Economic Security

By Joe Sestak

Congressman Joe Sestak's Economic Security Accomplishments/Future Proposals

Though the economy is on a path to recovery, the textbook ending to the "great recession" will be meaningless without aggressive measures to address joblessness. To ensure a lasting recovery that restores security to all Americans, Joe believes that job creation must be our nation's highest economic priority.

To return our employment rate to healthy levels we need to create almost 11 million jobs by the end of 2011 -- nearly 600,000 jobs every month. It can be done, as it was under President Truman in the 1950s, but it is going to take a committed and concerted effort. We have to act quickly.

The economic stimulus has helped, but we missed an opportunity to stimulate real job growth when Congress allowed a few Senators to highjack the bill, cutting billions for state aid and job-creating infrastructure projects. As I pointed out at the time, independent economic modeling clearly showed that those additional funds would have created millions of needed jobs. That money should have been included in the original package, and now we must move quickly to repair the mistake.

As millions of Americans facing unemployment know, the only real measure of an economic recovery is jobs -- for themselves, their families, and their communities. Our recovery won't be measured in GDP or stock market gains. It's going to be measured in the number of Americans going back to work.

FUTURE PROPOSALS

I. QUALITY JOB CREATION AND INCOME GROWTH

Creating and Securing Small Business Jobs

• Jobs Tax Credit: Provide a 15% Jobs Tax Credit to Small Businesses to Create 5 Million Jobs 15% refundable tax credit in FY2010 and a 10% refundable tax credit in 2011 to small businesses with less than $5 million in gross receipts for net increases adding jobs, adding hours, and raising wages.
• Raise SBA Lending Limits to $5 Million to Support Immediate Small Business Growth

From $3 million to $5 million and $5.5 million for manufacturing companies.

• Attract Lenders by Increasing SBA Interest Rates from 6% to 7% Banks are reluctant to loan to small businesses because SBA loans' interest rates are capped at or less than 6%-- not enough to compensate lenders for their risks at a time when business bankruptcies are high.
• Guarantee 98% of Community Bank Small Business Loans to Minimize Risk and Get Credit Flowing Again Temporarily increasing the SBA's loan guarantee level from the temporary level of 90% (normally 75%) would allow the SBA to support larger loan levels and provide added comfort to lenders. Extending these incentives for small business lending through the end of 2010 would help alleviate the credit crunch that firms are facing.
• Increase Lending to Startups with $50,000 in Micro Loans Raise lending limits on the SBA's microloan program from $35,000 to $50,000.
• Provide Tax Refunds for Struggling Businesses to Offset Losses Over Five Years Extend the 5 year Net Operating Loss Carry-back to losses which occur in 2010--allowing businesses that lose money to use their current losses to offset profits over the past five years and receive tax refunds.
• Encourage Small Business Growth by Offsetting the Cost of Capital Expenditures and Accelerate Expensing
• Extend Accelerated Depreciation Benefits for Small Businesses in 2010, which would allow small businesses to recover the cost of capital expenditures over time according to an accelerated depreciation schedule that allows businesses to write-off 50 percent of the cost of depreciable property acquired in 2010.
• Extend for one year enhanced small business expensing to allow small business taxpayers to write-off up to $250,000 (instead of $125,000) of certain expenses in the year of purchase in instead of recovering these costs over time through depreciation. The bill also extends the increased phase-out threshold from $500,000 to $800,000.
• Make SBA's Community Express Program Permanent to Improve Lending to Minorities and Women: Making Community Express permanent will lift the Program's 14-year status as one of SBA's most successful pilot programs and thereby remove artificial caps on the number of Community Express loans that may be issued. Community Express represents approximately 12% of current SBA loans and 25.6% of all SBA loans to minorities and socially or economically disadvantaged entrepreneurs.
• Provide Tax Incentives to Investors for Investments in Small Businesses: Eliminate capital gains taxes on investment into small businesses to spur job creation.
• Support Tax Credit for Angel Investors to Target Investments in Startups and High Growth Startup Firms: 30 percent credit for qualifying investments in small businesses and startups.
• Expand New Market Venture Capital Program (NMVC) to Bridge Gap Between Venture Capital Funding and Small Manufacturers
• Requires the SBA to "actively engage" in activities to expand the NMVC program; and
• Require the SBA to seek out at least one company from every geographic region throughout the United States to participate in NMVC.

• Create New Jobs in Emerging Industries and Green Technology
• Reinvigorating the development pipeline for emerging sciences and pharmaceuticals by expanding upon the $10 billion in high-tech medical research funding recently passed through the Economic Stimulus.
• Investments in clean energy create three times the number of jobs as investment in fossil fuels, and the green jobs bill I helped pass in the House of Representatives will create more than 71,000 new Pennsylvania jobs. o Extend the tax credits for renewable energy sources: Long-term (8 year) extension of renewable energy tax credits. o Fund job creating research and development of renewable energy sources: $150 billion investment over 10 years in renewable energy and energy efficiency and support increased funding to train researchers-- securing our future competitiveness. o Establish a cap and trade program for carbon emissions: Create an incentive for companies to burn less oil and other fossil fuels and to encourage more carbon-free alternatives such as solar power. o Increase the national renewable energy standard to 20% by 2020 in conjunction with a strong Renewable Electricity Standard, requiring at least 20% from renewable sources by 2020 together with a strong Efficiency Resource Standard.

• Target Infrastructure Spending at School Construction, Maintenance, and Repair
• Support an immediate $10 billion injection for the nation's schools to quickly and effectively support job creation through repairs and maintenance, putting to work some of the million and a half construction workers who remain jobless. Jobs in supplier industries will also be generated, as will jobs throughout the economy when those employed spend their salaries.
• In addition, Congress should quickly complete action on the stalled reauthorizations of transportation and Clean Water Act funding, which will support hundreds of thousands of jobs in construction, manufacturing, design, and engineering.
• Support expansion and extension of middle class tax cuts
• Child tax credit;
• Marriage penalty; and
• Tax break for income below $250K.
• Close Corporate Tax Loopholes that Delay Taxes on Foreign Profits and Outsourcing Jobs Delay a tax break enacted in 2004 that would let U.S. multinational companies that have shipped jobs overseas reduce their U.S. taxes by deducting more of their worldwide interest income against their U.S. income.
• Guarantee a Competitive Minimum Wage to Ensure a Secure Income for Working Families The minimum wage should be indexed to the "Consumer Price Index for Urban Wage Earners." (CPI-UWE) If the $1.60 minimum wage of February 1968 had been indexed to the CPI-UWE, the minimum wage in September 2006 would have been $9.46-- higher than the current $7.25. Exceptions must be made for economic crises like the one we are currently experiencing.
• Ensure Oversight in Corporate Boardrooms by Allowing Individuals to Vote on Compensation: Give shareholders of publicly-held companies a vote on corporate compensation.
• Support Disadvantaged Entrepreneurs by Establishing Business Enterprise Centers at Minority-Serving Institutions
• Establish Minority Business Enterprise Centers (MBEC) at Historically Black Colleges and Universities, Hispanic-, Asian-, and other minority-serving institutions of higher education and tribal colleges (Minority-Serving Schools) to target entrepreneurial development at minority-serving schools; and
• Develop and improve new and existing entrepreneurship training curriculum at Minority-Serving Schools, minority-serving non-profit organizations and minority-serving trade groups that train minority entrepreneurs and support minority business development.
• Eliminate Predatory Credit Lending to Prevent Unfair Fees and Risks that Drain Income
• Establish a Consumer Financial Protection Agency with the responsibility of enforcing fair

lending laws, including:

• Transparency: All disclosures and other communications with consumers must be balanced in their presentation of benefits, and clear and conspicuous in their identification of costs, penalties and risks.
• Simplicity: Set standards for requirements that credit providers offer "plain vanilla" credit products.
• Fairness: Allow the CFPA to prevent unfair treatment and abuse by tailoring restrictions on product terms and provider practices.
• Access: Ensure that minorities and disadvantaged groups have access to prudent financial services, lending and investment advice.

• Pass a Homeownership Vesting Plan- Keeping families in their Home by Incentivizing Responsible and Affordable Lending: Support additional recovery in the housing market by assisting distressed homeowners through affordable and sustainable loan modifications that provide necessary incentives for homeowners and lenders to prevent further foreclosures.

Proposed Provision/Amendments: o Forgive 1/5 of mortgage principal every year of on-time payments; o Eliminate the shared appreciation provisions; o Eliminate the 3% exit fee; o Pay mortgage servicers $1,000 per modified loan; o Buy out 2nd other subordinate lien holders at 5 cents on the dollar; o Extend to mortgages originated before December 31, 2008; and o Cap the eligible loan amount to the current FHA limit.

• Pass a Housing Market Stabilization Plan- Bringing Families and Lenders Together to Prevent Foreclosure The plan address continuing reports of rising foreclosures with matching grants to states and localities that initiate foreclosure diversion programs. The program is modeled after the Philadelphia's successful foreclosure mitigation program, which brings the mortgage holder and lender together for a "conciliation conference" between the lender and the borrower.
• Standards to Eliminate Predatory Lending o Bring accountability to the secondary market for home loans by ensuring strong oversight of Fannie Mae and Freddie Mac; o Hold creditors responsible for the loans they originate by ensuring that the lender retains an financial interest in the loan; o Expand consumer protections for high-cost "Jumbo" mortgages that pose a greater risk to the lender and the general market; o Require lenders to provide clear and comprehensive disclosure forms for consumers regarding the specific provisions and risks of the mortgage loan they are applying for; o Protect tenants who rent homes that go into foreclosure by requiring that notification be sent to renters if a home is going to be foreclosed upon; o Create the Office of Housing Counseling to ensure that families have somewhere to turn for information and assistance in preventing foreclosure; and o Provide legal guidance and assistance to the most vulnerable homeowners and tenants facing foreclosure.
• Access to affordable loans for responsible hardworking families Revitalize the Federal Housing Administration (FHA), which was established to provide a reliable source of affordable mortgage loans for first-time homebuyers. Enable the FHA to serve more responsible borrowers at affordable rates and terms, to attract borrowers that have turned to predatory loans in recent years.
• Protect Seniors from Abusive Housing Practices Prevent predatory lending in the reverse mortgage area-- which targets vulnerable seniors-- by requiring specific disclosure statements to be provided to seniors before entering into a reverse mortgage. The disclosure statement must make the risks of a reverse mortgage clear and emphasize the requirement that a senior meet with a counselor before signing the mortgage documents.
• Eliminate Taxes on Mortgage Debt for Struggling Families Extend a 2007 provision that stops the tax on phantom income when a lender forgives some part of a families' mortgage in foreclosure. It is wrong that homeowners can find themselves facing a large tax bill at the same time that they are losing their homes. This occurs because current law taxes homeowners on mortgage debt that is forgiven by banks. Families dealing with the pain of foreclosure should not have the double burden of a large tax bill for terminating their mortgage through no fault of their own.
• Expand the First Time Homebuyer's Tax Credit o Expand the Home Buyer's Tax Credit cap from $8,000 to 10% of the final sale price of a home - capped at 3.5% of FHA loan limits. o Extend the eligibility time frame from an end date of April 30, 2010 to an end date of December 31, 2010.
• Make Bankruptcy Laws Fair Allow bankruptcy judges to work with lenders and families to restructure primary residence mortgages to prevent foreclosure. Doing so would provide primary residences with the same bankruptcy rules as vacation homes and boats.
• Allow Families to Rent their Home During Foreclosure Proceedings Building on Fannie Mae's "Deed for Lease" program: offer private lenders an incentive to provide families a short-term rental rate to stay in their home for the interim period between foreclosure and resale. The traumatic effect of foreclosure on children and families is one of the unreported outcomes of the mortgage meltdown. Allowing families to pay rent to remain in their home until the home is resold at auction will give children more time to stay in the same school and provide working families additional time to get back on their feet while they still have a roof over their heads. PAST ACTIONS

VOTED FOR ECONOMIC RECOVERY AND REINVESTMENT ACT (ECONOMIC STIMULUS BILL)

II. STABILIZING THE HOUSING MARKET

AUTHORED COMPREHENSIVE BILL TO REDUCE RESIDENTIAL FORECLOSURES

AUTHORED LEGISLATION TO EXPAND FIRST TIME HOMEBUYER'S TAX CREDIT

SUPPORTED ADDITIONAL LEGISLATION TO:

• Open the HOPE for Homeowners refinancing program to more families and insure more consumer savings through the Federal Deposit Insurance Corporation (FDIC), to avoid many of the estimated 8.1 million additional defaults on mortgages predicted over the next four years
• Outlaw predatory industry practices that contributed to the subprime lending boom
• Preserve the existing supply of affordable housing for seniors, and expand seniors' access to affordable and "reverse" mortgages
• Provide mortgage refinancing assistance so that families in danger of losing their homes can refinance into lower-cost government-insured mortgages they can afford to repay
• Stabilize neighborhoods by funding grants to purchase and rehabilitate foreclosed homes
• Reform Fannie Mae and Freddie Mac with new regulator and creation of Affordable Housing Trust Fund, which is financed by Fannie Mae and Freddie Mac, not the taxpayers.

VOTED FOR EMERGENCY ECONOMIC STABILIZATION BILLS TO ENSURE CREDIT AVAILABILITY

VOTED FOR TARP REFORM AND ACCOUNTABILITY ACT

SUPPORTED IMPLEMENTATION OF THE "FINANCIAL STABILITY PLAN"

IV. ASSISTANCE TO SMALL BUSINESSES

AUTHORED LEGISLATION, WHICH IS NOW LAW, SUPPORTING SMALL BUSINESS FAIRNESS IN CONTRACTING

• Requires bundling analysis of federal mega-contracts to create more small business opportunities.
• Requires market research to be conducted by the Department of Defense on the ability of small businesses to perform work prior to awarding contracts of more than $5 million dollars

AUTHORED BILL TO SUPPORT ENTREPRENEURSHIP

AUTHORED SBA TRADE PROGRAMS ACT To help entrepreneurs overcome dislocations due to global trends through outreach centers.

AUTHORED TRANSPARENCY LEGISLATION FOR SMALL BUSINESSES AWARDS Allows applicant to request an explanation of why the applicant did not receive the award.

V. FURTHER PROTECTING CONSUMERS AND JOBS BY:

SUPPORTING THE CREDIT CARD HOLDER'S BILL OF RIGHTS Ends unfair credit practices such as retroactive interest rate hikes, double-cycle billing, and due-date gimmicks. Requires 45-days' advance notice of interest rate, fee, and finance charges hikes.

SUPPORTING THE AUTO INDUSTRY FINANCING ACT