A Strange, New World

By Mark Lee

On October 26, the House passed the Senate version of the FY2018 Budget Resolution. During Senate debate the previous week, House and Senate GOP leadership came to an agreement that would eliminate the need for a potentially time-consuming conference of the House and Senate resolutions.  Under this agreement, the House would accept the Senate’s resolution which includes reconciliation language authorizing $1.5 trillion over 10 years for the Congressional tax-writing committees – House Ways & Means and Senate Finance – to produce tax reform legislation.  Reconciliation is a legislative process that allows the Senate to pass budget-related bills with a simple majority of 50+1, instead of the 60 votes typically required. The resolution also includes a blueprint for nearly $47 trillion in federal outlays over 10 years, $35.4 trillion for defense and $11.5 trillion for domestic spending. 

The House version envisioned deficit-neutral tax reform, however authorized $300 billion in lost revenue over 10 years for tax reform.  As part of the agreement, the House gave up its insistence on $203 billion in mandatory domestic cuts over 10 years.  The Senate agreed to accept the House’s push for higher defense spending without offsets, or cost reductions, in other areas of the federal government.    

The passage of the resolution does not mean that Congress has passed the 12 appropriations bills that make up the federal budget for FY2018.  Since October 1, the federal government has been operating on a Continuing Appropriations Resolution (CR), which expires on December 8.  This budget resolution is primarily a vehicle for tax reform through reconciliation.

This year, the House passed an FY2018 omnibus appropriations bill on September 14, and the original House version of the FY2018 Budget Resolution on October 5. Typically, a budget resolution is adopted before the appropriations process can begin, however Section 303(a) of the Congressional Budget Act (CBA) enables the House to begin the appropriations process if a resolution has not been adopted by May 15. 

The Senate has not passed its appropriations bills and some Senate Appropriations subcommittees, including the Subcommittee on Financial Services & General Government which has jurisdiction for funding the Small Business Administration (SBA) and the Community Development Investment Fund (CDFI) at Treasury, have not yet held mark-ups on their bills. 

For FY2018, Congress has two choices:  follow the path of FY2017 -- which included three CRs prior to enactment of an omnibus spending bill, or complete the appropriations process by December 8.  We’re in uncharted territory when the appropriations process precedes the passage of a budget resolution. Regardless, AEO will be working overtime to ensure that the priorities of our nation’s microentrepreneurs and small businesses are not forgotten in this strange, new world. 

Are you better off than you were three years ago?

By Ann Sullivan

In a landmark hearing on women’s entrepreneurship in the Senate Small Business Committee held in 2014, senators focused on access to capital, access to contracting and access to resources. Jane Campbell, now our president, worked for the committee at the time and organized the hearing. As she tells the story, WIPP asked for the biggest hearing room in the Senate, confident that women would fill the room. The Senate staff was a little skeptical so they held back some seating, worried the cameras would see empty chairs. The opposite happened—there was standing room only in a room that held 325 people. 

A majority of the senators on the committee showed up to give their support and the women entrepreneurs in the audience were so engaged, one senator called it a “rally.” The witness list included Shark Tank’s Barbara Corcoran, Nelly Gelan and WIPP member Lynn Sutton from Atlanta, Georgia.

Fast forward three years. Last week, the same committee held another hearing on women’s entrepreneurship focusing on strengthening the entrepreneurial ecosystem for women. The witness testimony centered around barriers to capital, technology innovations and mentorship. This time, the room was not crowded and there were no star witnesses. But the messages were striking similar.

Witnesses cited the same statistics in 2017 as they did in 2014 with respect to lending. It appears there has been no movement beyond 4% of all commercial loan dollars go to women-owned firms. Neither has the statistic that 2.19% of all venture capital funds went to women owned firms.

The federal contracting picture is much the same. In FY14, women received 4.68% of all federal contracts, missing the 5% federal goal. In FY16, the government also failed to meet its goal, by awarding 4.79% of its contracts to women—still short of the 5% goal.

However, looking at federal funding for resources to women such as Women’s Business Centers (WBCs) gives us hope. In FY14, WBCs were funded at $13 million. In FY16, that number went up to $17 million, a bright spot in an otherwise dark picture. 

The significant change from 2014 to 2017 has not been in the number of federal resources devoted to this “ecosystem,” rather it has been in the numbers of women starting and growing businesses. According to the American Express OPEN’s “State of Women Owned Business in 2014” report, in 2014, there were nearly 9.1 million women-owned enterprises, employing nearly 7.9 million workers and generating over $1.4 trillion in revenues. Compare that to the 2016 report, there were 11.3 million women-owned businesses in the United States, employing nearly 9 million people and generating over $1.6 trillion in revenues. 

The disconnect between federal resources for women entrepreneurs and the number of women generating jobs by owning businesses in three years is stark. The number of women entrepreneurs who would benefit from greater resources continues to grow while public investment is at a standstill. The private sector is no more responsive as the access to capital numbers show.

Entrepreneurial-friendly public policies will help. Reducing the tax burden and compliance costs will go a long way toward making women-owned businesses profitable. In addition, beefing up the “ecosystem” of financial and business assistance through the Small Business Administration (SBA) and other federal agencies would be well worth the investment. With respect to the access to capital problem, WIPP’s 2017 Economic Blueprint contains concrete ideas on a path forward. While the federal government cannot require lenders to specifically lend to women (our lending laws prohibit discrimination of any kind), a first step should be to collect lending data on women. 

My hope is that I will not be writing this article with the same prognosis three years from now. A commitment to women entrepreneurs is a commitment to growing the nation’s economy. Both the private and public-sector efforts should reflect the tireless energy women entrepreneurs exude. 

The question for the women’s business community is: Are you better off than you were three years ago? Statistics show that women are doing their part – we want government to do its part too.