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.

We Did Pretty Good

We Did Pretty Good

Ann Sullivan

Every year when the WIPP Leadership conference convenes, our policy team does an assessment of what we accomplished in the past year.  Given the turbulent, go-no-go legislative year, I’m pleased and a bit surprised by our accomplishments on behalf of women entrepreneurs.

·      Finding a Fair Shot for Women on Federal Contract Opportunities

o   The Senate included in the National Defense Authorization Act (NDAA) language from a bill (S.1038) by Senators Joni Ernst (R-IA) and Kirsten Gillibrand (D-NY) asking the SBA to conduct a study on Women-Owned Small Business (WOSB) participation on Multiple Award Contracts (MACs). The legislation came in response to a report published by WIPP entitled, “Do Not Enter: Women Shut Out of Largest Government Contracts.”

·      Promoting Our Tax Reform Agenda

o   Prior to GOP leaders releasing their framework for tax reform this month, WIPP has been on the forefront of the issue. WIPP members have published Op-Eds across the country, Board Member Rebecca Boenigk testified before the House Committee on Ways and Means in a hearing on tax reform for small business, and WIPP submitted its tax platform to the Senate Finance Committee – asking for simplification of the code, fairness in tax rates for all entities, and repeal of the AMT and Estate taxes. All four of our asks were included in the recently released proposal.

·      Achieving A Major Objective

o   While health care is always a contentious issue in Washington, WIPP did achieve a major objective—tucked inside a major piece of legislation last December. Congress allowed Health Reimbursement Arrangements (HRAs) to be used again, which let business owners to reimburse employees for their insurance plans.

If you attended the Conference this year, you were able to witness some of the recognition WIPP’s policy work is getting first hand. Senator Joni Ernst addressed our delegation and accepted an award for her work on passing S. 1038. House Ways and Means Chair Kevin Brady (R-TX) made a special appearance at our luncheon to talk about tax reform, accompanied by Representative Kristi Noem (R-ND), who is also on the Committee. High ranking staff members of the Senate and House Small Business Committees sat down with us for a leadership tax discussion.

We work hard to make sure WIPP members’ voices are heard loud and clear on Capitol Hill. But at the end of the day, you have to use your voice, too.

I was shocked in our advocacy training session to find when I asked for a show of hands of those who had meetings scheduled with their representatives, only a few responded in the affirmative. Meeting with your legislators in D.C. or back home is critical to our efforts – they want to hear from you.

Let’s keep the momentum going. WIPP has had some extraordinary successes at a time when there have been very few. It shows the power of advocacy when 10 million women business owners speak with one voice.

What Washington Has in Store for Women Entrepreneurs

What Washington Has in Store for Women Entrepreneurs

Ann Sullivan

Had I written this article a few days ago, it would have been obsolete.  I would have told you that Congress was poised for a major fight over raising the debt ceiling and funding for Hurricane Harvey recovery was uncertain.  Things change. 

In a refreshing bipartisan move, President Trump reached out to Democrats to secure a three- month deal to raise the debt ceiling, fund the government on a continuing basis and provide recovery funds for Hurricane Harvey.  This deal avoids the panic in the markets over defaulting on the debt and a potential government shutdown.

Why did Trump deal with the Democrats?  Because the Freedom Caucus in the House was poised to fight raising the debt ceiling unless significant discretionary spending cuts were enacted. Trump needed Democratic votes to move much of anything in the House.  If my math is correct, the 194 House Democrats plus 24 Republicans in the House cobbles together a majority that can pass the deal.  In the Senate, Trump needed Democrats in order to pass this package, including Hurricane recovery funding to the tune of $15.25 billion for Hurricane damage.

Although Hurricane funding to some extent was going to pass, the House Republicans were opposed to tying the debt ceiling to the Harvey relief bill.  With respect to keeping the government funded past the September 30 deadline (the fiscal year ends), House Republicans had plans to send the Senate a comprehensive spending bill for FY18, also known as an omnibus bill.  Trump, however, had other plans.

As I was drafting this article, the Senate included an extension of federal flood insurance to the package and passed the Trump deal in lightning speed. Now the House needs to act before sending the bill to the President.  In addition, the House Republican Study Committee consisting of more than 150 Republicans announced their opposition to the Senate bill complicating the final House vote. Important to note is that this is only a three-month deal, setting in motion another go-round in December with respect to lifting the debt ceiling and funding the government for FY18.

WIPP is watching these developments with an eye toward its effect on women business owners.  If you are a government contractor, your customers are following this debate closely—

and so should you.  Even if you are not a government contractor, paying close attention to the market’s reaction to the debate can affect your wallet and your investments.

Aside from the fiscal deliberations, expect to see a focus on tax reform. Tax reform remains a top priority for the Trump Administration and the Congress this fall.  President Trump has engaged Members of both parties to spur action on this important agenda item.  From working with the Kogod Tax Policy Center at American University to examine the tax benefits women business owners leave on the table, to WIPP member Rebecca Boenigk’s testimony urging tax reform for pass-through entities as well as corporate entities, to op-eds from WIPP members nationwide urging action, WIPP is at the forefront of advocating for a tax code that works for women entrepreneurs.  In addition, WIPP submitted comments to the Senate Finance Committee in June, which can be read here.

Other legislation that might be considered is infrastructure improvements and funding, reinstatement of the DACA program that expires in six months and the National Defense Authorization Act (NDAA), which is important to federal contractors.  With respect to small business legislation, expect changes to the HUBZone program and a government study on the participation of women in multiple award contracts—the impetus of which was a study released by WIPP titled, “Do Not Enter: Women Shut Out of U.S. Government’s Biggest Contracts.”

This is an exciting time in Washington.  The Congress is busy as is the President.  We welcome major legislation that will have an impact on business owners, such as tax reform and infrastructure improvements.  In addition, we have a strong advocate at the helm of the SBA, Administrator Linda McMahon, and look forward to Senate approval of Emily Murphy as Administrator of the GSA. These strong, capable women have earned our support. 

Last but not least, the WIPP conference is just around the corner.  I hope to see all of you at the conference – we need all your voices and all your advocacy as we work to ensure women entrepreneurs are represented in the Nation’s Capital.