December 16, 2015

Biz Journal’s Kent Hoover Talks Washington and Small Business

By Bob Coleman
Editor, Coleman Report

Bob Coleman: Kent Hoover is the Washington Bureau Chief of the Business Journals. He is Mr. Small Business. What’s going on in Washington Kent? Tell us what’s happening with Congress.

Kent Hoover: Well this could be a big day for small businesses, this afternoon they are going to release the final details on the government spending plan and the tax expenditures. These tax breaks that expire, that are routinely renewed, don’t do much good if they are not renewed. The big one for small business is making the $500,000 expensing limit for section 179 expenses permanent.

It was $500,000 last year but they didn’t make it $500,000 until mid-December so it didn’t do anybody much good. It didn’t provide much incentive for small businesses to go out and buy new equipment. But then it fell back to $25,000 on January 1st. everyone expected that Congress would raise it back up. But here we are in December and right now it is still $25,000. So if they make it $500,000 permanently it would be a much bigger incentive for small businesses to have the confidence to buy big pieces of equipment and write it off now instead of having it depreciate over a bunch of years.

Bob Coleman: You mentioned small business confidence, what do you see from your perch about how confident main street is today.

Kent Hoover: The NFIB survey was pretty sour. Some of the other surveys have also been down too. Even big business, the CEO’s of America’s largest corporations are a lot less confident about hiring or buying new equipment in the months ahead. There is a lot of nervousness about the economy. Not so much that we are going into a recession, just an acknowledgement that what little recovery we had, this might be as good as it gets.

Bob Coleman: Let’s talk about SBA, David Vitter, and the Chairman of the Senate Small Business Committee, lost his election for Governor in Louisiana. Is he going to resign or is he going to serve out his term?

Kent Hoover: Vitter has announced that he is not going to run for re-election, I don’t think he is going to resign. Basically he is running out the clock on his Congressional career. He hasn’t been active on small business issues. I think he’s had more hearings in Louisiana while he was campaigning for Governor. There is a little bit of a vacuum and lack of leadership on the Small Business Committee on the Senate side.

Bob Coleman: And SBA has record numbers, and still seems to have bi-partisan support.

Kent Hoover: Yes that is correct. Congress raised their authorization limit to solve that temporary shutdown. Right now the 7(a) program is ahead of its record setting levels from last year. And the 504 program has kicked back up after a couple of really subpar years. That is good to see because they have been counting on getting this refinancing program back into place but I don’t think Congress is going to do that. So they are doing loans for commercial real estate, the loans they were created to do.

Bob Coleman: The SBA really does have bi-partisan support correct?

Kent Hoover: Yeah it does. The only danger on the side of the SBA came from the battle of the Export-Import Bank. A lot of the arguments to get rid of the Export-Import Bank involved the tone that the Government should not be involved in private sector businesses and the Government should not be picking winners and losers. So some of those arguments could be used against SBA but it’s a little different. You don’t have big businesses like Boeing and Caterpillar sucking up most of the dollars in the SBA loan program. But on the ideological front, a lot of those arguments can apply. Ex-Im Bank ended up getting a lot of bi-partisan support. I believe a majority of Republicans voted for it.

Bob Coleman: Both parties want to be the party of Small Business, what do you see on the political front?

Kent Hoover: They all say they want to be the party of Small Business. Hillary Clinton said she wants to be a small business President. In fact all of the candidates will say that. I think small businesses are much more interested in what policies they will favor. We’ve done non-scientific polls from our readers and Trump was getting a lot of support, so we’ll see. A lot of us thought the Trump fever would flame out but it sure doesn’t seem to be.

Bob Coleman: As Congress is cramming to get out of town, there could be some news on the NLRB?

Kent Hoover: Yes the National Labor Rights Board. We are waiting to see the details of this spending bill and the tax extenders bill. Negotiations are running concurrently so they are being lumped together. As far as the spending bill, a lot of people are really pushing hard for rider on it that would basically prevent the NLRB from enforcing its new joint employer rule. And again it was one case that was decided, and it wasn’t about Franchises, it was more about a staffing agency. But they are also building a case against McDonald’s franchises. Basically the implications are that a Franchise and a Franchising company could both be considered employers of individuals which would take a lot of power away from individual franchisees. This could also open up fast food chains to union organizing efforts. That something that the franchise industry is really concerned about. They want to keep the status quo for at least the end of the fiscal year. They don’t want this joint-employer rule until things shake out.

Bob Coleman: And that has support on both sides?

Kent Hoover: Well not so much on this issue. This is really a pro-labor issue, and a lot of Democrats want to see unionized workers.

Bob Coleman: Thanks for your update Kent.

Kent Hoover: Thanks Bob.