GOP leaders introduced the Jumpstart Our Business Startups Act (JOBS Act) on February 28-- a package of bipartisan bills that will encourage capital formation, and help businesses grow. Several of these bills - which are strongly supported by SBE Council -- have previously advanced in the House on a bipartisan basis. President Obama signaled his support for the initiative. SBE Council is confident these bills will advance in the House, and remains optimistic that the Senate will take action as well. Senate Majority Leader Harry Reid (D-NV) announced that the Senate will move forward on these capital access bills, and the Senate Banking Committee is hosting a hearing on March 7.
As SBE Council President & CEO Karen Kerrigan noted in a recent Politico.com article regarding Reid's announcement to move on the bills, "Access to capital continues to be a major struggle for small businesses and entrepreneurs. It is a no-brainer for the Senate to move forward with this package of capital formation bills."
The JOBS Act -- which includes provisions to modernizes existing regulations, update thresholds or provide compliance relief - is bundling the following provisions:
(The following information is provided by Majority Leader Eric Cantor, R-VA)
REOPENING AMERICAN CAPITAL MARKETS TO EMERGING GROWTH COMPANIES ACT (H.R. 3606): Approved by Financial Services Committee 54-1
H.R. 3606 reduces the costs of going public by providing companies with a temporary reprieve from Securities and Exchange Commission (SEC) regulations by phasing in certain regulations over a five-year period. The bill creates a new category of issuers called an "Emerging Growth Company" (EGC), which would retain its status for five years or until it exceeds $1 billion in annual gross revenue or becomes a large accelerated filer. H.R. 3606 ensures investors are protected by requiring the EGCs to provide audited financial statements as well as establishing and maintaining internal controls over financial reporting.
THE ACCESS TO CAPITAL FOR JOB CREATORS ACT, H.R. 2940: Approved by the House 413-11
H.R. 2940 removes an SEC regulatory ban preventing small businesses from using advertisements to solicit investors. H.R. 2940 allows small companies offering securities under Regulation D to utilize advertisements or solicitation to reach investors and obtain capital. The SEC's ban on solicitation, first adopted in 1982, limits the pool of potential investors and severely hampers the ability of small companies to raise capital and create jobs.
THE ENTREPRENEUR ACCESS TO CAPITAL ACT, H.R. 2930: Approved by the House 407-17
H.R. 2930 removes SEC restrictions that prevent "crowdfund investing" so entrepreneurs can raise equity capital from a large pool of small investors who may or may not be considered "accredited" by the SEC. H.R. 2930 allows companies to pool up to $1 million from investors without registering with the SEC, or up to $2 million if the company provides investors with audited financial statements. Individual contributions are limited to $10,000 or 10 percent of the investor's annual income, whichever is less.
THE SMALL COMPANY CAPITAL FORMATION ACT, H.R. 1070: Approved by the House 421-1
H.R. 1070 makes it easier for small businesses to go public by increasing the offering threshold for companies exempted from SEC registration from $5 million to $50 million. The SEC has the authority to raise this threshold but has not done so for almost two decades. Amending Regulation A to make it a viable channel for small companies to access capital will permit greater investment in these companies, resulting in economic growth and jobs.
THE PRIVATE COMPANY FLEXIBILITY AND GROWTH ACT, H.R. 2167: Approved by Financial Services Committee Voice Vote
H.R. 2167 removes barriers to capital formation for small companies by raising the shareholder registration requirement threshold from 500 to 1,000 shareholders. Many small businesses are forced to file as a public company because of an obscure regulation that requires companies with 499 shareholders and $10 million in assets to file with the SEC. This current shareholder threshold rule was originally adopted in 1964 and has not been modernized since. This regulation restricts the number of shareholders and assets these companies can have. In turn, this severely limits the growth stages for companies, which need time and flexibility to develop.
THE CAPITAL EXPANSION ACT, H.R. 4088: House Version of S. 1941, Referred to Financial Services Committee
H.R. 4088 increases the number of shareholders permitted to invest in a community bank from 500 to 2,000. This bill would enable banks to better deploy their capital to make loans and create jobs rather than comply with burdensome SEC requirements.
It looks like the House will vote on the JOBS Act on March 8, and SBE Council will KEY VOTE this important legislation, as a vote for small business, in its Ratings of the 112 Congress.
Karen Kerrigan, President & CEO
UN Control of Internet
Since having written a novel myself, I'm always looking for an idea or premise that would make for an interesting, exciting story.
How about the following? At the behest of authoritarian and communist regimes, the United Nations is used as a vehicle for gaining more control over the Internet, thereby allowing those governments to gain more resources and power, limit freedom, and undermine parts of our economy.
Unfortunately, this is not farfetched fiction. It's a very real concern due to a United Nations effort that was kicked off in Geneva in late February and will proceed to a culmination in Dubai towards the end of this year. The considerable risk is that a treaty, which would only need approval of a majority of 193 nations, would result in an attempt at centralized regulation of the Internet, which would result in a de facto fragmentation of the Internet. That, in turn, would restrict opportunity, communication, prosperity and freedom.
As reported on October 20, 2011 by Bill Gertz in The Washington Times, "Last month, Russia, China, Uzbekistan and Tajikistan submitted a resolution to the U.N. General Assembly calling for giving individual states the right to control the Internet. The resolution, submitted Sept. 14, calls for ‘an international code of conduct for information security.' It requests ‘international deliberations within the United Nations framework on such an international code, with the aim of achieving the earliest possible consensus on international norms and rules guiding the behavior of states in the information space.' China tightly controls the Internet through a cybersecurity police force estimated to be more than 10,000 people who monitor Internet users and websites. Russia's authoritarian government has taken steps in recent years to curb Internet freedoms. Uzbekistan and Tajikistan also are authoritarian regimes that seek to control Internet use."
Writing in The Wall Street Journal on February 21, 2011, FCC Commissioner Robert McDowell explained, "On Feb. 27, a diplomatic process will begin in Geneva that could result in a new treaty giving the United Nations unprecedented powers over the Internet. Dozens of countries, including Russia and China, are pushing hard to reach this goal by year's end. As Russian Prime Minister Vladimir Putin said last June, his goal and that of his allies is to establish ‘international control over the Internet' through the International Telecommunication Union (ITU), a treaty-based organization under U.N. auspices."
Concerns have come from various corners.
For example, Gertz reported, "The commander of the U.S. Cyber Command said Thursday that he does not favor giving the United Nations the power to regulate the Internet... But asked whether the U.N. should have a regulation role, [Army Gen. Keith Alexander, who is also director of the National Security Agency,] said: ‘No. I'm not for regulating, per se. I'm concerned about it, and this is a tough question. I would say, generally speaking, I'm not into that portion of regulating as you would espouse.'"
On February 27, FoxNews.com highlighted that a memorandum from the Obama administration. It was stated in the article, "The memo, dated Jan. 23, states that in January 2011, U.S. officials harbored ‘great and widespread concern' that the conference ‘would be a battle over investing the (International Telecommunication Union) with explicit Internet governance authority.' However, American diplomats, the memo maintains, succeeded in ‘narrowing the focus' of the conference by emphasizing the administration's ‘deregulatory position at every opportunity.' The memo concludes that the likelihood of the conference posing any ‘foundational' threats to the freedom of the Internet ‘seems low at this time.'"
That's a bit of a mixed message. While the emphasis on fighting off international regulation is correct, there seems to be a somewhat disconcerting lack of urgency.
FCC Commissioner McDowell is obviously far more concerned.
First, he noted the great success of Internet deregulation and privatization. He pointed out, "If successful, these new regulatory proposals would upend the Internet's flourishing regime, which has been in place since 1988. That year, delegates from 114 countries gathered in Australia to agree to a treaty that set the stage for dramatic liberalization of international telecommunications. This insulated the Internet from economic and technical regulation and quickly became the greatest deregulatory success story of all time." A bit later, he added, "This consensus-driven private-sector approach has been the key to the Net's phenomenal success. In 1995, shortly after it was privatized, only 16 million people used the Internet world-wide. By 2011, more than two billion were online-and that number is growing by as much as half a million every day. This explosive growth is the direct result of governments generally keeping their hands off the Internet sphere."
Second, McDowell warned, "Even though Internet-based technologies are improving billions of lives everywhere, some governments feel excluded and want more control. And let's face it, strong-arm regimes are threatened by popular outcries for political freedom that are empowered by unfettered Internet connectivity. They have formed impressive coalitions, and their efforts have progressed significantly." He also noted the desire to increase governmental revenues through possible and varied fees.
Third, he drove home the fundamental problem: "A top-down, centralized, international regulatory overlay is antithetical to the architecture of the Net, which is a global network of networks without borders. No government, let alone an intergovernmental body, can make engineering and economic decisions in lightning-fast Internet time. Productivity, rising living standards and the spread of freedom everywhere, but especially in the developing world, would grind to a halt as engineering and business decisions become politically paralyzed within a global regulatory body."
For good measure, in late February, Google's executive chairman Eric Schmidt declared his worries. At the Mobile World Congress 2012, as reported by ZDNet UK, "Schmidt said handing over control of things such as naming and DNS to the UN's International Telecommunications Union (ITU) would divide the Internet, allowing it to be further broken into pieces regulated in different ways. ‘That would be a disaster... To some, the openness and interoperability is one of the greatest achievements of mankind in our lifetime. Do not give that up easily. You will regret it. You will hate it, because all of a sudden all that freedom, all that flexibility, you'll find it shipped away for one good reason after another,' Schmidt said. ‘I cannot be more emphatic. Be very, very careful about moves which seem logical, but have the effect of balkanising the Internet,' he added, urging everyone to strongly resist the moves."
Entrepreneurs should take note, and be concerned. After all, few technological advancements or tools have expanded opportunity for entrepreneurs, small businesses and their employees more so than the Internet. Any move to international governance and regulation will only serve to reduce those opportunities - and drastically so. The Obama administration needs to make clear that UN regulation of the Internet is not an option, and it should be building an international coalition to protect Internet freedom and opportunity.
_______________
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
How about the following? At the behest of authoritarian and communist regimes, the United Nations is used as a vehicle for gaining more control over the Internet, thereby allowing those governments to gain more resources and power, limit freedom, and undermine parts of our economy.
Unfortunately, this is not farfetched fiction. It's a very real concern due to a United Nations effort that was kicked off in Geneva in late February and will proceed to a culmination in Dubai towards the end of this year. The considerable risk is that a treaty, which would only need approval of a majority of 193 nations, would result in an attempt at centralized regulation of the Internet, which would result in a de facto fragmentation of the Internet. That, in turn, would restrict opportunity, communication, prosperity and freedom.
As reported on October 20, 2011 by Bill Gertz in The Washington Times, "Last month, Russia, China, Uzbekistan and Tajikistan submitted a resolution to the U.N. General Assembly calling for giving individual states the right to control the Internet. The resolution, submitted Sept. 14, calls for ‘an international code of conduct for information security.' It requests ‘international deliberations within the United Nations framework on such an international code, with the aim of achieving the earliest possible consensus on international norms and rules guiding the behavior of states in the information space.' China tightly controls the Internet through a cybersecurity police force estimated to be more than 10,000 people who monitor Internet users and websites. Russia's authoritarian government has taken steps in recent years to curb Internet freedoms. Uzbekistan and Tajikistan also are authoritarian regimes that seek to control Internet use."
Writing in The Wall Street Journal on February 21, 2011, FCC Commissioner Robert McDowell explained, "On Feb. 27, a diplomatic process will begin in Geneva that could result in a new treaty giving the United Nations unprecedented powers over the Internet. Dozens of countries, including Russia and China, are pushing hard to reach this goal by year's end. As Russian Prime Minister Vladimir Putin said last June, his goal and that of his allies is to establish ‘international control over the Internet' through the International Telecommunication Union (ITU), a treaty-based organization under U.N. auspices."
Concerns have come from various corners.
For example, Gertz reported, "The commander of the U.S. Cyber Command said Thursday that he does not favor giving the United Nations the power to regulate the Internet... But asked whether the U.N. should have a regulation role, [Army Gen. Keith Alexander, who is also director of the National Security Agency,] said: ‘No. I'm not for regulating, per se. I'm concerned about it, and this is a tough question. I would say, generally speaking, I'm not into that portion of regulating as you would espouse.'"
On February 27, FoxNews.com highlighted that a memorandum from the Obama administration. It was stated in the article, "The memo, dated Jan. 23, states that in January 2011, U.S. officials harbored ‘great and widespread concern' that the conference ‘would be a battle over investing the (International Telecommunication Union) with explicit Internet governance authority.' However, American diplomats, the memo maintains, succeeded in ‘narrowing the focus' of the conference by emphasizing the administration's ‘deregulatory position at every opportunity.' The memo concludes that the likelihood of the conference posing any ‘foundational' threats to the freedom of the Internet ‘seems low at this time.'"
That's a bit of a mixed message. While the emphasis on fighting off international regulation is correct, there seems to be a somewhat disconcerting lack of urgency.
FCC Commissioner McDowell is obviously far more concerned.
First, he noted the great success of Internet deregulation and privatization. He pointed out, "If successful, these new regulatory proposals would upend the Internet's flourishing regime, which has been in place since 1988. That year, delegates from 114 countries gathered in Australia to agree to a treaty that set the stage for dramatic liberalization of international telecommunications. This insulated the Internet from economic and technical regulation and quickly became the greatest deregulatory success story of all time." A bit later, he added, "This consensus-driven private-sector approach has been the key to the Net's phenomenal success. In 1995, shortly after it was privatized, only 16 million people used the Internet world-wide. By 2011, more than two billion were online-and that number is growing by as much as half a million every day. This explosive growth is the direct result of governments generally keeping their hands off the Internet sphere."
Second, McDowell warned, "Even though Internet-based technologies are improving billions of lives everywhere, some governments feel excluded and want more control. And let's face it, strong-arm regimes are threatened by popular outcries for political freedom that are empowered by unfettered Internet connectivity. They have formed impressive coalitions, and their efforts have progressed significantly." He also noted the desire to increase governmental revenues through possible and varied fees.
Third, he drove home the fundamental problem: "A top-down, centralized, international regulatory overlay is antithetical to the architecture of the Net, which is a global network of networks without borders. No government, let alone an intergovernmental body, can make engineering and economic decisions in lightning-fast Internet time. Productivity, rising living standards and the spread of freedom everywhere, but especially in the developing world, would grind to a halt as engineering and business decisions become politically paralyzed within a global regulatory body."
For good measure, in late February, Google's executive chairman Eric Schmidt declared his worries. At the Mobile World Congress 2012, as reported by ZDNet UK, "Schmidt said handing over control of things such as naming and DNS to the UN's International Telecommunications Union (ITU) would divide the Internet, allowing it to be further broken into pieces regulated in different ways. ‘That would be a disaster... To some, the openness and interoperability is one of the greatest achievements of mankind in our lifetime. Do not give that up easily. You will regret it. You will hate it, because all of a sudden all that freedom, all that flexibility, you'll find it shipped away for one good reason after another,' Schmidt said. ‘I cannot be more emphatic. Be very, very careful about moves which seem logical, but have the effect of balkanising the Internet,' he added, urging everyone to strongly resist the moves."
Entrepreneurs should take note, and be concerned. After all, few technological advancements or tools have expanded opportunity for entrepreneurs, small businesses and their employees more so than the Internet. Any move to international governance and regulation will only serve to reduce those opportunities - and drastically so. The Obama administration needs to make clear that UN regulation of the Internet is not an option, and it should be building an international coalition to protect Internet freedom and opportunity.
_______________
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
Governors and Energy: Economics and Politics
Apparently, federal energy policy is frustrating at least a couple of governors.
When politics mixes with anything in the economics realm, including energy and energy policy, one can never be quite sure as to what the outcome will be.
For example, after a lengthy process that dated back to the previous administration, President Obama wound up rejecting the proposed Keystone XL pipeline project, which would boost U.S. economic growth, employment, and energy affordability and security. The unmistakable political desire was to push the decision beyond the 2012 elections. For good measure, the Obama administration has been slowing or stopping offshore and onshore oil production, pushing increased taxes on domestic energy producers, and proceeding with EPA regulation of emissions.
Two governors spoke out recently on energy policy emanating from the nation's capital.
According to a February 26 report in TheHill.com, Indiana Governor Mitch Daniels, a Republican, provided an interesting reminder on what the objective of the Obama administration's policies seems to be. The article noted:
TheHill.com went on to explain, "Republicans have leaped on comments from Energy Secretary Steven Chu to the Wall Street Journal in September 2008 saying that government needed to ‘figure out how to boost the price of gasoline to the levels in Europe.'"
Daniels added, "When you have environmental regulations that are going to raise the price of refining gas, possibly put some of our scarce refineries out of business, guess what? You are going to get higher gas prices."
While as a Republican, Daniels obviously wants to score political points, his basic economics are undeniable.
Meanwhile, a Democratic governor is none too pleased as well. In a February 23 report by The Canadian Press, Montana's Brian Schweitzer criticized the politics swirling around the Keystone pipeline. But he did so in a rather unique fashion.
Schweitzer is a big supporter of the project. The most interesting aspect of the article was the following:
That, of course, just adds more value to the project.
As for his criticisms, Schweitzer got colorful in pinning blame on Washington, D.C. But his wrath was not directed at the administration's political games. Instead, it was directed at Keystone supporters.
The Canadian Press quoted Schweitzer saying, ""Blah, blah, blah, Washington, D.C., politics. If you want to get something a) not done and b) cussed and discussed, send it to Washington, D.C. It's going to get built. Ninety per cent of these jackasses that are complaining about the Keystone pipeline in Washington, D.C., one year ago wouldn't have even known where the Keystone was. While we were doing the heavy lifting here in Montana and in South Dakota and in Kansas and Oklahoma ... in Washington, D.C. ... all these great defenders had never heard of Keystone before."
Hmmm. Why would a Keystone supporter go out of his way to take his Keystone allies to task? Well, while Schweitzer apparently gets the economic benefits of the project, he apparently cannot turn off the politics on the issue. So, he ignores that his fellow Democrats in the White House are the problem, and instead, highlights a point, whether accurate or not, that is meaningless in terms of the substance of the issue.
Like I said, when politics mix with economic policy, especially energy, you never quite know what the outcome will be.
_______
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
When politics mixes with anything in the economics realm, including energy and energy policy, one can never be quite sure as to what the outcome will be.
For example, after a lengthy process that dated back to the previous administration, President Obama wound up rejecting the proposed Keystone XL pipeline project, which would boost U.S. economic growth, employment, and energy affordability and security. The unmistakable political desire was to push the decision beyond the 2012 elections. For good measure, the Obama administration has been slowing or stopping offshore and onshore oil production, pushing increased taxes on domestic energy producers, and proceeding with EPA regulation of emissions.
Two governors spoke out recently on energy policy emanating from the nation's capital.
According to a February 26 report in TheHill.com, Indiana Governor Mitch Daniels, a Republican, provided an interesting reminder on what the objective of the Obama administration's policies seems to be. The article noted:
"‘Let's give the president credit for one domestic policy that works. He wanted higher gas prices and he got them,' said Daniels on Fox News Sunday. ‘Secretary Chu said $8 are about what they pay in Europe. It would be great. Secretary Salazar said $10 and it still wouldn't be for drilling in the places where we know there's an awful lot of domestic production. And so, they have gotten the doubling of gas prices and perhaps worse, it's a conscious policy of this administration. Maybe the one thing they set out to do and actually accomplished.' he said."
TheHill.com went on to explain, "Republicans have leaped on comments from Energy Secretary Steven Chu to the Wall Street Journal in September 2008 saying that government needed to ‘figure out how to boost the price of gasoline to the levels in Europe.'"
Daniels added, "When you have environmental regulations that are going to raise the price of refining gas, possibly put some of our scarce refineries out of business, guess what? You are going to get higher gas prices."
While as a Republican, Daniels obviously wants to score political points, his basic economics are undeniable.
Meanwhile, a Democratic governor is none too pleased as well. In a February 23 report by The Canadian Press, Montana's Brian Schweitzer criticized the politics swirling around the Keystone pipeline. But he did so in a rather unique fashion.
Schweitzer is a big supporter of the project. The most interesting aspect of the article was the following:
"Mr. Schweitzer said Keystone runs through Montana more than it does any other state and would be a boon for oil producers. Oil activity in Montana and North Dakota has picked up, he said, but the oil has to be transported to its destinations by rail. ‘Rail is not safe, it's not environmentally sound and it costs $20 [U.S.] to $30 a barrel more to get to market, so our producers are taking deep discounts because we don't have pipeline capacity and we've negotiated that with TransCanada."
That, of course, just adds more value to the project.
As for his criticisms, Schweitzer got colorful in pinning blame on Washington, D.C. But his wrath was not directed at the administration's political games. Instead, it was directed at Keystone supporters.
The Canadian Press quoted Schweitzer saying, ""Blah, blah, blah, Washington, D.C., politics. If you want to get something a) not done and b) cussed and discussed, send it to Washington, D.C. It's going to get built. Ninety per cent of these jackasses that are complaining about the Keystone pipeline in Washington, D.C., one year ago wouldn't have even known where the Keystone was. While we were doing the heavy lifting here in Montana and in South Dakota and in Kansas and Oklahoma ... in Washington, D.C. ... all these great defenders had never heard of Keystone before."
Hmmm. Why would a Keystone supporter go out of his way to take his Keystone allies to task? Well, while Schweitzer apparently gets the economic benefits of the project, he apparently cannot turn off the politics on the issue. So, he ignores that his fellow Democrats in the White House are the problem, and instead, highlights a point, whether accurate or not, that is meaningless in terms of the substance of the issue.
Like I said, when politics mix with economic policy, especially energy, you never quite know what the outcome will be.
_______
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
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