Ms. Kolditz, let me start 

with you. Try to keep your answer short. You said you did not 

want to complain about all the fees and regulations. I would say 

complain away. As much as you can complain the better. We will 

hear you. A simple question. The fees and regulations that you deal 

with, do they make you hire more and do they keep you from hiring employees? 

Ms. KOLDITZ. They’re making me rethink about hiring employees 

because the money that I would have had to hire the employee I 

now have to use to pay for all these fees. 

Mr. WALSH. Mr. Feinberg, you mentioned that you’re not an expert on health care. We are not either. It is a huge issue. When 

you look at the uncertainty you face with this piece of health care 

legislation that truthfully most people who voted for it did not really understand what was in it, how do you plan a week, a month, 

a year or two down the road? 

Mr. FEINBERG. It is very difficult. At times like I said I am hanging on by my fingernails and it is so difficult because the fees—the 

health care costs that I pay now, it is outrageous. 

Mr. WALSH. Do you know offhand what this legislation will cost 

you a year from now or two? 

Mr. FEINBERG. I think it will cost me a lot more than I am paying now. 

Mr. WALSH. Ms. Frank, you said a phrase that if I had a nickel 

for every time I heard this on the campaign trail I would be a 

wealthy man, ‘‘Get out of my way.’’ I heard that continually from 

people. Crystallize what that means for you and again be brief. You 

want your Government out of the way. Why? 

Ms. FRANK. I think we do a better job or creating jobs and creating wealth for the nation, and I think what happens is a lot of 


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politicians look to the rules, the regulations, the taxes, to try to social engineer us to guide us in whatever path or direction they 

want us to go in and I guess that would be kind of boiling it down 

there. 

Mr. WALSH. Let you do your thing? 

Ms. FRANK. Yes. 

Mr. WALSH. Mr. Phelan, you mentioned in your remarks that you 

see small-business owners finally opening the bunker door and 

starting to look outside. What concerns you is that will cause them 

to go back in and close the bunker door in this next year or two? 

Mr. PHELAN. I think it has been touched on here. I think that 

uncertainty is a businessman’s worst nightmare because they cannot plan and they have a lower probability of success and there is 

just a lower chance of success. If you do not understand what the 

future holds for you or if you have less confidence in the future, 

you are unlikely to go out on a limb. You are not going to borrow 

money, you are not going to take on a new project. So you are 

right, the image is they’re finally going outside and seeing the 

green shoots that were talked about over a year and half ago or 

something and I think that is comforting to everybody that we are 

seeing that kind of growth start to occur or emerge, but it could 

certainly go the other way. There is no question about it and it gets 

to uncertainty in my mind that if you just don’t have confidence 

about the future you are unlikely to go out on a limb as a smallbusiness owner. You hear the panel. Everybody operates on razorthin margins these days. There are a lot of challenges in making 

a buck basically and so why would you take on some additional 

cost or some additional project that has some risk to it if you did 

not have a lot of confidence in it? 

Mr. WALSH. Keep doing what you are doing. Educate us. If you 

have got specific regulations and fees, let us know about them, but 

amen. You guys are right on and it is up to us to get out of the 

way so you can do your thing. Thank you, Mr. Chairman. I yield 

back. 

Chairman GRAVES. Mr. Richmond. 

Mr. RICHMOND. Thank you, Chairman Graves and thank you to 

the panel for coming today. Just a general question. I guess I am 

hearing that we are on the up side of the economic downturn or 

recession or so we have it. How did you all cope during those 

times? Were you hard during those times? We can start with you, 

Mr. Feinberg. 

Mr. FEINBERG. Absolutely. I do not think I have taken a check 

in 6 months. I am living off of life savings. I have utilized every 

source that I can to keep my business going. Myself and my three 

brothers, we are constantly just where do we get the next check to 

pay our employees because that is first, our employees. They are 

our lifeline and we have to keep them happy and it is very, very 

difficult because banks are not lending money. I have tried. Trust 

me. 

Mr. RICHMOND. Okay. Ms. Kolditz. 

Ms. KOLDITZ. We definitely have been hard hit. One of the things 

with an entrepreneurial small business is you learn to change and 

adapt and that is why the final thing is that we can try different 

things and that is what we have. We have tried different things to 


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make sure that we can survive and that is why we have this opportunity that we have with our business with Costco and that what 

has helped us kind of stay afloat. 

Mr. RICHMOND. Ms. Frank. 

Ms. FRANK. Yes, definitely, and I would say employee costs, my 

husband and I actually work more—we work more with what we 

have instead of normally bringing in some additional help. So I 

would say just the nature—I say small-business people are like 

cockroaches, we find ways for the most part if we can to survive 

and we do whatever it takes. 

Mr. RICHMOND. Mr. Phelan, I guess my question to you and there 

has been a consistent message. I am a son of a small-business 

owner so I know the struggles and to me you are not a small-business owner unless you have had that struggle making payroll at 

the end of the week and then you understand. My question, Mr. 

Phelan, is what do you give credit or where do you give the credit 

for us getting out of the economic downturn? Would it be the stimulus? Would it be the Jobs Act? Was Government involved in getting us out of the recession that we were in? 

Mr. PHELAN. What we can see in the data is that small business 

reacted in a very I guess resilient way to this terrible recession 

that we had and they reacted without a lot of assistance. We can 

see that in the data that the default rates, these are measures of 

risk, the delinquency rates on their loans, have come way down so 

that they have managed to get their financial houses in order. They 

have done that by cutting expenses and cutting costs. We have 

seen in the index that was mentioned here that it was down 50 

percent from the height of the recession or from the peak before to 

the height of the recession and so sales have fallen dramatically for 

all these small businesses. So what they have done is they have 

used their own ability to pull themselves up by their bootstraps 

and be able to react to what conditions they faced. 

Mr. RICHMOND. I understand that they are survivors. 

Mr. PHELAN. Right. 

Mr. RICHMOND. But now the economy is starting to turn. 

Mr. PHELAN. Right. 

Mr. RICHMOND. And all the indicators are that the economy is 

moving in the right direction. I guess my question is did Government have any role in moving the economy now in the right direction in your opinion? 

Mr. PHELAN. There was an awful lot of money put into the economy from the Government. There is no question about it. I do not 

have direct evidence linking any of that money to turning around— 

having the index turn around or having delinquencies improve or 

what-not. I know there was a direct stimulus directly for small 

businesses and so it is very hard for me to say definitively that 

there is a direct correlation there. I am an information person and 

I rely on information to make these kinds of decisions. 

Mr. RICHMOND. I guess that, and my colleagues and everyone has 

been asking the question about specific regulations and I guess 

that I’m from an area where we are prone to hurricanes, and Mr. 

Feinberg I know you are, so when you talk about regulations I 

would assume that you are not talking about building codes and 


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things of that nature in terms of Government should get out of the 

way. 

Mr. FEINBERG. That is just some of them. That is some of the 

regulations, too, but even the Federal ones recently in the building 

codes and the lead mandate as far as us having to check before we 

do a job where our hands are tied. The information that we can use 

to run our business properly is everywhere we look there is another 

law or regulation that is put in place. 

Mr. RICHMOND. Mr. Chairman, I see my time is up. I will yield 

back. Thank you. And thank you all for coming. 

Chairman GRAVES. Ms. Ellmers. 

Mrs. ELLMERS. Thank you, Mr. Chairman, and thank you Ms. 

Ranking Member Vela ́zquez. To Mr. Feinberg, Ms. Kolditz and Ms. 

Frank, we were just discussing the issue of coming out of—and 

feeling as if according to the numbers that we are coming out of 

the recession. Those are very technical numbers, but in your opinion, a yes or no answer, do you feel that you or we are out of the 

recession? 

Mr. FEINBERG. Not as of yet. I think we are coming out. 

Mrs. ELLMERS. Ms. Kolditz. 

Ms. KOLDITZ. I think we are not out yet, no. 

Mrs. ELLMERS. Ms. Frank. 

Ms. FRANK. No, especially with gas prices increasing. 

Mrs. ELLMERS. My next question is for Mr. Feinberg specifically. 

Earlier we were discussing how you felt if it was fair that an insurance company would put a cap or if you had an employee that had 

reached the cap, how did you feel about that and whether that was 

fair. Have you ever had that happen? In the best of your knowledge, have you ever had an employee reach a health care cap level 

and be destitute because of that? 

Mr. FEINBERG. Not to my knowledge. 

Mrs. ELLMERS. Thank you. That’s what I thought. In your opinion and this is to all the members, do you feel that a Governmentrun health care system would be better or a free-market private 

health care system is the way for us to go in this country? I’ll go 

right down the line, Mr. Feinberg, starting with you. 

Mr. FEINBERG. I cannot say for sure whether it would be better. 

I think though it should be left up to us as individuals. 

Mrs. ELLMERS. As a business owner how do you feel? 

Mr. FEINBERG. Individually. 

Mrs. ELLMERS. Ms. Kolditz. 

Ms. KOLDITZ. I think individually and actually my mother-in-law 

she actually had a cap and she went above the cap. 

Mrs. ELLMERS. She did? 

Ms. KOLDITZ. She did. 

Mrs. ELLMERS. How did that—— 

Ms. KOLDITZ. And you know what? She managed to get out of it 

on her own without the Government’s assistance. So I think you 

have to leave it to the free market and leave it to people. She actually started a company, so you can do that. Just have the people 

do what they can. 

Mrs. ELLMERS. Ms. Frank. 

Ms. FRANK. Free market. 

Mrs. ELLMERS. Mr. Phelan. 


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Mr. PHELAN. Free market. 

Mrs. ELLMERS. Now, Mr. Phelan, I do not know that your business is a family-owned business, but I do believe that the other 

panelists are so this is a question for you. My understanding, the 

inheritance tax, this is yet another cumbersome tax or regulation 

on you. Are you in favor? Will this hurt you for your businesses as 

you pass your businesses onto your families having the inheritance 

tax starting with Mr. Feinberg? 

Mr. FEINBERG. I’m not familiar. 

Ms. KOLDITZ. Actually I’m not familiar either. 

Ms. FRANK. I don’t know the rules about inheritance taxes either, 

but I mean, I’m assuming if I leave a business of any value, the 

real estate and I guess just the value of that business of course is 

the day-to-day operation and if my children had to pay a tax on 

that then, no, they couldn’t come up with that kind of money if 

that’s what I’m understanding it would be. 

Mrs. ELLMERS. Mr. Phelan, I don’t know if that affects you. 

Mr. PHELAN. It probably does not, yes. 

Mrs. ELLMERS. I have only got less than a minute or I have a 

little over a minute. In relation to our President during the State 

of the Union, basically stated that in 2 years he would roll back 

on the Bush tax cuts for anyone who makes $250,000 or more. Now 

I do not know what kind of income your businesses create, but will 

that provision hurt you, does that hurt you today in the relation 

to the possibility of hiring new employees starting with Mr. 

Feinberg? 

Mr. FEINBERG. I do not think I am familiar with that. 

Ms. KOLDITZ. I think it will affect us. Personally it will affect us, 

yes. 

Mrs. ELLMERS. Thank you. 

Ms. FRANK. I do not know. 

Mrs. ELLMERS. Okay. 

Mr. PHELAN. Yes, it would. 

Mrs. ELLMERS. Thank you very much for your testimony. Ms. 

Frank, Mr. Feinberg, if he ever decides to not be in Congress, 

would you consider running for Congress? I think you could teach 

us, all of you actually could. We need more small-business owners 

in Congress. Thank you. I yield back my time. 

Chairman GRAVES. Ms. Herrera Beutler. 

Ms. HERRERA BEUTLER. Thank you all for being here. It is interesting to hear some of the comments from both sides and there is 

this quest for specifics. I cannot help but think every time I am in 

the District I get specifics whether its locally, state or Federal. Federal, it is everything from EPA rules and it affects everything from 

hospitals to small guys to building a new parking lot in your back 

yard, whether you can do that, whether you get the right permit 

or the wrong permit and you get fined. What you were saying, Ms. 

Kolditz, was customs so that you will get a container, it will be 

shipped to Portland so that they can scan it or because they did 

not scan it when it came in, they will then ship it back to San 

Francisco and then back to Portland and then they hand you the 

bill. That seemed pretty specific I assume. 

Ms. KOLDITZ. That is very specific, yes. 


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Ms. HERRERA BEUTLER. Yes, that was something that you shared 

that it is nonsensical. Do it at one point. Right? You would say 

Customs folks who work for the Government, you work for us, you 

want to protect our homeland, you are an American. We want people safe and healthy. What I seem to have heard from you was that 

the run-around is the problem. It is not that you cannot provide 

the specifics. It is almost as if people are not listening. 

Ms. KOLDITZ. Yes. I think we are just thrown with a bill. We 

have trucks. I have heard that we have the scans. Why don’t they 

use those instead of—you see the problem is you look at it and I’m 

thinking if Customs had to pay the bill, they might be a little bit 

more responsible because if they say I should unload my container, 

I am efficient. We get more people. We them in and out. And I 

think if Customs had to have the bill that they would do a lot better than what they are doing right now. 

Ms. HERRERA BEUTLER. That’s an idea for us, an area of regulation, to make sure that there is some skin in the game with these 

regulators. 

Ms. KOLDITZ. Yes. 

Ms. HERRERA BEUTLER. A timeframe or some sort of requirement 

that they are engaged so that there is some skin in the game there. 

Ms. KOLDITZ. Yes. 

Ms. HERRERA BEUTLER. One of the other things I heard was— 

the Government trying to helpful to you all, one of the comments 

I heard was whether it is either find the small-business center and 

they will help you with the technical problems which I kind of had 

to scratch my head a little bit. Or don’t you know that the bill that 

was passed last year is for your own good. You are going to like 

it. You just need to get someone to help you with it. Is that the 

way you would like to operate or would you prefer that you kept 

a little bit more of your own money and then you went ahead to 

provide a plan for your employees that met your employees’ needs? 

Mr. FEINBERG. For myself, my whole goal was partnering with 

my employees. Let me decide as a business owner the best way to 

do that. My employees get behind—we work together to figure out 

the best way what is going to work for us? How can we be profitable as a company? The last thing I need is more regulations. 

Ms. HERRERA BEUTLER. I guess one thing as some of these other 

massive pieces of legislation that we went through last year whether it is the health care bill or whether it is things that are going 

to affect small-business credit and lending, those 350-plus working 

groups who are coming out with new regulations. The EPA last 

year came out with over 928 new rules last year alone. The Administration in the fall said that they have over 4,000 new rules in the 

works. We know that you all are on the front lines and when you 

are successful we are successful. I do not say we the Congress. I 

say we as a country. I know of Democratic business owners and 

Independent business owners, people who are apolitical, people 

who are Republican, and that is the one thing I get from them is 

we are not trying to pick partisan lines, just help us help you. So 

I would just ask as we move forward I appreciate you taking the 

time away from your businesses to be here today. Please keep in 

contact with us. Please continue to share e-mails. That’s what this 

whole Committee is about is hearing and listening to you all beVerDate Mar 15 2010 20:51 Mar 31, 2011 Jkt 065196 PO 00000 Frm 00059 Fmt 6633 Sfmt 6602 E:\HR\OC\A196.XXX A196

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cause we are in a place to bring some balance to some of those regulations and we would like to do that. So thank you. 

Chairman GRAVES. Mr. Coffman. 

Mr. COFFMAN. Thank you Mr. Chairman, and thank you so much 

for coming here today. As a former small-business owner I know 

how tough it can be owning a small business. My question goes 

back to January 2009 when I was elected to Congress. I know 

starting in December of 2008, or earlier, that the economy was in 

a freefall and I think there was consensus among many economists 

that the Government needed to do something. I think supply-siders 

felt that it was lowering the tax rates to put more money into the 

economy for the private sector and then there were those on the 

demand side who felt that it was through Government spending 

that we would stimulate the economy. I just want to know from 

your perspectives, if you felt that the demand side, which is the 

side that the Congress of the United States took and of course the 

President supported, was the right direction; and in your view? If 

not where do you think the economy would be right now relative 

to your businesses if we had instead of, the first traunch of stimulus, if that had gone to the private sector, injected into the private 

sector versus Government spending, where do you think your small 

business would be today, where do you think this economy would 

be today? Let’s start left to right. 

Mr. FEINBERG. Thank you. I think that I would have been much 

better off had the money gone to the public. I know for a fact that 

there is not that much that has been done to stimulate my business. It has been done by myself and my employees. We are the 

ones coming up with the answer and the solutions to help us because there is really no help for us out there as a small-business 

person. 

Mr. COFFMAN. Thank you. 

Ms. KOLDITZ. We also said the same thing. It was more like if 

you had given us the money maybe something could have happened. But I think it would have probably been better if the money 

was not even handed out to anybody. I think you would have let 

us fail. If you have us fail, we would have come up probably with 

a better system that would have made it so that we are better to— 

on our way to recovery. So I think sometimes it is better to probably take a stand back and just let things happen, let people fail. 

It is okay to fail. When you fail you sometimes find better ways of 

doing things. 

Mr. COFFMAN. Thank you. 

Ms. FRANK. I disagree with what the Government—how they responded and I would have actually been for an immediate tax cut. 

I like numbers, I like results and statistics and statistics show that 

even John F. Kennedy, a Democrat, cut taxes and it worked. Ronald Reagan cut taxes and it worked and so that is immediately 

what I would have called for. I think you can trace all of the problems with the economic downturn back to the Government in the 

first place whether it was Fannie and Freddie, whether it was taxation and regulation of the oil industry and we cannot drill here 

and create jobs here. Whatever it is, we can trace most of the time 

the problems back to Government in the first place. So I do not 


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think the economy would—I actually think the economy would be 

better off if you wouldn’t have done what has been done. 

Mr. PHELAN. I think working with the Tax Code could have been 

very effective. It’s so hard. Right now we’re still talking about shovel-ready projects and it is hard to measure that. It is hard to understand if that is really working or not and I think that is part 

of the problem. Do we if it’s been effective or not? And you are setting policy and you want to set the right policy and you want it 

to work. Certainly if you had put money back in a lot of business 

owners’ pockets they could have reinvested that money to expand 

their business and that may have led to more job creation, it certainly may have led to more investment of capital, equipment and 

expansion. We are going to run deficits no matter what. Under either scenario deficits were going to occur. Right? So if is just a 

question of choose your poison. I think putting the money back into 

the pockets of folks like this and allowing them to decide where to 

invest it could have been a very effective route. 

Mr. COFFMAN. Let me ask you all one quick question just to go 

back and get a very short answer. All the incentives and mandates 

are on businesses in terms of offering health care. Do you think it 

would be better if we shifted and provided the incentives onto individuals and shift that model away from employers in terms of offering health care so we would have tax incentives which are not 

available right now to individuals? Why don’t we go right to left 

this time? 

Mr. PHELAN. I think incentives work for individuals. Economic 

incentives certainly work. I have not studied the issue at that kind 

of granularity to really provide you a policy position on it. But certainly providing an individual incentive I think is important and 

that has been proven in so many different ways over time with different subpopulations and plans. 

Ms. FRANK. I totally forgot your question. Would incentives be a 

better way of providing—or getting people to insure themselves? 

Mr. COFFMAN. Tax incentives as opposed to employer mandates. 

Ms. FRANK. Absolutely. Yes, absolutely I would agree with that. 

My own employees because I am in the food business, I do not have 

long-term employees so I encourage mine to move along to get further education. I see my place as a stopover for them. I would like 

for them to own their own business. And I pay almost double what 

the average rates are for that type of pay and the mindset I try 

to teach my employees is you can do it yourself. My husband and 

I did not have our own health insurance for many, many years. We 

were young. Young people don’t tend to get sick. We were taking 

the gamble. We saw insurance as a way of protecting our assets. 

Once we developed assets then we went to a high-deductible health 

insurance plan that will basically keep us from being wiped out but 

we don’t look at it as paying our day-to-day doctor bill. 

Ms. KOLDITZ. I actually agree with shifting the responsibility to 

the individuals than to the business because then we can then as 

business owners work on creating more jobs instead of now trying 

to figure out how to make the health care bill and carrying that 

burden. 

Mr. FEINBERG. I also think tax parity is very good and I think 

that everyone should really be treated the same no matter where 


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we buy health care. I think it should be up to us as individuals 

how we want to buy and treat our health care plan. 

Chairman GRAVES. Mr. Tipton. 

Mr. TIPTON. Thank you, Mr. Chairman. I appreciate you calling 

this hearing and I want to applaud each one of you fellow smallbusiness person in this country. I am hearing some great stories 

and they echo words that my parents raised me with and I am 

hearing expressed in your stories and it is American know-how and 

Yankee ingenuity to be able to get that job done. As a small-business person and now as a member of Congress, I just went out and 

toured our district. We traveled better than 1,700 miles over the 

course of about 5 days. In every meeting be it with potato growers 

in the San Luis Valley to small-business shop owners going 

throughout our district, city Governments, county Governments, 

every corner that we stopped at within no more than 10 minutes 

Government regulations came into play and how it was impacting 

the ability to be able to deliver a service, to be able to get that job 

done. If you are a small-business person as you are much like I am, 

and this is the question I would like to ask, we did not codify the 

Tax Code and we only extended it for 2 years. Did that impact 

business decisions that you made last year? And with the shortterm extension, is that impacting or will that impact do you suspect business decisions that you will make in the future? Mr. 

Phelan, if you would start. 

Mr. PHELAN. Sure. Certainly. Yes, it did. In my because, we put 

together an annual and 3-year plan so we plan out over the next 

12 months and the next 36 months and we get very specific about 

our expenses. We didn’t understand what the expenses were going 

to be in totality. Now we understand at least for the next 2 years 

and that helps us to plan again. It helps us to get organized and 

helps us to put our projects into place. So having more clarity, and 

I think that’s one of the uncertainties that was out there at year 

end, was what’s going to happen with the Tax Code? And having 

that clarity I think gives us all just a little bit—one ounce more 

of confidence about the future, helps run our businesses a little bit 

more smarter. 

Ms. FRANK. I’m probably the Department of Treasury’s dream 

small-business owner because I never consider or plan for what my 

tax liability is going to be. I just know how to work and I guess 

from the Government’s perspective I materially participate, and I’m 

usually about the business of getting my job done, getting what my 

customers need and paying my own bills. So a lot of times I come 

to the end of the year or I come to April and I realize I should have 

planned for this, I should have seen this coming and I didn’t know. 

So I hope that answers your question. I just do a terrible job of 

planning and I think that is one of the criticisms I have is it should 

be so simple and there shouldn’t be all these changes so we kind 

of have an operating knowledge of how to go forward and be successful. 

Ms. KOLDITZ. I think for us it is still—kind of still that uncertainty. What it did is it just offered a short-term relief because now 

what this means is that in 2 years I have to deal with the same 

situation all over again. So I can only plan—for now it’s kind of like 

we can grow a little bit but there is still that looming uncertainty 


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and I think when you are trying to run a business you want a plan, 

you want to figure out where you are going to go so I would rather 

have this more resolved than and done with, to just say this is 

what you are going to pay and stick with it. It’s kind of like I always want to know what’s the final thing. I don’t want to hear all 

this other stuff. I just want to know exactly what I’m going to pay 

and what this has done is just give us more uncertainty. 

Mr. FEINBERG. I would have to agree. I just think the complexity 

of the system and the uncertainty of not knowing what our future 

brings and not knowing what next year is going to be just makes 

it much more difficult for us to run my business and knowing that 

I can’t make decisions because it’s not clear what really hampers 

us. 

Mr. TIPTON. Thank you. Mr. Feinberg I wanted to compliment 

you because I think so many people in this country failed to recognize what you verbalized. You said you missed a paycheck but in 

prior testimony you are still providing health care insurance. 

You’re putting your people before yourself. As a small-business person maybe you feel a lot like I do, you just happen to be the person 

privileged to lock and unlock the door in the morning and sign the 

back of that paycheck. So your work is incredibly admirable, but 

we’ve heard comments and they say statistics are bearing out that 

we are no longer in a recession. What is your sense right now? Are 

your communities, are your businesses still in a recession? 

Mr. FEINBERG. We are definitely still in a recession. I’ve just seen 

last month one of my largest competitors that had been in business 

for 43 years, someone I respected highly, a great competitor for me, 

just went out of business. The real estate market in our area is still 

in decline. I do believe that we are still in a recession. I am optimistic that we are coming out of it. And I know for a fact had my 

employees not helped me and jumped on our bandwagon to work 

together, sacrificed their time, their efforts and pooling together, 

there is no way that my company would have survived these past 

couple of years. Like I said, I took on the most debt I’ve ever taken 

on in my life just at the time when the economy took a tank and 

my employees—I applaud my employees because without them 

there is no way I would have made this. 

Mr. TIPTON. I want to be respectful of our time and that was 

thanks probably to a boss that was willing to miss a paycheck so 

thank you for being here. Mr. Chairman, thank you for my time. 

Chairman GRAVES. I want to thank all of our witnesses for coming. I apologize for the vote that was in the middle of the hearing 

and if it inconvenienced you any. Your testimony today kind of set 

the stage for some of the debates we’re going to be having coming 

up and I look forward as a Committee to try and remove some of 

the burdens that you all face. So thank you very much for coming 

in. I’d ask for unanimous consent that all members have five legislative days to submit statements or materials for the record. There 

are no objections. So ordered. This hearing is adjourned. 

[Whereupon, at 4:17 p.m., the Committee was adjourned.] 


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