[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                     MAIN STREET REALITIES: EXAMINING THE 
                    CURRENT ECONOMIC LANDSCAPE IN AMERICA

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                              
                             JULY 10, 2024

                               __________


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]                     
                               

            Small Business Committee Document Number 118-055
             Available via the GPO Website: www.govinfo.gov
             
                               __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
56-137                  WASHINGTON : 2024                    
          
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                    ROGER WILLIAMS, Texas, Chairman
                      BLAINE LUETKEMEYER, Missouri
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                         BETH VAN DUYNE, Texas
                         MARIA SALAZAR, Florida
                          TRACEY MANN, Kansas
                           JAKE ELLZEY, Texas
                        MARC MOLINARO, New York
                         MARK ALFORD, Missouri
                           ELI CRANE, Arizona
                          AARON BEAN, Florida
                           WESLEY HUNT, Texas
                         NICK LALOTA, New York
                          CELESTE MALOY, Utah
               NYDIA VELAZQUEZ, New York, Ranking Member
                          JARED GOLDEN, Maine
                        DEAN PHILLIPS, Minnesota
                          GREG LANDSMAN, Ohio
                  MARIE GLUESENKAMP PEREZ, Washington
                        SHRI THANEDAR, Michigan
                       MORGAN MCGARVEY, Kentucky
                       HILLARY SCHOLTEN, Michigan
                          JUDY CHU, California
                         SHARICE DAVIDS, Kansas
                      CHRIS PAPPAS, New Hampshire

                  Ben Johnson, Majority Staff Director
                 Melissa Jung, Minority Staff Director
                            
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Roger Williams..............................................     1
Hon. Judy Chu....................................................     2

                               WITNESSES

Ms. Hazel Davis, Vice President, Compliance Manager & Corporate 
  Responsibility Officer, Jefferson Bank, San Antonio, TX........     5
Mr. Steve Martinez, President, Tradewinds General Contracting, 
  Inc., Boise, ID................................................     7
Mr. James D. Ewing, Jr., Chairman & Chief Executive Officer, COE 
  Distributing, Smock, PA........................................     8
Mr. Tom McCarthy, Vice President & Co-Founder, Motiv Space 
  Systems, Pasadena, CA..........................................    10

                                APPENDIX

Prepared Statements:
    Ms. Hazel Davis, Vice President, Compliance Manager & 
      Corporate Responsibility Officer, Jefferson Bank, San 
      Antonio, TX................................................    35
    Mr. Steve Martinez, President, Tradewinds General 
      Contracting, Inc., Boise, ID, with supporting documents....    40
    Mr. James D. Ewing, Jr., Chairman & Chief Executive Officer, 
      COE Distributing, Smock, PA................................    52
    Mr. Tom McCarthy, Vice President & Co-Founder, Motiv Space 
      Systems, Pasadena, CA......................................    55
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Associated Builders and Contractors (ABC)....................    57

 
  MAIN STREET REALITIES: EXAMINING THE CURRENT ECONOMIC LANDSCAPE IN 
                                AMERICA

                              ----------                              


                        WEDNESDAY, JULY 10, 2024

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
2360, Rayburn House Office Building, Hon. Roger Williams 
[chairman of the Committee] presiding.
    Present: Representatives Williams, Luetkemeyer, Stauber, 
Meuser, Van Duyne, Molinaro, Bean, LaLota, Maloy, Landsman, 
McGarvey, Gluesenkamp Perez, Scholten, Thanedar, Chu, and 
Davids.
    Chairman WILLIAMS. Before we get started, I would like to 
recognize myself. If you will rise, we will say the prayer and 
the pledge.
    Heavenly father, God of all people, thank you for allowing 
us to meet today and the [inaudible.] to share great thanks for 
our great country. Thank you for being with all of us the best 
day of our lives. In your name we pray. Amen.
    Join me in the pledge. I pledge allegiance to the Flag of 
the United States of America, and to the Republic for which it 
stands, one nation, under God, indivisible, with liberty and 
justice for all.
    Good morning to everybody and I now call the Committee on 
Small Business to order. I am authorized to declare recess of 
Committee at any time.
    I now recognize myself for my opening statement and I want 
to welcome today's hearing all of you again for being here, 
where we will be focusing on the current economic realities 
impacting Main Street America. These types of hearing are 
especially important to our Committee because we get the chance 
to hear directly from our small businesses back home.
    First, I want to thank our witnesses for being here today. 
I know all of you have traveled a long way, some as far as 
Texas, to share your stories with us and everyone here greatly 
appreciates it.
    This Committee serves as the voice for Main Street America 
in Washington. Each and every day, we strive to learn more 
about the current state of small business from the people who 
know it best, our nation's job creators. There is no doubt that 
in the first half of 2024, they have experienced many ups and 
downs. I hold the opinion of starting a small business is the 
definition of the American Dream. Part of what makes America so 
special is it is a place where anyone from any background can 
take a risk, bet on themselves and bring a new service or 
product to the marketplace.
    Our economy is dependent upon small businesses. And it is 
our job here in Washington to ensure that they have a fighting 
chance. Unfortunately, many small businesses are dealing with a 
variety of challenges, many of which are the result of a bad 
policy decisions.
    Main Street America has been getting bombarded with 
regulations that are causing small business firms to play 
defense. Just look at the numbers. Since President Biden took 
office, his administration has instituted new rules that are 
estimated to cost over $1.6 trillion. Every dollar spent on 
additional compliance staff could have been used to bolster 
their core operations, and every hour dedicated to reading and 
understanding the new regulations that have been used to 
discover new growth and opportunities. And worst of all, when a 
business owner fears expensive new mandates just beyond the 
horizon they hold up hiring that extra employee, or buying that 
new piece of equipment.
    America's entrepreneurs have had to confront historic 
challenges, the COVID-19 pandemic, out-of-control inflation, 
broken supply chains, high interest rates and labor shortages 
is making it hard to find quality employees. But as small 
businesses have done countless times before, they have endured. 
Those of us here in Washington must fight back against these 
policies which have been strangling America's job creators.
    As we listen to the state of small business in America, we 
salute the entrepreneurs who continue to fight and give 
selflessly back to their communities. This committee is here to 
help them and make life a little bit easier and we mean that, 
we really do.
    I am excited to have all of you here with us today. And I 
am very much looking forward to today's hearing.
    With that, I will yield for opening remarks. Congressman 
Chu, please.
    Ms. CHU. Thank you, Mr. Chair, for this important 
opportunity to discuss the realities of our economy and hear 
from those who do incredible work directly in the communities 
we represent. Hearings like this allows us to take stock of how 
our efforts in Congress effect those on main street.
    Four years ago, small businesses had to navigate an 
unprecedented array of challenges stemming from the COVID-19 
pandemic from public health shutdowns to supply chain 
disruptions, labor shortages and rising costs. Yet, despite 
these obstacles, small businesses have demonstrated 
extraordinary resilience.
    Obstacles remain, but our strong economic headline numbers 
clearly show slowing inflation, low unemployment and sustained 
growth. Looking around there is much to be proud of. We have 
seen a remarkable surge in small business creation since 2020, 
reversing decades of decline. It has become clear this isn't 
just an anomaly due to the pandemic, it is a trend that is 
continuing, even today, 4 years later. This terrible small 
business boon shows that so many Americans still have hope for 
the future and trust that we are moving in the right direction.
    The ripples of the current startup boom will reverberate 
for decades, delivering wealth creation for families, 
opportunities for its workers, and economic development for 
communities across the country.
    This is especially significant because many who have 
historically been underrepresented in the business community, 
including women and minority business owners, are the ones who 
disproportionately power this small business boom, and reap the 
broad benefits delivered when we build the economy from the 
bottom up and the middle out.
    The resilience in our economy continues to overcome 
headwinds, primarily because of investments made by the 
Democratic Congress and the Biden-Harris administration over 
the past several years. This transformational fiscal policy 
started with the American Rescue Plan, which played a critical 
role in stabilizing our economy during the pandemic. By 
extending support to small businesses and providing direct 
stimulus to American families we kept millions of businesses 
afloat, all while providing relief to the unemployed and 
cutting child poverty in half through the expanded Child Tax 
Credit.
    This was complemented by historic bipartisan legislation 
when we passed the Infrastructure Investment and Jobs Act and 
the CHIPS and Science Act--two landmark laws that are providing 
long-term investments to strengthen our supply chains, rebuild 
our country's road and bridges, and lay the foundation for a 
more resilient and inclusive economy. These investments are 
supporting the growth and the flourishing of small firms and 
new startups.
    Finally, Democrats and the Biden Harris administration pass 
the Inflation Reduction Act which included the largest ever 
investment in fighting climate change and provisions to further 
incentivize domestic manufacturing and lower cost for 
everything from healthcare to electricity.
    While there is no doubt these laws will provide a boost for 
small firms into the foreseeable future, there is still much 
more to be done.
    Access to capital remains a challenge, and the high cost of 
borrowing poses a long-term threat to small businesses. In this 
high interest rate environment, SBA's capital access programs 
are especially important for connecting small businesses to 
affordable financing.
    Additionally, the government can continue to do more to 
incentivize innovation from reversing disastrous provisions of 
the Tax Cuts and Jobs Act to extending our core SBA programs, 
including SBIR and STTR.
    Finally, investments in families will continue to 
strengthen small businesses, whether it is the expanded Child 
Tax Credit or continued investment in childcare, these actions 
can help build a more sustainable and resilient business 
environment, while delivering for American families. It is 
crucial that we continue to support these business through 
thoughtful legislation.
    While the accomplishments of Democrats in Congress and the 
Biden-Harris administration have provided a strong foundation, 
we must continue to build on this progress, ensuring that small 
businesses can thrive in a stable and supportive economic 
environment.
    Thank you, and I look forward to our discussion today. And 
I yield back.
    Chairman WILLIAMS. The gentlelady yields back.
    And I will now introduce our witnesses. Our first witness 
here with us today is Ms. Hazel Davis. Ms. Davis is the vice 
president, compliance manager and corporate responsibility 
officer for Jefferson Bank, located in San Antonio, Texas. Ms. 
Davis joined Jefferson Bank in 2013 as vice president of fair 
lending and CRA officer before transitioning to her current 
position because of her regulatory compliance expertise. Prior 
to joining Jefferson Bank she was compliance officer at Frost 
Bank and Hilltop Bank. Ms. Davis currently serves as a Board 
Member of the Texas Bankers Association and recently served as 
the president of Financial Women in Texas. Ms. Davis attended 
Chadron.
    Ms. DAVIS. Chadron.
    Chairman WILLIAMS. Chadron State College where she earned 
her Bachelor of Arts degree in business administration and 
accounting, then attended the Graduate School of Banking at the 
University of Wisconsin in Madison. I want to thank you for 
being with us today and I am looking forward to today's 
important conversation.
    Our next witness here with us today is Mr. Steve Martinez. 
Mr. Martinez is the president of Tradewinds and General 
Contracting, Incorporated located in Boise, Ohio. Founded by 
his parents in 1980 Tradewinds and General Contracting has 
always been a part of Mr. Martinez's life, whether it was 
completing a small task as a kid, up to framing houses in 
college.
    After graduating from college, Mr. Martinez began working 
for the business full-time, becoming president after 6 years 
with the company. Mr. Martinez has won numerous awards, 
including builder of the year multiple times from both local 
and State building associations, and has received recognition 
from the National Association of Home Builders. Mr. Martinez 
graduated from Boise State University, home of the Broncos, 
right, with a bachelor of business administration. I want to 
thank you for being here today and I look forward to our 
conversation.
    Our next witness here with us today is J.D. Ewing. Mr. 
Ewing is the Chairman and CEO of COE Distributing, located in 
Smock, Pennsylvania. COE Distributing is the largest wholesale 
office furniture distributor in the U.S. and the Caribbean. Mr. 
Ewing took over the business when he was just 19 years old, and 
as the sole employee of the company becoming the third-
generation owner, now with over 100 employees spread out across 
three States, the company has been consistently recognized 
among them fastest-growing private companies in America. In 
addition to serving as a Board Member for the Community 
Foundation of Fayette County, Mr. Ewing serves on the National 
Association of Wholesalers' Institute for Distribution 
Excellence as Chairman of the Board. Mr. Ewing graduated from 
Penn State University where he studied business. Thank you for 
joining with us today and look forward to our conversation.
    And I now recognize the Ranking Member Chu to introduce the 
last witness appearing before us today.
    Ms. CHU. Thank you, Mr. Chair. I am so honored to introduce 
our final witness today, my constituent, Tom McCarthy, the co-
founder and vice president of business development at Motiv 
Space Systems, which is located in Pasadena, of course, in my 
district. Tom spent 11 years at NASA's JPL, also in my 
district. And he is an electronics engineer designing motion 
control systems for rovers and robotic systems for extreme 
environments. He then spent 4 years as the director of business 
development at the Missile Defense Agency before cofounding 
Motiv in 2024.
    Motiv was founded on the belief that space-based robotic 
systems could be produced more efficiently and with a higher 
level of quality by a small business and they were quickly 
proven right. They earned and successfully executed a range of 
contracts at NASA, including designing the robotic arm used on 
the Mars 2020 Perseverance Rover. They are also the recipients 
of several SBIR awards from the SBA and are using that 
investment to innovate the next generation of space 
exploration.
    Thank you for joining us, Mr. McCarthy.
    Chairman WILLIAMS. And again, thank you all for being here 
today. And before recognizing the witnesses, I would like to 
remind them that oral testimony is restricted to 5 minutes in 
length. That is a big number for us, we want to stick with 
that.
    If you see the light turn red in front of you, that means 
your 5 minutes is up. And you should conclude your remarks 
immediately. And if you keep going, you are going to hear this. 
That means stop, okay? And so with that in mind, I now 
recognize Ms. Davis for her 5-minute opening remarks.

STATEMENTS OF HAZEL DAVIS, VICE PRESIDENT, COMPLIANCE MANAGER & 
CORPORATE RESPONSIBILITY OFFICER, JEFFERSON BANK, ON BEHALF OF 
    TEXAS BANKERS' ASSOCIATION; STEVE MARTINEZ, PRESIDENT, 
  TRADEWINDS GENERAL CONTRACTING, INC., ON BEHALF OF NATIONAL 
  ASSOCIATION OF HOME BUILDERS OF THE UNITED STATES; JAMES D. 
  EWING, JR., CHAIRMAN & CEO, COE DISTRIBUTING, ON BEHALF OF 
   JMJS, INC AND COE DISTRIBUTING; AND TOM MCCARTHY, VP, CO-
FOUNDER, MOTIV SPACE SYSTEMS, ON BEHALF OF MOTIV SPACE SYSTEMS.

                    STATEMENT OF HAZEL DAVIS

    Ms. DAVIS. Thank you, Chairman Williams, distinguished 
Members of the Committee, my name is Hazel Davis, I am vice 
president, compliance manager and corporate responsibility 
officer for Jefferson Bank, a cornerstone of the San Antonio 
community since 1946. With assets totaling approximately $3 
billion, we serve the dynamic and growing region of San 
Antonio-Austin, which encompasses 4.8 million people. We 
specialize in commercial lending and consumer mortgages.
    San Antonio, a city where 64 percent of residents are 
Hispanic, thrives on the entrepreneurial spirit of 34,000 small 
businesses and 145,000 sole proprietorships. These businesses 
are the lifeblood of our economy, facing challenges such as 
workforce shortages, rising costs of materials, and housing 
affordability constraints. And yet, despite these hurdles, we 
continue to see robust demand for credit, although higher 
interest rates have impacted some of our price sensitive 
customers.
    As a compliance officer and advocate for the community I 
have witnessed firsthand the profound impact that economic 
shifts and regulatory measures have on access to credit. Today, 
I am before you not only as a representative of a small 
business, but also as a voice for the Texas Bankers Association 
which represents 375 banks across our State, employing over 
218,000 individuals. Community banks like ours play a pivotal 
role in supporting small businesses. We understand the local 
landscape intimately, offering personalized service and 
flexible terms that larger institutions often cannot.
    Our commitment goes beyond transactions, it is about 
fostering relationships and ensuring our borrowers succeed. 
This approach not only drives economic growth, but also, 
strengthens the social fabric of our communities. In my opinion 
financial literacy remains a significant barrier for aspiring 
entrepreneurs. In my experience many start with personal funds 
before seeking formal credit, often unaware of the long-term 
ramifications if not utilized appropriately.
    As a fair lending officer, I have reviewed numerous loan 
applications where a lack of financial acumen has proven 
detrimental. Community banks are dedicated to bridging gaps 
through education and targeted support programs, ensuring that 
all entrepreneurs have the tools required to succeed.
    The Community Reinvestment Act is instrumental in our 
efforts emphasizing the importance of equitable and fair access 
to credit. Proposed revisions must strengthen, not dilute, 
support for underserved communities and foster small business 
growth.
    In San Antonio, historical disinvestment in specific areas 
has left lasting scars, breeding mistrust of traditional 
financial institutions and minority communities.
    Through proactive engagement and targeted investments, we 
work tirelessly to rebuild trust and forge lasting 
partnerships. However, escalating regulatory burdens and 
compliance costs threaten our ability to continue these efforts 
as every dollar devoted to regulatory compliance is a dollar 
less reinvested into our community businesses.
    In conclusion, I urge the committee to consider the 
unintended consequences of regulatory actions on small 
businesses by fostering a regulatory environment that supports 
fair lending access, as well as small businesses, such as my 
institution, and recognizing the unique needs of commercial 
lending and promoting financial literacy. Together, we can pave 
the way for vibrant small business ecosystems to continue to 
grow.
    Thank you for the opportunity to testify today. I am 
committed, along with you, to enabling, rather than hindering, 
the success of small businesses across our great nation.
    Chairman WILLIAMS. Let me just say one thing to all of you, 
you are going to see Members move in and out, it has no effect 
on your testimony or anything, we have other hearings they will 
go to and come back, so that is the reason you may see that.
    Next, I want to recognize Mr. Martinez for his 5-minute 
opening remarks.

                  STATEMENT OF STEVE MARTINEZ

    Mr. MARTINEZ. Thank you, Chair. Chairman Williams and 
distinguished Members of the Committee, thank you for the 
opportunity to testify on the current economic landscape in 
America. Housing is, by far, the largest single expense for the 
American household. And rising costs are putting the nation in 
an ever-worsening situation.
    A 2024 report by Harvard's Joint Center for Housing Studies 
found that record high 22.4 million Americans are paying more 
than 30 percent of their income on rent. And more than 12 
million are paying more than half of their incomes.
    A newly released housing affordability index by NAHB shows 
that in the first quarter of 2024, 38 percent of a typical 
family's income was needed to make a mortgage payment on a 
medium-priced single-family home. Shelter inflation and rent 
and ownership cost is still rising well above a 5 percent rate 
driven, in large part, by a nationwide shortage of about 1.5 
million housing units. The only way to tame inflation and ease 
the nation's housing affordability crisis is to build more 
homes.
    In order to increase the inventory of a single-family home 
and multifamily housing we must remove more barriers; 
regulatory barriers, labor barriers and supply chain barriers, 
that are preventing home builders from increasing housing 
production.
    Regulatory barriers, which include complying with building 
codes make up nearly 25 percent of the cost of a single-family 
home, and more than 40 percent of an apartment home. Without 
adequate review or consideration of how it will affect home 
buyers or renters, HUD and USDA recently issued a mandate that 
will require all HUD and USDA financed housing to be built to 
the 2021 energy code. This will do little to curb overall 
energy use, but will worsen the housing affordability crisis 
and hurt the nation's most vulnerable house hunters and 
renters. It will also compel more buyers and renters to stay in 
their much older, less-efficient homes.
    More concerningly, the Federal Housing Finance Agency is 
considering applying similar standards to those adopted by HUD 
and USDA for homes financed by Fannie and Freddie, which 
provides 72 percent of the financing for new home purchases. 
This would set a de facto national energy code severely 
disrupting new home construction, increasing the housing supply 
shortage and negatively impacting affordability. The adoption 
of this 2021 energy code can add $31,000 to every new home. In 
my home State of Idaho, every $1,000 that you raise the price 
of a house, 800 households are priced out of the market. All 
regulations should be designed with small business and their 
consumers in mind, and should consider the true real-world cost 
of these regulations.
    Labor barriers are also contributing to the housing 
affordability crisis through higher home-building costs, and 
construction delays. In the construction industry a shortage of 
skilled labor means that we can expect almost 400,000 open jobs 
in any given month. And NAHB research suggests that we will 
need 2.2 million workers in the next 3 years to meet existing 
home-building demand.
    This places upward cost pressures on existing home prices 
and rents and pushes the dream of homeownership out of reach 
for potential homeowners. Policymakers at all levels of 
government can help by supporting full funding for building and 
construction trades education including the DOL's Job Corps 
program.
    Since the pandemic, the cost of materials has surged 38 
percent. Building materials, supply-chain barriers, are harming 
housing affordability as the cost of lumber, steel, aluminum 
and other imported materials and equipment increased price 
volatility and drive up housing costs. Of particular concern, 
currently, is the price of the availability of distribution 
transformers. Since February of to 2020 the price of 
distribution transformers is up 72 percent and NAHB's members 
report that wait times for transformers range from 12 to 36 
months.
    One of my recent condo projects was facing a potential 
delay of 18 months because we couldn't get the right 
transformer. We were forced to modify the product at a cost of 
an additional $60,000 on just six condos. These added costs are 
pricing local Idahoans out of the dream of homeownership.
    Congress must help ease supply chain barriers by investing 
in the domestic production of sorely needed distribution 
transformers. The current economic landscape for the home 
building industry is challenging without question. It is a 
generational policy challenge that we can solve. We must solve 
it. And it begins with continually removing barriers to 
increase housing production.
    Thank you again for this opportunity. And I look forward to 
your questions.
    Chairman WILLIAMS. Thank you.
    I now recognize Mr. Ewing for his 5-minute opening remarks.

                STATEMENT OF JAMES D. EWING, JR.

    Mr. EWING. Thank you, Chairman Williams, Ranking Member 
Chu, and Members of the Committee, good morning. Thank you for 
the opportunity to testify at today's hearing on state of the 
small business economy. My name is J.D. Ewing, Chairman and CEO 
of COE distributing, a national office furnishings, wholesale 
distributor and contract manufacturer based in Fayette County, 
Pennsylvania. COE Distributing is a family-owned business, it 
has operated since 1947 when my grandmother started the 
business in a basement of a tavern out of the necessity to 
support her two sons. I am the third-generation owner of COE 
Distributing after taking over the business at age 19 in 1989. 
At that time, I was COE's only employee.
    Through an enormous amount of hard work and dedication from 
a number of dedicated and talented team members, COE has grown 
to over 120 employees with distributions centers in Charlotte, 
North Carolina; Houston, Texas; and southwest Pennsylvania; 
where our corporate headquarters are located.
    At COE, we have cultivated and continuously strived to grow 
a robust culture, which is fundamental in the success of our 
and any small business. We take immense pride in fostering an 
inclusive environment or input from all team members at every 
level of the organization. It is not only encouraged, but 
actively sought. We are also proud to provide our team members 
with extensive benefits and career development programs, 
including health and retirement benefits, formal profit 
sharing, 401(k) plans, quarterly cash bonuses and personal 
benefits, such as financial workshops and volunteer paid time 
off.
    In addition, we are the official engagement partner of the 
Pittsburgh Penguins, and hold monthly peer-to-peer recognition 
program awarding a game worn Penguins helmet to the employee 
who embodies COE's core values of customer service, respect, 
teamwork, quality, safety, innovation and transparency. This 
and other employee engagement focus efforts allow our unique 
workplace culture to grow stronger every day.
    Today, we see many challenges in the economy, including 
rising costs and supply chain disruptions, looming tax 
increases on small businesses and compliance costs with new 
regulations. Although the country has recovered from the 
pandemic, many of these same supply chain challenges we face 
then are beginning to reemerge today. Major ports are again 
beginning to see severe backlogs due to congestion and delays. 
The disruption in the Red Sea and the Suez Canal due to 
terrorist activity has had a material impact on shipping costs 
delivery time, adding up to 4 weeks to some shipping lanes. 
This disruption has led to substantial increase in the cost of 
shipping containers, with the average cost of the shipping 
container increasing over three times in the past 90 days 
alone.
    In April, a container from Asia to the U.S. was 
approximately $2,500. By July, now the cost is over $8,000 and 
expected to rise to over $10,000 in the coming months because 
of the peak season that we are now entering. Many home 
furnishing retailers have already implemented ocean freight 
related surcharges to their goods reminiscent of the COVID 
supply chain consequences.
    While small businesses like mine are already seeing the 
impact of the supply chain disruption, it will soon impact the 
entire economy as it did 2 years ago. In addition to rising 
costs, small businesses are also seeing their near-term 
challenge of potential tax increases. The 2017 tax reform 
reduced taxes for small businesses through the reduction in tax 
rates and the creation of the 199A small business deduction.
    This tax cut helped us reinvest in our workers by giving us 
more resources to hire, raising wages and provide benefits and 
training as well as devoting more resources toward expanded the 
business and contributing to our local communities. Not only 
does this looming expiration of these tax reforms threaten our 
ability to continue reinvesting the workers in the communities, 
but it also makes it more challenging to compete with large 
businesses, especially in attracting and retaining talent given 
today's job market.
    A longer-term tax challenge for family-owned businesses 
like mine is planning for the death tax, which makes businesses 
vulnerable by acquisition by large corporation or foreign 
entities and often forces family-owned businesses to liquidate 
a portion of the business or the entire business to pay this 
death tax.
    Small businesses are also disproportionately hit by 
regulatory requirements. As a small-business owner, the time 
and cost to keep current on these issues is overly burdensome 
from the time and resource standpoint. While regulations are 
inevitably a cost of doing business, we must ensure together 
that all businesses are not unduly impacted by red tape and 
disproportionate cost.
    Thank you again for the opportunity to testify today, Small 
Business Committee. I hope my insights on the economy are 
helpful and I look forward to your questions.
    Chairman WILLIAMS. Thank you very much.
    I now recognize Mr. McCarthy for his 5-minute opening 
remarks.

                   STATEMENT OF TOM MCCARTHY

    Mr. MCCARTHY. Good morning, Chairman Williams, Ranking 
Member Chu, and distinguished Members of the Committee. Thank 
you for the opportunity to testify in this hearing about the 
current economic landscape in America.
    I appreciate the opportunities that allow a small business 
like mine to participate in a setting like this in our Nation's 
Capital. Special thank you to Congresswoman Judy Chu who has 
worked tirelessly to support us and thousands of small 
businesses achieve success and thrive in today's economy.
    My name is Tom McCarthy, I am a cofounder and the vice 
president of business development for Motiv Space Systems 
located in Pasadena, California. We support the civil national 
security and commercial space sectors by enabling 
maneuverability in complex environments primarily in space.
    Over the past 10 years, our company has grown from a team 
of three people to almost 80 employees just last year. In 
preparation for this hearing, I looked at our subcontractor 
list and the results were pretty remarkable. Throughout our 
history, Motiv has utilized almost 800 suppliers across 42 
States and four countries. Small businesses have a larger 
economic impact than most people realize. We started the 
company because we believed that we could develop and build 
space-based robotic systems more efficiently, with a higher 
level of quality and capability than our competitors in a 
globally competitive aerospace market.
    And we were right, we successfully won and have executed 
multiple NASA contracts for a range of missions including a 
robotic arm and science camera systems on the Mars 2020 
Perseverance Rover. From our beginning, innovation has been 
crucial for thriving in the highly competitive aerospace 
environment. Our company's long-term health relies on 
consistently incorporating new technology for our mission 
partners, this means continuously expanding our research and 
development.
    I would like to discuss a few topics related to small 
business in the United States, and our relationships with 
various government partners today. With regard to the small 
business innovative research programs we have developed a chart 
that shows how SBIR contracts have been fundamental to 
innovating our technology. I think that may be how we got 
invited today. But the key here is we don't live off the 
revenue of SBIR contracts. We convert those SBIR investments 
into seeds to grow new commercial products and close technology 
gaps for our partners to enable new and exciting scientific 
missions continuing the pulse of scientific discovery.
    We have won a total of 18 Phase I and Phase II SBIR awards, 
and leverage those awards into eight commercialized program 
awards. And then historically, that has amounted to about 25 
percent of our revenue over the course of business.
    As you look at the SBIR reauthorization next year, I would 
encourage you to absolutely keep this vital program alive. Talk 
with the small businesses in your community who leverage these 
programs, and then engage with those who are not aware of them.
    With regard to consistent predictable budgets, many of our 
customers are dependent on federal budgets and the effects of 
budget delays to those customers amplified within the small 
business community. Over the last decade, I believe every 
single fiscal year started off under a continuing resolution. 
CRs only delay programs and forces our partners to make 
premature decisions, much like we saw with the Mars Sample 
Return Campaign. The aerospace industry has faced worsening 
supply chain disruptions and rising prices due to recent 
events. And on top of that, the cost and lead time for raw 
materials have doubled, and our suppliers have had to 
significantly increase their prices and that ripples through or 
community as well.
    With regard to the research and development tax credit, I 
would also like to raise the importance of the R&D tax credit 
that has expired. It is extremely important for a small 
business like mine that operates on tight budgets. I have heard 
the discussions in press related to Fortune 500 companies but 
rarely from the small business perspective. Let me be clear: 
The R&D tax credit allowed us to reinvest into further R&D and 
other business operations to encourage innovation, and allows 
you to tackle more ambitious projects. Investing in R&D allows 
small technology businesses to develop new products and improve 
existing ones, helping us stay competitive in the global 
market.
    In conclusion, small businesses are leading contributors to 
the economic success of this country. We cannot take this 
lightly and must consider all the tools in the toolbox when it 
comes to incentivizing the backbone of this great nation which 
are our small businesses.
    Again, thank you for inviting Motiv to participate in this 
hearing, and to discuss how our small businesses is literally 
allowing our nation to do things out of this world while 
bringing jobs and economic prosperity to our hometown. I look 
forward to today's dialog and answering any questions you may 
have. Thank you.
    Chairman WILLIAMS. The gentleman yields back. And those are 
great testimonies. We will get started now and I recognize 
myself for 5 minutes.
    This Committee has routinely heard from small business 
owners that Bidenomics has not been working for Main Street 
America. As we have seen the cost of capital increase in this 
high interest rate environment, small businesses have become 
increasingly reliant on credit cards which carry high interest 
rates, and traditional bank loans to finance their operations.
    I am very concerned that we are approaching a cliff with 
this mounting credit card debt piling up, but that is a 
conversation for another day. However, it is not just interest 
rates that are increasing the cost of borrowing, regulations 
add significant costs to financial institutions, which are 
ultimately passed along to their customers.
    Ms. Davis, first question, you previously served as 
compliance officer to your bank and are very aware of the 
impact that regulations have on the price of various financial 
products. So can you tell us how increased compliance burdens 
are negatively affecting the access to capital in your 
community? And which customers are most impacted by this 
increased cost?
    Ms. DAVIS. Thank you, Chair. Yes, related to compliance 
costs, as I said in my statement, every dollar spent takes away 
from an investment in the community either through a loan, or 
through direct capital program investments to improve those LMI 
individuals lives specifically related to the increase in 
costs. It overhead costs the same amount to originate a $5,000 
loan versus a $100,000 loan, but the cost ratio of what has had 
to be implemented is less proportional to the smaller-dollar 
loans. So it tends to affect our low- and moderate-income 
borrowers the most, because they are those that are looking for 
the smaller-dollar business loans.
    Chairman WILLIAMS. The recent report projected that the 
housing industry will need an additional 500,000 workers 
annually to meet the demands of the market. This is an 
unfortunate reality for many industries across the country. 
When I served as Secretary of State of Texas, I was charged 
with overseeing the infrastructure projects in the State. And 
eventually we had to delay a bunch of these projects we had 
planned because we couldn't find enough qualified welders to do 
the work.
    With this large infrastructure project to brand new homes, 
delays in work have drained local economy. So Mr. Martinez, how 
has a lack of skilled workers impacted your business?
    Mr. MARTINEZ. Absolutely, thank you, Mr. Chair. We 
continue--Idaho is a small State, and so, we compete with labor 
from States like California, Washington and Oregon. We aren't 
able to find the labor that we need to complete our projects. 
And when we do, I feel like we are overpaying for the quality 
of work that we are getting. We do high-end residential and so 
in order to find the qualified worker that we need to do the 
project that we are talking about, we either have delays in 
time, we have delays in quality, we have a delay in trying to 
get somebody at a market rate that we feel is appropriate. And 
we continue to work with our--the Job Corps, we continue to 
work the Pell grants, we are working with the high schools. We 
are trying to find a way to funnel kids into our industry in a 
way that provides an incredible opportunity for them. It is a 
shorter route.
    In Idaho, our Governor worked on lowering the requirements 
to get a journeyman's license because we can't--we just don't 
have enough bodies and the barriers to entry are so high that 
we are continually working on making it easier, fast-tracking, 
trying to get these kids in our industry.
    Chairman WILLIAMS. That is good.
    Mr. Ewing, the story of your family-owned business really 
hits home for me. I have been in the car business for over 52 
years, still am. And I took my father's business over, now my 
daughters are third generation, and they are currently running 
its operations back in Texas. It is real rewarding--as it is--
as rewarding as it has been to keep this business in the 
family, it comes with many unique challenges. So my question is 
to you, can you talk about some of the issues that your 
businesses faced, much like mine, as it has transitioned from 
generation to generation?
    Mr. EWING. Thank you, Mr. Chair. Our business, thankfully, 
did not have a transition challenge. I have been running it for 
35 years. My dad's still around, but he's not involved in the 
business. The challenge that we have in the business today, I 
touched on the rising costs, particularly in the supply chain, 
and you get a 3- to 4x increase in the cost of moving product 
that you need for inventory or product that you need to build 
houses; that is a very difficult situation to react to and pass 
the costs along, particularly as a small business.
    That is the biggest challenge that we have today in my 
opinion, reining in costs and trying to understand how we can 
react to them appropriately and not overburden our customers at 
the same time.
    Chairman WILLIAMS. That is a big deal. You just can't pass 
everything on to the customer.
    Mr. EWING. No, sir.
    Chairman WILLIAMS.--because if it rolls back on business.
    So with that in mind, I now recognize the Ranking Member 
for 5 minutes for her questions.
    Ms. CHU. Mr. McCarthy, thank you for being here today to 
share your experience as a high-tech small business. I was so 
impressed when I visited your facility last year and was able 
to see how remarkable Motiv's success and growth has been over 
the past decade.
    Can you tell us more about Motiv's story, how you came to 
find success in Pasadena and build a customer base nationwide? 
And also, I was able to see your robotic arm, why was that so 
innovative allowed for the Mars Perseverance Rover to survive 
the harsh weather conditions on Mars.
    And also, actually can you address this issue, we talk a 
lot about space, but do space programs help us here on Earth? 
Space programs have routinely returned some of the most 
advanced technology on the market to consumers. So can you talk 
about the next generation of products that will be coming from 
these small businesses to us?
    Mr. MCCARTHY. Thank you, yes. So I think in terms of 
Motiv's success, I think the primary function that has made 
Motiv successful in building up and surviving and thriving over 
the last decade is really staying true to a particular common 
thread. For us, it is the robotics, it is the motion control 
and having the skilled expertise and constant workforce labor 
development in order to deliver that to our customer. We have 
to differentiate, we have to invest in ourselves constantly, we 
have to develop new technologies. We are creators and inventors 
all in a small building or a couple of buildings.
    And so, that is important to us. And maintaining that 
energy, staying hungry and pushing and engaging with our 
customer base is the value proposition. And it makes us good 
partners to those groups. And so, I think that is primarily key 
to our success.
    So, some of these programs that I talked about in my 
testimony or the predictable budgets for our customers and 
making sure that those are operating on a certain cadence allow 
us not to engage in disruption, allows us to keep working in 
those arenas.
    Ms. CHU. And again, why was your robotic arm for the Mars 
Perseverance Rover so innovative that it allowed to you survive 
on Mars?
    Mr. MCCARTHY. And what is really interesting about the 
things that we worked on, we look at the landscape of what NASA 
or other government agencies want to do in space, and what we 
try to do is we try to predict from a technological position. 
We try to understand and anticipate what they are going to 
need, and that is where our investments go, is to hone those 
skills and then apply them and test them and validate them so 
that the reliability and quality is high and the customer is 
going to get a good solid product that they know is going to 
work year in and year out. And fortunately we have had that 
success on the programs that we supported in the Mars' 
activities and that has been very rewarding for us.
    You asked another question, I think, which was related to 
how does space benefit the rest of us? Space, it is 
interesting, sometimes we feel very disconnected to what 
happens in space, but the reality is we use it every day. It is 
part of our GPS activities, most of the functions on your phone 
have some origins or some biproduct that feeds into its utility 
through a space capability. Our weather predicting comes from 
space, our early warning systems from solar activity that could 
disrupt networks, power stations, distribution centers and that 
kind of thing come from space observation. So space, whether it 
is pursued for science or it is pursued for economic benefit, 
commerce, utility is really valuable. And it is easy to 
overlook because we are often doing things very terrestrially, 
if you will, but it is a huge contributor to the success of 
our----
    Ms. CHU. And let me follow up on SBIR itself because you 
have a remarkable 18 contracts with SBIR, which of course is 
the program administered by the SBA. How do SBIR grants 
represent an opportunity for the American taxpayers and the 
federal government to see a return on their investment with 
these small businesses? And also, it was only reauthorized for 
3 years in 2022. When it comes around next year, should we 
consider a long-term extension or even permanency?
    Mr. MCCARTHY. So, I will answer the back half of that 
first, yes, please. I think long-term extension and permanency 
of that program is extremely valuable. I think it is something 
that for businesses that are in the high-tech arenas and are 
looking to serve different government agencies and help them 
close technical gaps, it is extremely valuable. Sometimes gaps 
exist in conceptual mission or technology development. And it 
is really that distilled talent that resides within America's 
small business force that sometimes is able to execute those 
functions, and that then makes future missions, future 
technologies, future capabilities viable.
    So I think that SBIR program has shown its worth by those 
investments turning into the things that we see on a daily 
basis.
    Ms. CHU. Thank you. I yield back.
    Chairman WILLIAMS. The gentlelady yields back. I now 
recognize Representative Luetkemeyer from the great State of 
Missouri for 5 minutes.
    Mr. LUETKEMEYER. Thank you, Mr. Chairman.
    My questions today will be with regards to tax cuts and 
regulations, you know. I think the tax cuts of 2017 showed that 
leaving money in people's pockets, leaving money in business' 
pockets so they can reinvest it as they see fit, whether it is 
to expand your lines, to go expand your business, pay 
employees, buy more product whatever it is seems to work and 
generated a revolution in entrepreneurship during the 16, 17, 
18, 19, 20-year cycle, where suddenly it went from more 
employees than jobs to over $1 million--a million more jobs 
than employees in just a short period of time.
    So Ms. Davis, quite frankly as a former banker, you have 
got the toughest job at the became as a compliance officer. I 
empathize with you. You have a tough job, especially with the 
rules and regulations pouring out of Washington and the cost of 
complying with those. My question today is with regard to the 
tax cuts, you see it every day with the businesses that you 
finance in the bank. Have you seen those businesses take those 
dollars and reinvest them or do you see them sticking in their 
pocket and running off and vacationing with those things?
    Ms. DAVIS. Most small businesses are members of their 
communities. So they are going to take those dollars that they 
have been able to accumulate and reinvest not only to grow 
their businesses, but also in their employees. A lot of them 
small businesses provide additional services, volunteer hours. 
Small businesses really are the lifeblood of all of our 
communities. And so, when they have dollars available they can 
expand their businesses.
    Mr. LUETKEMEYER. You have to remember too, those are their 
dollars, not the government dollars.
    Mr. Martinez, the other three of you have lived the 
American Dream. You started from basically nothing and built 
your companies. I admire you beyond what you know. Tell me 
whenever you got the tax cuts in 2017 what did you do with 
those dollars? How did it affect your business?
    Mr. MARTINEZ. Absolutely, thank you, Representative.
    Our business relies on debt. We have to procure debt in 
order to do more projects. And so, we were able to--and with 
that debt comes investment that we have to make, it comes with 
dollars that we have to come up with from a downpayment 
perspective.
    So when we are doing lots, when we are doing a subdivision, 
when we are doing an apartment project, we have to come up with 
that additional money. And that was more money in our pocket to 
continue to grow the economy in our local market. It allowed 
us, it fast-tracked us an opportunity to be able to do projects 
that we had on the shelf that had been moth-balled waiting on 
funds to come in. And so it absolutely projected our company 
forward in those years after that.
    Chairman WILLIAMS. Mr. Ewing, same question to you, how 
does the tax cuts affect you? And I would argue that since the 
pandemic, it actually is underpinning the growth of our economy 
by allowing businesses to keep their own money and then 
reinvest as you see fit. How did the tax cut affect you and 
your business? And how are you managing those dollars today?
    Mr. EWING. Thank you for the question. You mentioned that 
the reinvestment into our team members through raising wages, 
additional training, creating a better environment for them is 
really where we focused. Our business is also built on 
inventory and having product on the shelves so we were able to 
expand the amount of inventory that we had in our facilities 
and our distribution centers and therefore we could react to 
the market and our clients quicker. So it was really about 
reinvesting into the company mainly with the people.
    Mr. LUETKEMEYER. Mr. McCarthy, you talked about the 
research and development tax credit, that is a huge deal for 
small business especially, and especially in your situation 
where you are doing a lot of research and development. The 
continuation of that is going to be very, very important, you 
know, we had tax cut, this 2017 tax cut is coming up for 
renewal next year. It is a really, really big deal that we make 
sure that happens. Can you talk about the impact on that?
    Mr. MCCARTHY. Yeah, absolutely. So just like my colleagues 
here said the reinvestment is critical to success. In the past 
when those credits have been available, we have been able to 
put that into our facilities, put that into capital equipment, 
put that into capability. And those become again 
differentiating tools for us going forward and allow us to grow 
our company, train workforce, or, again, plan for the future.
    So we try to develop a roadmap on how to better serve our 
customer base and that is a constant activity. And so those 
give us one more tool just like other programs to help us 
execute.
    Mr. LUETKEMEYER. Thank you very much.
    Mr. Martinez, I think you talked about the 2021 energy code 
that is very difficult to comply with. I have got a limited 
amount of time, can you just, very quickly, give us a little 
brief problem that you have there?
    Mr. MARTINEZ. Yes. My concern is in my very limited time. 
The State of Idaho has done their own energy code that makes 
sense for Idaho. Through the negotiated rule-making process, we 
had the opportunity to take things out that don't make sense 
and add things that do make sense. With the national 
standardization of code, we are now I feel like taking States 
rights away on their ability to make changes on the energy 
code.
    Mr. LUETKEMEYER. Thank you very much. My time has expired. 
With that, I yield.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize Representative Scholten from the great 
State of Michigan for 5 minutes.
    Ms. SCHOLTEN. Thanks so much, Mr. Chair. And thank you to 
our witnesses for coming here today and for all of your 
incredibly valuable testimony. So proud of the small business 
footprint in my district, actually 99 percent of businesses in 
the State of Michigan are classified as small, if you can 
believe that. When I speak with businesses in my district, 
rising costs are the biggest concern that they have. Many of 
them say supply-chain bottlenecks concentrated market power as 
a primary cause.
    My first question is for Mr. McCarthy. In your testimony, 
you emphasized how important it is to ensure small businesses 
can compete with larger companies, agree. In addition to 
funding mechanisms such as R&D Tax credit, are there other ways 
Congress can encourage competition to keep prices low 
throughout the supply chain?
    Mr. MCCARTHY. I think one thing that we have seen that has 
been difficult is that coming out of COVID with the supply-
chain issues we saw that buying power changed dramatically, 
speaking to our particular supply-chain semiconductor industry.
    What we started getting from the sellers of semiconductors 
was different requirements on how much you could buy, prices 
went way up, lead times got excessively long, and then in some 
cases, there was no guarantee of the price that you were 
actually being quoted as being the final price. I have never 
seen that before in my life, my entire career where there is an 
unstable price basis. And so, I think something needs to be 
looked at there. I don't know if that is all COVID-related or 
just a global economic situation, but that really hurts the 
buying power for small businesses that are trying to be 
innovative and are trying to compete against a variety of 
entities.
    Ms. SCHOLTEN. Thank you, that is really helpful.
    Another top concern among small business owners in west 
Michigan is the need for skilled labor. Some small-business 
owners tell me they have had to reduce hours and service 
because of the labor shortages they face. Our country has had 
low unemployment for several years now, a low unemployment rate 
for several years now. Usually is a very good thing, right? But 
we know that our small businesses are looking for the workers 
that they need. This has benefited our economy in some ways. 
However, unique circumstances brought on by the pandemic have 
meant that small businesses are now trying to grow without a 
workforce that can meet the demand that they have.
    The next question is for Mr. Martinez. Are there additional 
factors that you see that are contributing to the labor 
shortages and actions that we specifically in Congress can take 
to meet those needs?
    Mr. MARTINEZ. Yes, absolutely. So as we are facing a 
shortage of labor, the Job Corps funding, the $1.2 billion Job 
Corps funding got cut this year. We were jumping up and down 
saying, We are trying to train our workforce and you cut Job 
Corps funding. It did get reinstated fortunately and it did get 
reallocated for next year, but you have to remember through Job 
Corps, through Pell grants, we have to be able to fund these 
programs that are funneling kids into the trades. They are not 
even just kids, people that retraining our military, those that 
have been in the correctional system. We really are trying to 
retrain a group of people. I would say the last part of this is 
not everybody is made for college, and we keep pushing that 
narrative. And we are finally getting kids that are saying I 
can go for 2 years, I can work the whole time I am doing that 2 
years, make money and come out with a trade or a skill set. But 
now, you have got to convince their parents that they are not 
going to college. And I think that is the next hurdle that we 
have to jump. So I think we have a cultural shift that needs to 
be made at the national level.
    Ms. SCHOLTEN. I couldn't agree with you more. I have got a 
great bill, The Honoring Vocational Education Act, many of my 
colleagues here are cosponsors. It is a bipartisan bill, and it 
actually changes the way the United States Census tracts what 
constitutes higher education. Currently, you only get to check 
that box if you completed a 4-year college degree. I know the 
vocational centers around my district. I go in and I see how 
these auto mechanics are trained. That is higher education. I 
couldn't do that work. So I completely hear you. I think more 
than, you know, funding which we absolutely need, there has to 
be a cultural shift around this in the United States. And I 
think it comes and starts by honoring, you know, all different 
types of education as being higher education. So one very small 
thing we are trying to do here, but I appreciate you bringing 
that up. Thank you.
    I yield back.
    Chairman WILLIAMS. The gentlelady yields back. I now 
recognize Representative Van Duyne from the great State of 
Texas for 5 minutes.
    Ms. VAN DUYNE. Thank you very much, Mr. Chairman.
    I continue to hear countless stories about how this 
administration has hampered the ability of small businesses to 
grow due to its reckless spending and taxing and 
overregulating. Throughout President Biden's administration, 
federal agencies have finalized, get this, 996 new regulations. 
It costs about $1.7 trillion to American businesses. Listening 
to small businesses in my district, that is a cost they can't 
absorb. It must be passed down to the consumer. And this isn't 
so these companies or these company owners can get rich, but it 
is just to be able to survive in a burdensome regulatory 
environment. Now this is part of the reason why earlier this 
year this Committee passed my bill, the Small Business 
Regulatory Reduction Act. And this bill requires that the Small 
Business Administration ensure for each fiscal year that the 
cost of small businesses at the administration's rulemaking is 
not greater than zero, which also requires the SBA to issue a 
report on any regulations issued by other federal agencies that 
impact small businesses. That is the role of the SBA, to 
actually be a champion of small businesses. And I look forward 
to seeing this bill move forward and to working to ensure that 
Congress reins in on the power of out of control, regulatory 
glutton executive branch. And I also look forward to continuing 
to work with this Committee to strengthen small businesses 
across the country. I appreciate all of the witnesses being 
here this morning.
    Along with serving on this Committee, I also serve on the 
Ways and Means Committee which has established 10 tax teams in 
April to study key tax provisions from the 2017 Trump tax cuts 
set to expire in 2025, and to identify legislative solutions 
that will protect Americans from President Biden's multi 
trillion-dollar tax increase.
    I am going to ask--basically I will go ahead and start with 
you, Ms. Davis. Can you tell me how the uncertainty in the tax 
world impacts your planning for the future?
    Ms. DAVIS. Uncertainty in the tax world, specifically I 
can't answer that. From a regulatory perspective what I can 
tell you is that when small businesses don't have additional 
capital available, they are unable to support their 
communities. Providing tax credits and relief to small 
businesses allows them to thrive as well as our financial 
institution as a small business.
    Ms. VAN DUYNE. Appreciate that.
    Mr. Martinez.
    Mr. MARTINEZ. Yeah, thank you. I think as we all know on 
this Committee, business doesn't do well with uncertainty. And 
so we start to horde cash when we feel that we have got a wave 
of regulation coming along.
    The State of Idaho, Governor Little enacted a bill that for 
every one piece of regulation, two had to be stricken from the 
legislature. In doing so in the year of post-COVID we had a 
record surplus of $2 billion. Now that might not sound like a 
lot of money for some States where the Police Department's 
budget might be $2 billion, but in a State of 1.5 million 
people a $2 billion surplus is a huge number. And I think we 
are seeing the effects of some States taking that anti-
regulation or deregulation stance. And Idaho has, by far, 
become the most deregulated or unregulated State. Some may 
argue that is a good thing and some argue that is a bad thing. 
But we have seen the consequence of that with a 99.2 percent 
small business community there was explosive growth in Idaho.
    Ms. VAN DUYNE. Can you also, Mr. Martinez, I wanted to 
expand on this, in 2022 I hosted a program called the Texas 24 
Works, and it brought together high school and middle school 
counselors. We took them around the district and we them there 
can be great careers that can be had where you are making six 
figures without a college degree. Can you talk about how the 
career in the technical education, vocational training and 
apprenticeships can play a great role in addressing our labor 
shortage?
    Mr. MARTINEZ. Absolutely, thank you. We have partnered with 
the high schools as well. We brought in high schools through 
the Home Builder Institute that does receive funds from Job 
Corps, it has created a curriculum to bring kids into the 
trades. We started bringing them in. We have what we call the 
Parade to Homes for Pets, where they are building dog houses 
and they are engaging them. They are excited to work with their 
hands. It has essentially replaced shop that got cut out of the 
school program so long ago. And it is incredible as we meet 
with the youth, the excitement they have, the pride of doing 
something with their hands. So it is just getting the hook in 
and engaging them. And they see the potential for the growth is 
great so----
    Ms. VAN DUYNE. In the 20 seconds I have got left, Mr. 
Ewing, would you like to expand on any of the questions that I 
have asked?
    Mr. EWING. Just reinforcing the uncertainty creates a 
hoarding of cash and resources, which doesn't allow us to 
invest in our employees and the business. So that uncertainty 
is a challenge.
    Ms. VAN DUYNE. Thank you very much.
    I yield back.
    Chairman WILLIAMS. The gentlelady yields back.
    I now recognize Representative McGarvey from the great 
State of Kentucky for 5 minutes.
    Mr. MCGARVEY. Thank you, Mr. Chairman.
    Mr. McCarthy, we will start with you today. Talking about 
the SBIR program that is known as America's Seed Fund, not only 
is it a vital program for research and development, but it also 
awards small businesses like yours with access to the federal 
government as a partner. The federal government must fulfill 
its purpose and invest in our communities, our constituents, 
and their ideas. Mr. McCarthy, your company has received both 
Phase I and Phase II SBIR awards. But Phase III is especially 
important because it encompasses two of the sort of primary 
objectives in the program, the commercialization transition of 
technologies. Have you had any trouble transitioning from Phase 
II of the program into Phase III?
    Mr. MCCARTHY. So actually we have been awarded a couple of 
Phase III programs. And in my testimony, I referred to Phase I 
and II, because those are the allocated funds, whereas the 
phase three is the programmatic funds, the customer funding 
that utilizes that connection from the Phase I's and II's, the 
success from there, and then bridges the gap to development, 
the execution, the production of the technology into regular 
use case.
    So we have had some success there and, I think, to your 
point, it has helped us develop that relationship stronger 
within the federal agencies in terms of those who want to 
utilize that technology. So I think that has been very 
successful.
    Mr. MCGARVEY. Is there anything else helpful that we could 
do in these types of instances, like a centralized database for 
all the projects in Phase III that eligible agencies could use 
to shop for their needs?
    Mr. MCCARTHY. That is an interesting idea. I think 
socializing that is a good thing.
    I usually find that there is always a reeducation, even 
with customers, making sure that everybody is communicating 
about what the benefits are of the program. People who haven't 
used it before, haven't utilized it, even as a monitor of the 
program, they may be somewhat unfamiliar.
    So I think any time there is more opportunity for education 
and awareness, I think those are wins.
    Mr. MCGARVEY. Thank you very much.
    I am going to switch topics here a little bit. Going to Mr. 
Martinez.
    I appreciate all your comments today. I enjoyed your 
written testimony as well. And obviously agree that we should 
all continue working to lower costs.
    I really like what you said about promoting careers in the 
skilled trades to address the labor shortage. This is something 
that we have worked on in multiple Committees here.
    And I love the line in there where you say, ``America 
should have a choice in securing safe, decent, and affordable 
housing.'' And I think that that is something, affordable 
housing, I think we are ready for a Marshall Plan of affordable 
housing, not just in my community, but in this country.
    What I want to go to for a second, though, is in your 
written testimony you said that ``increased regulations, 
especially energy building code requirements, are making it 
harder and harder for home builders and multifamily developers 
to build housing that is attainable and affordable for American 
families.''
    But when I went to your website--which is amazing. The 
homes are incredible on there. If you guys haven't checked out 
this website, it has absolutely stunningly beautiful homes.
    You have advertised an incredible commitment to 
sustainability. In fact, it says on your website that, quote, 
``Commitment to sustainability is woven into every aspect of 
our construction process.'' Quote, ``We strive to minimize our 
environmental impact while maximizing energy efficiency and 
incorporating ecofriendly materials that set the standard for 
sustainable luxury living.'' And, quote, ``We are leading the 
way in sustainable luxury home construction.''
    And so this is not going to--I don't want this--this is not 
a ``gotcha'' question. It is really a question.
    When we have these--you complain about the regulations, but 
then obviously are building homes, I am guessing, because 
people want those. It makes having that home cheaper and more 
affordable.
    How do we square that with the opposition then to the 
regulations that are encouraging that efficiency for every 
American who does deserve and want to have a home?
    Mr. MARTINEZ. I actually really appreciate this question, 
because I get it asked at the legislature all the time at the 
State level, because nothing I build is affordable or cheap. 
And I am always, always, always advocating on the first-time 
home buyer.
    What we don't understand is, if we don't have a first-time 
home buyer who is then able to sell their home and increase 
their wealth to become a second-time home buyer and a third-
time home buyer, eventually I lose clients.
    So, selfishly, I am trying to advocate on behalf of just 
getting people into a home initially who then will turn into 
customers down the road.
    But I also--I was a first-time--we all were first-time home 
buyers in this room. And there is a difference of a mandate and 
giving people the choice.
    My clients can afford to choose some of those things. They 
are willing to pay for those things. But if you have somebody 
that is trying to get into their home for the first time--and 
it is death by a thousand cuts.
    It is not just the energy code. The energy code is a low-
hanging fruit. But it is every jurisdiction, from the local to 
the State to the national, that ends up blowing that budget out 
of whack to where people can't afford their home.
    Mr. MCGARVEY. We are out of time. I would love to ask you 
more questions about this, particularly for first-time home 
buyers. As competing Committee schedules go up here, I have a 
bill up in another Committee. But I really appreciate your 
testimony.
    Mr. Chairman, I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize Representative Maloy from the great State 
of Utah for 5 minutes.
    Ms. MALOY. Mr. Martinez, I was going to ask you something 
along the same lines, so let's just continue.
    You said that a de facto national energy code sets pricing 
households out of the market.
    I represent Utah's Second District, and Idaho's Number One 
being just north of Utah. So we have a lot of the same housing 
issues and affordability issues.
    If an energy code isn't mandated by the federal government, 
do you have faith that the State of Idaho can figure out how to 
build homes that are right for Idahoans?
    Mr. MARTINEZ. Yes, thank you for that.
    I think when you talk the body of codes, it is not a 
federal code. It is actually a private group that puts these 
codes. There is an energy code, the residential code, the 
commercial code, the remodel code.
    And so understanding kind of how this body puts it 
together, as you can imagine, lots of special interests: ``You 
can only get to this level of insulation value by using my 
product. So I am advocating special interest on my product.''
    Versus the State of Idaho, which is also in the same 
climate zone as Boston, Massachusetts, doesn't quite make sense 
on some of the things. It is 108 degrees today in Boise. I 
think probably really similar.
    Ms. MALOY. But it is a dry heat.
    Mr. MARTINEZ. Yeah.
    But the point is, is that we are involving the 
professionals. So we are sitting around the table with the 
building officials, with the State officials, with the 
builders, with the remodelers, and we are coming to a consensus 
of what makes the most sense.
    So I absolutely believe that as a State we can regulate 
ourselves better, because we are looking at all of the pieces. 
We don't have our blinders on of what gets us the max amount of 
energy efficiency. We are looking at: How do we even get people 
in these homes to begin with? What are easy upgrades down the 
road? What are things we can't upgrade down the road?
    Ms. MALOY. I agree. I admire your dedication to 
sustainability. I think sustainability is a great goal. I don't 
think the federal government needs to mandate it for home 
builders or States to figure out how to do sustainability.
    Go ahead.
    Mr. MARTINEZ. Real quick. I think the federal government's 
regard is in life safety. So I am not against building code and 
the things that progress building code for life safety. I have 
got a great relationship with the fire officials, with building 
officials. I think energy is a separate concept and an idea. 
And I agree with you there.
    Ms. MALOY. Thank you.
    Ms. Davis, you talked about self-funded entrepreneurs in 
your testimony and how making small loans and large loans cost 
the same amount but it ends up being more burdensome to the 
small loans.
    I have good relationships with the regional banks in Utah, 
and one of the things they have expressed concerns about to me 
is that they don't always recommend federal small business 
programs. They specialize in main street businesses. They are 
investing in their communities.
    But the programs that we are in charge of that are supposed 
to help small businesses have so much red tape and such an 
upfront cost and barriers to entry that they don't always 
recommend them to the same businesses that they are designed to 
help.
    What has your experience been with that?
    Ms. DAVIS. Thank you. That is a great point.
    To many of our customers, it is more expensive to go 
through SBA loan programs and other federal programs because 
there is so much red tape.
    Our experience is that we are able to meet those needs 
better, faster, cheaper. And we don't have prepayment 
penalties. You can pick up the phone and you can call someone 
directly. You don't have to go through specific 
representatives.
    Ms. MALOY. Yeah. Thank you. That squares with what I am 
hearing from folks in Utah. And that is something that we as a 
Committee need to be aware of and be addressing that. We can 
design programs, but if they don't work for the people they are 
designed for, we are wasting our time and the taxpayers' money.
    Mr. Martinez, I want to come back to you for a second.
    You are talking about skilled labor and working with high 
schools. And I know not everybody needs college, but over the 
last couple of generations I think college has become the way 
people get into the workforce, the way they find jobs.
    How are you finding laborers for your industry?
    Mr. MARTINEZ. Yeah. I think the Band-Aid to the fix is 
immigration. Immigration through the visa program. The work 
visa is definitely a Band-Aid. And I think that is one, 
unfortunately, that just doesn't get enough attention.
    Really it is identifying now this youth group that again 
wouldn't really go down the college route. In fact, I just 
talked to a guy the other day that is trying to--he has got all 
8,000 of his hours to become a journeyman for HVAC and just 
hasn't finished his schooling.
    Ms. MALOY. Yeah.
    Mr. MARTINEZ. So they are putting in the time, but the 
requirement from the schooling perspective is so hard that it 
is a barrier to the entry.
    Ms. MALOY. Yeah. I worry about main street businesses that 
have labor needs, and people are willing to do it, but they 
don't have a mechanism for connecting with each other.
    Mr. Ewing, I had questions for you, but I am out of time. 
Thanks for being here.
    Mr. Chairman, I yield back.
    Chairman WILLIAMS. The gentlewoman yields back.
    I now recognize Representative Thanedar from the great 
State of Michigan for 5 minutes.
    Mr. THANEDAR. Thank you, Chairman Williams. Thank you for 
this hearing. And I appreciate all of our witnesses here.
    I want to start with SBIR.
    When I started a small technology business way back in 
1990, one of the things that I did was I came across the SBIR 
proposals, request for proposals.
    And I was excited. There were so many opportunities, 
innovative opportunities for me. As a Ph.D. scientist, I was 
excited to see and be able to solve some of those problems.
    And so I wrote my first Phase I grant myself, but I 
realized the odds were so high back then. I don't know what 
they are today. Back then I was told that there is a 1 in 25 
chance of me winning a Phase I SBIR grant, Phase I.
    Is that true today, or is it better, worse?
    Mr. MCCARTHY. It is definitely competitive. I think that 
what we see in our area is maybe it is closer to 20; 20 percent 
chance of success is pretty typical.
    But I think it goes to the competitiveness and in the value 
proposition and so forth and answering the call, understanding 
the fit of your technologies or the science you are trying to 
secure and understand research.
    So I think it would be great if that program could be 
expanded, that would be amazing, so we could offer more 
opportunity, because I am sure there are plenty of excellent 
proposals that are submitted but aren't funded just due to the 
limitation of what the pool is.
    Mr. THANEDAR. Yeah.
    Mr. MCCARTHY. But it definitely is competitive.
    Mr. THANEDAR. Let me stop you there.
    So what I noticed again was the competitiveness of it. And 
so in 3 years we will be--in 2025 we will have to reconsider in 
terms of renewing this.
    And I see no downside to not only renewing this program, 
but making it permanent, because it is the small businesses 
that are responsible for most of the innovation in technology. 
And these innovations are something that is needed.
    And I was later on able to get other similar grants. And 
while I was still running my technology business, I got my last 
patent on electric batteries in 2016.
    And after that I said I want to go help others, other small 
businesses, because the small businesses in Michigan--Michigan 
is one of the most innovative States in the country.
    And our small businesses are--one, they do not know about 
many of the SBA programs, including don't know much about the 
SBIR. It is really a best kept secret. It is not marketed. It 
is not talked about. So many innovative companies do not know 
that.
    Secondly, there are not enough grants available.
    And thirdly, there seems to be a huge shortage of highly 
skilled engineers, scientists that small businesses could hire.
    And I would like any of you to comment on this.
    But this is stifling innovation in America. This is hurting 
America's ability to stay on the forefront of innovation and 
discoveries.
    And what can small business do in terms of promoting 
innovation, helping, getting this skilled workforce?
    Often we have skilled workforce Ph.D.s, engineers who are 
highly skilled in American universities, who can't just get a 
work visa to stay in this country and continue to help American 
businesses, to help our innovation.
    I want to just kind of get some idea on, some of you, on 
what we could do to improve America's position in innovation.
    Mr. MCCARTHY. Well, just quickly.
    I think for us from a small business perspective, I mean we 
have to make ourselves attractive to that workforce as well.
    So it is a really a two-way street. We have to develop 
ourselves, invest in ourselves in order to make that happen. 
And I think that is a critical element of operating to improve 
the workforce and meet those challenges head on that you 
brought out.
    Mr. THANEDAR. Thank you.
    I am out of time, so I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize Representative Stauber from the great State 
of Minnesota for 5 minutes.
    Mr. STAUBER. Thank you, Mr. Chair.
    Since President Biden took office, as we have heard, over 
900 new regulations have been passed, costing nearly $440 
billion and climbing. And it has added more than 236 million 
paperwork hours to American small businesses.
    Over the next decade compliance with Biden's regulations 
will cost Americans more than 1.5 trillion.
    Regulations such as these are unacceptable and often take 
funding away from growth opportunities for your businesses.
    Further, businesses should not need teams of compliance 
officers just to be able to compete in the marketplace. The 
costs alone are enough to force many of these small businesses 
to close, further harming our economy. We must and can do 
better for the small businesses in our communities.
    Mr. Martinez, how big is your company's regulatory 
compliance division?
    Mr. MARTINEZ. You are talking to it. So I would be 
compliance, I would be HR, I would be legal. We have four 
employees, period.
    And so to your point, I read a great book called, ``Buy 
Back Your Time.'' And reading through that, is the highest and 
best use of my time figuring out compliance? Is the highest and 
best use of my time figuring out regulatory burdens? Or should 
I be out selling homes and building communities?
    And so I love the fact that you keyed in on that because 
for a small business, we have been kind of a mom-and-pop 
business for 44 years. You are talking to every one of those 
silos here at this table.
    Mr. STAUBER. And how does the avalanche of regulations 
coming out of Washington make your job more difficult?
    Mr. MARTINEZ. I can tell you that because we are talking 
energy codes, because we are talking building codes, when we 
get a new wholesale set of codes, it is a six to eight hundred 
page document that we have to peruse through oftentimes in our 
truck as we are trying to figure out a code change.
    And that is just on the building code side of things. When 
you add OSHA, when you add EPA, when you add Army Corps of 
Engineers, I mean, the list goes on and on.
    Mr. STAUBER. Local planning and zoning.
    Mr. MARTINEZ. Yeah. Not to mention the anti-growth 
sentiment that we are getting now because of the amount of 
growth.
    And so we are fighting it on all fronts. And, 
unfortunately, it is just making the problem worse.
    Mr. STAUBER. And so reference the 2021 International Energy 
Conservation Code that is coming without amendment. What impact 
will these changes have on your business, and how might they 
impact potential home buyers?
    Mr. MARTINEZ. Yeah, we already have a pricing problem. I 
mean, we have already priced in Boise the local buyer. And I am 
born and raised--I am one of the few that is born and raised in 
my hometown. But we are pricing the local buyer out of the 
market.
    And I think when a regulatory agency comes out and says, 
well, it is only $200 here, and it is only $300, they don't 
realize the total impact. Going from our current energy code to 
the 2021 code will be almost $30,000 for Idahoans. And that is 
a number I can't stomach.
    Mr. STAUBER. I mean, the median income in the district that 
I represent is a little over $55,000. It is unbelievable when 
this comes down on you.
    Ms. Davis, what effect does increased regulations have on 
inflation?
    Ms. DAVIS. Well, I can speak directly to the costs that 
have to be passed to borrowers. You asked the size of the 
compliance departments. We have four full-time compliance 
people just to read the regs. We have one full-time person just 
to deal with the data collection efforts on CRA and HMDA. We 
will definitely have to add to staff with 1071. We have got two 
full-time CRA individuals; more than that on the BSA side. And 
then, of course, we have to invest in systems. So all the 
frontline individuals are part of our compliance team too.
    Mr. STAUBER. It is just amazing the number of people you 
just mentioned you have to hire to keep up with these rules and 
regulations that are just crushing small businesses across 
America.
    Ms. DAVIS. Correct. It is part of our overhead, and we have 
had to pass that down in origination charges.
    Mr. STAUBER. Yeah.
    Mr. Ewing, I am very happy that you are bringing your best 
employees to the Pittsburgh Penguins games. Minnesota is the 
State of hockey. And when I heard you testify, I said that is 
awesome. So I appreciate that.
    Listen, I am almost out of time. I want to ask every one of 
you the question: Has Bidenomics and inflation affected your 
business?
    Mr. Martinez, your business?
    Mr. EWING. Inflation absolutely.
    Mr. MCCARTHY. Inflation.
    Mr. STAUBER. So here is the issue. There is not one person 
that has come in front of this Committee that has said, ``We 
want more regulations. Please put more regulations on them.'' 
Every single Member that I have asked, witness at a hearing, 
``No more. We are done. We can't handle it.''
    I am a small business owner for 31 years. We sold our 
business. It is unbelievable, unacceptable what this 
administration is doing to you all.
    Mr. Chair, I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize Representative Gluesenkamp Perez for 5 
minutes from the great State of Washington.
    Ms. GLUESENKAMP PEREZ. Thank you, Mr. Chairman.
    And thank you to all of our witnesses for being here today.
    Mr. Martinez, I wanted to talk with you a little bit about 
housing. I appreciate your perspective on the economic 
landscape for small businesses, including contracting companies 
like your own.
    We have also talked in this Committee about how we feel the 
lack of affordable housing can actually be a barrier to small 
businesses being able to hire and retain quality employees. 
Someone isn't going to move to a new town for a job if there is 
no place to live. So this is especially a challenge in 
incentivizing business development in rural communities.
    I agree with you completely that we need to boost the 
housing supply to address this issue of housing affordability. 
And this means in some cases tackling--in many cases--tackling 
burdensome local zoning regulations, shoring up the supply 
chain for materials, and promoting careers in the skilled 
trades so there is ample labor.
    But I also wanted to talk about regulations. In November, 
the Consumer Product Safety Commission proposed a rule that 
would mandate finger detention technology on all consumer and 
commercial table saws, which sounds like it made for good 
reading.
    But the reality is there is just one company that owns the 
monopoly on that patent technology, and effectively enforcing 
that would have been a government-mandated monopoly.
    Your organization commented on the proposed rule that the 
cost of table saws has more than doubled, small manufacturers 
may be forced to exit the market, and businesses may be unable 
to operate.
    I believe that if the Commission had had somebody who has 
worked in construction on the body, they would know that if you 
raise the cost of a table saw by $400, people are just going to 
put a circ saw on a sheet of plywood, and more people are going 
to end up hurt.
    So that is why I introduced a bill to help maintain access 
to lower-cost table saws and prevent the proposed rule from 
leading to a monopoly on table saws with that kind of 
technology.
    So my question, Mr. Martinez. Do you believe it would be 
helpful to have people in the decisionmaking room who have 
hands-on-the-ground knowledge about the potential impacts of 
rulemaking like this.
    Mr. MARTINEZ. Yes, Representative. I really appreciate that 
question.
    One, you have got way more common sense than a lot of the 
jurisdictions that we work with. We get excluded out of 
conversations all the time about growth, about safety, about 
the things that directly affect us.
    I was at a summit a couple weeks ago, and even the members 
in that summit, they were activists, they were academics, they 
had never worked in our industry, and yet were proposing laws 
and regulations and rules that I just kept scratching my head.
    I am a framer. I was telling my team the other day when we 
were talking about the table saw issue, I know ways around all 
of that safety. I am worried that we are going to use a SKIL 
saw as a table saw to get around that.
    So it is very similar on the energy code side again where 
you have got one company that provides that product. They are 
the ones advocating on it. They go, advocate on behalf of that.
    So I appreciate the commonsense approach to that. We should 
always be at the table on anything housing.
    Ms. GLUESENKAMP PEREZ. Yeah. Board tables, table saws, 
whatever it is, we need to be there, you know.
    Mr. MARTINEZ. Absolutely.
    Ms. GLUESENKAMP PEREZ. I also recently visited a 
transformer distributor in my district, and we talked about 
their concerns about the implementation of DOE's recently 
finalized rule regarding efficiency standards for transformers.
    I know this is a particularly salient issue in your 
industry due to the significant delays and high costs for 
transformers that you have outlined in your testimony as a 
barrier in the supply chain.
    Could you elaborate on this and speak about what you think 
should be done to ease supply chain challenges for transformers 
and other building materials? What other checkpoints are you 
seeing?
    Mr. MARTINEZ. Yeah, absolutely.
    So you can't just do--just to define transformers for a 
minute, because it is not the movie--but when you do a 
transformer on a project, that is what brings power to your 
project, power to your home, power to a subdivision.
    It was a very ill-timed rule in that we already had a 
shortage on a product, and then we were going to make it more 
energy efficient, which just made the supply chain side a 
bigger problem.
    So we were able to defeat the efficiency standard of DOE, 
but we still have a shortage. And it is not the transformer 
itself, it is the alloy and the components that go into it.
    But it continues to be a huge challenge. It is just the 
challenge of the day. Lumber was the challenge of the day 3 
years ago. And coming from a lumber State, you have probably 
heard that a lot.
    And so transformers just happen to be that, the issue of 
the day that we are really trying to solve. And there is such a 
cost impact to getting them. And kind of to your point, I don't 
even know what I am going to pay for them. I will put money 
down, just get it here, I need it, I can't do my project 
without it.
    Ms. GLUESENKAMP PEREZ. Yeah, and we are not going to 
electrify without them either.
    Thank you very much. Thank you all for your testimony.
    I yield back.
    Chairman WILLIAMS. The gentlelady yields back.
    I now recognize Representative Molinaro from New York for 5 
minutes.
    Mr. MOLINARO. Thank you, Mr. Chairman. I appreciate that.
    I appreciate you all being here.
    And I do appreciate my colleague's common sense. In fact, 
we often, even this week, get ridiculed for having to draft 
legislation to preserve the rights of American citizens to buy 
their own home appliances as if that isn't the most significant 
issue facing Americans.
    And here we are faced with bureaucrats establishing rules 
and regulations that make it difficult to purchase a table saw 
or a dishwasher or a refrigerator.
    And it is often those faceless bureaucrats that establish 
policy that, frankly, make it so damn expensive for all of you. 
And then, of course, those costs either get passed down to your 
customers, our constituents, or you fold up your tent and stop 
working. And that to me is the great crisis that is facing main 
street.
    Mr. McCarthy, you had offered earlier that it was good to 
have small businesses at the table and the voice of small 
businesses being heard in tax policy, what have you. I do want 
to credit this Committee in a bipartisan way under the 
Chairman's leadership. We give voice to small businesses every 
week.
    The problem is that small businesses often might make it to 
a White House roundtable, but they are not the ones at the 
table, as Mr. Martinez has offered, and you all have kind of 
referenced in your testimony, they are not the ones at the 
table when it comes to policymaking.
    Yesterday, the Transportation and Infrastructure Committee 
held a hearing on new emission standards in California that 
California acknowledges would have an $86 billion disruption to 
supply chain and then went on to suggest that that would have 
nominal impact to American customers, whether they are buying 
food products or construction material.
    Mr. Martinez, I wanted to return to you and give you an 
opportunity to kind of expand on some of the regulatory 
burdens.
    You summed it up pretty well. You are all of the silos in 
your business. We know that in small businesses that is the 
case. For you it is a burden.
    At times, it would be great if Washington or the federal 
government didn't have so many silos. In fact, it would be nice 
if one entity knew more about other challenges so we wouldn't 
have this regulatory regime that creates such a crisis.
    The Biden administration consistently has ignored the voice 
of small businesses. We can pretend that sounds partisan, but 
it is not. Consistently, small businesses have been burdened 
with regulation because the left hand not only doesn't know 
what the right hand is doing, sometimes the left hand doesn't 
even know there is a right hand. And so what the EPA says might 
contradict with the Department of Labor, might contradict with 
some local zoning practice.
    This administration finalized in 2023 alone more than $451 
billion in final rules--imagine that--$451 billion in new costs 
because of regulations established in 2023 requiring 286 
million paperwork hours. I can't even fathom calculating that.
    I introduced the POST IT Act. Why? Because it would force 
the federal government to simplify regulations and require 
access transparency, small businesses having access to those 
regulations.
    Mr. Martinez, in a real world sense just talk a little bit 
about how providing greater transparency might at the very 
least provide some benefit to your business, but also perhaps 
hold the federal government a bit more accountable.
    Mr. MARTINEZ. Yeah, absolutely. Thank you, Representative.
    Really knowing the basis for a rule, knowing why we are 
doing this, like what is the end goal in this rule. Is it to 
save money? Is it to save lives? Tell us what it is.
    You had the EPA that had a waters of the U.S. standard. It 
was being challenged in the Supreme Court. And yet they still 
moved forward, the EPA kept moving forward with their rule, 
knowing that they stood on very--and it was an Idaho case. Of 
course, I was a little sensitive to it.
    But that Sackett case reversed the waters of the U.S. rule, 
and yet the EPA kept moving forward. And we as a small business 
who deal with the EPA and Army Corps, one or the other, kept 
saying this standard stopped, like let's wait till the Supreme 
Court rules, because we are going to just go right back and 
start all over again.
    Mr. MOLINARO. I am glad you brought that up, because 
actually there are Members like me from New York. I have spent 
my entire life trying to preserve watersheds, wetlands in the 
Hudson River Estuary. And the fact that that particular 
determination by EPA, by rolling it back, some of my colleagues 
on the other side of the aisle suggest that somehow we are not 
interested in protecting water.
    That couldn't be further from the truth. We have 
environmental standards, federal and state environmental 
standards that provided those protections. The EPA overstepped.
    I am going to run out of time because of my own fault. But, 
Ms. Davis, I recall some years ago in the 1980s when my parents 
were thrilled that they finally got a mortgage at under 11 
percent.
    Can you talk about what the highest rate of inflation in 
the last 40 years has meant to lenders?
    Ms. DAVIS. Well, for starters, the rates have been up. When 
I was in banking school, the Capstone Project provided this 
scenario that could never possibly happen to ensure that 
bankers were prepared. And, yet, we have see it rapidly 
increasing rates. And it surpassed even that.
    Mr. MOLINARO. Thank you, Ms. Davis. I apologize. That was 
my fault.
    Mr. Chairman, I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    I now recognize Representative Bean from the great State of 
Florida for 5 minutes.
    Mr. BEAN. Thank you very much, Mr. Chairman. A very good 
morning to you.
    Good morning, Small Business Committee.
    And to our all-star panel, welcome to your Nation's 
Capital, and thank you for your testimony. You will always 
remember this day, the day you testified before Congress.
    There is no hiding it anymore: Bidenomics is not working 
for America, for main street. And your testimony today really 
is in sync with the business owners of northeast Florida, in 
Clay County, in Jacksonville, that are just struggling with 
curveball and fastball and just an environment that makes it 
extremely difficult.
    In a perfect world, it is extremely difficult to run a 
small business. But when government is just throwing things in 
your way left and right, I know it is a struggle.
    We have had dozens of people sit in the same chairs that 
you are sitting in right now. All--many--have testified that 
they have never--they have been in business a long time. They 
have never seen the regulatory environment, the new regulations 
come down more than right now.
    Ms. Davis, would you agree with that? This is the most 
regulated environment we have ever seen? It is breaking the 
backs of small business? Would you agree with that statement?
    Ms. DAVIS. I would agree with that.
    Mr. BEAN. Very good.
    Mr. Martinez, jump in. Tell us.
    Mr. MARTINEZ. Yes. And I lived through a once-in-a-lifetime 
financial meltdown of 2008 to 2012 that I thought, okay, now I 
am good, I am back to being in business. And I do feel like we 
are in an environment now that is harder than it was in that 
financial meltdown.
    Mr. BEAN. I am going to put you down a yes, because you 
agree with that, for sure.
    Mr. MARTINEZ. A long way around it.
    Mr. BEAN. No, no, I am with you.
    Mr. Ewing, welcome. Glad to have you here.
    What say you? Is it the most regulated? Is the federal 
government just throwing things at you left and right that you 
have never seen before?
    Mr. EWING. For our business, I can't speak to that 
directly. But any time the federal government or any government 
adds cost of doing business to the business, it takes away from 
the employees and our ability to treat them better.
    And that trickles down. And I think that is one of the 
effects that aren't recognized on regulatory burdens. 
Additional costs of running a business is--it is going to 
affect a business, but it is also going to affect the tens, 
dozens, hundreds of employees of those businesses which impact 
main street even further.
    Mr. BEAN. It sounds like a yes to me. So thank you very 
much.
    Mr. McCarthy, I haven't forgot about you. What say you? 
Trying to get to Mars, but it is hard to do so when the federal 
government throws all these monkey wrenches in the spaceship. 
What say you? Is it being overregulated right now?
    Mr. EWING. I think there are a couple of things that have 
impacted us. I mean, as we mentioned before, inflation has. 
Definitely, we feel that. We feel that. That is our buying 
power.
    Mr. BEAN. But you don't have to--do you have to have a 
circular saw or a stove to get to Mars?
    Mr. MCCARTHY. No. No. I don't--correct. I don't have the 
same situation there.
    But I will say something that is important that is coming 
on that does affect us, is there are standards associated with 
NIST and security and so forth.
    And those are things that for small businesses to start up 
with those compliances and so forth, that is something that is 
a new activity, a new burden for us. But I am not saying that 
it is not important.
    Mr. BEAN. No. I got you.
    Mr. EWING. But those are--those are things--those are----
    Mr. BEAN. So it is a challenging environment, and I will 
take that as a very strong maybe from you.
    Mr. MCCARTHY. A very strong maybe.
    Mr. BEAN. Ms. Davis, I was a banker too. You have the 
heartbeat of main street, and hopefully every small business. 
Get to know your banker or a banker that can help you navigate 
the tough environment.
    What are you seeing? What are you seeing right now at the 
bank? What are your customers doing to try to keep up with 
regulations and a rising interest rate?
    Ms. DAVIS. Well, I think many of them are trying to cut 
costs. They are trying to figure out ways to continue to move 
forward.
    Again, we have demand for credit, but that liquidity is 
such a big deal.
    Mr. BEAN. It is. It is tough.
    Mr. Martinez, what would you say if you could talk directly 
to the Chairman of the K-12 Subcommittee on Education on how do 
we pivot to a more society focused on teaching kids a skill? 
What would you say to that Chairman? How do we do it? What 
should you advise Congress? How do we have a new conversation?
    Mr. MARTINEZ. I say reengage the industry. You walked away 
from the industry a while ago. It is time to come back. And 
doing that, there are plenty of programs, there are plenty of 
funds now. Like, there is no reason they can't be doing this.
    Mr. BEAN. Very good. You just told the Chairman. I am the 
Chairman of that Committee.
    Mr. MARTINEZ. Oh.
    Mr. BEAN. We have had multiple Subcommittee--you did a 
great job by the way.
    Mr. MARTINEZ. You are supposed to let me know.
    Mr. BEAN. You did a great job. That is a little curveball 
here we can throw you to. But listen, thank you. You did a 
great job.
    And we are having that conversation. We welcome input, and 
we are going to have to do it together. And I think it is 
changing. I think kids are realizing, ``I can make more money 
without going into this debt''--which is a whole nother topic 
altogether.
    Look at me, ran out of time. But I am grateful for each of 
your coming. Thanks for your testimony today.
    Mr. Chairman, I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    And I now recognize Representative Meuser from the great 
State of Pennsylvania for 5 minutes.
    Mr. MEUSER. Yes, thank you, Mr. Chairman.
    Thank you to all of you. My apologies for being late. I had 
an earlier Committee. And as my colleague just said, good luck 
following that.
    Thank you, Representative Bean.
    So I am a small business person as well for well over 20 
years, helped grow a small business into what eventually became 
a large business. What is being faced today is really 
burdensome, to say the least, to put it in the nicest way 
possible. And, boy, oh, boy, we hope to correct that come next 
year.
    But from energy, we in northeast Pennsylvania call it gas 
backwards energy policy, taxes, regulations, crime, interest 
rates, inflation. The regulations that seem endless. I start 
listing them here. It is a long list, from the beneficial 
ownership rule to 1071 coming out of the CFPB.
    So I will start with you, Mr. Ewing. And you are from 
Fayette County?
    Mr. EWING. Correct.
    Mr. MEUSER. Great. Well, that is a beautiful spot in the 
world.
    Mr. EWING. That it is.
    Mr. MEUSER. I will be heading that way at the end of the 
week. But anyway--or in our great Commonwealth of Pennsylvania.
    So you mentioned--well, first off, the sunsetting of the 
Tax Cuts and Jobs Act, R&D tax credits, potentially the 199(A) 
small business deduction, which has been stated by President 
Biden, doing away with that, all the tax relief that occurred.
    So how do you all feel about that, Mr. Ewing?
    Mr. EWING. Well, the 199(A) is going to eliminate a lot of 
investment that small businesses are able to make, and that is 
a problem. And we can't--we talked about it earlier. Not being 
able to plan to invest in your business, you start to pull 
back. Innovation is squashed a bit.
    And for us, as I mentioned earlier in testimony, the 
investment into our people is really what is going to be 
challenging if the cost of doing business rises substantially 
because tax cuts go away.
    Mr. MEUSER. That is devastating. I hear from my friends who 
own small businesses and my constituents, and all devastating.
    So I read your OSHA officer issue, and in my district--and 
I have a conference call with them on Friday with OSHA--they 
seem to have this new walk-around rule where they stopped on a 
construction site the other day, just small putting up 
Sheetrock for people, and the ladder was over 15 feet high. And 
they said it wasn't secure enough.
    So after 4 hours of interrogation and permits and getting 
their licensing, they informed--they wrote them a warning and 
stated that the fine will be anywhere from zero dollars to 
$14,500. Unbelievable. Walk-around. So-called walk-around by 
OSHA. So we are going to have a little conversation there.
    Tell us a little bit more about your interlude with the 
OSHA officer.
    Mr. EWING. It was in our Charlotte facility. And it was--I 
don't know that it was a walk-around, but it was an unexpected 
visit. And the officer identified what they believed to be a 
problem with stability of product on racking. All our racking 
was installed according to code. But this officer, who we found 
out much later in the process--this was a 6-month ongoing 
process--was new and very aggressive and wanted to put a name 
in the local agency for themselves.
    Mr. MEUSER. Right, mount on the wall. Right.
    Mr. EWING. Yeah.
    Mr. MEUSER. Allow me to move on. I appreciate that.
    Ms. Davis, do you think that the CFPB's 1071 rule will harm 
or help your ability to serve your customers?
    Ms. DAVIS. It will absolutely harm it.
    Mr. MEUSER. Can you elaborate?
    Ms. DAVIS. Plain and simple.
    As part of my testimony, we are able to meet the small 
business needs by being effective and fast and efficient. That 
added cost that we are going to have to tack on for all those 
data collection points is going to hinder the expediency of our 
lending efforts.
    In addition, for every compliance officer that we have to 
hire to manage those data points and the examination 
ramifications, that is one fewer banker that we have out in the 
community serving our customers' needs.
    Mr. MEUSER. Mr. Martinez, has there been anything done over 
the last three and a half years that has been a positive 
development? I know inflation, everything else. Is there any 
policy? And we are going to work on this. Believe me. That is 
why most of us are in Congress, to be advocates for small 
business.
    Mr. Chairman, I have run out of time. But maybe we could 
talk afterwards. I appreciate it. I yield back.
    Chairman WILLIAMS. The gentleman yields back.
    I would like to thank our witnesses today for your 
testimony. It has been a great hearing. I think you have seen, 
unlike you see in many other hearings, we do have a lot of 
bipartisan agreement on where we need to take main street. And 
I want to thank you all for being here.
    Without objection, Members have five legislative days to 
submit additional materials and written questions for the 
witnesses to the Chair, which will be forwarded to the 
witnesses. So I ask the witnesses to please respond promptly if 
that happens.
    And if there is no further business, without objection the 
Committee is adjourned. Thank you.
    [Whereupon, at 11:42 a.m., the Subcommittee was adjourned.]
                           
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