Economy and Banking
“The Great Recession has taken an enormous toll on our nation and our area. As your Congressman, my focus is on getting Americans back to work, restoring America as a manufacturing powerhouse, and retaking economic leadership in the world. I am pursuing policies to keep America the most creative, entrepreneurial and technologically advanced country in the world, and to reinvigorate our exports.” – Congressman Adam Schiff
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We now know what earlier we had only suspected–that this recession has been one of the worst in history. Two years ago, we were losing 750,000 jobs a month. The situation has improved somewhat from the darkness of those times–we have been gaining jobs in the private-sector for each of the past 15 straight months. Nonetheless, the unemployment rate is still hovering around 8 percent and job growth is still terribly inadequate.
Small businesses have powered the country out of every recession in our history. They have always been the true engine of growth in challenging times. Unfortunately, businesses are currently suffering from taxes that stifle innovation and growth, a complex regulatory code and the accelerating cost of health benefits. They are also having difficulty accessing the capital they need to make new hires and invest in new equipment. Large businesses and banks have huge cash reserves, but they are waiting to see a consistent economic recovery before investing in workers and businesses again. By enacting tax and regulatory relief, as well as improving access to capital for small businesses, we can help small businesses lead our way into a sustainable and lasting recovery.
For this reason, Congressman Schiff has been fighting to enact tax deductions for small businesses that can be used for start-up expenses, to eliminate payroll taxes for new hires, and to do away with capital gains taxes for the purchase of small business stock. Through these efforts, small businesses can begin growing and adding jobs again. Schiff has supported the Small Business Jobs Tax Relief Act, which increases the amount of startup expenses that small businesses are allowed to deduct from $5,000 to $20,000. The Small Business Jobs Tax Relief Act will help entrepreneurs in the vital early days as they try attract the capital they need to launch new companies.
Schiff also voted for the HIRE Act, which will forgive payroll taxes for businesses that hire individuals who have been out of work for at least two months. Businesses that hire workers today will see a larger tax credit than those that wait until next year. This is designed to further encourage small business owners that might be struggling with the decision of whether to hire a new employee now. The HIRE Act also encourages businesses to make new investments in equipment by providing tax incentives. This legislation received bipartisan support and has now been signed into law by the President.
Schiff is also working to remove burdensome regulation for small businesses. U.S. tax law requires businesses to submit a Form 1099 for every contractor paid at least $600 for services during a year. This requirement usually does not apply to corporations receiving payments, but this exemption will be phased out beginning in 2012. This change would require a small business owner to fill out a Form 1099 every time the owner completed a sale or series of sales that totaled more than $600 in revenue in a given year, driving up the cost of doing business and wasting valuable time for the owner. Schiff voted for the Small Business Tax Relief Act, which would repeal this provision and he will continue to work to ensure that this fix gets passed.
Schiff is also acutely aware of the difficulties that small businesses have experienced in obtaining credit and believes we must make credit easier to obtain if small businesses are going to fuel the country’s economic recovery. Schiff supported the Small Business Financing and Investment Act, which will modernize the SBA’s capital access program for the first time in ten years. It will unlock lending and investment for small business owners, providing $44 billion annually in loans and investments to small businesses and will help to create up to 1.3 million jobs every year.
Schiff has also supported legislation that would establish a $30 billion Small Business Lending Fund to make capital investments in community banks with assets less than $10 billion. This would allow the banks to leverage up to $300 billion in loans, helping to loosen tight credit markets and get businesses expanding again. That legislation has now passed the Senate, and Schiff hopes we can send it to the President shortly.
Providing tax and regulatory relief and improving access to capital are steps that we need to take in the short term to get the economy moving again. Over the long term, Schiff believes we must ensure that America continues to nurture the spirit of entrepreneurship that has encouraged new businesses, new technologies and new ventures to be born here. We now live in an interconnected global business environment, with competition arising all over the world. Schiff believes we need to compete for economic leadership by being the most inventive, ingenious and productive people on earth. We cannot compete with the developing world on wages, and we don't want to try. But we can and must ensure that we continue to be the most productive nation in the world if we are to maintain our quality of life. Critical to this effort is ensuring that America produces an educated workforce second to none.
Schiff believes we must also invest in the future, making the much needed investments in infrastructure that will efficiently transport more goods and people, and create jobs. He has worked with Los Angeles Metro to ensure that the groundbreaking on Phase 2A of the Gold Line to Azusa occurred several years ahead of the schedule called for in Measure R, because the line needed to be extended into the San Gabriel Valley as soon as possible. Construction would create nearly 7,000 jobs and $1 billion in economic activity.
Schiff also introduced the Build America Bonds Extension Act of 2011, which extends the popular Build America Bonds program that has helped the state of California and countless municipalities and school boards across the state finance infrastructure projects, creating much needed jobs in the hard-hit construction industry in the state.
Schiff knows that the creativity and ingenuity of the American people will pull us out of this recession. He will be doing all he can to return our country to prosperity, and hopes constituents will continue to share their thoughts and ideas with him on how we can accelerate a shared and sustainable economic recovery.
Schiff is deeply concerned about the current housing crisis and believes that we must find a way to better inform future homebuyers of the risks involved with certain loans and prevent current homeowners from facing foreclosure. Families around the country, and especially in California, are being hard hit by the current housing crisis.
Compared to the rest of the nation, California still has high property values, but foreclosures will cost Californians a total of $67 billion in lost property values, an average individual loss of more than $8,000 and the state ranks 4th highest in the number of foreclosures. The problems surrounding the subprime mortgage markets have pushed the housing market into its worst slump in 16 years – weakening the American economy and making American families less secure.
This is why Schiff supported the Helping Families Save Their Home Act (H.R. 1106) which strengthens the country’s housing market. The bill makes crucial changes to the HOPE for Homeowners Program to encourage more lenders to participate in this program that has helped keep millions in their homes. The legislation strengthens the mortgage insurance market by restricting predatory lending firms from participating in the Federal Housing Authority’s mortgage insurance programs.
The House version of the legislation allowed for judicial modification of the mortgage terms involving primary residences. Homeowners facing foreclosure would have been required to attempt to notify the lender and work out a loan modification before applying for judicial modification. Bankruptcy judges could have extended an applying homeowner’s mortgage repayment period and reduced exorbitant mortgages interest rates to keep the mortgage affordable over the long-term. This is the same power bankruptcy judges have for all other types of debt. Unfortunately this provision was not included in the final version of the bill, which was signed into law on May 20, 2009.
In 2009, Schiff supported legislation to make it easier for homeowners to refinance. The American Housing Rescue & Foreclosure Prevention Act (H.R. 3221) which improved upon the FHA program so many borrowers in danger of losing their primary residence can refinance into lower-cost government -insured mortgages they can afford to repay. It also strengthens regulation of Fannie Mae and Freddie Mac and raises the loan limits so families can more easily purchase single family homes in high cost areas, such as California.
For information on federal programs to prevent foreclosure, click here.
Schiff is proud to be a cosponsor of the Credit Cardholders’ Bill of Rights (H.R. 627), legislation to give consumers the rights and information about credit cards that will help them make educated decisions about their financial lives and could save some families thousands of dollars.
Credit-card debt in the U.S. has reached a record high —nearly $1 trillion -- and almost half of American families currently carry a balance, and their average balance was $7,300 in 2007. One-fifth of those carrying credit-card debts pay an interest rate above 20 percent. In 2008, credit-card issuers imposed $19 billion in penalty fees on families with credit cards.
This legislation applies common-sense regulations that would ban unfair rate increases and forbid abusive fees and penalties. For example, it will prohibit retroactive interest rate hikes on existing balances, double-cycle billing (charging interest twice for balances paid on time), and due-date gimmicks. It will also require 45-days’ advance notice of interest rate, fees, and finance charges hikes, and requires payments to be applied fairly to the highest interest rate balance first. By providing consumers with clear information and transparency, families will be better equipped to manage their finances in these difficult times.
Schiff was present at the White House when President Obama signed the Credit Cardholders’ Bill of Rights into law on May 22, 2009.
Mortgage Lending Reform
Subprime and predatory lending practices were at the heart of the current financial crisis. Schiff strongly supported much-needed reform to prevent these bad loans from being made in the first place when the House considered the Mortgage Reform and Anti-Predatory Lending Act of 2009 (H.R. 1728).
The bill establishes a simple federal standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold. For refinancing, the bill will require that all loans provide a net tangible benefit to the consumer rather than merely putting money in the pockets of the lender. The legislation prohibits the financial incentives for subprime loans that encourage lenders to steer borrowers into more costly loans and mandates strong new federal rules to require creditors to retain an economic interest in a material portion (at least 5 percent) of the credit risk of each loan, to make sure creditors have a stake in ensuring their loans will not default.
Top students from around the world study at our nation’s world-leading research institutions. Unfortunately, current policy makes it very difficult for these tremendously talented individuals to build a business here and forces them to take their ideas and develop them in foreign countries -- boosting those economies instead of our own -- and creating competition for American companies.
One recent study by the National Foundation for American Policy found that nearly half of the country’s top fifty venture-funded companies were founded by foreign-born entrepreneurs. Another study found that jobs for more than two American-born workers are created for every foreign-born worker who puts their advanced degree to work in this country. Many other studies all lead to the same conclusion: highly-skilled immigrants create jobs for American workers.
The INVEST in America Act will make conditional permanent residency (green cards) available to immigrant entrepreneurs with a science, technology, engineering, or mathematics (STEM) graduate degree from an accredited U.S. college. To qualify, the immigrant entrepreneur will need to start a new business relevant to the area of study and hire 5 full-time employees or invest $500,000 within 5 years. This bill would give the founder of even the smallest start-up, with little more than an idea and a set of skills, the opportunity to build a company in the United States and earn citizenship.
In President Bush’s 2006 State of the Union Address, he announced the American Competitiveness Initiative, which included immigration policies to attract and retain the best and the brightest high-skilled workers from around the world. Likewise, President Obama recognized during his 2012 State of the Union speech that many come to this country "to study business and science and engineering, but as soon as they get their degree, we send them home to invent new products and create new jobs somewhere else."