Small business owner Jenny Fulton says that additional U.S. free trade agreements would boost her pickle exports.

On the Verge of a Trade Bonanza?

Page 5

May 2013

CAPITAL ROUNDUP

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May 2013

BILL NAME SUMMARY OF BILL AND WHAT IT MEANS TO YOU U.S. CHAMBER’S POSITION STATUS

HEALTH CARE TAX H.R. 763

Jobs and Premium Protection Act of 2013

This legislation would repeal the annual tax imposed on health insurance plans enacted by the Patient Protection and Affordable Care Act (PPACA) that will be passed on to consumers in the form of higher premiums. Expected to cost $8 billion in 2014 and increase annually to an estimated $14.3 billion in 2018, the tax will be borne primarily by small businesses that purchase plans in the fully insured market.

The Chamber supports this bill because keeping the health insurance tax in place will only increase the cost of coverage, further penalizing small businesses that offer health insurance coverage.

Last ActionIntroduced February 15, 2013.

Next Step

CO

MMITTEE

VOTE

ENERGYS. 17

Energy Production and Project Delivery

Act of 2013

This bill would free up new energy projects by streamlining permits, stopping executive branch inaction on oil and gas leases, cutting back on activists’ abusive lawsuits to stop projects, and requiring federal agencies to consider the economic and employment impact when they draft regulations.

The Chamber supports this bill because it would help meet the growing demand for energy in the United States by removing regulatory barriers.

Last ActionIntroduced February 27, 2013.

Next Step

CO

MMITTEE

VOTE

EMPLOYER MANDATE

S. 399 H.R. 903

American Job Protection Act

These bills would repeal the employer mandate included in the Patient Protection and Affordable Care Act (PPACA). This mandate is already having a negative effect on employment and will continue to discourage small business growth. The Chamber’s most recent quarterly small business survey released in January 2013 confirmed that 71% of small business executives believe that the implementation of the health care law will make it harder for them to hire more employees.

The Chamber supports this bill because repealing the employer mandate provision would not only protect existing jobs, but it would also spur the creation of new jobs by removing the fear and uncertainty that many small businesses are experiencing in anticipating these coverage requirements, which begin in 2014.

Last ActionBoth bills were introduced February 28, 2013.

Next Step

CO

MMITTEE

VOTE

WORKFORCE TRAINING

H.R. 803

Supporting Knowledge and Investing in Lifelong Skills

(SKILLS) Act

This bill would repeal many ineffective and duplicative federal training and employment programs. It would require both state and local workforce boards to have a two-thirds business majority, ensuring an employer-driven system focused on in-demand jobs. These boards would be required to engage the local business community and coordinate with economic development agencies.

The Chamber supports this bill because it would provide for some much-needed updates and improvements to America’s workforce and training system.

Last ActionApproved by the House, March 15, 2013.

Next Step

VOTE

SE

NATE

COMM

ITT

EE

CAPITAL ACCESSS. 511

Expanding Access to Capital for Entrepreneurial

Leaders Act

If enacted into law, S. 511 would make available an additional $500 million a year in privately funded investments in small businesses through the Small Business Administration’s Small Business Investment Company (SBIC) program. The resulting increase in capital to small businesses would come at no additional cost to taxpayers.

The Chamber supports the SBIC program because it is an important source of early and alternative funding for entrepreneurs.

Last ActionSenate committee hearing held March 14, 2013.

Next Step

CO

MMITTEE

VOTE

Information is current as of press time. For the very latest, go to www.FreeEnterprise.com.

Free Enterprise1615 H Street, NW | Washington, DC 20062

www.FreeEnterprise.com

Publisher Thomas J. CollamoreExecutive Editor Kevin Ganster

Editor-in-Chief Gregory S. GaldabiniEditor Laurie S. Frankel

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Quips

Heard in and About theu.s. Chamber

Thomas J. Donohue President and CEO U.S. Chamber of Commerce

Join the conversation on www.FreeEnterprise.com, www.facebook.com/AmericanFreeEnterprise, and on Twitter @FreeEnterprise.

Comments published on this page may be edited for length and clarity.

Your Feedback

IN YOUR CORNER May 2013

FreeEnterprise.com As long as the federal government thinks it knows better than you or your doctor and holds the purse strings, health care will get worse and more expensive. With the government in control, more people will die from neglect and lack of medical professionals, proper medicine, and therapies. Simple solution is to get government out of business of any kind, including health care and health insurance.

—BlueViolets

FreeEnterprise.com Keeping Obamacare alive is killing us! Let it die, and bring free market principles back to our health care industry, and we will drive prices down. Get our government out of the health care business. It destroys everything it touches. I don’t need to list examples do I?

—pjstevenson2001

FreeEnterprise.com People should own their own health plans. Employers may contribute to Health Savings Accounts, and those funds may be drawn from to pay for health insurance or other medical needs.

After some period of time of paying into insurance, there should be some equity guarantee against price increases or being dropped. Giving people the chance to make decisions will make them more responsible.

—anotherinterestedreader

FreeEnterprise.com With due respect to Tom Donohue, we lost this debate when the Affordable Care Act was enacted without input from the Chamber of Commerce or the American people! The only leverage now is for Congress to get serious and defund this monstrosity before it sinks its teeth so deep that we will need dandelion killer to get the regulations out!

—WHYGETMAD

FreeEnterprise.com I had a long conversation with my health care provider representative just yesterday. Next year his company, one of the largest in the nation, will be hit with a $6.5 billion tax to help fund Medicaid for the currently uninsured. The result will be dramatic premium increases for those with health insurance—no way around it. In this brave new world

of one-size-fits-all, equality-for-all health care, the quality and availability of health care will be reduced to the lowest common denominator. There will be fewer doctors, fewer treatment choices, longer waits, and higher costs for all except the elite and the poor.

—swisher7

Joined Sen. Orrin Hatch in intro bill to eliminate job-

crushing Obamacare health insurance tax on small businesses.

—Sen. John Barrasso

GA biz owner on Obamacare rules & regs: “I don’t know

what I’m going to do when 2014 rolls around.”

—Rep. Phil Gingrey

We have got to cancel this obnoxious piece of

bureaucracy!—Stephen Fields

To provide health care, as much as I’d love to, would put

me out of business. I’d lose money every week.

—Matt Knowles

Readers Slam Health Care Law

More Than 100,000 Heroes HiredHiring Our Heroes Adds New Programs

The U.S. Chamber’s two-year-old Hiring Our Heroes (HOH) program has helped tens of thousands of men and women who have served their country find jobs through hundreds of hiring fairs and a major campaign to engage the business community in the mission.

U.S. companies recognize the extraordinary value military personnel and spouses can bring to their workforces. Last year, HOH partnered with Capital One and launched a campaign to secure commitments from companies to hire 500,000 heroes by the end of 2014. One year into the effort, 933 businesses have pledged to hire 212,107 veterans and spouses—and 108,000 heroes have already found jobs through the campaign. HOH has also brought together job candidates and companies at more than 450 hiring fairs in all 50 states plus the District of Columbia,

resulting in new jobs for 18,400 veterans and spouses.Today, we are moving the mission forward by

building new programs to address some of the systemic drivers of veterans’ unemployment. One of the biggest obstacles is showing how military service transfers to civilian work. To address this challenge, HOH, Toyota, and Medal of Honor recipient Sgt. Dakota Meyer recently unveiled an online Personal Branding Resume Engine. This first-of-its-kind tool enables veterans and transitioning servicemembers to input details on their deployments, specialties, awards, and duties. Their military career history is then translated into “civilian-speak” in the form of a fully formatted resume.

HOH has also teamed up with Spike TV to host a competition in search of the most veteran-friendly small business in America. The Military Spouse

Employment Program is launching a business council to engage the private sector in addressing challenges spouses face. And we will soon offer employment workshops at all our jobs fairs.

Our nation is indebted to the men and women who have served and sacrificed for us—ensuring that civilian career opportunities await them is one important way we can show our gratitude.

The Keystone XL project has become one of the most closely examined infrastructure projects in our nation’s history—and it continues to pass with flying colors.

—U.S. Chamber’s Institute for 21st Century Energy President

Karen Harbert, quoted in the Los Angeles Times,

March 1, 2013

Report after report has established that the only changes that have materialized under the [2010 health care law] are, in fact, the opposite of what small-business owners have been demanding for decades.

—U.S. Chamber Executive Vice President for Government Affairs

Bruce Josten, in a joint op-ed in USA Today, March 21, 2013

Small businesses of every type are struggling to comply with the Patient Protection and Affordable Care Act (PPACA)—aka Obamacare. But franchisee owners, many of whom don’t currently offer employee insurance because of tight margins and large numbers of part-time workers, are particularly feeling the ill effects of the law’s employer mandate.

Beginning in January, businesses with 50 or more full-time equivalent employees must offer “affordable” health insurance or potentially face penalties starting at $2,000 per employee after the first 30 full-time employees. A full-time employee is defined as one who works at least 30 hours per week.

The International Franchise Association says that the employer mandate threatens 3.2 million jobs at franchises across the country. Below are some reactions from restaurant franchisees and franchisors that are being forced to radically alter their workforces and raise prices in order to meet this new government mandate.

Papa Johns CEO and founder John

Schnatter says, “Our best estimate is that Obamacare will cost 11 to 14 cents per pizza, or 15 to 20 cents per order from a corporate basis. Our business model and unit economics are about as ideal as you can get for a food company to absorb Obamacare. If Obamacare is, in fact, not repealed, we will find tactics to shallow out any Obamacare costs and core strategies to pass that cost onto consumers in order to protect our shareholders’ best interests.”

Burger King Brian Vaughn, owner of four franchises in Georgia, 

testified before Congress, saying, “It is ironic that the law is touted as the Patient Protection and Affordable Care Act—it neither protects our country’s people nor makes health care more affordable. It is a law of broken promises under which no one will be able to keep the health care they have even if they like it, and one which will incentivize more companies to scale back their workforces and reduce benefits that were previously valued by their employees. Prior to the law’s enactment, my goal had always been to hire fewer people for more hours. Now, because of what Washington has mandated, it seems to

make more practical business sense for me to hire more people for fewer hours.”

IHOP According to Scott Womack, owner and president

of Womack Restaurants, a 12-unit IHOP franchise in Indiana and Ohio, “This new expense is beyond our ability to pay. I estimate the cost to my company to be 50% greater than our company’s earnings. Let me state this bluntly: This law will cost my company more money than we make.”

Red Lobster and Olive GardenThe Darden Group, owner of Olive Garden and

Red Lobster, tried increasing the number of workers on part-time status, meaning that they work less than 30 hours a week. They ended the test after customer and shareholder backlash. Darden Chief

Executive Clarence Otis explains, “Because health care reform will remain a topic of much conversation over the next several months, it does contribute to our caution about performance for the remainder of the year.”

Five Guys Mike Ruffer, a franchisee in

North Carolina, says that the employer mandate is so expensive that it will eat up the entire profits from one of his eight stores. “Any additional costs are going to have to be passed on,” adds Ruffer, who says he has also put plans for another three stores on hold.

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May 2013 HEALTH CARE

SPIRIT OF ENTERPRISE AWARD

Franchises Burned by Health Care LawRestaurants Forced to Make Difficult Decisions

The U.S. Chamber awarded 300 House and Senate members with its annual Spirit of Enterprise Award for their support of pro-growth legislation during the second session of the 112th Congress.

For this year’s award, senators were graded on 8 votes; members of the House, 12 votes. Each vote must meet three criteria. It must be a recorded floor vote, the Chamber must have a clear policy on the issue, and the Chamber must have communicated its position on the issue to Congress. Members of Congress who support the Chamber’s position on at least 70% of these votes receive the award.

Visit www.uschamber.com/soe for a complete list of the 2012 Spirit of Enterprise recipients and to see how your elected representatives voted.

U.S. Chamber HonorsPro-Business Lawmakers

Photos: ©Bloomberg except where noted

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Photos: Ian Wagreich

www.FreeEnterprise.com 5

Discovering a New World of TradeU.S. Chamber, Administration Pursue Expanded Agenda

Jenny Fulton, owner of Miss Jenny’s Pickles in Kernersville, North Carolina, represents a growing segment of international trade—a small business owner with a global vision.

Just three years after starting her pickle business with business partner Ashley Furr, Fulton sought customers outside of the United States. At an in-bound trade mission for Chinese buyers and distributors sponsored by a North Carolina state government agency, Fulton and Furr met their soon-to-be Chinese business partner. And with the help of the North Carolina Export Department, they sent off their first five pallets of pickles to China. Miss Jenny’s Pickles is now eyeing Canada, Hong Kong, and Germany as potential export markets.

“Knowing that 95% of the world’s population lives outside the United States, we decided early on that exporting would be crucial to our success,” says Fulton, who now employs five full-time employees and a part-time CFO. “Today, we continue to look for new markets, bringing our products to customers all over the world.”

Small and medium-size businesses like Miss Jenny’s Pickles now account for one-third of all merchandise exports—an all-time high. And with the United States currently in negotiations on more than one landmark trade agreement, greater opportunity is knocking on the door for these firms and their larger U.S. counterparts.

The New Trade FrontierDuring its first term, the Obama administration

was slow to embrace three vital free trade agreements with South Korea, Panama, and Colombia that were negotiated by the Bush administration. But in 2011, the Obama administration finally sent them to Congress, where they quickly won bipartisan approval. It also didn’t show much interest in initiating new negotiations.

Today, however, the United States suddenly has a bold new trade agenda filled with ambition and possibility. Its success would reignite economic growth and generate millions of new jobs. “It’s not complicated—when companies large and small have more customers, they can do more business. That, in turn, leads to more hiring and investment,” says U.S. Chamber President and CEO Tom Donohue.

The administration and the business community have thrown their support behind three groundbreaking trade agreements that could help jump-start the economy, open new markets to American goods and services, and create badly needed jobs.

Trans-Pacific PartnershipAt the top of the agenda is the Trans-Pacific

Partnership (TPP) agreement, which would expand access for American goods and services in the fastest-growing and most dynamic region of the world.

To boost U.S. exports and create jobs at home, the United States needs to improve its access to the Asia-Pacific market, which accounts for two-thirds of the world’s population and GDP. TPP is the vehicle to accomplish that.

Working closely with the Office of the U.S. Trade Representative (USTR), the Chamber is working

to ensure that the TPP includes strong intellectual property protection as well as pathbreaking new rules on regulatory coherence and due process in antitrust enforcement. TPP would put private enterprise on a level playing field with state-owned companies, which, at times, enjoy preferential access to finance and contracts as well as favorable regulatory treatment.

Transatlantic Trade and Investment Partnership

Business groups and political leaders on both sides of the Atlantic are rallying around a Transatlantic Trade and Investment Partnership (TTIP) covering goods, services, investment, and regulatory cooperation. The divergence of regulatory standards is perhaps the greatest barrier to U.S.-EU commerce. For example, U.S.-made automobiles that successfully pass crash tests must be retested in Europe before they can be sold there.

Though tariffs between the American and European economies are already relatively low, eliminating them would boost bilateral trade by more than $120 billion in five years.

“If there’s one thing the U.S. and EU economies need right now, it’s growth. So why not build on a commercial relationship that already works pretty well, that’s already substantially integrated—and take it to the next level?” asks Donohue.

International Services Agreement In January, the Obama administration announced

that it would negotiate an International Services Agreement with 50 countries as a way to increase exports and jobs in sectors such as banking, express delivery, information technology, insurance, and telecommunications. A services agreement would also help establish new rules to address critical emerging

issues such as barriers to digital commerce. “The International Services Agreement would be an

economic boost for the U.S. and the world economy,” says Myron Brilliant, the Chamber’s executive vice president and head of international affairs. “It would create new markets for U.S. exporters and generate a host of business and job opportunities from coast to coast.” The United States leads the world in services exports, which surpassed $600 billion last year.

Trade Promotion AuthorityTo secure any new market-opening trade

agreements, Congress must renew the traditional trade promotion authority (TPA) that every president since Franklin Delano Roosevelt has enjoyed. Sometimes called fast track, TPA permits the executive branch to negotiate agreements in consultation with Congress. When an agreement is reached, Congress may approve it or reject it with a straight up-or-down vote, but it cannot amend it. This authority lapsed in 2007.

Without TPA, no foreign government will engage in serious trade negotiations with Washington without some guarantee that Congress won’t run roughshod over commitments made by the executive branch. The president in March finally signaled that his administration would work with Congress to renew TPA.

Jenny Fulton of Miss Jenny’s Pickles is encouraged by a more robust trade agenda in Washington, and she recently trekked to Washington to rally lawmakers. Testifying before a congressional committee, Fulton called for the removal of existing trade barriers and a renewed focus on helping small businesses export. “Investing in the export potential of America’s small and medium-size businesses could bring dramatic gains and stimulate the economy.”

COVER STORY May 2013

Jenny Fulton already exports her pickles to China, but she’d like to sell to other countries too. Cover Story Photos: Ian Wagreich

The U.S. Chamber’s Brightest StarsSmall Business of the Year Finalists Shine

Seven regional finalists competed for the 2013 DREAM BIG Small Business of the Year Award, sponsored by Sam’s Club®. The winner, announced on April 30 during America’s Small Business Summit in Washington, D.C., receives a

$10,000 cash prize courtesy of the U.S. Chamber of Commerce.

The DREAM BIG Small Business of the Year Award honors businesses that excel in the areas of staff training and motivation, community involvement, customer service,

and strategy. The finalists were selected from 100 Blue Ribbon Award winners.

Praetorian Group | San Francisco, California

Founded in 1999, the Praetorian Group provides online resources and cutting-edge information to first responders to help them stay safe and protect their communities. Praetorian owns and operates 25 websites focused on specific public safety markets, including firefighter rehabilitation, first responder grants, and volunteer firefighting. All told, its websites reach 2.5 million unique visitors each month. Led by co-founder and CEO Alex Ford, Praetorian has expanded from 2 employees to 52 and has big plans for future growth. Last Veterans Day, it launched www.Military1.com, an online resource for military personnel with 150,000 registered members and 24,000 Facebook fans.

EastErnWEstErn

Pet$aver Healthy Pet Superstore | Rochester, New York

Pet$aver Healthy Pet Superstore has 33 employees at two retail pet supply stores that also provide grooming services. CEO Russell Herman and his wife and co-founder, Brenda, were awarded the Greece (N.Y.) Small Business of the Year in 2010. In a competitive industry full of big-box competitors, Pet$aver has stood out by focusing on customer service and being part of the community, including organizing and hosting a Canine 5K, which drew 200 participants last summer.

Visit us online at FreeEnterprise.com/sbsummit to read our interviews with each of the finalists.

Superior Service Center | Eagan, Minnesota

Superior Service Center is an automotive facility providing both mechanical and collision repairs. Owner Dan Sjolseth started the business out of his three-car garage nearly 30 years ago. In 2004, a city redevelopment plan eliminated any chance of maintaining an auto body-related business on its existing site. Sjolseth says that by working with his local government he found a whole new line of business. In 2007, he expanded into the mechanical business with a 20,000 square-foot garage that includes 7 bays for mechanical work and 21 for body work. Sjolseth and his 29 employees are committed to “LEAN and green” business practices, including having a low carbon footprint and embracing innovative technologies.

Larsen Dye Associates Architects | Irving, Texas

Larsen Dye Associates Architects is a commercial architecture design firm in the greater Dallas-Fort Worth area dedicated to three building blocks: clients, commitment, and competence. Partners Richard Larsen, left, and Phillip Dye have created a flexible work environment that allows employees to bring their children and pets to work, adjust their work hours if needed, or work from home if necessary. Larsen and Dye are also active in their local chamber of commerce—the Greater Irving-Las Colinas Chamber of Commerce—which Dye says has been a great resource as well as a source for new clients.

Rapoport’s Restaurant Group | Boca Raton, Florida

Rapoport’s Restaurant Group oversees three restaurants and a sandwich shop. In an industry with a documented 100% employee turnover rate, 43 of Rapoport’s 181 employees have worked with the company for more than five years. President Burt Rapoport attributes the high retention rate to daily staff meetings, performance reviews, satisfaction surveys, and promotion within the company. That focus on employee satisfaction led to Rapoport being recognized as Business Leader of the Year by the Greater Boca Raton Chamber of Commerce in 2008.

Rich Duncan Construction, Inc. | Salem, Oregon

Rich Duncan Construction, Inc. was founded in 2002 with a tool belt, a pickup truck, and $5,000, according to Rich Duncan, president and founder. The company specializes in commercial construction, such as interior and exterior remodeling, renovation, and new builds as well as tenant improvements to retail and commercial spaces. Rich Duncan Construction was recently named to the Inc. 5000 list and was recognized with the Best of Salem 2012 Award in the Miscellaneous Builders & Contractors category. The firm has been recognized for its community spirit, including bringing together more than 5,000 volunteers and 1,200 trade volunteers to work on an Extreme Home Makeover project in 2010.

GrEat LakEsBerks Fire Water Restorations, Inc. | Reading, Pennsylvania

Berks Fire Water Restorations, Inc. specializes in the restoration and reconstruction of residential and commercial properties damaged by fire, mold, sewage, smoke, storm, water, wind, or other damage. President and CEO Ted Lavender and COO Lisa Lavender lead a 45-member team of restoration technicians, carpenters, and tradesmen who provide 24/7 emergency services with a one-hour response time. In August 2012, they opened the Restoration Technical Institute as a training center for restoration, insurance, and other related industries, as well as for their in-house staff. sOUtHWEst &

sOUtH CEntraL

sOUtHEast

MIDWEst

Photos: Ian Wagreich

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OUTRAGE of the MonthMEMBER BENEFIT

May 2013 INFRASTRUCTURE

Member Benefits From Sam’s ClubAs a U.S. Chamber member, when you join or renew

at Sam’s Club® as a Business Plus Member, you’ll receive a $25 gift card (non-Plus new or renewing Members receive a $10 gift card). Visit www.uschamber.com/samsclub, print your certificate, and present it to the Member Services Desk at your local Club. Benefits include no minimums, no contracts, Business Members-only hours, online ordering, 100% satisfaction guarantee on merchandise and membership, and more!

Union Asks College to Stop Training Workers A local steelworkers union is asking the Milwaukee Area Technical College (MACT) to stop training nonunion Caterpillar Inc. employees to weld. The United Steelworkers Local 1343 sent a letter to MACT arguing that Caterpillar is trying to use MATC in its “union-busting games” and asked the college to immediately stop the training and to return any training materials to Caterpillar. Putting nonunion workers into the welder-training program is standard practice whenever contracts are close to expiring, according to Caterpillar.

Source: Milwaukee Journal-Sentinel, March 13, 2013

The nation’s infrastructure grade is barely above failing, and its continued deterioration has significant implications for the U.S. economy and global competitiveness. In a report issued every four years, the American Society of Civil Engineers (ASCE) gave the nation’s overall infrastructure—everything from aviation to wastewater systems—a D+.

This means that the nation’s infrastructure is in poor to fair condition and mostly below standard, with many elements approaching the end of their service life. A large portion of the system exhibits significant deterioration. Condition and capacity are of significant concern, with strong risk of failure. ASCE’s evaluations are based on capacity, condition,

funding, future need, operation and maintenance, public safety, and resilience.

Those looking for a silver lining point to a slight improvement over the grade of D in 2009. This improvement can be attributed in part to increased public and private

investment at all levels of government. For example, public-private partnerships at PortMiami and the Port of Baltimore have

brought billions in private and public sector investment that support local job growth and

increase American economic competitiveness. ASCE says, “The 2013 Report Card demonstrates

that we can improve the current condition of our nation’s infrastructure—when investments are made and projects move forward, the grades rise. For example, greater private investment for efficiency and connectivity brought improvements in the rail category; renewed efforts in cities and states helped address some of the nation’s most vulnerable bridges; and, several categories benefited from short-term boosts in federal funding.”

However, there is little cause for celebration, says Janet Kavinoky, vice president of Americans for Transportation Mobility, a U.S. Chamber-led coalition. “Much of the nation’s Interstate

Highway System, many of the nation’s bridges, our drinking water and wastewater systems, our public transportation networks, and more need continual renewal and reinvestment—just like your house. At some point you have to fix the boiler, replace the roof, refinish the floors, and trade in the refrigerator freezer that doesn’t hold a consistent temperature.”

The U.S. Chamber, in partnership with the National Association of Water Companies, earlier this year launched a new campaign, Water is Your Business, to raise awareness of largely unseen leaky and outdated water pipes. In addition to preserving scarce water resources, repairing and expanding the U.S. water system would boost job creation and growth. According to Water is Your Business, each $1 billion in water infrastructure investment creates 28,500 jobs and contributes $3.46 billion in economic activity.

ASCE estimates that $3.6 trillion in investment is needed to bring the nation’s entire infrastructure up to par. A study from McKinsey & Company argues that the infrastructure price tag could be reduced by more than 35% if projects that meet clearly defined needs and deliver desired benefits were prioritized, land acquisition and permit processes streamlined, and technology that lowers operation and maintenance costs deployed.

“The Chamber supports all of the above as strategies to raise our grade,” Kavinoky says. “But we continue to be clear that more investment is still needed. All levels of government, in partnership with the private sector, need to marshal the capital to invest sooner rather than later and have realistic conversations about how to pay for investment.”

Public-Private Partnerships NeededUnited States Misses the Grade on Infrastructure

Photo: Ryan Anson ©Bloomberg

www.FreeEnterprise.com 9

It’s mid-March, and Marvin and Laura Hornes’ 20-acre vineyard in Central California is in full bloom. But instead of tending to his next raisin crop, Marvin Horne is about to jump aboard a flight to Washington, D.C., to defend himself against a government assault that has been going on for more than 10 years.

“It’s been a long and arduous journey fighting these guys just to sell our own products,” says Marvin during an exclusive interview with Free Enterprise magazine. “We’d like to be left alone to market our raisins and do it in conformity with the law and abide by it.”

The U.S. Supreme Court is reviewing the Hornes’ challenge to the 64-year-old federal raisin marketing program that can require raisin farmers, as a condition to selling their raisins in interstate commerce, to fork over to the government a portion of their crops—as much as 47% in some years—often for no payment or below the cost of producing the raisins.

The federal program seeks to stabilize raisin prices by keeping some of the annual crop off the market, putting it into what is called a “reserve pool.” The marketing limitation applies to “handlers”—packers and producers of raisins that head to market—and not on the grape growers. So in 2001, the Hornes, raisin

growers since 1969, decided to market their own raisins and bought more than $300,000 of packaging equipment. Soon, other farmers came to them to package and market their raisins. The Raisin Valley Marketing Association, a coalition of raisin growers in Fresno and Madera counties, was born. “The growers just kept saying, ‘We can’t afford to stay in the raisin business. Can you help us?’ And we said OK.”

It wasn’t long before the Department of Agriculture (USDA) began monitoring and harassing the Hornes, their staff, and their buyers, according to Marvin. “They stopped my employees’ children and scared them. They stopped the trucks hauling our products and asked the drivers if they knew they were hauling contraband,” he says. “They also harassed our buyers, subpoenaed their records, and asked how many raisins they bought. I don’t think any businessman in America has ever been as harassed as we were.”

The Raisin Valley Marketing Association had grown significantly by 2008, but its numbers have since dwindled. “Because of the relentless pursuit by USDA, we’re back down to 55 growers.”

Still, the Hornes have continued fighting the government, claiming that the program violates the U.S. Constitution’s “takings clause,” which provides that if the federal government takes private property, it must justly compensate the private property owners for it. The Hornes lost both their district court and appellate court cases.

Now, the Supreme Court will hear the growers’ arguments and decide whether the Hornes can raise the Constitution as a defense, or if they must turn over the raisins (or rather, the cash value). If they want their money back, they will have to bring another lawsuit in federal court. That means twice the litigation—and twice the legal fees. 

Whatever the final decision, the case will have long-term implications for businesses, and Marvin hopes that other small business owners won’t face the same harassment he’s faced. He advises, “If the government comes after you, weather out the storm and hopefully someone will come to some reason. If you believe in it, stay with it. We have a Constitution, and I believe in it.”

Raisin Farmers Take Their Case to the

U.S. Supreme Court

Speak Out!Take our weekly surveys at FreeEnterprise.com

or at facebook.com/AmericanFreeEnterprise.

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I have a strong understanding of how the law impacts me ................. 19.2

What is the most needed reform of our tax system?Make it less complex.............................. 63.4%Lower tax rates ....................................... 26.9Limit certain deductions

and credits ........................................... 9.7

If you were able to hire, which of the following would you be more likely to hire?Full-time employee ............................... 25.8%Part-time employee ............................... 22.6Temporary or contract worker ............ 51.6

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READ coverage of America’s Small Business Summit. FreeEnterprise.com/sbsummit

SIGN a petition to show your support for real health care reform. http://bit.ly/XIzF9S

CHECK OUT the Chamber’s new comprehensive immigration reform website. http://immigration.uschamber.com

USE the Chamber’s online calculator to determine if you must comply with the health care law’s employer mandate and what your penalty might be if you don’t. uschamber.com/health-reform/calculator

SEE how trade supports jobs in your area. tradesupportsjobs.com

MayTo-Do List

T H E B U S I N E S S A D V O C A T E May 2013

T H E B U S I N E S S A D V O C A T E

Raisin farmers Marvin and Laura Horne, seen here at a Fresno, California, trade show in March 2013, are fighting to keep the federal government away from their crop.

Photo: Courtesy Marvin Horne

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To share your expertise on small business issues or technology, email editor@uschamber.com.

Daniel KehrerFounder, BizBest.com

Hiring Teens Be Informed of Federal and State Rules

Soon, teenagers by the millions will be seeking summer jobs—the vast majority at small businesses coast to coast. An estimated 18 million U.S. teens will work this year, one of the highest totals in the developed world.

The U.S. Department of Labor (DOL) is rife with rules and regulations on teen labor and prone to enforcing them with fines and sanctions. Most rules are common sense and deal with safety issues. That’s because young workers suffer a disproportionate share of on-the-job injuries. About 160,000 teens suffer work-related injuries or illnesses yearly—about a third of them requiring emergency room treatment. And more than 75% of incidents happen in the retail and services industries—not the sectors usually considered more injury prone, such as manufacturing and construction.

Dozens of private suppliers sell Occupational Safety and Health Administration (OSHA) compliance materials, and there are many safety

consultants to choose from, available easily online. It is best to start at OSHA’s small business website, osha.gov/smallbusiness. Look for OSHA Compliance Assistance Quick Start. OSHA has a website devoted to restaurant safety for teen workers. To find it, check the A-Z Index at the top of the OSHA home page under Restaurant Safety.

DOL has a helpful website called Youth Rules at youthrules.dol.gov. Here you’ll find information and links to federal and state rules, including limits on hours teens are allowed to work, jobs they can perform, age requirements, work permits, and wages.

Another helpful government site called TeenWorkers, OSHA.gov/SLTC/teenworkers, has a wide range of information on summer job safety for specific sectors. The small business FAQ section answers common questions that businesses have about hiring teens.

Teen Hiring BasicsFor teens employed in nonagricultural

jobs, restrictions on hours and jobs include:• Minimumageis14.• Those18andoldermayperformanyjob

(hazardous or not) for unlimited hours.• Youths16and17mayperformany

nonhazardous job for unlimited hours.• Youths14and15mayworkoutside

of school hours in nonmanufacturing, nonmining, and nonhazardous jobs. They may not work more than 3 hours a day on school days or more than 40hoursperweekwhenschoolisnot in session.

• Duringtheschoolyear,14-and15-year-olds may not work before 7:00 a.m. or after 7:00 p.m. During the summer, that’s extended to 9:00 p.m.

This article appears courtesy of SCORE, Mentors to America’s Small Business. Get free advice from more than 12,000 volunteer business mentors in more than 340 chapters across the nation at score.org. ©2012 BizBest Media

Jonathan RickSenior Director, Social Media

U.S. Chamber of Commerce

Send questions to techcorner@uschamber.com.

What’s in a Domain Name?Your URL Is Integral to Your Brand

When creating a company website, many small businesses defer to their “Web person” on the address. “Oh, JanesFlowers.com isn’t available? OK, JanesFlowers.co is fine.”

NO! NO! NO! Seemingly trivial, your URL is critical. Don’t let it be an afterthought; make this decision an integral facet of your planning and branding.

After all, not only will your domain be printed on your business cards and in your email signatures, but you’ll also need to pronounce it in a way that leaves no room for confusion. Consider a few case studies.

Bad• Foundedin1999,NewMediaStrategies

(NMS) had the perfect name. Before people called it “social media,” the playground of Facebook and YouTube was known as “new media.” Yet NMS’ website—NewMediaStrategies.net—was awful: long and .net. Recognizing this, NMS changed its URL to the simpler, shorter NMS.com.

• WB&AMarketResearchhasanampersand in its name. This led the firm to choose the URL, WBAndA.com. The problem: There are several ways to spell this. Is itWBAndA.com?OrWB&A.com?OrWBNA.com? After years of frustration—and, no doubt, lost customers—the company is relaunching its site as WBA.com.

• Mostfederaldepartmentsfollowasimpleformula for their URLs: the Defense Department uses defense.gov, Energy uses energy.gov, Commerce uses commerce.gov, and so on. Not the Labor Department. Type “labor.gov” into your address bar, and you’re met with the message, “Invalid URL.” Apparently, we are supposed to know that the Department of Labor is located at DOL.gov.

Good• Thewebsiteofpoliticalmediafirm

Engage is EngageDC.com. This is

savvy branding—Engage is based in Washington, D.C., and draws many clients from the surrounding area—and why the company doesn’t seem to mind that it’s often referred to as “Engage D.C.”

• BythetimetheAmericanConservativeUnion discovered the Internet, the URL, ACU.org, was taken. Yet recognizing that the voice of conservatism ought to have a Web presence that reflected its mission, ACU laid claim to conservative.org.

• Whendecidingonitsdomain,PRagencySusan Davis International entertained a number of options: SusanDavisIntl.com, SusanDavisPR.com,SDI.com,SusanDavis.com, and so on. It chose the latter, a happy medium between its formal name and its acronym, without letting suffixeslike“PR”or“Intl”intrude.

The bottom line: Your URL is more than a string of characters. It’s your online calling card. Give it the consideration it deserves.

May 2013 S m a l l B u s i n e s s M a t t e r s | HOW-TO

Dr. Martin Regalia

Senior Vice President and Chief Economist, Economic Policy

U.S. Chamber of Commerce

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ECONOMY & TAXES May 2013

Although it cannot be verified, financier Baron Rothschild is credited with saying that compound interest is the eighth wonder of the world. Most of us are at least vaguely familiar with the concept by which our savings earn interest, which is then added to the principal so that in successive periods we earn interest on our interest—we earn compound interest. If you put away $100 at 10% interest, you would earn $10 the first year, $11 the second year, $12.10 the third year, and so on. The $100 in principal would double in a little over seven years. Mathematicians would quickly recognize this phenomenon as growth theory or exponential growth theory.

What many people don’t seem to be as knowledgeable about is the flip side of the coin, that is, what happens when we borrow money and don’t pay it back such that the interest is added to the principal and in successive years we actually owe more than the original amount we borrowed. We must pay interest on our interest. In the mortgage industry, this is called negative amortization, and it is generally frowned upon, especially when borrowers find its description buried deep in the small print of the mortgage contract.

What even fewer people seem to recognize is that our government engages in negative amortization every single day, and in the end, it is us, the American taxpayer, who foots the bill. Every year, our government owes interest on its accumulated debt, and since the government generally runs a deficit on the non-interest part of the budget (i.e., a primary budget deficit), the interest owed this year is added to the current deficit and accumulates as next year’s debt. Next year, the debt level is higher and we pay even more in interest, which adds to next year’s deficit and debt and so forth.

Size of Our DebtAs long as the overall level of debt

is relatively small and interest rates are relatively low, the interest numbers are swamped by other spending figures and the problem goes largely unnoticed. But a funny thing happens when the size of our debt gets large relative to the size of the economy and the interest rates owed on that debt rise. The debt service, the interest payments on our debt, become a bigger and bigger share of our annual deficit and begin to accumulate as larger additions to our level of debt. At some point, it becomes beyond our ability to service our debt—let alone repay the principal. At that point, our deficit is out of control and even a truly draconian combination of spending cuts and tax increases may not be able to rectify

the situation. At that point, we have become Greece or Cyprus.

Now, the United States may not be quite that bad yet. But a clear sign that we are approaching the danger zone is when our debt relative to the size of the economy exceeds 100% and when the interest on the debt starts to grow as a percentage of our total deficit.

Our Fiscal HealthSo let’s take a hard look at our current

fiscal situation. At the end of fiscal year 2012, the U.S. economy was about $15.5 trillion. The total debt of the U.S. government was about $16 trillion—$11.3 trillion was debt held by the public or outside debt, and roughly $4.7 trillion was in inside debt, that is, debt held in government accounts, such as the Social Security Trust Fund. Thus, the total debt to GDP ratio was 103%. Now, some would have you believe that the debt in the internal accounts is debt that we owe to ourselves and therefore is not a problem. That is simply not true. When Social Security obligations exceed their current cash flow from payroll tax revenue, the trust fund must call on the Treasury to redeem the debt held in the trust fund. However, with the government in a perennial deficit position, the only way that the Treasury will be able to get the needed funds to redeem the inside debt is to issue more outside debt. The inside debt becomes outside debt when the trust funds need to write checks to the beneficiaries.

In its most recent forecast, CBO projects that over the next 10 years the outside debt will grow to $19.9 trillion, and the inside debt will grow to over $6.1 trillion. With the economy expected to grow to about $26 trillion, the overall debt ratio would still be in excess of 100% and rising 10 years from now.

The current interest cost on the debt in 2012 was $360 billion—just over $222 billion on the outside debt and $137 billion on debt held in government trust accounts. The latest CBO forecast projects interest cost on the outside debt to rise to over $857 billion by 2023. Net interest on just the outside debt is projected to grow from 6.3% of the total deficit in fiscal year 2013 to over 14% of the deficit in 2023. This increase in the interest portion of the deficit is even more damning when one considers that the size of the deficit is projected to grow from $3.6 trillion to $5.9 trillion over that period.

CBO doesn’t forecast the growth in interest cost of inside debt, but a rough approximation using similar rate assumptions would show that the interest on the inside debt would rise to over $300 billion. Together, interest on the government debt would be over $1.1 trillion annually or over 4% of GDP.

Impact of Higher Interest RatesA number like 4% of GDP may not shock

anyone, since back in the 1980s and early 1990s we had gross interest ratios that high. Back then, however, the ratio was that high because of historically high interest rates, but our debt ratio was much lower (about 60%) than it is today. Recently, CBO was asked what would happen if we were to experience such high rates today? Its answer is shocking.

If interest rates went back to the average of the 1980s—about 8.8% at the short end of the maturity spectrum and 10.8% at the long end—the interest cost on the outside debt alone would rise dramatically, reaching over $350 billion in just four years and adding almost $1.4 trillion per year in 2023. The cumulative effect would be over $6 trillion.

Because the 1980s were unusual times, CBO ran the numbers to see what would happen if rates rose to their 1990s average—about 4.9% at the short end and 6.7% at

the longer end. At these more modest rates, the interest cost on the outside debt only would add over $250 billion per year by the end of the 10-year period. The cumulative

impact would add over $1.4 trillion to the level of outside debt. Just the effect on the outside debt would add over 5.5 percentage points to the debt to GDP ratio.

The bottom line is this. Our debt levels are way too high, our deficit is way too high, and the existing low interest rates are masking the danger. If interest rates rise— and remember they are at rock-bottom levels historically—our deficits and debt levels will rocket out of control. The Fed’s aggressive monetary policy is currently keeping rates low but at the risk of future inflation and higher interest rates.

We need to cut government spending, especially entitlement spending; lower our deficit; and stabilize and then reduce our level of debt. We need to start the process now. In the meantime, praying that interest rates don’t rise may be a good idea.

Dr. Martin Regalia: ECON 101

Disinterest With Interest

We need to cut government spending, especially entitlement

spending; lower our deficit; and stabilize and then

reduce our level of debt. We need to start the process now.

www.FreeEnterprise.com 11

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Members also have access to a variety of Chamber programs, information, and services by visiting www.uschamber.com/member.

Save on FedEx Shipping

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FedEx—U.S. Chamber members are eligible for reduced rates—up to 26% on select FedEx Express® services and up to 12% on select FedEx Ground® services. The FedEx Express discounts include a 5% discount when you create a FedEx Express shipping label using FedEx Ship Manager® at fedex.com and other FedEx® electronic shipping solutions. Save on the benefits that make a difference to your business, including easy access to shipping tools.

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Sam’s Club®—As a U.S. Chamber member, when you join or renew at Sam’s Club as a Business Plus Member, you’ll receive a $25 gift card (non-Plus new or renewing Members receive a $10 gift card). Discover exceptional values on essentials and specialty items for your business and home.

Additional benefits:• No minimums, no contracts• Business Members-only hours• Online ordering• 100% satisfaction guarantee on

merchandise and membership and more

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FedEx Freight—U.S. Chamber members can save up to 70% on FedEx Freight® services. For on-time reliability and for careful handling of your LTL (less-than-truckload) freight needs, count on FedEx Freight. You can rely on FedEx Freight® Priority when speed is critical to meet your supply chain needs or FedEx Freight® Economy when you can trade time for savings. FedEx Freight is committed to delivering an easier way to ship LTL.

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FedEx Office—Double your savings at FedEx Office! As a U.S. Chamber member, you can save up to 20% on the materials you need most with FedEx Office® copy and print services. And now you can save up to 40% through May 2013. It’s the perfect time to save big on color copies, posters, signs, banners, direct mail services, and much more. Go to www.uschamber.com/fedex to learn more.

Chamber members save on:• Copying and printing• Signs and graphics• Other select services

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Next month, the U.S. Chamber’s Campaign for Free

Enterprise will kick off a two-month, cross-country tour, On the Road With Free Enterprise.

The team of two chosen tour guides will check out attractions, participate in local events, talk to businesses, and share their experiences with you online.

There are no backseat drivers on this road trip. Be a part of the experience online at

www.FreeEnterprise.com/tour.