Capitalist Chatter

Milton Friedman, R.I.P.

Strangely, there are people who can have an enormous influence on one’s life, yet you never get to meet them personally.  Economist Milton Friedman, who died today (November 16), was just such a person for me. 

Of course, Friedman has been a guiding light for countless free-market economists for decades.  He will be missed, but his ideas will live on, thankfully.

Friedman was an economist of formidable insights and great courage.  For example, when it was against overwhelming popular and intellectual fashions, Friedman was a stalwart opponent of Keynesian economics, not to mention socialism.

He provided illumination on the role of monetary policy in the economy.  His book Capitalism and Freedom ranks as a true classic.  Friedman also was the leading early economic voice for school choice, and more recently made clear that consumer-controlled, pro-competition, pro-market reforms, such as health savings accounts, make the most sense in terms of health care policy.

It was particularly fitting that Friedman won the Nobel Prize in 1976 – the year that marked both the United States’ bicentennial and the 200th anniversary of the publication of Adam Smith’s The Wealth of Nations.  Freidman was an eloquent voice for the fundamental freedoms upon which this country was built, and for many of the free market ideas that Smith put forward.  In the Introduction to their book Free to Choose, Milton Friedman and his wife Rose Friedman noted the link between the U.S. and Smith:

The story of the United States is the story of an economic miracle and a political miracle that was made possible by the translation into practice of two sets of ideas – both, by a curious coincidence, formulated in documents published in the same year, 1776.

One set of ideas was embodied in The Wealth of Nations, the masterpiece that established the Scotsman Adam Smith as the father of modern economics.  It analyzed the way in which a market system could combine the freedom of individuals to pursue their own objectives with the extensive cooperation and collaboration needed in the economic field to produce our food, our clothing, our housing.  Adam Smith’s key insight was that both parties to an exchange can benefit and that, so long as cooperation is strictly voluntary, no exchange will take place unless both parties do benefit.  No external force, no coercion, no violation of freedom is necessary to produce cooperation among individuals all of whom can benefit.  That is why, as Adam Smith put it, an individual who “intends only his own gain” is “led by an invisible hand to promote an end which was no part of his intention.  Nor is it always the worse for the society that it was no part of it.  By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.  I have never known much good done by those who affected to trade for the public good.”

The second set of ideas was embodied in the Declaration of Independence, drafted by Thomas Jefferson to express the general sense of his fellow countrymen.  It proclaimed a new nation, the first in history established on the principle that every person is entitled to pursue his own values: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights; that among these are Life, Liberty, and the pursuit of Happiness.”

Milton Friedman stood strong for these two freedoms – economic freedom and political freedom.  His work will continue to do so for generations to come.

Raymond J. Keating

Chief Economist

SBE Council

November 16, 2006

The Challenges of Patent Reform

In a new publication – “Patent Reform & Industrial Structure” -- from the Progress & Freedom Foundation, James V. DeLong provides a must-read overview on the challenges facing patent reform today.

DeLong first sums up the major issues being kicked around, including the definition of “nonobviousness;” delays, funding, incentives and other problems facing the USPTO; involvement of outside parties in the patent process; enjoinment and damage assessments; venues for patent lawsuits; and jury trials. He then proceeds to place all of this within the context of today’s varied and dynamic market structure for invention, in particular struggles between invention shops and downstream firms, and between large corporations and the small inventor. DeLong ably raises the points made by each side.

He makes the case that reforms are needed, but that with each issue addressed there not only exist current problems, but potential risks with each reform proposal. Patent reform seems ideally designed for those economists apt to say “on the one hand … but on the other hand…”

The entire paper is worth reading , with three key points worth highlighting here:

• “… no distinction between the rights of integrated firms and those of invention shops is viable. In the context of injunctions, where the efforts to draw this distinction are rife, whether the patent holder is practicing the patent or licencing it should be irrelevant; in either case, it has the right to exclusivity. Other factors, such as whether the patentee lay in wait until a firm committed capital or the availability of information about the existing patent, are relevant to the equity of an injunction.”

• Regarding patent law and policy: “If standards are clear and incentives appropriate, then one procedure plus an appeal is enough. If they are not, additional procedures add expense and quirkiness to the system without improving quality.”

• “The key characteristic of any form of property that provides the foundation for a commercial system is that it be clearly defined. The history of tangible property, including tangible property that takes such intangible form as electronic blips in computerized systems of account, is characterized by increasing degrees of specificity. The primary problems with the patent system seems to be that it has not undergone a comparable reform, and thus we are having great difficulty in using it as the foundation of a disaggregated industrial system based on the market.”

Raymond J. Keating

Chief Economist

SBE Council

November 12, 2006

EU Actions Belie Their “Think Small” Rhetoric

Over the past several years I have met with European Union (EU) officials about public policy and small business. And, while these officials proudly tell me that they have adopted a small business attitude in the EU – that is, to “think small” before regulating -- a current initiative to extend broadcasting regulations to websites that use video images -- from small business to clubs and organization to “video bloggers” (read: YouTube, etc.) -- runs counters to their small-business sensitive claims.

According to an October 17 article in the The Times, “The European Commission proposal would require websites and mobile phone services that feature video images to conform to standards laid down in Brussels.”

The purpose of the proposed regulation is to “set minimum standards” in areas such as advertising, hate speech and the protection of children.

UK Broadcasting Minister, Shaun Woodward, is troubled by the proposal and is working to thwart the effort, or at a minimum to find a compromise: “Supposing you set up a website for your amateur rugby club, uploaded some images and added a link advertising your local sports shop. You would then be a supplier of moving images and need to be licensed and comply with the regulations.”

If EU regulators were really “thinking small,” they would inherently know that one-size-fits-all regulation is not only a poor approach to enabling innovation and entrepreneurship, but a bad approach to public-policy making in general.

Karen Kerrigan

President & CEO

SBE Council

October 17, 2006

Costs of Motion Picture Piracy

The costs of music and movie piracy reach well beyond just the big producers and stars, and reach across significant parts of the economy.  We at SBE Council have made this point on many occasions, in articles, columns, policy papers, and media interviews.  Now, a new study puts some dollar estimates on the issue.

Specifically, a report from the Institute for Policy Innovation looks at the costs of motion picture piracy – both Internet and hard goods piracy.  The study – “The True Cost of Motion Picture Piracy to the U.S. Economy” – was conducted by Stephen Siwek, and is built upon a May 2006 LEK Consulting study for the Motion Picture Association of America (MPAA), which estimated that MPAA studios lost $6.1 billion to piracy in 2005.

Siwek takes those findings and applies them to the U.S. Bureau of Economic Analysis’ Regional Input-Output Modeling System in order to estimate the economy-wide impact of this kind of piracy, or more aptly, this kind of theft.

The findings are quite sobering.  Motion picture piracy inflicts the following estimated costs:

• total lost output of $210.5 billion annually for all U.S. industries;

• $5.5 billion in lost earnings each year for U.S. workers;

• 141,030 jobs are lost that would have been created absent piracy, including 46,597 jobs in the motion picture industry and 94,433 in other industries;

• $837 million in revenue is lost to governments at all levels.

So, few are spared the ill effects of such theft, including consumers, taxpayers, small businesses and large firms.  Siwek observes: “This study, focused solely on the effects of piracy from one industry, suggests that the economic toll taken by copyright piracy and counterfeiting as a whole is enormous, and harms not only the owners of the intellectual property but all U.S. consumers and taxpayers.  As policymakers seek to maintain the health and vitality of the U.S. economy and preserve our global competitiveness, the importance of recognizing the real costs of piracy and counterfeiting cannot be overstated.”

Raymond J. Keating

Chief Economist

Small Business & Entrepreneurship Council

October 12, 2006

Tax Cuts, the Economy and the President’s Advisers

An odd and discouraging news story appeared in the October 5 Washington Times titled “House or Senate Shake-Up Likely to End Tax Cuts.”

Rob Portman, the director of the Office of Management and Budget, and Ed Lazear, chairman of the Council of Economic Advisers, did an interview with reporters and editors at Washington Times. Reporter Patrice Hill wrote the story.

Now, we cannot know all that was said at this gathering, but the report about the meeting can only be described as disappointing, as the President’s advisers seemed to fail to make a robust case for the economic benefits of tax relief, while also apparently missing some key causes regarding budget deficits and even economic growth.

Let’s take the following point reported by the Times first: “But they [Portman and Lazear] conceded that the tax cuts have not prompted more people to get work and contribute to the economy, while they cut deeply into government revenue and contributed to record budget deficits that have not shown much improvement until recently. ‘We do not say the tax cuts pay for themselves,’ said Mr. Lazear. ‘The point is that they created a positive environment for income growth’ while helping make the 2001 recession shallower than it otherwise would have been.”

Well, it seems peculiar to say that the tax cuts failed to prompt more people to get work and contribute to the economy, especially since employment growth kicked into gear right after the 2003 tax cuts – the key pro-growth tax measures passed during the Bush years – were passed and took effect. In fact, from July 2003 to September 2006, the U.S. economy added 7.4 million jobs.

For good measure, while most tax cuts do not fully pay for themselves, there certainly is a revenue feedback effect – often quite significant -- when pro-growth tax cuts are implemented. Again, we have seen this, as federal revenue growth picked up after the 2003 tax cuts gave a boost to the economy. In fact, a remarkable stretch of three straight years of declining federal revenues was reversed, as revenue growth resumed and accelerated after the 2003 tax cuts were implemented.

In addition, it is very difficult to make the case that the initial 2001 tax cut package made the 2001 recession shallower. Key aspects of the 2001 tax relief measure that would have provided some energy to the economy were delayed, to be phased in slowly at later dates. In fact, one can make the case that the long phase-in period for tax relief in the 2001 tax measure provided few immediate benefits for the economy, and in fact, the economic recovery under-performed until the 2003 tax relief bill was passed.

The Times article continues later: “Despite the revenue surge this year, the administration is projecting a precipitous drop in revenue growth to 2.4 percent in fiscal 2007, in large part because of generous cuts in the alternative minimum tax enacted by Congress. Also cutting revenue by $17 billion, they said, is the administration's decision to eliminate the telephone excise tax that President Theodore Roosevelt enacted to pay for the Spanish-American War, and to refund some of that tax. Partly as a result of the drop in revenue, the administration expects the budget deficit to rise again in 2007 to $339 billion from $296 billion or less in 2006. As a percentage of economic output, the deficit would rise to 2.4 percent from 2.3 percent, assuming Congress holds a tight line on 2 percent growth in domestic discretionary spending as prescribed by the administration.”

In reality, revenue growth for the government is tied to economic growth. If the economy continues to chug along, then revenues will continue to grow. The problem when it comes to the U.S. budget and its deficit is way too much spending, not too little revenue growth. For example, federal spending has increased by an annual average rate of 7.7 percent during the Bush budget years, far outpacing the rate of inflation, for example.

Finally, the Times story notes: “Mr. Lazear said he sees economic growth bottoming out at around 3 percent this year and next. The economy cannot grow as fast as the 4 percent average growth rates attained in the late 1990s, he said, because growth in the labor force has slowed sharply this decade. ‘It's a function of the aging work force and slower population growth,’ he said. Mr. Lazear conceded that the cut in the top tax rate from 38 percent to 33 percent and other Bush tax cuts should have provided an incentive for more people to work, but instead both men and women have been dropping out of the labor force.”

First, the reporter, I assume, made a mistake in that the top tax rate declined from 39.6 percent to 35 percent under President Bush (not 38 percent to 33 percent). Second, the economy certainly can grow at 4 percent per year, which by the way has been the average rate of real growth during recovery/expansion years post-World War II. Growth is not just about population growth, but also about productivity, investment, innovation, invention, entrepreneurship, and so on. For good measure, while labor force participation declined from its 2000 peak, it has been climbing higher in 2005 and 2006.

Finally, it must be highlighted that real GDP growth accelerated markedly once the 2003 tax cuts were passed, with real gross private domestic investment expanding at a rapid clip as well. This is no mere coincidence, as those tax relief measures enhanced incentives for working, investing and entrepreneurship.

Funny, but one might expect a more robust defense of tax cuts coming from the President’s own leading men on the economy.

Raymond J. Keating

Chief Economist

Small Business & Entrepreneurship Council

October 10, 2006

“Ease of Doing Business” Around the World

The World Bank and IFC recently released its “Easy of Doing” study that ranks 175 countries on the ease of doing business. Singapore comes out on top, New Zealand is second and the United States gets the bronze. This year’s report, Doing Business 2007: How to Reform, identifies top reformers of business regulations and describes best practices in how to reform.

The report cites examples of countries cutting taxes and reforming or modernizing regulations that deter business and economic growth.  The authors favor an across-the- board approach to reform – a level playing field, if you will, for businesses of all sizes.   

“Reforms should ease the burden on all businesses: small and large, domestic and foreign, rural and urban. This way there is no need to guess where the next boom in jobs will come from. Any business will have the opportunity to thrive,” said Simeon Djankov, an author of the report.

In addition to “Ease of Doing Business” being a high-quality report, its real value rests in the fact that government officials and politicians throughout the world are actually using it as a benchmark to advance and accelerate the reform process. This has been particularly beneficial for entrepreneurship as reformers have focused mostly on encouraging business formation during the past two years. According to the report:

“The most popular reforms in 2005/06 were making business start-up easier and simplifying tax regulations. Less progress was made on labor regulations - a determinant of job creation in the formal sector, particularly for women, youth and the poor. Labor rigidity leads to unemployment in rich countries and informality in developing countries, yet only 8 countries improved their labor laws.”

Other findings from this year’s report include:

• Africa ranks third on the pace of reform among regions. Two-thirds of African countries made at least one reform, and Tanzania and Ghana rank among the top 10 reformers.

• In the past 3 years, nearly 85% of reforms took place in the first 15 months of a new government.

• Georgia was the top reformer in the world, improving in 6 of the 10 areas studied by Doing Business.

Given the growing understanding that good policy is good for business, it looks like global competition will only get fiercer.

Karen Kerrigan

President & CEO

SBE Council

October 4, 2006

Manzullo Report: Growth and Health of Small Business Correlates With GOP Policies

A U.S. House Small Business Committee study documents the growth and vitality of the small business sector over the past 12 years, and reports this is due to GOP leadership and policy.

“House Republicans have enacted an aggressive agenda to give America’s 25.8 million small businesses the tools they need to prosper and create jobs,” said House Small Business Committee Chairman Don Manzullo (R-IL). “By reducing taxes, creating more affordable health care options, and eliminating unnecessary regulations, Republicans have made our small businesses more competitive in the global marketplace.”

The 9-page report includes a comprehensive list of all legislative and administrative actions that have occurred since 1995 to help small businesses in the following categories: tax relief, regulatory relief, health care reform, litigation reform, procurement, and Small Business Administration programs.

The report also includes a statistical table showing the growth in the number of small businesses, including women-owned and minority-owned firms; the rise in the percentage of federal government contracting opportunities for small business; an increase in the number of SBA-backed loans; and that the cost of regulation has decreased while the number of small firms offering health coverage has increased.

Karen Kerrigan

President& CEO

SBE Council

September 27, 2006

European Regulators vs. Europeans and U.S. Companies

I’m sure there are lots of businesses, entrepreneurs and consumers in Europe looking forward to Microsoft Corp.’s new operating system Vista. Well, the message to them from European regulators seems to be: “Tough luck, you just might have to wait longer.”

In a Dow Jones story from September 7, reporter William Echikson writes: “Microsoft Corp. said it is awaiting a response from European regulators to determine whether the next-generation Vista operating system will be delayed in Europe.” He later adds: “Microsoft said it has provided regulators with ‘extensive briefings’ on Vista over the past 15 months and given regulators copies of the product to review. The Commission has raised various concerns, noting complaints made by competitors, the statement said.”

Hmmm, note that the complaints come from competitors, not consumers. Of course, that’s how it usually goes with antitrust regulation – whether here in the U.S. or elsewhere, as in Europe. It’s supposed to be about helping consumers, but it turns out to be about government providing aid and protection to companies that face a tough time or are losing out in the competitive marketplace.

Ironically, EU spokesman Jonathan Todd was quoted declaring: “There is no reason why Microsoft cannot market Vista in a way that is fully compliant with competition regulations.” Was that “competition regulations”? How’s that for an oxymoron?

But at least not all government officials in Europe are lost causes on such matters. The Dow Jones story noted: “Earlier Thursday, four European parliamentarians criticized European regulators for their handling of an antitrust investigation into Microsoft, saying it could result in delays of the release of the company's software in Europe. In a letter addressed to European Antitrust Commissioner Neelie Kroes, the four members of the European Parliament -- three from the U.K. and one from Poland -- complained that the regulators' ongoing pursuit of Microsoft has led to ‘uncertainty about the legal principles that govern product design issues for future releases of Microsoft products in Europe.’” Indeed, it not only creates uncertainty for Microsoft, but for any company that gains significant market share by serving consumers well.

The regulatory mess in the U.S., including on the antitrust front, entangles far too many businesses, and is far too costly. Microsoft certainly has seen that firsthand over the past decade-and-a-half. But Europe is even worse, as the company faces enormous fines, court costs and judicial appeals.

This EU antitrust case should be instructive to policymakers in the U.S. on two fronts. First, if our nation journeys farther down the path towards European-style regulation, businesses, entrepreneurs and consumers will suffer. Second, as more and more U.S. businesses expand globally, they could face protectionism through government regulation.

Raymond J. Keating

Chief Economist

Small Business & Entrepreneurship Council

September 7, 2006

Eminent Domain Update

When the power of eminent domain is abused by politicians, those most likely to suffer, of course, are homeowners and small business owners. History has shown that time and again.

SBE Council noted in a recent report (“Stopping Kelo One Year Later: Legislative Efforts to Reverse Eminent Domain Abuse”) legislative changes passed or under consideration at the federal and state level after the U.S. Supreme Court’s egregious Kelo decision in June 2005. A recent SBE Council Fact of the Week (“Property Rights on State Ballots”) also looked at measures on state ballots this year regarding property rights.

It’s worth taking a look at what’s going on in a few spots around the nation to reinforce that restrictions on eminent domain are both needed and desired around the nation:

• The Village of North Hills in New York was considering the use of eminent domain to take a private golf club so that village residents could use it. Earlier this month, state legislators and Governor George Pataki came up with a narrow, unique solution. As 1010 WINS radio website reported: “The new law says land in a groundwater protection area -- which the golf club is in -- can not be seized by eminent domain if the municipality plans to use the land for the same thing as the private owner.” A more comprehensive answer to New York’s liberal and abusive eminent domain ways would have been welcome, but this at least stops one case of government theft.

• Earlier this month, voters in Clayton, Missouri, voted overwhelmingly – with 70.8 percent of voters, according to the Citizen Journal – to approve strong limitations on the city’s power of eminent domain “in conjunction with any economic development or redevelopment project.” However, this was a non-binding, advisory measure, so it will be interesting to see how city officials react.

There already is a test. As the Citizen Journal reported:

“One such development that fits that definition is a Centene redevelopment gearing up in Clayton's central business district. The $190 million project will include Centene's national headquarters, which will accommodate 1,200 corporate staff members. City and Centene officials have said the redevelopment would create 800 new jobs.

“City officials also believe the development could seriously bolster the city's economy while adding hundreds of thousands of additional tax dollars to the city and Clayton School District each year.

“But the development also came with the first use of eminent domain in the city. Two property owners along Forsyth Boulevard reportedly lost their properties to Centene through eminent domain, with the court deciding the compensation. City officials said two other property owners have court dates scheduled for October to determine if their properties could be taken through eminent domain as well.”

• An August 15 Bloomberg News story by reporter Greg Stohr offers a few highlights of what’s going on around the nation since the Kelo decision. For example, he noted:

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“Officials in Riviera Beach, Florida, needed to act fast. Governor Jeb Bush was poised to sign a bill to limit government seizures of private land, jeopardizing the town's vision for a $2.4 billion waterfront redevelopment. So city officials called an emergency meeting for May 10, the night before Bush's planned signing. Looking to beat the clock, the City Council approved a contract with the project's developer and promised to use the city's power to take land for public use to secure the necessary property.”

- “New York City aims to build a new arena in downtown Brooklyn for professional basketball's Nets, while San Francisco plans to redevelop 150 blocks in its Bayview-Hunters Point neighborhood. And in an unusual twist, officials in Hercules, California, are vying to seize land owned by Wal-Mart Stores Inc. in the hope of filling the space with smaller shops.”

- “The Institute for Justice says it has identified almost 5,800 instances in which agencies at least threatened to seize properties for transfer to other private parties in the year following the Kelo decision. That's up from an average of about 2,000 annually in the five preceding years, according to the group's figures.”

• Finally, settlements were reached between the parties in the Kelo case in New London, CT. On August 22, the Associated Press reported:

“The state spent $2.3 million to settle with New London property owners in a landmark eminent domain dispute that reached the U.S. Supreme Court, an official said Tuesday. The six property owners received the money to settle their claims and pay for their relocation, according to Tom Londregan, city attorney for New London. That figure does not include about $1.1 million in back rent officials agreed to waive and about $1.7 million that had been held in escrow for the property owners since their homes and businesses were condemned by the New London Development Corp. in 2000, officials said…

“The last two holdouts in New London's Fort Trumbull neighborhood agreed in June to give up their land to make way for private development. Susette Kelo, the lead plaintiff in the case, agreed to have her pink cottage moved elsewhere in New London. Pasquale Cristofaro, the other holdout, has agreed to give up his home but is entitled to purchase a new one in the neighborhood at a fixed price if new homes are built. The Cristofaros and Kelo had faced the possibility of forced eviction from their homes to make way for a riverfront project slated to include condominiums, a hotel and office space.”

It’s fitting to note the comment from one of the New London property owners, William Von Winkle, who declared: “I can't go buy anything with a gun like they did. This money was to make them look good. I will look for something safe from eminent domain, if that's possible in this country now."

Raymond J. Keating

Chief Economist

Small Business & Entrepreneurship Council

August 23, 2006

Is the “trifecta” package a good deal?

The House approved H.R. 5970 by a vote of 230-180 last week.  Included in the package were various tax relief measures – including phased-in, and permanent death tax relief (eventually, by 2015)  -- as well as a  hike in federal minimum wage to $7.25 by 2009 (a 40 percent increase).  The Senate is considering the same “trifecta” package, and it will be a tough row getting to the 60 votes needed on cloture to proceed with debate.

(To read The Hill’s coverage of the bill, please visit: http://www.thehill.com/thehill/export/TheHill/News/Frontpage/080206/trifecta.html)

The business lobby, in general, supports the wage hike piece as long as it includes the tax “sweeteners.”  The question is whether the package is actually a good deal  -- both in the short and long term -- for small businesses and the economy.

Here are the details of the package:   

With respect to the death tax provision, H.R. 5970 increases the exemption amount to $5 million per person (indexed for inflation), which will fully take effect on Jan. 1, 2015.  Tax rate on amounts up to $25 million will be taxed at the capital gains rate (15 percent, but will increase to 20 percent in 2011 unless it is extended).  Estates in excess of $25 million in value will be taxed at 30 percent.

Other tax provisions include the Work Opportunity Tax Credit, the Research and Development Tax Credit and the state and local sales tax deduction -- through 2007.

The minimum wage would be increased in phases --  $5.85 on Jan. 1, 2007, $6.55 on June 1, 2008, and $7.25 by June 1, 2009. A provision that allows employers to count tips toward meeting the minimum wage requirement was also included.

Before the House vote, the Republican Study Committee (RSC), a group of over 110 House Republicans organized for the purpose of advancing a conservative social and economic agenda in the House, had this to say about the “trifecta” package: “Historically, conservatives have viewed any federally mandated minimum wage hike as anti-business, anti-consumer, and anti-worker….  Of course, other ‘sweeteners’ are being considered in the overall package that are pro-taxpayer (death tax reduction, extension of other current tax reductions, etc.).  Thus, in determining their vote, each member must weigh the benefits of these positive provisions against a known job killer and a long-time favorite of their colleagues on the Left.” 

Congressman Mike Pence (R-IN), Chairman of the RSC, called for a bill that was “jobs neutral” in response to the proposed hike in the minimum wage.  Pence, and a few other RSC members (21 Republicans in all), voted against H.R. 5970.

SBE Council Chief Economist Raymond Keating says he would vote against the measure as well:

“I'd vote against it,” said Keating. “Small business, workers and the economy get hit with the wage hike, and for what?  A compromise that leaves the death tax in existence?  Given the starting point on this issue, this ranks as a lose-lose to me. If we had to, we'd be better off actually leaving the death tax alone until 2011 approaches and test Congress to see if they really would impose a massive tax hike and pay the commensurate consequences.”

There will obviously be some losers that come out of this legislation if enacted – certain small businesses that operate on thin margins, are not established and will not be able to afford the wage hike.  Workers on the lower rung of the economic ladder, or those trying to enter the workforce obviously suffer too.

Given the fact that some Senate Democrats would have voted for the tax extenders in the pension bill – the R&D tax credit, state and local tax write off, etc. – and that Majority Leader Frist says he won’t allow a vote on these tax measures outside of the current package…makes you wonder what the GOP is trying to accomplish here.

Karen Kerrigan

President & CEO

SBE Council

August 3, 2006