The People’s Place

Answers Over Questions. Facts Over Opinions. Moving Forward Over Standing Still.

Will September Mark Credit and Tax Relief for Small Businesses?

Did you know that small businesses with fewer than 50 employees accounted for more than 60 percent of the job losses in America? Did you know that back in June the House passed two bills that would tremendously help small businesses across the country meaning more jobs for American workers?

In June, the House passed both the Small Business Jobs and Credit Act (HR 5297) and Small Business Jobs Tax Relief Act (HR 5486). While these bills are fully paid for, similar bills have stalled in the Senate. The push is on again for these bills to be the number one priority when Congress reconvenes in September.

Neither side of the aisle can deny that small businesses have taken a beating over the past two years, and with the exception of these two bills aimed at providing credit and tax relief, there is little help in sight.  Similarly, neither side of the aisle can deny that small businesses are the backbone of our American economy. According to a recent Department of Labor report, in the final few months of last year, small businesses with fewer than 50 employees accounted for more than 60 percent of the job losses in America.  Relief for small businesses can mean more Americans back to work.

What type of help are we talking about? As reported on The Gavel, a summary of the two bills passed by the House follow.

Small Business Jobs and Credit Act (H.R. 5297 – net cost $2 billion)

• Small Business Lending Fund: Delivers loans to small business on Main Street to push the recovery forward and create jobs through a new $30 billion lending fund for small and medium sized community banks ($10 billion or under) that could leverage up to $300 billion in lending.
  
• Community banks provide the credit that small businesses need to grow and create jobs in communities across the country and now the financial crisis on Wall Street and the Bush recession have diminished these banks’ ability to lend.
  
• CBO estimates that this provision would actually save taxpayers $1 billion over 10 years, as banks are expected to pay back these funds over 10 years with interest.
  
• The bill includes tough performance-based incentives to make sure that these banks lend to small business.
  
• Banks with assets of less than $1 billion would be able to borrow an amount equal 5% of their assets, and banks worth up to $10 billion would be eligible for an investment of up to 3% of their assets.
  
• The banks would repay the government’s loan at a dividend rate starting at 5% with lower interest payments if they expand their small business lending. That rate would drop by 1% for every 2.5% increase in small business lending that the bank shows compared to 2009.  A lender could cut its dividend rate to just 1% by increasing small business loan portfolio by 10%.
  
• But if the bank reduced its small business lending, its repayment dividend would shoot up as high as 7%.
  
• The program would only be available to banks with assets of less than $10 billion — ruling out the megabanks that have drawn fire for putting their own interests before their customers.
  
• State Small Business Credit Initiative: Provides $2 billion in funding for new or existing state lending programs. These programs already exist in around thirty states, and use small amounts of public dollars to generate substantial private bank financing. By supporting existing expertise in states around the country and using an easy to replicate model, this program will be able to quickly increase small business lending and create jobs. This would have a significant bang for the buck supporting over $20 billion in small business lending.
  
• Small Business Early Stage Investment: Helps promising small business start ups through a public/private partnership designed to channel investment capital to them. How small businesses are financed is evolving.  While entrepreneurs have traditionally used assets like real estate to secure loans, we are now seeing more business owners seek financing based on non-tangible strengths — like their intellectual capital and employees.  This proposal recognizes this shift and helps firms access capital to grow and create jobs.   This provision has twice passed the House, in the Small Business Financing and Investment Act – H.R. 3854 – and, again, in the Small Business Early Stage Investment Act of 2009 – H.R. 3738, with strong bipartisan support. Estimated cost: $1 billion over 10 years.
  
  Read the Small Business Jobs and Credit Act.

Small Business Jobs Tax Relief Act (H.R. 5486)

• Spur Investment in Small Businesses: Increases the capital gains tax cut for those who invest in small businesses this year, like President Obama’s budget.  The bill would exclude 100% of capital gain income for stock in small businesses purchased from March 15, 2010 to January 1, 2011.  Estimated cost: $2.0 billion over 10 years.
  
• Small Business Penalty Relief: Fixes a tax shelter disclosure penalty (Section 6707A) disproportionately impacting small businesses. Endorsed by the Small Business Council of America, the bill makes penalties for failing to disclose reportable transactions on their taxes proportionate to the underlying tax savings for small businesses.Some businesses were assessed penalties as high as $300,000 for receiving a tax benefit of as little as $15,000.  Estimated cost: $176 million over 10 years.
  
• Increase in deduction for business start-up expenditures: Increases to $20,000 (from $5,000 in current law) the deduction forstart-up expenditures in connection with investigating the creation of a business (but not capital or equipment), and allows more businesses to qualify for the maximum deduction. By allowing entrepreneurs to recover more start-up expenses, small business owners can focus more on hiring new workers and growing their businesses. Estimated cost: $508 million over 10 years.

Read the Small Business Jobs Tax Relief Act.

Fully Paid for/Closing Tax Loopholes ($7.1 billion)

• Crude Tall Oil: Closes a loophole that allows paper mills to claim biofuel tax credit for a byproduct known as “crude tall oil”– a waste by-product of paper manufacturing. The bill would limit the tax credit to fuels that are not highly corrosive (i.e., fuels that could be used in a car engine or in a home heating application). Estimated to raise $1.849 billion over 10 years.
  
• Curtailing a Gift Rule Loophole: Includes the President’s 2011 Budget proposal to significantly limit a type of tax planning that allows rich families to pass on wealth while cutting their estate and gift taxes. It requires taxpayers setting up a trust (grantor retained annuity trusts (“GRATs”)) totransfer of assets to another individual to avoid gift taxes must include a minimum 10-year term for the annuity. GRATs are a trust with a specific life or term that allows a wealthy person to transfer more money to heirs than they otherwise could under the “$1 million in a lifetime” rule. With the strategy, an asset is placed into a trust by a grantor, who then takes back an annuity, which is made up of the asset value plus a variable interest rate.  GRATs work best when the asset appreciates more than the interest rate. Death during the term of the annuity generally eliminates the tax benefit of using a GRAT, as it is taxed to the estate. By calling for a 10 year term, the bill requires that taxpayers take a greater risk that they might die during the GRAT term in order to take advantage of the gift tax benefits of this device. Estimated to raise $5.297 billion over 10 years.

If you agree that providing help for small businesses is the right thing to do, speak up! Your voice does matter. Use the tools in our toolbar to contact your congressional representatives.

Also, let us know what you think about the legislation and the process.

The People’s Place | The Anita Estell Blog
www.anitaestellblog.com

Corporate Cash and Influence in Our Elections

How do you feel about the record amounts of cash that corporations are throwing into the 2010 elections?Are you interested in knowing what corporations are spending and where?

This year’s Supreme Court ruling in Citizens United v. Federal Election Commission, gave corporations and private interest groups a green light to infuse as much cash as they can afford into elections. Since corporations have a legal responsibility to spend only in the interest of making the company money, many people have argued the Supreme Court ruling presents a conflict of interest to the bedrock of our democratic system, a system that should reflect the will of the people, not a system that reflects the will of a corporate bottom line.

The Chamber of Commerce is a notable example of private interest funding. As reported recently in the Associated Press,

“The country’s largest business lobby has pledged to spend $75 million in this year’s elections. That’s on top of a lobbying effort that already has cost the organization nearly $190 million since Barack Obama became president in January 2009.

Those numbers alone, together with what chamber officials say is a network of online backers that can amplify the pro-business message, give the group clout as a virtual third party and a powerful voice in what laws are made and who’s elected to write them.

“Elections have consequences, votes matter,” said Bill Miller, the chamber’s political director. “And we’re going to go out and engage in an effort to try and ensure we have people on Capitol Hill that will listen to our arguments and propose and promote ideas that are more supportive of the free enterprise system.”

Fortunately this is a democracy and your voice is the most powerful tool you have. If you agree or disagree with unlimited corporate spending in elections, you can make your voice heard by sharing your views with the corporations you support. The first step though is being informed. We found a website that helps make staying informed on corporate spending a little easier.

Corporate Spending | NYC Public Advocacy, launched by Bill de Blasio, the public advocate for the City of New York, is making it easier to track which corporations are getting involved in politics. The site breaks major corporations into three categories: those that have pledged to stay out of politics, those that have not pledged to stay out of politics, and those prepared to spend money in politics. He also makes it easy for web surfers to contact corporations and encourage them not to spend on elections.

Take a look at the site and let us know what you think >>>.

Also there is a push across the country for a federal amendment to reverse the supreme court decision, Citizens United. Do you agree or disagree with this approach? Take a look here.

The People’s Place | The Anita Estell Blog
www.anitaestellblog.com

Anita Estell on the OMB and FY12

Higher Education and the Economy

Would it surprise you to learn that the United States has fallen from 1^st to 12^th place internationally in the percentage of young adults with post-secondary degrees?

In an effort to reverse this trend and reclaim the number one spot, the Commission on Access, Admissions and Success in Higher Education, has set a goal for the United States to reclaim world leadership in college completion by 2025. The campaign mirrors President Obama’s quest to reclaim world leadership in college graduates by 2020. Both are goals that many Americans would agree are important.  However, a recent article from the Brooking Institute, Higher Education and the Economy, written by Grover J. “Russ” Whitehurst, offers a different perspective.

Whitehurst contends that a single-minded pursuit of regaining the world’s lead in college graduates may not be the best approach to solve the problem faced by our nation. He contends that such a…

“single-minded focus, may blind us to the fact that one size does not fit all nations or all young adults.  One of the distinctive feathers of the U.S. higher education system is its diversity.  We have over 6,000 institutions of all manner and stripe serving students of many ages and needs.  In contrast, the higher education system in most of the countries with which we compete is centrally managed and homogenous.  We should make diversity our strength by establishing national policies that encourage institutions to adjust quickly to changing needs in the marketplace for learning...”

We found the article interesting and thought you may as well.  Check it out the full article here and let us know if you agree or disagree.

The People’s Place | The Anita Estell Blog
www.anitaestellblog.com

Washington Post Perspective: Why Corporate Profits Have Returned, But Hiring American Workers Has Not

Are you like many across the US, who wonder when the economy will rebound in the form of jobs for Americans?

You may be surprised to learn what was highlighted in the recent Washington Post article, The new division of labor: adding profits, subtracting workers. In the article, Steven Pearlstein offers another perspective on the jobless recession by suggesting what he calls the hypocrisy of the U.S. Chamber of Commerce and others who blame the Obama Administration for continued high unemployment when annual corporate profits have rebounded to a staggering $1.2 trillion – “higher than they were at the height of the bubble” and yet hiring of American workers remains stalled.

Although the mantra from everyone around the country has been jobs – jobs – jobs, Pearlstein contends the following:

On the outside of its majestic headquarters in Washington, across the park from the White House, the U.S. Chamber of Commerce recently hung four giant banners that spell out exactly what it thinks is missing from the current economy: J-O-B-S.

This is a particularly Orwellian bit of political theater, given that it is the private businesses the Chamber purports to represent that eliminated 8 million jobs in 2008 and 2009 and have managed to add a scant 600,000 since then. If Chamber President Tom Donohue wants to round up those responsible for the lack of job growth in this country, all he has to do is call a meeting of his board of directors.

Although the jobs haven’t returned, corporate profits surely have and, at $1.2 trillion annually, are now higher than they were at the height of the bubble…

…it is more than a bit hypocritical for business leaders to pin the blame on the Obama administration for their own failure to create private-sector jobs, as they have been doing lately.

To read the full article, click here.

Do you agree with Pearlstein’s assessment? Why or why not?

The People’s Place | The Anita Estell Blog
www.anitaestellblog.com

Ask Anita: What Will Happen to Sponsored Legislation as a Result of Mid-Term Elections?

Dear Anita,

I’m concerned about the legislation that has been sponsored by Congressmen and Congresswomen who are up for midterm re-election. What happens to this legislation should they not win re-election? I am sure that even though legislation may have been passed on to various committees for review, if the champion of this legislation is no longer a member of congress, does it then fall by the wayside with no one there to “put the pressure on” until it makes it through to a final vote?

Sincerely, Melanie McWhorter

Dear Melanie,

Thank you for taking a moment to write. When a Member of Congress loses a seat, legislation (s)he may have introduced does not necessarily die. During a mid-term election cycle, the bill could carry over to the next session, if there is another lead co-sponsor who still is in Congress.  If there are no co-sponsors, another Member may choose to re-introduce the measure. The bill will receive a new bill number and the former Member’s name would not be assigned to the bill as a sponsor.  Each Congress is marked by a four-year cycle.  Mid-term elections occur two years in the cycle, and all bills die at the end of every four years.

They can be resurrected in various forms and with different numbers and sponsors indefinitely.

Again, thanks for writing in. If you have any additional questions, don’t hesitate to send them in.

~Anita Estell

The People’s Place | The Anita Estell Blog
www.anitaestellblog.com

WOW – Gerrymandering

Have you heard more mentions of redistricting or gerrymandering?

With the mid-term elections a few short months away, many issues are at stake including the issue of redistricting. The redrawing of U.S. House district boundaries is required every 10 years. The Constitution mandates that U.S. House districts be adjusted every decade to ensure equal representation based on population shifts. State governors and legislators will help draw new boundaries based on the 2010 Census. Redistricting can affect the House balance of power and can lead to accusations of “gerrymandering.”

What exactly is gerrymandering?

Gerrymandering is a form of boundary delimitation (redistricting) in which electoral district or constituency boundaries are deliberately modified for electoral purposes, thereby producing a contorted or unusual shape. The resulting district is known as a gerrymander; however, that word can also refer to the process.

Gerrymandering may be used to achieve desired electoral results for a particular party, or may be used to help or hinder a particular group of constituents, such as a political, racial, linguistic, religious or class group.

When used to allege that a given party is gaining disproportionate power, the term gerrymandering has negative connotations. However, a gerrymander may also be used for purposes that some perceive as positive, notably in US federal voting district boundaries which produce a proportion of constituencies with an African-American or other minority in the majority (these are thus called “minority-majority districts”).

source: CNN, Merriam-Webster Online, Wikipedia.org

The People’s Place | The Anita Estell Blog
www.anitaestellblog.com

Ask Anita: How Can Congresspersons Seriously Use the Deficit as an Excuse to Vote Against Umemployment Insurance?

Dear Anita,

I’ve been very disheartened to watch the bitter partisan battle play out in Congress as November elections draw near. Most disheartening has been the fact that Congress has failed to pass the necessary legislation that will keep unemployment benefits flowing for millions of Americans who struggle to find work. The “line in the sand” appears to be the record deficit and how any proposed legislation must not to increase it, including unemployment benefits. I may be naive to use the word fair when it comes to politics but all in all I don’t think this is fair.  Why didn’t these congressman care about the deficit enough to not let it balloon as it did under the last administration? And how can they seriously use the deficit as an excuse to turn a blind eye to the Americans who will be hurt by their vote?  What are we left realistically to think other than it is politics and not care for the citizens of the state they represent that most fuels them? Am I totally off the mark with this one?

Huriyyah M.
The People’s Place, Blog Administrator

Dear Huriyyah:

I feel your pain and understand your concern.  Currently, there are over 15 million persons in the United States of America without work.  In percentages, that number represents 9.5 to 10 percent of the nation’s working age population.  The numbers and percentages often camouflage the anguish reflected in your comments and the realities faced by those without jobs or no way to make ends meet.  Based on my personal experience with unemployment, there are days when most of the people counted in this number are worried about eating, sleeping, paying bills, having a place to live and avoiding any health emergency.  Unemployment places real pressure on relationships, families, children and communities — not to mention sanity. To speak of and treat the unemployed as “those,” “they,” and “them” is not only disheartening, but is disingenuous. They are us and we are them.  What do I mean?  None of us in America can escape the reality associated with our descent from an economic precipice and the gravity associated with standing on what feels like a slippery slope, or possibly hanging from a cliff.   All of us feel the pull.  Albeit many more feel it much worse, and have been bruised by the fall.  We feel the tension of the pull in our gut, sensing that in just a matter of time, it could be us.  Before it is over, it may be us.

The challenges we face are multiple and layered — a good piece of it has to do with the national debt and annual deficits.  Extension of unemployment insurance is a short-term solution for a long-term problem.  The government is spending more than it receives.  Yes. We need unemployment insurance, and even most importantly jobs for people.  Even more so we need productivity.  We need new jobs generated by production of something, goods and services, provided to someone (hopefully living outside of the U.S).  We need ingenuity, invention, investment and infrastructure to serve as the foundation for a New America prosperity paradigm.  This is a work in progress.  To you and others I would say, don’t wait for the government to get it right.  Strap on your gear and work, baby, work from home, online, on the corner, on the road, in the community, back at school to prepare yourself and help others to make it in what already promises to be a very different century.

I am entertained by the economists who recommend that we adopt an austerity approach by cutting programs and spending at the federal level, as well as those who recommend that we spend more.  At this point, as we face the winds of change and slippery slopes, I don’t think it matters if you throw a knife or a dollar bill at what is about to hit us, all of us, including the poor and yes, the middle class.  Maybe a combination of strategies would work?  Not sure.  I sense that this thing right now is bigger than most truly understand.  Only time will tell.  The real answer has everything to do with time.  Do we have time, talent, tools and the energy to head to higher ground?  Do we have compassion and time to ensure that folks are not left behind?  Interestingly, compassion is free; it doesn’t cost a dime; and can be pursued absent any action by any politician or elected official.

Now, to answer the questions you raise. Yes. Many Congresspersons and the last Administration displayed a callous disregard for doing right by the American people when they allowed the debt to balloon after inheriting a surplus; I don’t know if they have a blind eye, or simply turned a deaf ear to those who are hurting.  For all the money we spend on protecting and rebuilding other countries, one would hope that the quality of life in America would not be sacrificed for a war that few understand.  Funding for all domestic discretionary programs combined represents about half of all the funding going for defense.  Presenting another challenge, by the way —  what happens when you cut defense spending?  More people get laid off.  Another question! What happens when those who have placed their lives on the line come home and cannot find jobs?  As my grandmamma used to say: “this is ’bout to be a hot mess.”

There are no easy answers. But, I think you are on the mark in that all you are asking is for those elected to sit down and roll up their sleeves and truly work as Americans to craft solutions and approaches that are good for all Americans.  I agree.  It is time to give the partisan crap a rest.  Our very future depends on it. I would recommend that you at least get anyone running for office to put people and not party politics first before sending them to office.  And make sure that they are more committed to developing nonpartisan solutions than ousting the other party.   Let’s continue the conversation.  I am just getting warmed up.

What do you think?

~Anita Estell

The People’s Place | The Anita Estell Blog
www.anitaestellblog.com

Today’s Unemployment Crisis by the Numbers

An except can be found below:

“Allowing benefits to the long-term unemployed to expire threatens our nascent economic recovery. Economists across the board agree that unemployment benefits are one of the most important counter-cyclical economic policies we have.

The Federal Reserve believes our chances of swift economic recovery in the coming months are slim, noting that “Financial conditions have become less supportive of economic growth on balance” and that “the pace of economic recovery is likely to be moderate for a time.” To be sure, the economic policies of Congress and the Obama administration have helped the U.S. economy avoid an all-out catastrophe and then turned the economy toward recovery, putting over one to nearly three million people to work so far, but unemployment continues to be unacceptably high and is projected to hover around its current rate for the near future.

Businesses of all sizes are not hiring because they do not see sufficient demand for their goods and services. The Federal Reserve is doing its bit, maintaining the federal funds rate—the interest rate at which banks can borrow from the Fed—at near zero for a year and a half, but there is no more room for monetary policy to boost the economy. That leaves fiscal policy—including especially unemployment benefits—as the primary tool government has to increase the demand for goods and services.

Alas, enough members of Congress don’t get it. Despite the lack of jobs and record-breaking unemployment, Congress allowed federal unemployment insurance provisions to lapse on June 4. Nearly a month later, they still have not reauthorized the unemployment insurance extensions that millions of jobless workers are relying on in this weak job market. Never before has Congress cut off benefits when unemployment was so high. Since the 1950s, federal unemployment insurance extensions remained in place during recessionary periods until unemployment dropped to as low as 5.0 percent. The highest unemployment rate at which these extensions were allowed to expire was 7.2 percent, following the 1983 recession—substantially lower than our current rate of 9.7 percent (see table 1).”

To read the full memo, click here.

After you’ve finished reading, be sure to let us know your thoughts.

The People’s Place | The Anita Estell Blog
www.anitaestellblog.com

Grant Alert: FY10 Minority Community HIV/AIDS Partnership: Preventing Risky Behaviors Among Minority College Students

Are you a minority community HIV/AIDS partner looking for grant funding?

The Department of Health and Human Services recently announced the availability of $1,000,000 in
grant funding to qualified institutions. If this money sounds like a god-send, begin preparing your applications
today. The application deadline is August 2, 2010.

To qualify for funding, an applicant must:

• Be an established, nonprofit national minority-serving organization defined by
charter or bylaws to operate nationally which address health and human services and
has a demonstrated history of service to racial and ethnic minority populations.
Bylaws and/or charter must be furnished with the application. The applicant must
have a minimum of five years experience in conducting HIV/AIDS programs for
minority populations. Examples of national minority-serving organizations that
may apply include:

- organizations representing community health organizations serving minority populations;
- organizations that focus on minority health, education, leadership development, and national
partnerships; and
- organizations whose membership represents minority-focused health professionals.
- national faith-based organizations
- federally recognized American Indian Tribes and Alaska Native Villages and Corporations
which meet the definition set forth in U.S.C. Section 1603(e); Tribal Organizations, which
include Intertribal Councils and American Indian Health Boards which meet the definition set
forth in 25 USC Section 1603(e);

• Represent a collaborative partnership arrangement with at least two institutions (one
urban, one rural) of higher education, particularly those with a demonstrated history
of serving minority populations (including community colleges) and at least two
community based health care facilities.

For more information be sure to visit the online grant application page.

If we can answer any questions for you during the process, don’t hesitate to let us know.

Good luck!

The People’s Place | The Anita Estell Blog
www.anitaestellblog.com

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