Chabot, Connolly Introduce Bill to Help More Small Businesses Export
WASHINGTON – Small Business Committee Chairman Steve Chabot (R-OH) and Congressman Gerry Connolly (D-VA) have introduced H.R. 2586, the Export Coordination Act of 2015, a bill to improve the coordination of federal export promotion resources and to streamline the export process so that more small businesses can sell goods overseas.
“When it comes to exporting, most small businesses don’t know where to start,” said Chabot. “The process can be incredibly complex and the federal resources that are supposed to help them navigate the process are just as intimidating. The Export Coordination Act would streamline these resources and take steps to make the process easier for businesses.
Chabot added, “It is my hope that this bill – and other solutions that the Small Business Committee is currently working on – will open the door for more small businesses to sell their goods overseas, which ultimately provides more opportunities for working families.”
Congressman Connolly said, “The federal government stands ready to help small businesses access foreign markets and create jobs through exports. This bill will ensure that federal trade promotion agencies are reaching out to state and local partners and making access to these resources as straightforward as possible.”
U.S. exports support more than 38 million American jobs – including 1 in 3 manufacturing jobs. Despite the fact that 95 percent of the world’s consumers live outside of the United States, only 2 percent of all small businesses export their goods.
H.R. 2586 would require the United States Department of Commerce’s Trade Promotion Coordinating Committee (TPCC) to clearly define each federal agency’s role in the export process, establish a central listing of all trade events, give state trade agencies a voice in setting our national export strategy, and reduce overlap of current export resources.
1. Hearing Notice
2. Witness List
3. Hearing Memo
Walberg Statement: Hearing on "Promoting Safe Workplaces Through Effective and Responsible Recordkeeping Standards"
As I said at a hearing last month, we all agree that hardworking men and women should be able to earn a paycheck without risking a serious injury or being exposed to a deadly disease, and every family deserves the peace of mind that their loved ones are safe on the job. There is no one in this room who doubts the need for strong health and safety protections, or that OSHA has a role to play in promoting safe workplaces. Reducing occupational injuries, illnesses, and fatalities is a priority that crosses party lines, and stretches from the White House to the halls of Congress.
However, there are times when we share a difference of opinion in how to reach that goal. One illness, one injury, or one fatality in the workplace is one too many. That’s why, as a committee, we believe bad actors who cut corners and put workers in harm’s way must be held accountable. At the same time, the administration should work with employers to address gaps in safety in order to prevent injuries and illnesses before they occur.
We also believe health and safety policies should be created with input from the public. Employers and their employees know better than most the unique safety challenges facing their workplaces. If rules coming out of Washington fail to account for those unique challenges, or if they’re too complex and confusing to understand, they won’t deliver the protections workers need. That’s why the rulemaking process should be transparent and allow for public feedback.
Unfortunately, time and again, the Obama administration has pursued a different, more punitive approach. The majority of employers want to do the right thing. But instead of working with those employers to develop proactive safety measures, the agency is focused more on punishing everyone for the actions of a few.
As I said, employers who jeopardize the safety of workers must be held accountable. But the agency’s reactive approach does nothing to help employers understand complicated regulations, and it does nothing to achieve our common goal of preventing tragedies from occurring in the first place.
Several recent changes to OSHA’s injury and illness reporting standards are the latest example of this flawed approach, and the focus of our hearing. These new requirements significantly change who the standards apply to, what needs to be reported, and how and when OSHA must be notified. As is often the case, these changes will create additional layers of red tape—especially for small businesses with limited resources to fully understand complex safety standards. And to make matters worse, the administration has advanced these expansive changes despite broad, public concerns.
One of the most concerning requirements calls for public posting of injury and illness records online without corresponding context. This regulatory scheme designed to shame employers will do little—if anything—to advance the cause of worker safety. What it will do is make it easier for Big Labor to organize, and for trial lawyers to bring frivolous lawsuits. The agency will need to spend millions of dollars on this special interest tool, which will shift scarce resources away from proactive policies to improve safety, such as inspections and compliance assistance programs. And in the process, the agency is jeopardizing the privacy of workers’ personal information. This rule isn’t about serving the best interests of workers—it’s about serving powerful special interests at the expense of workers.
We owe it to working families to hold the administration accountable for its misguided policies and to call on OSHA to take a more responsible, effective, and collaborative approach. This oversight hearing is an important part of that effort and our commitment to protecting the health and safety of America’s workers.
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At 6:30 on the morning of September 26, 1955, the Jacksonville, Florida-based crew of the Snowcloud Five departed Guantanamo, Cuba for Category Four Hurricane Janet.
The aircraft and eleven brave lives were lost to the storm. Hurricane Janet then went on to hit the Yucatan peninsula, with a death toll numbering over five hundred.
As a current NOAA Corps hurricane hunter pilot tells it, when folks ask him if he’s crazy, he just answers, “You’re worth it.” The dedicated officers of the NOAA Corps and the scientists their planes carry are passionate.
And even after the tragedy of the Snowcloud Five, NOAA employees continue to brave the elements to provide severe weather warnings.
So as a senator from the state with the most hurricane strikes in the U.S. mainland, I am deeply appreciative of the work of our witness, the National Hurricane Center, the NOAA Corps hurricane hunters, and the Hurricane Research Division. And I’m proud that each of these entities call Florida home.
Yesterday, I had the distinct pleasure to get my hands on technology that can extend the impressive reach of the NOAA hurricane hunters.
Did you know that the hunters fly as low as 1500 feet in these storms?
They do that because the lowest levels of a hurricane—called the boundary layer where the storm meets the ocean—provide critical information about what the storm is going to do. Hurricanes are fueled by warm ocean water. And yesterday, we got to see the hunter’s new partner: a hurricane drone called “The Coyote.” NOAA will deploy eight of these drones—made by Raytheon—during the upcoming hurricane season, which officially starts next week. The Coyote can fly as far as 50 miles away from the hurricane hunter airplane gathering important data about the storm, and especially, about the boundary layer.
Dr. Knabb, I hope you won’t take offense when I say that I hope your job is very boring this year. We’ve been spared from “the big one” for several years now.
Though I hope that trend continues, I also realize that it’s only a matter of time. And we have to be ready.
After the horrific series of storms in 2005—Katrina, Rita, and Wilma—it became clear that our ability to forecast the intensity of a hurricane was not up to par. So several expert reports recommended that we invest $85 million a year for the next 10 years to improve the forecasts.
Seven years ago this month, NOAA formally established the Hurricane Forecast Improvement Project.
The five-year goal of the project to reduce average track and intensity errors by 20% has been met. And that’s no small feat. Research within NOAA and at places like the University of Miami has significantly improved our ability to predict where a hurricane will go and how strong it will be.
But proposed budget cuts by the administration threaten the ten-year goal of the program. This is unacceptable.
That’s why Senator Rubio and I filed legislation to codify the Hurricane Forecast Improvement Project. This program is about saving lives and property from one of the most fatal natural disasters.
And we simply cannot afford to be penny-wise and pound-foolish when it comes to hurricanes.
In 1992, Hurricane Andrew claimed 26 lives—15 in Florida alone—and left more than 160,000 Dade County residents homeless. Its economic cost to the United States was over $25 billion dollars.
Hurricane Katrina was responsible for 1833 deaths and $108 billion in damages.
And as Ranking Member Booker knows too well, Superstorm Sandy took 147 lives, damaged at least 650,000 houses, and left 8.5 million customers without power.
So I appreciate Senator Rubio for calling this hearing today. We can’t afford to look in the rearview mirror and wish we had invested more in the science.
Thanks Dr. Knabb for all you do to help us prepare for and avoid the devastation that comes with hurricanes.
1. Hearing Notice
2. Witness List
3. Hearing Memo
Ms. Caroline Bruckner
Executive-in-Residence, Accounting and Taxation
Managing Director, Kogod Tax Policy Center
Mr. Rob Willey
San Francisco, CA
Mr. Morgan Reed
ACT The App Association
Mr. Joe Kennedy
Information Technology and Innovation Foundation
"Two years ago, the Commerce Department’s National Telecommunications and Information Administration (NTIA) announced its intention to transition the functions of the Internet Assigned Number Authority (IANA) to the global multistakeholder community.
"Since that time, the multistakeholder community—made up of businesses, technical experts, academics and civil society—has spent more than 26,000 working hours on the IANA (pronounced eye-ANNE-uh) transition proposal, and held more than 600 related meetings and calls.
"At the outset of this hearing, I would like to acknowledge the hard work undertaken by many stakeholders, some of whom are here today as witnesses, in taking on the daunting task of developing the transition proposal.
"Regardless of where one stands on the transition, we should recognize the difficult work that has been done, and the ongoing commitment that will be needed if the transition is to be completed in a way that addresses the important concerns that have been raised about the future governance of the Internet.
"On March 10th, the Internet Corporation for Assigned Names and Numbers (ICANN) forwarded to NTIA for review the transition proposal developed by the global community of Internet stakeholders.
"NTIA set a target of 90 days to complete its review, which is expected to be completed on June 10th, whereupon NTIA will issue a report stating its determination as to whether the proposal meets the criteria NTIA outlined when it first announced the transition, such as the requirement that the proposal maintain the openness and global interoperability of the Internet.
"If NTIA approves the transition, ICANN expects to produce an implementation report by August 15th.
"The existing IANA contract is set to expire on September 30, 2016, unless NTIA acts to extend it or Congress acts to delay the transition.
"These dates are rapidly approaching, which is why I called this hearing today to examine the stakeholders’ transition proposal.
"Our Committee held an earlier hearing on the proposed IANA transition in February of 2015.
"At that hearing, I said I would review any IANA transition plan to make sure it both meets the requirements laid out by NTIA, and that it adopts meaningful accountability reforms, such as curtailing government involvement in apolitical governance matters; providing additional oversight tools to the multistakeholder community; and adopting an independent dispute resolution process.
"Last year, I also introduced the DOTCOM Act along with Senators Schatz, Wicker, and Rubio, which our committee approved on a bipartisan basis.
"With that bill, which also passed the House of Representatives by a vote of 378 to 25, we all made it clear that any transition plan must not “replace the role of the NTIA with a government-led or intergovernmental organization.”
"Further, the DOTCOM Act would require any transition plan to maintain “the security, stability, and resiliency of the Internet domain name system.”
"I hope to hear from each of our witnesses whether they believe the proposed IANA transition plan developed by the multistakeholder community meets these requirements, as well as whether it satisfies NTIA’s criteria.
"In particular, I am interested to learn whether the stakeholder community has delivered a proposal with accountability reforms strong enough to give Congress and the American people confidence that the time has come to privatize the IANA functions.
"At last year’s IANA hearing, I said that the goal of everyone here is the same: we want one, global Internet that is not fragmented nor hijacked by authoritarian regimes.
"Whether the IANA transition goes forward or not, I know that everyone wants to ensure all Internet users can continue to have complete faith that the IANA functions will be carried out effectively and seamlessly long into the future.
"We have a distinguished panel here today, representing a diverse variety of perspectives, professional experiences, and personal views.
"I’m looking forward to hearing from each of you.
"With that, I turn to the ranking member for any comments he would like to make."
Foxx Statement: Hearing on “Demanding Accountability at the Corporation for National and Community Service”
As the head of the corporation, Ms. Spencer, you have a responsibility to ensure the federal funds you receive—which is no small sum—are being spent in full compliance with federal law. That includes policies that prohibit the use of taxpayer dollars to fund abortion activities. We’re here today because the office of your Inspector General has reported one AmeriCorps grantee, the National Association of Community Health Centers, violated the law. As of today, this organization is still receiving taxpayer funds.
More specifically, this organization—one of the largest to participate in the AmeriCorps program—allowed AmeriCorps members to engage in illegal activity by providing support services during abortion procedures. Regardless of your position on the issue of abortion, the law is the law, and it must be followed. The most recent law reauthorizing CNCS programs explicitly prohibits the use of AmeriCorps resources to “provide abortion services or referrals for receipt of such services.”
For two years, these illegal activities were allowed to continue, completely undetected by the very agency meant to oversee these programs. The investigation that began when you finally did become aware of what had happened confirmed that taxpayer funds were used to support unlawful activities, but it also revealed much more.
The Inspector General also found that several AmeriCorps members were regularly tasked with conducting work performed by employees of the centers they supported. This activity is also against the law, but the grantee failed to stop or even report it. AmeriCorps members are to serve strictly in volunteer roles and should never preform the same tasks as employees. But, again, that’s not the end of it.
It was also discovered that the grantee’s senior management chose not to inform the corporation of instances of waste, fraud, and abuse, choosing instead to undermine transparency and avoid reporting information that would make them look bad.
This disturbing list of unlawful and dishonest practices really makes you wonder: How on earth was this allowed to happen? How were these activities allowed to go on for so long? And, why is the National Association of Community Health Centers still a grantee?
When the committee learned about this unlawful activity last month, Chairman Kline immediately called on the corporation to cease all future funding of this organization. On behalf of the committee, I am renewing that call today, Ms. Spencer. I sincerely hope that you will be able to provide us with a plan of action and describe steps you are taking to address this situation.
Revoking this grant would be a good start, but it’s also important to recognize that this is not an isolated incident. In fact, I chaired a hearing back in 2011 examining reports that AmeriCorps members had engaged in other unlawful activity. In response to questioning, the head of CNCS assured us the corporation would be diligent in educating grantees, “helping them to understand the rules,” and would require “all AmeriCorps grantees to annually assure compliance with regulations on prohibited activities.” It seems that neither strategy has solved the problem.
That’s why today I am also calling on the corporation to conduct a comprehensive review to ensure all other grantees in the program are complying with the law. Enough is enough. The corporation needs to be held accountable for the way it spends taxpayer dollars, and that’s why we are here today.
TaskRabbit, Experts Describe Challenges of the Sharing Economy to Congress
WASHINGTON – A representative for the on-demand platform company TaskRabbit told the House Small Business Committee today that the current tax, regulatory and legal climate threatens the success of entrepreneurs in the new sharing economy. The panel of experts described to lawmakers the bevy of new tax compliance challenges faced by small employers, employees and their customers as they navigate the online, app-driven sharing economy.
“No matter what you call it, the sharing economy is changing the face of American entrepreneurship and small businesses before our very eyes,” said House Small Business Committee Chairman Steve Chabot (R-OH). “The dizzying pace of this change has presented many new opportunities and new challenges for the millions of Americans who participate in it.”
“These new platforms have dramatically changed the way companies provide goods and services, giving their workers unprecedented freedom and independence. However, in their enthusiasm, these entrepreneurs are running smack-dab into the buzz-saw of an outmoded tax code that is not designed to accommodate them,” observed Chabot.
“Unfortunately, the IRS has not been part of the solution for entrepreneurs in navigating this new sharing economy. Too often, it has been part of the problem. Our current tax system isn’t working for these new small businesses. In many ways, it is working against them. We can do better, we must do better,” Chabot added.
ENTREPRENEURS TASK WASHINGTON WITH TAX & REGULATORY REFORM
“Tax compliance is just one area of many where our Taskers could benefit from better training. Our Taskers also are looking for direction on how to better market themselves and their services, access health care, and plan for retirement,” testified Rob Willey, the Vice President of Marketing for TaskRabbit.“We at TaskRabbit would like to be a resource, a partner, and a collaborator for that training – it is one of our main areas of focus in determining what types of services we can provide for our Taskers. We hesitate to pursue the kinds of training services we want to provide simply because the threat of litigation and the risks tied to worker classification laws and regulations at the federal and state level are real.”
Pointing to a proposal by economist Joseph V. Kennedy, who also testified at today’s hearing, Willey called for a legal and regulatory “time-out” for new sharing economy companies.
“In the early years of the Internet, Congress imposed a moratorium on federal and state taxation of Internet transactions. Doing so helped a young, nascent sector of the economy develop and provide real benefits for consumers,” explained Willey. “A limited period of legal and regulatory relief would enable platform economy companies to pursue innovative ways to develop and provide services and benefits to those small business owners and entrepreneurs who utilize platform services.”
“What we want to avoid is a situation in which the burdens of tax compliance become so great that it forces Taskers to scale back on their tasks, if not compel them to leave the network altogether,” added Willey.
NEW STUDY: SMALL BIZ GETTING “SHORT-CHANGED” IN SHARING ECONOMY
“The current tax administration system isn’t working for a significant percentage of on-demand platform small business operators or Treasury or IRS,” noted Caroline Bruckner, the Managing Director of the Kogod Tax Policy Center at American University. “At the root of this problem is a lack of information and understanding of tax filing obligations, which is compounded by an information reporting regime that results in widespread confusion. And these tax compliance challenges are only going to continue to grow and impact more and more self-employed small business owners.”
“Everyone is losing under the current rules. Both on-demand economy players and the IRS deserve greater efficiency and less hassle. We can do better,” said Bruckner.
Bruckner is the author of a brand new study released this week titled“Shortchanged: The Tax Compliance Challenges of Small Business Operators Driving the On-Demand Platform Economy.”
“Although millions of Americans are engaging in the on-demand platform economy every day as sellers and service providers, the tax compliance challenges this new frontier presents have gone relatively unnoticed,” Bruckner’s study found. “At the same time, these challenges will grow with this fastest growing segment of the labor economy—creating unnecessary and ongoing burdens for the small business operators who power the on-demand economy.”
“At best, these small business owners are short-changed when filing their taxes; at worst, they fail to file altogether. In addition, these taxpayers face potential audit and penalty exposure for failure to comply with filing rules that are triggered by relatively low amounts of earned income and inconsistent reporting rule adoption,” the study concluded.
IS THERE AN APP FOR THAT?
“Congress and the IRS should take great care to make sure that the federal tax code enables—rather than stifles—the sharing economy,” testified Morgan Reed, the Executive Director of ACT/The App Association. “Specifically, the treatment of all sharing economy workers as 'employees' under the federal tax code would be detrimental to the sharing economy, especially small businesses.”
“Congress should work to advance legislation that would provide taxpayers with certainty and transparency in the tax resolution process and would provide the ability to settle disputes with the IRS in an effective and efficient manner,” Reed suggested.
*Today’s hearing was the first in a two-part series on tax compliance for small businesses in the sharing economy. On Thursday, the Committee will hear from the IRS’ National Taxpayer Advocate Nina Olson.
As a country, we have long worked to ensure all individuals have an equal opportunity to achieve success. A quality education is one of the best paths to a brighter future, but students cannot learn and succeed in class if they are hungry or lack proper nutrition. That’s why ensuring all kids have access to nutritious meals has long been a national priority, and why I am leading an effort in Congress to help do just that.
For years, a number of programs have helped states, schools and other institutions serve children and families in need. These programs and the services they offer play an important role in the lives of millions of low-income Americans, helping to deliver healthy meals to kids who might not have them otherwise. Then, in 2010, Washington got in the way — as it constantly does in so many areas of our lives.
Rather than heed calls to continue and improve these services, a Democrat-led Congress significantly expanded the federal role in child nutrition. The result? A wave of federal rules and mandates that made it harder for schools to meet the nutritional needs of children.
These heavy-handed reforms are expected to increase school costs by more than $3 billion — an enormous amount of money that schools simply cannot afford. At the same time, overall student participation has declined more rapidly than any other time in the past 30 years. Equally troubling are concerns from nonpartisan government watchdogs regarding the waste, fraud and abuse in these programs.
As chairman of the congressional subcommittee that oversees these programs, I’ve seen firsthand the effects of these consequences in our schools, and I’ve heard from school food directors and administrators who say federal rules prevent them from providing the assistance their students need.
I’ve also worked to develop a solution that will strengthen nutrition assistance for children, families and taxpayers. This proposal—the Improving Child Nutrition and Education Act—will reform federal policies to give states, schools and local providers the flexibility they need to provide children access to healthy meals.
The bill will ensure nutrition standards reflect the input of school leaders, meet the needs of all students, and do not add new costs for schools. It will enhance the verification process to increase accountability and rein in waste, fraud and abuse. The proposal will provide states more flexibility to serve nutritious meals during the summer, especially to children in rural and low-income areas.
These are just some of the bill’s positive reforms, aimed at improving support for kids and families in need. Another example is a change to the Community Eligibility Provision. This provision allows schools to provide free meals to all students if 40percent or more of students are, among other factors, homeless, in foster care or in a family eligible for welfare assistance.
Created in 2010, this provision has provided some help to schools administering these programs, but it has also allowed taxpayer dollars to subsidize students who are not eligible for free school meals. That’s something Congress has tried to avoid since these programs were first created.
That is why my proposal would increase the threshold to 60 percent, making this provision of the law consistent with other policies affecting the school lunch program.
By improving community eligibility, we can increase the reimbursement schools receive for providing low-income children breakfast. This is the first time in more than 20 years schools would get additional assistance for serving students breakfast, and we do this at no additional cost to taxpayers.
While there is always room for disagreement, this should not be a partisan issue. Unfortunately, as is often the case when you try to change the status quo, partisan attacks are underway.
To be clear: Every child who is eligible to receive assistance today will still be eligible for assistance under our child nutrition bill. The legislation simply enables us to more effectively use taxpayer dollars and provide more help to those who need it most.
We, as Americans, have a responsibility to promote policies that spend taxpayer dollars wisely and a moral responsibility to look out for our most vulnerable children and families. The Improving Child Nutrition and Education Act helps us do both.
To read online, click here.
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Former SEC Commissioner Brings Shareholder-Proposal Reform Ideas Advanced in WLF Working Paper to Capitol Hill
1. Hearing Notice
2. Witness List
Mr. Joe Steffy
Poppin Joe’s Gourmet Kettle Korn
Accompanied by: Mr. Ray Steffy
Ms. Lisa Goring
Executive Vice President
Programs and Services
Autism Speaks New York, NY
Ms. Terri Hogan
Contemporary Cabinetry East Cincinnati, OH
Mr. Rajesh Anandan
ULTRA Testing New York, NY
WASHINGTON – Today, entrepreneurs shared their personal stories with the House Small Business Committee about providing employment opportunities for adults with autism, Down syndrome and other intellectual or developmental disorders, syndromes, or disabilities. Witnesses told members of the Committee how these individuals boost morale and productivity in the workplace while raising awareness about the untapped talents and abilities of this often-overlooked community.
“For adults with intellectual or developmental disabilities or disorders, finding sustaining employment can be a real challenge,” said House Small Business Committee Chairman Steve Chabot (R-OH). “These individuals can be overlooked when employment opportunities arise, and too often they are shut out from the workplace all together.”
“Yet across the country we are seeing examples of how small businesses, with their ability to adapt and accommodate, are able to provide employment opportunities to those who might not otherwise get a chance,” Chabot added.
ONE CINCY SMALL BUSINESS OWNER’S STORY
“We need to educate others so they begin to take the “dis” out of disabilities and replace it with ‘abilities,’ said Terri Hogan, the owner of Contemporary Cabinetry East in Cincinnati, OH, who was accompanied today by Mike Ames, an employee who has Down syndrome. “We also need to make small businesses aware of the huge untapped resource that is people with diverse abilities. Hiring people who are physically, genetically or cognitively diverse is not just the right thing to do, it is the smart thing to do.”
“Mike has raised morale, brought community awareness, caused others to have broader perspectives and has developed many friends at CCE. For the business, Mike has helped to develop a healthier ‘bottom line’; everyone works harder because of the example he sets. Mike has raised everyone’s standards at Contemporary Cabinetry East and hiring Mike was the best business decision I have ever made,” testified Hogan.
“POPPIN’ JOE” SHARES HIS STORY WITH CONGRESS
Joe Steffy, the owner of Poppin Joe’s Gourmet Kettle Korn in Louisburg, KS, shared his personal entrepreneurship story with the Committee.
“In high school, my IEP (Individualized Education Plan) team began to plan for my transition into adulthood. The team had very low expectations. The worst disability there is that of low expectations. They said I would never hold a job, that I had no attention span, could not focus, would need to live in a group home and go to a sheltered workshop. My parents disagreed. They knew I was capable of working and that I learned by watching. They also knew I would do exactly what I saw done, so teaching me the right way to do things would be important. I am happiest when I am busy and my parents knew this. I would work, they said,” recalled Steffy.
“My business works for me. It creates new opportunities for me to grow as a person, and to be an engaged, valued member of my community. With the right support system, being a self-supporting entrepreneur can be, and is, a reality for me,” he added.
AUTISM SPEAKS: ADVOCATE’S VIEW
“Small businesses are in a position not only to develop new models that employ individuals with autism, but also to innovate in a way that directly responds to local labor market needs,” testified Lisa Goring, the Executive Vice President for Programs and Services at Autism Speaks. “The connection many small businesses have with their community is vital to creating the partnerships necessary to transition young adults into the local workforce, share best practices with other local businesses, and nurture a workforce comprised of people with varying abilities.”
WASHINGTON - House Small Business Committee Chairman Steve Chabot (R-OH) made the following statement on House passage of the 55th National Defense Authorization Act (NDAA):
“The contracting reforms included in this year’s NDAA will provide new and improved opportunities for America’s 28 million small businesses to compete for defense contracts so that we can get the best possible products in the hands of our war fighters and make sure the tax payers get the most bang for their buck. I want to thank Chairman Thornberry and the House Armed Services Committee for their work in putting together this year’s NDAA and for including these common sense small business contracting reforms. I look forward to continuing to work with them and our Senate colleagues to get this vital national security bill to the President’s desk post haste.”Chairman Chabot penned an op-ed for Defense News this week in outlining the key contracting reforms included in this year's NDAA.
Minnesota Republican Rep. John Kline and former California Rep. George Miller, a Democrat, knew there’d be blowback as architects of a controversial 2014 reform allowing failing pension funds to cut accrued benefits. To their credit, the duo plowed forward with the legislation anyway, recognizing that some hardened problems have no good or easy solutions, and that in such situations, strong leadership means identifying the least bad option.
There are few better illustrations of this than the Kline-Miller Multiemployer Pension Reform Act, a painful but necessary measure that acknowledged federal bailouts for severely underfunded pension funds are unlikely and gave unprecedented flexibility to pension funds to restructure on their own to avoid insolvency.
Unfortunately, a recent U.S. Treasury Department decision undermined the law, leaving pensioners in the sprawling Central States retirement fund for Teamsters potentially facing even more dire cuts than they would have under the Kline-Miller law. That’s a truth those celebrating the Treasury decision as a reprieve, such as Teamsters General President Jim Hoffa, need to publicly acknowledge more honestly than they have.
The Central States pension holds retirement funds for 407,000 trucking industry workers and retirees. The fund faces insolvency in 10 years. Its struggles include a shrinking trucking industry, reduced numbers of contributing younger workers, the 2008 stock market crash gutting investment income and the exit of major employers (among them: the Star Tribune, as part of its 2009 bankruptcy reorganization) that left too few employers contributing to the fund to cover its obligations.
Anger predictably ensued when Central States administrators proposed cuts for 270,000 drivers and retirees as part of their rescue plan. The average cut would have been 23 percent, though some would have been much higher. But the Treasury Department rejected the Central States restructuring and benefit cuts earlier this month, a dubious decision that seems more rooted in election year politics than the restructuring details.
Following the decision, union leaders bashed the Kline-Miller law, while Hoffa exulted about no cuts for the “foreseeable future” and promised to find a solution. The reality, however, is that rejecting the least bad option simply means that the other solutions are worse. The plan’s dire finances have not changed. And without reform, pensioners’ cuts eventually may be even deeper. If the plan does run out of cash, there is a federal safety net program called the Pension Benefit Guaranty Corp. But the PBGC has an annual payment cap of $12,870 — a sum less than the Central States fund’s average annual payout. The PBGC’s finances are also so precarious that absorbing Central States could jeopardize the PBGC itself, potentially result in this program paying out even less to all retirees depending on it.
A congressional bailout for the Central States fund, which carries the price tag of $11 billion, is an obvious way to stave off cuts. But Josh Gotbaum, a Brookings Institution pension expert, likened this strategy to believing in the “tooth fairy.’’ He said that a Democratic-controlled Congress had a chance to bail out the fund in 2010, and did not. With both chambers now controlled by Republicans, a financial rescue is even more remote. The Star Tribune Editorial Board also notes that there are dozens of other severely underfunded pension funds, and the federal government can’t afford to help them all. The debate going forward needs to honestly acknowledge the long odds of a congressional bailout for the Central States fund and what can realistically be done to preserve pensions. Anything else, Gotbaum said, is “keeping people from facing the choices they actually have.”
To read online, click here.
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