Dashboard: What the Inflation Reduction Act Means for Businesses

[Music] welcome to another 21 hats dashboard I'm Lauren Feldman and I'm here with John arensmeier who is founder and CEO of small business majority and advocacy group for businesses and entrepreneurs welcome back John good to be here Lauren great to have you um you're in DC you're following what's going on there's been a lot going on let's dive right into the uh inflation reduction act uh your organization has been supporting it uh why sure well there's a there's a lot in here that's good for uh for small business uh I'm going to focus particularly on the health care Provisions um majority of U participants in the uh marketplaces in the exchanges are small business owners employees and self-employed people and uh we're very thrilled to see that the premium subsidies are going to remain in place for at least another two years uh that takes um off the table some pretty serious um increases in healthcare that might have happened um and also um you know we've been advocating to reduce prescription drug prices for years and they finally taken the first step uh in the bill by uh allowing for um the government to uh to negotiate um Med medicate Medicare prices with with drug companies so that's huge so those things kind of help small businesses by kind of indirectly by helping their uh employees primarily correct right got it and then how about the go ahead no go ahead well I mean you know the people are talking about the tax provisions and um again you know we have a very unequal tax code where big businesses really are able to uh legally avoid lots of taxes and the fact that there's going to be a requirement that businesses over with over a billion dollars in profits pay uh taxes um on at least 15% in taxes on their book income is a way of sort of of leveling the playing field uh and bringing more Revenue in and certainly not an expense of small business and then there's of course the The increased tax enforcement uh which is really going to be targeted to large businesses and very wealthy uh even the Secretary of Treasury Jan Yellen has said that not going to use any of that uh to Target um businesses uh people with incomes under $400,000 which is 97% of of the business ownership out there and then there's a and then I'm sorry then there's the clean energy um which you know small businesses are a huge part of a sustainable clean energy economy moving forward and substantial um investment and and tax um considerations to promote a clean energy economy um is going to really enable uh is really going to boost small business domestic small businesses who play a big role in in our uh clean energy economy going forward and not to mention the environmental benefits what are you referring to is that uh you know it targets electric vehicles it targets uh you know fuel pumps and things like that you're talking about small businesses that are part of the supply chain to create those products yeah the electric vehicles tax credit investments in clean energy uh manufacturing there are small businesses up and down the line in the supply chain in in all of our um clean energy Industries so this is going to benefit them the bill does have a lot of critics um no Republicans voted for it uh one of the things I saw was Senator Grassley on Twitter saying warning that IRS agent with AR-15s are going to be coming and knocking on the doors of business owners um should I guess he was referring to the fact that there going to be 880,000 more employees at the IRS uh to help the IRS do a better job of going after tax cheats is there any reason why business owners should be concerned about that well the the IRS is is significantly underfunded and a lot of taxes aren't being collected and the majority of those taxes are um you know corporate taxes or um you taxes U on the very wealthy and these aren't necessarily people or corporations that are overt criminals um they may be pushing the envelope and it's going to require an additional Workforce of IRS agents to take a look and see is this is this proper or is it not I mean I'm not going to respond to the AR-15 comment I mean this Hyperbole and uh you know we're in a we're in a pretty pretty intense polarized political environment now so I'll I'll let that one stand uh I hear you I you know I think think to try to make sense of what he was saying the the best face you could put on that argument is that if there's increased enforcement there may be businesses that are forced more businesses will be forced to go through um and audit and that can be a painful process even if you're not doing anything wrong um is that a concern I mean nobody will likes to go through an audit but it's hard to argue that um businesses should be concerned if there's going to be enforcement of tax laws and that they need to be looked at um I do not see anything in this legislation or anything that um secretor yell or anyone else has said that indicates this is going to be targeting very small businesses it's obviously not going to be targeting the 97% of business owners that have income under $400,000 500,000 for um married fing jointly so um it's not it's not a significant concern for the vast majority of small businesses and it's you know the IR s is is is wellfully under staff there's been all sorts of studies showing that um you know billions of dollars aren't being collected and as I said it's not just overt criminals these are these are people attempting to do things perhaps and that need to be looked at how about the uh electric vehicle stuff there's been some criticism there suggesting that this is not going to have the immediate impact it might because it forces uh the manufacturers of elect electric vehicles to to change their supply chains and make more stuff in America as opposed to overseas is that a a good thing or a bad thing well I think a lot of what is in the uh in the in the clean energy portion of this legislation um is the the benefits will be over time you're not going to see immediate benefits this year that's absolutely correct um but um I do think that over time uh look the car companies in in this case are already trending in this direction and this gives them a boost gives them this gives them a signal that hey you already have started to move your manufacturing much more toward sustainable and ultimately electric vehicles and we're we're we're going to we're telling you that's the way to go and there going to be tax benefits um to doing that and there's going to be invest increased investment in in those Industries so yeah we're going to see a trend over time and um to the extent that we get more of of this work done more of this Manufacturing in the United States that's going to benefit a greater number of of of you uh businesses of all sizes it's been called the inflation reduction act do you think it will reduce inflation I think we'll see uh an impact over time I I as I said I I don't want people to expect we're going to this legislation alone is going to cause inflation to to drop inflation is a function of a lot of different um issues really mostly related to um uh dislocations coming off of the pandemic um so um but I do think over time time it will it will help to stabilize our economy a large part of what's going on with inflation just a lot of uncertainty um people not having the right run inventory uh not being prepared for uh to have enough people working uh you know the whole system got thrown out of whack by by the pandemic so um this this will help to settle things down but in of itself it's not going to cause inflation to plummet overnight um my sense of the small business majority and I've been to some of your events is that you you represent a very broad swath a very diverse group of business owners did you get any push back from Republican members of your organization um who did not think you should be supporting this uh very little um we uh we were able to secure a sign on of 260 small businesses in a matter of two days to sign on to this and and we had a few interesting comments that came back in that process I have to say um but uh it was it was it was very small number um we obviously welcome welcome opinions from all sides and we're always prepared to learn and listen to people's concerns our sense was that um the opinions were you know being driven by some of the partisanship that's that's infusing everything um and uh but sure I mean there's nothing's that 100% but uh by by and large our businesses in our Network tend to be smaller tend to be more skewed toward business owners of color and women in resource areas um they're very uh very pleased about this as you said you know very few things are get it right 100% um are there any criticisms that you've heard that rang true to you that that did give you concern is there anything that you would like to be different um there really wasn't any concern about the uh about the legislation itself I mean to your point earlier I'm sure there are some businesses that may be concerned about increased IRS enforcement um didn't hear a lot of that but that would be a reasonable thing to be concerned about quite frankly and I really don't want to focus on what's not in here but um you know there's a lot more that we can do and hopefully we'll be able to do in terms of child care and pay family leave and we're hearing a lot of support for that so again I don't want to focus on what's not in here because um this there's a lot in here that's really good but I would say the biggest um comments that are I wouldn't call them negative but are just like hey you know we can do better um along those lines and not so much criticizing what's in here so let's move on to a couple of other topics um this is such an unusual economic time neither you nor I is an economist but I'm curious what you're hearing from your organization you know we're at this moment where there's been a lot of talk about recession looming and there there certainly are red flags out there we also have this incredibly you know dramatic growth in jobs um more than half a million in July I guess the first question I ask is do you think the labor shortage is ending over still going on yeah look let me first of all say there there's a lot of uncertainty out there and quite frankly we just came out of the field with a survey we're going to be releasing um the results which showed uh actually a decrease in optimism um from um from uh 6 months ago um and there's definitely concern about inflation concern about a possible recession to your point Workforce is is a huge component of this uh it is is um the frustration across so many Industries uh and not having being able to access a Workforce uh that is needed right now that that is a big that is a big big concern and is there are they calling for something to be done about it is there a sense that something should happen well I think there are a number of things that um that we can do I think that um I think that I mentioned um Talk care for example uh we're hearing a lot on the issue of child care and the lack of affordable child care is really impeding the ability of many caregivers mostly women to get back into the workforce and on top of that most of the child care providers are small businesses Mo almost all run uh by women and many run by women of color and immigrants so um child care we're hearing a lot uh and then that if we if we could get to the heart of that I think we could really um solve things obviously the healthc care stuff we talked about is going to be helpful um we'd love to see U more attention being paid to pay Le so I think things that are necessary to to to to bolster um a Workforce are essential but there are a couple other things we can be doing here um it's absolutely crazy that um we have a more restrictive immigration system when immigrants uh provide huge amounts of the workforce in a lot of Industries Hospitality construction um and we're hearing in those Industries just tremendous lack of of of support and the the last thing we should be doing is is restricting immigration obviously we need to um to have a secure border but um you know we we've really created a situation where there are far fewer immigrants available for many of these jobs than there were the other thing we can be doing is boosting um Justice impacted Second Chance hiring um there are large numbers of of of people out there who are looking for uh Second Chance uh jobs is something we're going to be getting more and more involved in and it's just sitting there um so those are two those are two things we can be doing immediately to boost the um to boost the uh um to boost our Workforce as far as immigration would it take a comprehensive agreement on immigration to to solve that problem or do you think there's smaller steps that might happen more quickly than than that well look a comprehensive agreement is obviously would be the best uh and um you know it's really unfortunate that we actually had the bipartisan uh legislation in the Senate was it 67 years ago that never got a hearing in the house um and at one point in time this really was a bipartisan issue theber of commer supports uh a more expanded um immigration um but that said uh the one thing I didn't mention before is DCA uh the uh the dreamers uh these are people who are essentially American they've been in this country so almost enre lives um and um you know having restrictions on their ability and and creating uncertainty in their lives is not is not helpful through boosting entrepreneurship boosting the workforce of the future um there are um there are definitely things we can do um uh with our border policy to um to ensure that we don't have um you know people coming in who are going to you know who may be criminals or maybe maybe will disrupt things but at the same time you know that's led to to reductions in legal immigration that's led to um reductions H hm 1B program h2b program so um there are a lot of things we can be doing um short of of a comprehensive solution obviously comprehensive solution is what we really should be shooting for in the long run I also want to ask you about another piece of legislation that kind of been overshadowed by the inflation reduction act but uh We've also recently passed uh the the chips act which uh encourages the manufacturer of computer chips in this country does that have uh a potential impact for small businesses well I think what we saw up and down the line were the the breakdowns in the supply chain and a lot of that did have to do with um with dependence on on foreign sources um you know we're you know we think that that uh free trade is is a great thing but I think we learned in the pandemic that if you uh allow yourself to uh depend too heavily on countries for key uh key um supplies such as chips in this case um you're putting yourself behind the eightball so yes that is that is huge uh and uh the ability to to bolster a domestic uh manufacturing base of chips is is is going to be essential uh obviously U the industry itself will you know will employ more Americans and will allow more um small businesses in the supply chain to participate but also um Industries like the Auto industry that has been really hampered not having the the right kind of chips uh and then then then that's had a ripple effect all the suppliers in the um in the Auto industry uh yes so that that is huge um it's obviously National Security concern but is definitely uh a domestic economic concern that is going to have a a big benefit for small businesses John we've covered a lot of ground here is there anything else you'd like to see happening at this point that would be useful to two quick things we haven't touched on Capital and continues to be a need to as as we come down from all of the P pandemic programs um there needs to be a continued focus on ensuring that not only Capital but technical assistance um gets to the most underresourced businesses to provide them with um with capital uh kind of get Beyond some of the uh traditional restrictions on Capital um that have um left a lot of them on the side and to give them more access to education and technical assistance we're very excited about the um uh State small business um credit initiative the ssbci um that is going to enable states to get 10 billion dollars out to um mostly underresourced uh small businesses um and uh a half a billion of that is directly tied to providing technical assistance so we're very excited about that the other thing I just want to mention briefly is there's been a real upti in a focus as you know on anti trust and Fair competition uh which is actually again a bipartison issue um and and um small businesses have been you know this been any trust has been something people haven't focused on very much at all in the last 40 years and small businesses are bearing the brunt of sort of in unequal relationships with large businesses not just Tech although that's a big part of it but in franchise relationships in uh other contractual relationships and across the board and we're very pleased to see that there's an uptick in uh in um concern about this and uh we think small businesses need to be at the table um making the case for why we need to enforce some of these laws uh and maybe pass some new laws to deal with that is that what what it's going to take do you think um legislation is required or are you referring to litigation what's what's going to move the needle all the above we know there's there pending legislation I know it's gotten some play the um uh clubber Char Grassley bill on self- preferencing uh in the tech industry um but also this something like the Robinson Patman act that's been on the books for decades um that uh really needs to be enforced by the FTC and and the justice department on price discrimination um and then and then there's an opportunity yeah for additional private private action so um and the states are by the way taking action in this New York has is is is is trying to get fairly substantial landr law pass so um you know it's small business that really gets harmed by these unequal economic relationships and to answer your question it's really across the board new legislation enforcement of existing legisl and um a little more opportunity for private rights of action going back to your concern about getting Capital to to small businesses do you think the state small business credit initiative will be sufficient or are you looking for other types of action there to to help smaller businesses I think it's a really good start um you and and it's also um it's also uh going to set a tone for perhaps States on their own or even for the federal government to to follow up with with similar programs um you know it it's an opportunity to get the capital processed through uh organizations like um cdfi um Community Development Finance institutions um to to give a real boost to technical assistance providers um in uh in the states who are who are helping uh under resource businesses and um I think we think it's a model for how we can go to get Capital to businesses that have traditionally been been under capitalized although um it it does make it a little bit more complicated because it's not like you a business just goes to the SBA to learn more about it that the the funds are distributed state byst state if I'm not mistaken which means you have to look for organizations in your own uh in your own state it makes it a little bit more complicated for businesses to figure out where to turn do you have any advice on that yeah no you're absolutely correct and and we're we're we're spending a lot of time um reaching out in the States you know to to educate small businesses about where to go and working with part Partners in the states to do that um so um yeah you're ABS you're absolutely correct but uh you know this this program existed under the Obama Administration and it uh was very successful um he was set up coming out of out of the um out of the um the Great Recession and um the states really stepped up and this the states as the tribal tribal entities as well stepped up I think there's 56 different entities that that are playing a role in this it's also U revitalized the minority business development agency under the Department of Commerce um and so what it's doing is it's it's activating a lot of different um uh groups out there nationally and and and in the states to um to take a more um affirmative role uh so um we think it's a model and no it's not everything uh we a long way to go um but uh this is this is a big step forward you're right it did exist before what changed is it got a the big infusion of funding which happened a year ago I guess with the or more than a year ago now maybe a year and a half with the pandemic uh legislation um it it's taken a long time for that money to get distributed is there a problem with that or do you do you know if the money is Flowing the money is Flowing um it is it is slow and a little slower perhaps than we would have ideally liked but it is it is Flowing um you know it wasn't all going to be um uh distributed immediately out of the for the 10 bilon there are three different tranches um over the course of of the next few years so uh uh you know and and the the um Treasury Department has taken time looking at all the applications from the states and the tribal entities um and is is moving is moving um you know fairly expeditiously uh so uh yeah so um it is underway and um you know we'd always love to see stuff happen faster than it does but they've been doing a pretty good job um getting this done and and taking care of things all right that's a great overview John aens Meer is founder and CEO of small business majority and our man in Washington uh John thanks for taking the time thanks Lauren great to Great to chat with you I appreciate it have a great week everybody [Music]