Clinton Details Small Business Plan Governor Bill Clinton today detailed his plan to get America's small businesses moving again. Noting that small business is the engine of economic growth, but that under George Bush business incorporations have declined for the first time in almost 50 years, Clinton outlined a plan to help small businesses do their work again. "I want a government that works with business to spur growth, create jobs, and increase incomes," Clinton said. "I want a streamlined government that does what the government of every other advanced country does: work aggressively promoting private sector growth." Clinton detailed a 5-point plan: * Increase access to capital and credit by creating a new enterprise tax credit, directing banking regulatory agencies to review all regulations and increase lending activity to small businesses, and helping the private sector establish a national network of 100 community development banks and 1000 microenterprise programs. * Strengthen investment incentives by providing a targeted investment tax credit, making permanent the research and development tax credit, and creating comprehensive enterprise zones. * Cut government regulations by enforcing the Regulatory Flexibility Act; developing regulatory short forms; and strongly supporting a White House Conference on Small Business. * Expand market access and R&D by creating a Rebuild America fund, doubling the Small Business Innovation Research program, and creating 170 manufacturing centers in a national technology extension service. * Control health care costs by restoring competition in health care. The Clinton plan will provide tax credits to help small businesses cover their employees, and does not include a payroll tax. Clinton also criticized the Bush Administration's record. He noted that under Bush, America has seen the highest bankruptcy rate since the current law took effect, and the lowest growth since World War II. Three million more Americans are unemployed today than in January 1989. Under Bill Clinton's leadership, Arkansas has led the nation in creating jobs, and the Arkansas Development Finance Authority Clinton helped create has become a model in small business financing assistance. "In Arkansas, we've created 72,000 new private sector jobs -- most of them in small business - - since Mr. Bush has been president," Clinton said. "In that time, the country as a whole lost 40,000 private jobs." Clinton's small business plan is a key part of Putting People First, his National Economic Strategy for America. "I know that entrepreneurs need less regulation, not more," Clinton said. "I know that small businesses need more credit, not less. And I know that exploding health care costs place a heavy burden on small businesses. A Clinton Administration will meet these challenges head on -- and create an environment where entrepreneurs and government can work together in a real partnership." -30- [Please see the attached summary of the Clinton plan for small businesses.] CLINTON/GORE ON SMALL BUSINESS AND ENTREPRENEURSHIP "The most important family policy, urban policy, labor policy, minority policy and foreign policy America can have is an expanding, entrepreneurial economy of high-wage, high-skill jobs." - Bill Clinton, Democratic Convention Acceptance Speech Healthy small businesses are critical to our nation's economic growth and technological leadership. They create most of our new jobs and many of our technical innovations. Yet today small businesses are fighting for survival. Failed Republican economic policies have devastated the national economy and left America's entrepreneurs starved for capital, overregulated, shut out of markets, and crippled by out-of-control health care costs. Bill Clinton and Al Gore understand the challenges that face entrepreneurs in America today. They know that small businesses must play a leading role in getting the American economy moving again. And so they'll work for all of America's small businesses -- including women- and minority-owned businesses, often among the newest and most vulnerable market entrants. The Clinton/Gore plan recognizes that entrepreneurs need less regulation, not more, and more credit, not less. It deals with the exploding health care costs and restricted access to health insurance that have placed a heavy burden on small business. A Clinton/Gore Administration will meet these challenges head on to create an environment where entrepreneurs can do what they do best: create jobs and develop technology. Through an unprecedented partnership between a Democratic Administration and America's small business community, Bill Clinton and Al Gore will create the prosperity Americans deserve. Working with small businesses, they'll expand access to capital and credit, strengthen incentives to invest in people and equipment, decrease regulatory burdens, expand market access and R&D, and control health care costs. The Bush/Quayle Administration has failed small business in each of these areas. INCREASING ACCESS TO CAPITAL AND CREDIT The Bush/Quayle Record Under George Bush, debt and equity financing for small business have dried up. The credit crunch has retarded recovery and devastated small business. In typical fashion, the Bush Administration has blamed someone else -- in this case bank examiners and bankers themselves - - for a credit crunch caused by failed Reagan/Bush policies toward depository institutions. This credit crunch has sharply restricted the ability of small businesses to grow, create jobs, and compete in international markets. Since 1991, the level of outstanding commercial and industrial loans has fallen by over $50 billion, and for the first time since 1965 banks are now investing more funds in government securities than in loans to business enterprises. A Clinton/Gore Administration Bill Clinton and Al Gore pledge to reverse these trends and restore the credit lifeline. They understand that the goal of government policy should be to assure that viable private enterprises do not fail because they can't get capital or credit. Financial institutions should help create jobs and restore healthy economic growth. A Clinton/Gore Administration will: * Provide a new enterprise tax credit that allows a 50% tax exclusion for those who take risks by making long-term investments in new businesses. * Provide a 100% tax exemption for new, direct long-term (10 years or more) investments in the stock of small businesses with $5 million or less in paid-in capital. Governor Clinton strongly supports Senator Bumpers' pending small business seed capital legislation containing this exemption. * Work with the private sector to create a national network of 100 community development banks and 1000 microenterprise programs to provide capital and technical assistance to individuals who want to start or expand small businesses. * Explore means of allowing pension funds to invest a greater portion of their portfolios in long-term venture and seed capital investments, while ensuring the security and safety of members' retirement investments. * Direct banking regulatory agencies to review Federal regulations, examination procedures, and loan classification standards to increase banks' lending activity to small business. * Explore new ways to securitize bank loans to small businesses into debt securities that can be sold in secondary markets, with techniques like those used for home mortgages and other asset-backed securities. Such securitization would free up bank capital for further small business lending. * Increase opportunities and assure equal opportunity for qualified small businesses and community banks to access public equity markets. Support and further extend the recent Securities and Exchange Commission proposals to simplify registration requirements and reduce the costs and enhance the ability of small businesses to make Initial Public Offerings, while ensuring that adequate safeguards exist for the investor. * Modify, for small businesses only, the recent Financial Accounting Standards Board proposals on current accounting of the future value of executive stock options to support management's long-term commitment to the business. * Support the recent SBA-authorized legislation providing for new equity-type financing for small business investment companies (SBIC's). STRENGTHENING INVESTMENT INCENTIVES AND TRAINING The Bush/Quayle Record The small business tax burden has increased dramatically under successive Republican administrations. The payroll tax on the self-employed, for example, has almost doubled since 1981. While the tax crush on America's middle class continues unabated, Reagan/Bush have repeatedly cut taxes on the wealthiest 2 percent of individuals. A Clinton/Gore Administration Small business investment in plant and equipment is vital to providing Americans with the tools they need to compete in international markets. The Clinton/Gore plan includes targeted initiatives and tax incentives that will: * Provide a targeted investment tax credit to encourage investment in new American plants and productive equipment needed to compete in the global economy. * Make permanent the research and development tax credit to reward companies that invest in ground-breaking technologies. * Reduce the income tax burden of middle class Americans. * Explore allowing a longer tax carryforward period for net operating losses, and consider changing the definition of NOL's so that certain transactions will not trigger change of control limitations. Small business should not be penalized by the IRS in their treatment of net operating loss carryforwards as they attempt to raise badly needed capital. * Allow small businesses to deduct a reasonable amount of pre-operating expenses. * Explore making Sub-Chapter S status available to a broader class of businesses by expanding its definition. * Explore allowing a longer tax carryforward for net operating losses. * Explore allowing start-up small businesses a longer carryforward period for the R&D tax credit. * Create 75-125 comprehensive enterprise zones which combine capital incentives and new Community Development Block Grants to help revive economically disadvantaged areas. * Create a National Apprenticeship Program to offer non-college bound students valuable job training and provide a skilled workforce to businesses. Local business, education, and community leaders will help design the apprenticeship programs. DECREASING GOVERNMENT REGULATION The Bush/Quayle Record The Bush/Quayle Administration has neglected the regulatory concerns of small business. Expanding regulations threaten to overwhelm the nation's entrepreneurs and divert them from the task of building strong, innovative companies. While loudly complaining about crushing government regulations, Bush and Quayle have piled one regulation after another on the backs of America's entrepreneurs. The only regulatory relief they have provided has gone to the wealthy friends of the Competitiveness Council -- not small businesses. Under George Bush, the number of employees devoted to issuing and enforcing federal regulations has increased from 104,000 to a stifling 125,000. The Bush/Quayle penchant for overregulation has not gone unnoticed. The conservative Heritage Foundation recently concluded that "although President Bush often complains about the burden placed on the economy by excessive regulation, only Richard Nixon in the last two decades has done more to add to this burden." Moreover, the Bush Administration has largely ignored and left unenforced the Regulatory Flexibility Act. Passed in the Carter Administration to reduce small business regulatory burdens, the act provides for a revision of all regulations which have a significant economic impact on small businesses. The ten-year period for review of the regulations has now passed with almost no activity. A Clinton/Gore Administration A Clinton/Gore Administration will aggressively streamline the regulatory process while maintaining appropriate safeguards to guarantee the nation's health and safety. It will: * Enforce the Regulatory Flexibility Act's provisions for reducing the regulatory burdens on small businesses. * Develop regulatory short forms for use by small businesses, much like the short forms used for federal taxes. * Strongly support a White House Conference on Small Business. The small business community will be assured a place at the policy table in a Clinton/Gore Administration. * Appoint a SBA Administrator who knows from first-hand experience the concerns and strengths of today's small businesses. * Appoint a strong SBA Chief Counsel for Advocacy to protect the interests of small businesses and to guard against overregulation. * Appoint government officials who understand the unique costs and burdens that government regulations pose for small business entrepreneurs. * Eliminate 100,000 unnecessary positions in the federal bureaucracy. * Reduce the White House staff by 25% and challenge Congress to do the same. INCREASING MARKET ACCESS AND RESEARCH AND DEVELOPMENT FOR SMALL BUSINESSES The Bush/Quayle Record Under George Bush and Dan Quayle the competitive climate for small business has steadily worsened. While many international markets remain closed to American businesses, the Bush/Quayle Administration refuses to take constructive action. Few federal procurement dollars are awarded in truly competitive, sealed-bid competitions. Despite small business' leading role in technological innovation, few federal R&D dollars go to small business. The government R&D market remains largely closed to small business. The Bush/Quayle Administration has also failed to protect small business from unfair and anti- competitive practices. Since 1983, not a single case of monopolization or attempted monopolization has been filed under Section 2 of the Sherman Act. This is the nation's longest period of lax antitrust enforcement in more than a century. A Clinton/Gore Administration Bill Clinton and Al Gore are committed to expanding markets at home and abroad for the goods and services of a revitalized small business community. They will also direct more federal procurement and research dollars to small business. A Clinton/Gore Administration will: * Create a Rebuild America Fund to increase federal investment in the nation's infrastructure by $20 billion a year for four years. A significant portion of these expenditures for improved roads, bridges, sewers and information networks and technologies will accrue to small businesses. * Double the Small Business Innovation Research (SBIR) Program which allocates a percentage of federal research funds to small businesses. The SBIR program has helped introduce numerous innovative technologies and products to the private sector while simultaneously improving the quality of existing federal government research programs. An increase in the percentage of funds from 1.25 percent to 2.5 percent will raise federal SBIR support of small business R&D to $1.15 billion, without increasing total federal spending. Al Gore championed the 1982 legislation that created the SBIR program, while the Reagan/Bush Administration initially opposed it. * Create a national technology extension service similar to the successful Agriculture Extension Service, comprised of 170 manufacturing training centers. The network of centers would assist small businesses in integrating "best practices" technology and techniques and serve as "teaching factories" where employers and employees could test cutting-edge technologies. A primary goal of the extension service will be to provide marketing, financial and technological information to small businesses. * Extend special conversion loans to small businesses that adapt their productive capacity from defense to civilian uses. * Increase government procurement dollars for small businesses, including minority- and women-owned businesses that conform to constitutional standards. * Work to create an open international trading system, and support efforts to reduce trade barriers through the General Agreement on Tariffs and Trades (GATT). * Pass a sharper, stronger "Super 301" trade bill to ensure that U.S. companies enjoy the same access to foreign markets that foreign companies have to our market. * Enforce U.S. trade laws, and sanction countries that fail to live up to negotiated agreements. * Strengthen the commercial sections of our embassies abroad so that they can promote U.S. goods, participate in foreign standards-setting organizations, and support the sales efforts of small and medium-sized businesses. * Provide matching funds to trade associations or other organizations that establish overseas centers to promote U.S. exports that have a net effect of creating American jobs. * Further liberalize East-West export controls and avoid unilateral export controls and controls on technology that are widely available in world markets. * Streamline the current decision-making process for export controls. CONTROLLING HEALTH CARE COSTS The Bush/Quayle Record The cost of health care has exploded during the Bush/Quayle Administration, currently consuming more than 13 percent of GNP. Family and individual spending on health care has tripled in the last decade, rising from $2500 to $7500 per family. For the first time in American history, health care costs now exceed business' after-tax profits. Costs are particularly high for small businesses, and inflation is forcing many to drop benefits. Small business health care premiums have also tripled in the last decade. It now costs at least 8 percent of payroll to offer health benefits, and without fundamental changes, health care costs will hit 20 percent of payroll in 8 years, As a result, many small firms will not do any major hiring until health care costs are brought under control. Many small businesses do not have affordable access to health care for their employees and cannot become part of a large group in order to spread risk and lower costs. A Clinton/Gore Administration Bill Clinton and Al Gore will work tirelessly to bring health care costs down. They recognize the burdens that small businesses are now under to provide health care for themselves and their employees. The Clinton plan will: * Provide substantial financial assistance through tax credits to enable small businesses to provide private health insurance without risk to jobs. With savings from cost containment, these tax credits will substantially reduce the cost of providing health care. The Clinton plan is not a "play or pay" plan and does not propose a payroll tax. * Increase the health care insurance premium tax deduction for the self-employed from 25% to 100%. * Phase in employer requirements for coverage after cost controls are in place. The smallest businesses will enter the system last. * Control health care costs through managed competition and a national health budget. Insurance market reforms and community purchasing groups will give small businesses bargaining power to get lower, large group rates and greater choice of insurance plans. These cost control measures will save $700 billion by the end of the decade. * Require employee co-payments to discourage overutilization and encourage shared responsibility. * Stop underwriting practices that divide Americans into small risk groups and raise the cost of health care coverage for small business. THE CLINTON SMALL BUSINESS RECORD IN ARKANSAS As Governor of Arkansas, Bill Clinton has demonstrated his commitment to helping small businesses start and succeed. * For the year ending June 1992, Arkansas ranked first nationally in job growth rate. * In the last half of the 1980s, the number of manufacturing jobs in Arkansas grew at ten times the national average. Much of the growth was in small business. For example, from 1979 to 1991, there was a 142 percent increase in the number of Arkansas companies exporting products. Almost three of every four of those companies had fewer than 200 employees. * Governor Clinton created the Arkansas Development Finance Authority (ADFA) to provide a source of long-term, low-interest, and fixed-rate financing for economic development projects. ADFA was among the first agencies in the nation to develop an industrial bond pooling program. This program enables small businesses to participate in the bond market and brings down the net interest rate for Arkansas borrowers. * Governor Clinton established a Linked Deposit Program, which allows up to $50 million of state funds in lending institutions to be loaned to small businesses at below-market rates. * Governor Clinton helped create the Southern Development Bancorporation (SDB). SDB's Southern Ventures division makes loans and equity investments in small, growing companies. SDB's Elk Horn Bank & Trust has made over $5.5 million in SBA- guaranteed loans that would not have been granted by other institutions. * In 1985, Governor Clinton revived the Arkansas Capital Corporation (ACC). The ACC makes reduced interest loans to small businesses with good management and a record of successful operation, but which do not meet the requirements for conventional bank loans. Between 1985 and 1992, the ACC has approved more than $18 million in loans to these businesses. * Governor Clinton established the Arkansas Science and Technology Authority (ASTA), which encourages partnerships between universities and businesses pursuing high-tech projects with clear economic potential. ASTA matches funds invested by businesses in these projects, and doubles the match for small businesses. * Governor Clinton established the award-winning "business incubator" program in 1985, which provides shared resources, low-cost rental space, technological assistance, and management and marketing counselling to fledgling, high-tech small businesses. THE GORE SMALL BUSINESS RECORD IN THE U.S. SENATE Al Gore's legislative record as a United States Senator reveals a long-standing advocacy on behalf of America's small businesses. * Senator Gore championed the Small Business Innovation Development Act of 1982, which directs the federal government to provide a more equitable and effective distribution of federal research and development funds toward small businesses. Since its adoption, the SBIR program has stimulated technological innovation, encouraged the participation of small science and high-technology firms in government research, and provided incentives for the conversion of research results into commercial applications. * Senator Gore has been an active advocate of Tennessee small businesses. As a sponsor of statewide Government Procurement Conferences, Senator Gore brought hundreds of small businessmen and women together to learn of business opportunities with the U.S. government. * Senator Gore is a proponent of an annual White House Conference for Small Businesses, and was a cosponsor of legislation which established the conference held in the 98th Congress. * Senator Gore fought against the Reagan/Bush Administration's proposal to abolish SBA as an independent federal agency. * Senator Gore co-sponsored numerous bills to encourage small business ownership and to maintain a favorable tax policy for small business growth. * Senator Gore co-sponsored the Small Business Capital Formation Act, which would provide preferential tax treatment for capital gains on small business stock held over four years. BUSH/QUAYLE'S NEGLECT OF AMERICA'S SMALL BUSINESSES AND ENTREPRENEURS The Bush/Quayle Administration has the worst record for small business and economic growth since Herbert Hoover. George Bush has long ignored and neglected the Small Business Administration. Rather than read George Bush's lips, we can read his record: * During the first three years of the Bush/Quayle Administration, the number of new business incorporations declined at a 3.3 percent annual rate, the first decline since 1945. [Joint Economic Committee] * In 1991, 944,000 individuals and businesses filed for bankruptcy - the highest number since the current U.S. Bankruptcy Code took effect in 1979. During the Bush Administration, the number of personal bankruptcies filed exceeds net new jobs created by a 3-1 margin. [Administrative Office of the U.S. Courts] * Under the Bush/Quayle Administration, the Savings and Loan debacle has created a credit crunch for small businesses, shutting off credit needed by small businesses to grow. * Despite a severe credit crunch, George Bush did not seek significant increases in Small Business Administration lending programs until six months before the election. * In his last budget, George Bush proposed halving SBA small business loan subsidies, eliminating Small Business Development Centers, and raising the interest rates on SBA disaster loans. [1993 Budget Request] * The Reagan/Bush Administration proposed the elimination of the Small Business Administration first in 1985 and then again in 1986. When that failed, they continually proposed budget reductions for the agency. [Senate Small Business Committee] * The Bush/Quayle Administration appointed two failed Republican Senate candidates to head the Small Business Administration - neither business owners. Small business deserves better than a failed, retired or aspiring politician to head the SBA. [Common Cause, 5/6/91; Senate Small Business Committee] * George Bush further demonstrated his lack of commitment to small business when he left the key position of SBA's Chief Counsel for Advocacy vacant for over three years. The Chief Counsel's job is to represent small business interests before the federal bureaucracy and the Congress. [Senate Small Business Committee] * Since George Bush took office, no net private sector jobs have been created, unemployment has increased by 3 million, 1.3 million manufacturing jobs have been lost, and real weekly earnings have fallen by 4 percent. [Bureau of Labor Statistics, Department of Commerce]