[Senate Hearing 113-346]
[From the U.S. Government Publishing Office]
S. Hrg. 113-346
SMALL BUSINESSES SPEAK: SURVIVING THE GOVERNMENT SHUTDOWN?
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 15, 2013
__________
Printed for the Committee on Small Business and Entrepreneurship
Available via the World Wide Web: http://www.fdsys.gov
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED THIRTEENTH CONGRESS
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MARY L. LANDRIEU, Louisiana, Chair
JAMES E. RISCH, Idaho, Ranking Member
CARL LEVIN, Michigan DAVID VITTER, Louisiana
TOM HARKIN, Iowa MARCO RUBIO, Florida
MARIA CANTWELL, Washington RAND PAUL, Kentucky
MARK L. PRYOR, Arkansas TIM SCOTT, South Caarolina
BENJAMIN L. CARDIN, Maryland DEB FISCHER, Nebraska
JEANNE SHAHEEN, New Hampshire MICHAEL B. ENZI, Wyoming
KAY R. HAGAN, North Carolina RON JOHNSON, Wisconsin
HEIDI HEITKAMP, North Dakota JEFFREY S. CHIESA, New Jersey
EDWARD J. MARKEY, Massachusetts
Jane Campbell, Democratic Staff Director
Skiffington Holderness, Republican Staff Director
C O N T E N T S
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Opening Statements
Page
Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana. 1
Heitkamp, Hon. Heidi, a U.S. Senator from North Dakota........... 4
Cardin, Hon. Benjamin L., a U.S. Senator from Maryland........... 7
Levin, Hon. Carl, a U.S. Senator from Michigan................... 7
Witness Testimony
Smith, Joaneane, President and Chief Executive Officer, Global
Commerce and Services, LLC..................................... 12
Leh, Christopher J., President, Tl Technologies, Inc............. 15
Firestone, Lisa, President and Chief Executive Officer, Managed
Care Advisors.................................................. 19
Griffall, Keith, Chief Executive Officer, Western Leisure, Inc... 25
Poole, Sabrina B., President and Chief Executive Officer, SERDI,
LLC............................................................ 30
Singh, Barun, Founder and Chief Technology Officer, WegoWise,
Inc............................................................ 35
Robertson, Sally B., President and Chief Executive Officer,
Business Finance Group, Inc.................................... 41
Ford, Antwayne, President and Chief Executive Officer,
Enlightened, Inc............................................... 49
Withee, Charles, President, The Provident Bank................... 55
Paul, Ronald D., Chairman, Eagle Bancorp, Inc.................... 58
Alphabetical Listing and Appendix Material Submitted
Cardin, Hon. Benjamin L.
Opening statement............................................ 7
Farquharson, Dr. Stuart
Prepared statement........................................... 108
Firestone, Lisa
Testimony.................................................... 19
Prepared statement........................................... 20
Ford, Antwayne
Testimony.................................................... 49
Prepared statement........................................... 51
Griffall, Keith
Testimony.................................................... 25
Prepared statement........................................... 26
Heitkamp, Hon. Heidi
Opening statement............................................ 4
Prepared statement........................................... 5
Landrieu, Hon. Mary L.
Opening statement............................................ 1
Post-hearing questions for the record posed to:
Sally B. Robertson....................................... 84
Lisa Firestone........................................... 91
Joaneane Smith........................................... 93
Keith Griffall........................................... 94
Sabrina B. Poole......................................... 99
Christopher J. Leh....................................... 102
Leh, Christopher J.
Testimony.................................................... 15
Prepared statement........................................... 16
Levin, Hon. Carl
Opening statement............................................ 7
Prepared statement........................................... 9
List of 7(a) and 504 Loans Approved.............................. 123
National CAPACD
Prepared statement........................................... 104
Paul, Ronald D.
Testimony.................................................... 58
Prepared statement........................................... 60
Poole, Sabrina B.
Testimony.................................................... 30
Biographical sketch.......................................... 32
Robertson, Sally B.
Testimony.................................................... 41
Prepared statement........................................... 43
Singh, Barun
Testimony.................................................... 35
Prepared statement........................................... 37
Smith, Joaneane
Testimony.................................................... 12
Prepared statement........................................... 13
Tobiska, W. Kent
Prepared statement........................................... 109
U.S. Senate Committee on Small Business & Entrepreneurship
``Shutdown Impact Stories''.................................. 124
Withee, Charles
Testimony.................................................... 55
Prepared statement........................................... 56
World Trade Center New Orleans
Prepared statement........................................... 116
SMALL BUSINESSES SPEAK: SURVIVING THE GOVERNMENT SHUTDOWN?
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TUESDAY, OCTOBER 15, 2013
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The committee met, pursuant to notice, at 2:30 p.m., in
Room SR-428A, Russell Senate Office Building, Hon. Mary L.
Landrieu (Chair of the Committee) presiding.
Present: Senators Landrieu, Levin, Cardin, Shaheen, Hagan,
Heitkamp, and Fischer.
OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, AND A U.S.
SENATOR FROM LOUISIANA
Chair Landrieu. Good afternoon, everyone. Thank you all for
making the effort to join us here today for this hearing to
allow the voices of small business and partners of small
business to be heard in how this shutdown of the Federal
Government is affecting you.
We are now on day 15 of a government shutdown and,
unfortunately, only two days away from the possibility of the
United States signaling to the world that we will not pay our
bills. American Express CEO Ken Chenault said, quote, ``If the
United States hits a debt ceiling and is unable to pay its
debts, the consequences will be immediate and dramatic. The
United States,'' he went on to say, ``has been the wealthiest
nation on the planet for 100 years. No one ever believed the
United States would not pay its bills. If the U.S. defaults,
the world financial system literally unwinds.''
Gautam Mukunda, a Harvard Business School professor, said
this week, ``The economic risk to the average American if the
government defaults on its debts is so great, I find it hard to
believe policy makers would ever allow it to happen. The entire
crisis is entirely unnecessary and avoidable.''
Yet, we are here today still facing this potential
catastrophic crisis because of, in my view, a small minority
from one party in one House decided to hold the Federal
Government and the global economy hostage to defund or delay a
health care law they find objectionable, a health care law that
passed the Senate on December 24, 2009, passed the House on
March 21, 2010, was signed into law by President Obama on March
23, and upheld by the Supreme Court on June 28, 2012.
Hundreds of committees held hearings on this law over a
span of 40 years. This committee held several hearings on this
law, one just recently, where we had people come in and talk
about what they liked about it, and what they did not like
about it. I will refer to that in a minute. At our recent
hearing, we heard from one small business owner from Maryland.
He stated, ``I always wanted health insurance, and being self-
employed, we could not afford it. I do not want to go back to
that.'' He went on to say the status quo was completely
unacceptable. ``Doing nothing would have wreaked havoc on my
business and other small businesses like it.'' We had at that
time a stream of testimony that is on this record and public
record of business owners saying how pleased they were with
many parts of the law. We had some on record that said they did
not like parts of the law.
But what we find ourselves here today is because a small
group could not get it amended, repealed, et cetera, they have
now shut down the government. And I wanted to give voice to
small businesses today, regardless of what your feeling is
about that particular act or health care in general, we want to
hear from small businesses about how the Federal Government,
when it furloughs almost 800,000 people and puts a stop to
contracts, projects, et cetera, how it affects small business.
Maybe there is no effect. We will hear from you all today. I
think there is.
So, this hearing will attempt to focus attention on the
current government shutdown on America's small businesses, and
there are 27 million of them, 20 million self-employed, about
seven to eight million small businesses, and we have thousands
of banks represented here that lend to those businesses. We are
going to get some of this on the record today.
Our witnesses, all of you, come from a variety of different
industries. You come from the tourism industry, from the high-
tech efficiency firms, from IT, from cybersecurity firms, you
represent the health care sector, and even a small manufacturer
of gun parts is here to testify about how this shutdown is
affecting your business.
Some of my colleagues that have joined me, and I will
recognize them in a minute and thank them for being here--
everyone is on a tight timeframe today--but some of their firms
that they represent in their States have expressed strong--
given strong letters of support for this hearing and expressed
their views. Here are just some that we have collected, and I
will do this briefly.
One of my small business owners in Donaldsonville,
Louisiana, Todd Dorian, sent me a letter. He works in the sugar
industry. He is owner of a small consulting business, but he
wanted to open Grapevine Cafe and Gallery in Donaldsonville.
Now, we are famous for our restaurants, lots of good food, and
they are not always fancy places, but they are always good. I
have no doubt his would have been one. He had nearly completed
an application for a 504 loan which he would use to purchase
the restaurant. The SBA had not approved the loan yet. The
restaurant he is buying has 15 employees, but in his plan, he
was going to add five new jobs within 90 to 120 days of
purchase. That job hiring has been delayed because his loan
application could not be approved because this is just one of
500 agencies of the Federal Government that are closed down and
not operating properly.
Another one of our businesses, in business a long time,
Perez and Associates from the 1940s, it has grown into a
national company. This company happens to now be owned by women
and minority-owned. Their government clients include the Corps
of Engineers, Department of Agriculture, U.S. Air Force. More
than 50 percent of their work is Federal contract, but 50
percent is private. They are losing, they have testified to me,
more than $41,000 a day and 40 employees are affected by this
shutdown.
Another Louisiana company, Gulf Coast Bank, that I am well
aware of, they are one of our strongest small business lenders.
They are one of the largest mortgage lenders in South
Louisiana. They have closed over 1,300 loans totaling $230
million to date. They are on target this year to close $300
million because the market is picking up and things are moving
forward. Yet, every day, they said, they are losing--they are
saying no to $1.8 million in lending because of this closure.
I am going to read just one more off that is not from
Louisiana, that is from Philadelphia, Pennsylvania, and then
turn it over to my colleagues for brief opening remarks as we
get to our panel. But in the Wall Street Journal just this
week, Charlotte Calmels had been planning to use a $150,000 SBA
loan to open her second French restaurant in Philadelphia. But
before the loan can close, her lender, which is Susquehanna
Bank, must confirm her legal immigration status. That process
begins with the SBA. The Federal immigration agency, which
remains open because they are under an exception, stopped
receiving requests because they cannot get what they need from
the SBA, which brings to the point that just because a few
agencies have been deemed ``essential'' under the emergency
does not mean by any chance that operations are going smoothly
and it is stopping a lot of economic work in our nation. I hope
that we can open up our government.
I am going to submit the rest of my statement for the
record, but I want to just say that the SBA approved 53,000
loans supporting over 30 business and small business lending
through its flagship 7(a) and 504 loan programs. If loan
volumes hold, that means every day the government is shut down,
an average of 150 loans totaling over $93 million are not being
processed.
The Export-Import Bank is under the wheelhouse of this
committee. What about that bank? Last year, 88 percent of the
Export-Import Bank transactions were from small businesses,
totaling $6.1 billion. That bank today is not currently
operating. Translate that to $16.7 million a day of lost
transactions for small businesses all over America.
Now, let us take the IRS. I promise you, this is not going
to be on the favorite list of House Republicans to open it up.
It is not one of my favorite agencies, either. However, many
small mortgage lenders and real estate agencies are in danger
of seeing transactions put on hold because, by law, any
mortgage loan approved is subject to the review by a mortgage
lender of at least one year's worth of Federal tax returns. If
they cannot get one year's worth of Federal tax returns
verified by the IRS, all of these mortgages and loans are tied
up. So you can see what our situation is here.
So, let me, in closing, say we have a wonderful collection
of small business owners today who, I know you are eager to
tell your stories. I look forward to hearing you all.
Chair Landrieu. I am going to turn to my Ranking Member
when he arrives, but until then, let me, in order of
appearance, recognize the Senators just for a very brief, you
know, one minute or two, opening remarks, and then I would like
to introduce our panelists.
Senator Heitkamp.
OPENING STATEMENT OF HON. HEIDI HEITKAMP, A U.S. SENATOR FROM
NORTH DAKOTA
Senator Heitkamp. Thanks so much, Chairwoman Landrieu, for
putting this hearing together in such a short period of time,
and I want to assure the witnesses, we understand that your
time is valuable, but your stories are extraordinarily
important and this opportunity to really tell those stories, I
think, is critical to impressing upon people that there is more
that is hurt than just feelings here. There is more than what
is hurt than just our emotion.
And this may come as a surprise. This committee is a
committee that I worked very hard to be on because North
Dakota, in fact, is affected almost more than any other State
with the SBA shutdown. My home State of North Dakota actually
ranks number one in the number of loans per capita based on
dollar value secured through the SBA. The agency reported that
in fiscal year 2012, it granted almost $28 million, or $152 per
resident, of loans in North Dakota. And in the first four
months of the current fiscal year, the SBA provided twice as
much financing compared to the same period in 2012. And you
might know that North Dakota is undergoing a huge economic
boom.
But what is really tragic here is that this opportunity
that small business people have of taking advantage of this
economic opportunity in North Dakota is being stifled every
day, and tragically, the places where it is being hit the
hardest is our Indian Reservations. And I could tell you very
sad stories, but I think it is important that we hear your
individual stories and not relay the ones that we have from
home, and so I would ask that my whole opening statement be
available for the record.
[The prepared statement of Senator Heitkamp follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Without objection. Thank you.
Senator Cardin.
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, A U.S. SENATOR
FROM MARYLAND
Senator Cardin. Well, Chairman Landrieu, first of all,
thank you very much for bringing us together and thank you for
pointing out so frequently on the floor of the Senate, in our
caucus, and to the American people the harm being caused to our
country as a result of the shutdown of government.
I represent the State of Maryland. We have ten percent of
our workforce that works for the Federal Government--ten
percent of our workforce. It has had a huge impact on the
Maryland economy. So we know about that ten percent. We know
about that 125,000 or 130,000 Federal workers who are
furloughed. But it is having a major impact on small businesses
in our State.
I stopped at a restaurant last week near the Baltimore
beltway and I know the owner and I asked him how things are
going. He said, ``Terrible.'' He said, ``You know, we do not
have the Federal workers who usually come in here and have
lunch. I do not know how much longer we can deal with our
current situation with the government shutdown.'' So businesses
are hurting.
I want to thank all of the guests that we have here today
that are going to relay their stories. I am particularly
pleased that we have so many on the panel that have a Maryland
connection.
We talk about the Federal workers, but how about the
employers that do contract work for the Federal Government?
That is a huge number in my State and around the country. So I
am glad that Lisa Firestone is here, who will be able to talk
about the fact that 90 percent of her revenues are in jeopardy
because of the shutdown. She helps save money for the Federal
Government in the work that you do for lost days and worker
comp costs, and we know the great work that you do. We want to
see you at full strength.
And to Sabrina Poole, a woman-owned small business, 25
percent of her revenues are jeopardized because of the
shutdown.
And I want to also thank Sally Robertson and Ron Paul for
being here to explain what this will mean from the point of
view of the SBA inactivities as it affects the businesses done
by their financial institutions. This is important for us to
get your story and I thank you for being here.
Chair Landrieu. Senator Levin.
OPENING STATEMENT OF HON. CARL LEVIN, A U.S. SENATOR FROM
MICHIGAN
Senator Levin. Thank you very much, Madam Chairman, for
doing this, and for your great leadership here.
Small business is getting clobbered by this government
shutdown. Each of us have probably dozens of stories. I have
about a dozen in my statement, which I would ask that you put
in the record. I will just use one of those stories, and will
try to pick out the one here which maybe somehow or other will
resonate.
There is a little ferry service that runs out of Leelanau
County way up in the Northwest part of the Lower Peninsula, a
little ferry service that runs hunters and hikers and bikers to
a little island in the Sleeping Bear Dunes National Lakeshore.
Under the government shutdown, that ferry service cannot run.
Five runs a week is all it was doing, 50 people on each ferry,
about 250 people at about $35 each. That is the income of that
ferry service. It cannot run. It is about $8,000 in lost fares
per week. A small business, one of, again, a dozen that I am
setting out here in my opening statement.
The only point I would make other than that, Madam
Chairman, is this. Everybody wants us to negotiate. It is
obvious we should negotiate. It is obvious that the
negotiations have to be bipartisan. The real issue is whether
government is going to be functioning while we negotiate. And
on that, everybody ought to join in and say, of course,
government should be functioning while you negotiate. That is
the issue.
And I would hope our small business people will let their
own representatives and Senators know how important it is that
government reopen. Negotiate, of course, but for heaven's
sakes, pay our bills while we negotiate. But please, please get
government open again while these negotiations take place.
So, again, my thanks to you, Madam Chairman, for your
tremendous leadership, not just in this committee, but publicly
on the floor of the Senate and so many other ways you are
indispensable in this effort.
[The prepared statement of Senator Levin follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Well, thank you, Senator. I appreciate
that. You have been a leader for many years yourself.
I am going to ask each member, because we have a large
panel, and it is unusual, but we have set it up this way so we
could be both formal, if necessary, and informal in questions
and back and forth. Let us start with you, Ms. Smith, if we
could. If you would, just introduce yourself and for one minute
give your views about your business and how it is being
affected. And then I have got questions to throw out to all of
you as we continue this hour-and-a-half hearing. Thank you.
STATEMENT OF JOANEANE SMITH, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, GLOBAL COMMERCE AND SERVICES, LLC
Ms. Smith. Okay. My name is Joaneane Smith. I am President
and CEO of Global Commerce and Services. We are an information
technology company based in New Orleans, Louisiana.
I am currently in D.C. because I have meetings with private
industry clients. Originally, I planned on meeting with Federal
Government agency clients. However, they are unavailable due to
the shutdown. We are not able to meet with our small business
representatives, our contracting officers, and our contracting
officer representatives at the agencies to get assistance since
they are furloughed, as well.
GCS was started with me being an independent contractor
while working my own contracts before branching out to other
agencies. We managed to get a line of credit for our business
while using my property as collateral.
I have been asked to talk about the impact of the shutdown
and how it has affected me and my company. The most compelling
thing that has happened as a result of the shutdown is having
my resources at home and not billing my USDA contract in New
Orleans. The contract started September 1 of 2013 with three
resources and we received a stop work order two weeks ago. USDA
is one of our major agencies we work with.
In the interim, we are still paying salaries, health
insurance, and other benefits for resources with hopes of
starting back on our contracts soon. We currently have a total
of 17 resources covering our contracts. GCS is a $2 million
company in revenue. Payroll is $33,000 per month, and insurance
is $3,800 per month. We have approximately $60,000 in reserves
that we can use for payroll.
We are doing our best to keep our employees working, since
they have already started the contract before the furlough.
Another two weeks of the furlough, it will make it tough for us
to continue to pay our employees who are not billable at this
time. Another three or four weeks of the furlough, we will
definitely have to have our own furlough.
There are contracts which we are anticipating awards.
However, they have been placed on hold because of the furlough.
GCS is pushing for the furlough to end so we can put our people
back to work.
[The prepared statement of Ms. Smith follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you, Ms. Smith.
Mr. Leh.
STATEMENT OF CHRISTOPHER J. LEH, PRESIDENT, TL TECHNOLOGIES,
INC.
Mr. Leh. Thank you, Madam Chairwoman, Senators, and fellow
entrepreneurs. I wanted to take a quick moment just to thank
you for the opportunity to tell my story about the success and
the plight of my company, TL Technologies.
TL Technologies is a specialty manufacturer of precision
metal components, supplying brand-name manufacturers and
worldwide markets. Since its inception, the business has grown
rapidly from an idea and is now poised with recently awarded
projects to double in size in 2014.
To truly appreciate the predicament that we find ourselves
in today, I believe it is really important for you to
understand the investment that I, my family, and my business
partner have made to build TL Technologies to be a $1.2 million
company.
We currently employ three people in the manufacturing
sector. We were about four weeks into the process of securing
additional capital to support the new business and we were
being backed by an SBA 7(a) loan and we missed the window when
the government shut down, so we cannot proceed with the
purchasing of our equipment. We had to stop about $600,000
worth of equipment from moving. We idled riggers, electricians,
employees. We had already extended two offers of employment to
highly educated CNC machinists who would make combined salaries
of around $130,000 a year with full medical benefits. We had to
rescind those offers and we are completely and absolutely in a
stall mode at this point.
[The prepared statement of Mr. Leh follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you.
Ms. Firestone.
STATEMENT OF LISA FIRESTONE, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, MANAGED CARE ADVISORS
Ms. Firestone. Chair Landrieu and distinguished members of
the committee, thank you for this opportunity to testify this
afternoon.
My name is Lisa Firestone. I am President, CEO, and owner
of Managed Care Advisors, a woman-owned small business founded
in 1997 specializing in employee benefits and workers'
compensation. I also sit on the board of Women Impacting Public
Policy, or WIPP.
MCA specializes in reducing the risks associated with work-
related injuries and illnesses. Since 2005, our Federal agency
customers have projected workers' compensation savings of more
than $100 million, which includes 440,000 avoided lost time
days. Today, we hold six Federal contracts accounting for
approximately 90 percent of our revenue. We have 39 employees
in 16 States. We expect to hire more than 25 additional
employees during 2014.
In many ways, our growth through public sector contracting
is the success story that this committee seeks to promote, yet
our company has been thrown into turmoil since the government
shutdown. The new staff we have hired cannot complete their
required security clearance, so I am forced to carry them
longer than anticipated. New hires are also held up because the
e-Verify system is not operational due to the shutdown. My 39
employees are working. However, it is uncertain when the
company will be paid. In order to meet our financial
obligations, we will be drawing on our line of credit, which we
estimate can cover us for 60 to 90 days and no longer, and we
are paying an interest rate of 4.5 percent.
During WIPP's annual meeting in Washington, D.C. last week,
many women came forward to plead to Congress to open the
government. They came from both political parties and made it
very clear that we were not interested in assigning blame, that
we just wanted a solution. Small businesses like MCA, who are
draining our resources to cover the government's obligations,
need to know whether there is a plan in place for expediting
the payment of past-due invoices when Congress reopens the
government.
I would like to end with a favorite quote. Nobody can go
back and start a new beginning, but anyone can start today and
make a new ending. I urge the Congress to work together in a
bipartisan fashion to make a new ending, one that benefits all
of us.
Thank you very much for the invitation to speak today. I
look forward to questions.
[The prepared statement of Ms. Firestone follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you very much, Ms. Firestone.
Mr. Griffall.
STATEMENT OF KEITH GRIFFALL, CHIEF EXECUTIVE OFFICER, WESTERN
LEISURE, INC.
Mr. Griffall. Thank you, Chairwoman Landrieu and all the
members of the committee. I really appreciate you having the
foresight to have us come here and tell our stories, and
hopefully, we will make it clear that this is devastating to
small businesses.
I am the founder and CEO of a small tour operator located
in Salt Lake City, Utah. We operate tours and they are
customized group travel tours for other tour operators and
special interest groups. Most of our tours operate in the
Western United States, and consequently, we include national
parks, monuments, and recreation areas in almost all of our
tour programs. It would be pretty hard to overstate the adverse
economic effects this shutdown of the government and the
national parks has had on small businesses and entire
communities of the Western United States.
I am here not just to represent my company, which is
managing to hang in there for the moment, but there are
thousands of small businesses that are related to the tourism
industry. It is an industry which is populated mostly by small
and very small businesses, and as a tour operator, we use these
businesses on every program we operate, everything from hotels,
attractions, motels, gift shops, restaurants.
These businesses were immediately affected by this shutdown
and they are suffering and many of their workers will never see
this money come back, and certainly the companies will not,
either. This is not something they are going to get back pay
for. If you work in a restaurant and you make tips for a living
and no one shows up to your restaurant, you do not get that
money back. So it is the type of thing that truly has been
difficult for the tourism industry.
The first years of the 21st century have been very
difficult for the tourism industry and we have, as a small tour
operator out West, still suffered from all of these. Obviously,
the first one was the terrible events of September 11, 2001. It
took us about three years to recover from that, and
fortunately, we had loans from the Small Business
Administration to get through that time frame.
The natural disasters that have come from Hurricane
Katrina, which I am sure Senator Landrieu would be more than
familiar with, Western forest fires, Superstorm Sandy, and on
to the difficult economic times of 2008, which have just this
year turned the corner, where tourism businesses are coming
back to where they were before 2008. People had confidence.
They began to spend their money on travel again.
And now we have the government shutdown of 2013, which is
just one more devastating blow to the small businesses, not
just in the Western United States but certainly throughout
America. Thank you.
[The prepared statement of Mr. Griffall follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you.
Ms. Poole.
STATEMENT OF SABRINA B. POOLE, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, SERDI, LLC
Ms. Poole. Good afternoon, Honorable Chair, Ranking Member,
and members of the committee. I am Sabrina Poole, President and
CEO of SERDI. SERDI is a small disadvantaged woman-owned
certified 8(a) information technology firm providing IT
consulting services to the Federal Government. So, basically,
the Federal Government is our number one, you know, source.
I am pleased to be here today to discuss the impact of what
the shutdown has to my company. I cannot even begin to speak,
because it has been quite from one extreme to the other. We
have had to lay off our billable and non-billable staff, which
means that the current contract that we do have that is
ongoing, where we have not had a stop work order, we do not
have anyone to really oversee the contracts, which is on the
DOD side. This means that our revenue is going to be down and
we are not, compared to large companies, we do not have deep
pockets where we can afford to have folks stay on the payroll,
so we were forced to lay off. We could not do like you did and
keep them on the payroll for an extended amount of time.
The financial impact has been really horrible. Our revenues
are down about 25 percent and it has continued to go down from
there. Most of our employees are not billable, which means that
we have a big decrease in revenue and we will see this decrease
for several months because as the government invoice cycle
continues to progress and the new contracts we have won, there
are no task orders on them, we think that it probably will take
us about a year to recuperate some of the losses we have had.
Similar to Ms. Smith, we worked for the last six months to
capture work, which you spend six months capturing and winning
work. We won the work. In September at the USDA, the same thing
happened. They pulled the plug. The State Department has been
ongoing for our essential personnel. The FAA pulled the plug.
The IRS pulled the plug.
And so all my employees, I now have them on unemployment.
Our staff has been laid off and they are going for unemployment
benefits. There has been a lot of talk about the Federal
workers being paid. I have yet to hear about the contracting
staff, so they know they will not be paid for this time off.
Ultimately, my fear is that a lot of my good employees, my
good qualified employees, are going to be looking for work in
the commercial industry, and some of them who have security
clearances that cannot afford to pay their bills, it will
impact them as they come up for reinvestigation, because as
part of reinvestigation for your security clearance, you cannot
be late on any bills, and most of my contracts have security or
TS-level clearances. So I am really concerned about that.
My last point is I am really concerned that I will be
forced to close my business if a resolution is not reached
quickly. Myself and other small businesses may be forced to
close our doors. And my fear is also if one company closes its
door, then a handful of folks are impacted. If numerous
companies are forced out of business, then it becomes the large
business take over, which puts the small business exactly where
we were before, where we fought over the last ten years for me
personally to get to.
In conclusion, we have sacrificed, struggled, and slowly
make progress as a woman-owned small business and the shutdown
is threatening to destroy all our progress, wiping away ten
years of sacrifice. I am an IT expert. I can always go back to
work. It is not something I want to do, but if that is what I
have to do, I will do it to feed my family.
To me, it is disturbing that the government has caused
SERDI and other small businesses to lose employees and
significantly impacted our revenue. How can we make up for the
loss of revenue? How are our employees going to pay their
mortgages and feed their families? And, lastly, how are small
businesses supposed to survive?
I agree with the rest of the panel members. I do not care
about Democrat or Republican. I just want a solution and I am
praying to God that one comes very quickly.
Thank you very much.
[The prepared statement of Ms. Poole follows:]
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Chair Landrieu. Thank you.
Mr. Singh.
STATEMENT OF BARUN SINGH, FOUNDER AND CHIEF TECHNOLOGY OFFICER,
WEGOWISE, INC.
Mr. Singh. Thank you, Chairwoman Landrieu and members of
the committee for the opportunity to speak today. I am here as
founder and CEO of WegoWise, a Boston-based web start-up that
is helping solve one of our nation's most pressing challenges
by improving the efficiency of the buildings in which we live
and work.
In just over three years, WegoWise has grown from idea to
industry leader, with 32 employees and contractors. We help
organizations across the country identify inefficient buildings
and uncover savings, which creates new jobs for auditors and
contractors, reduces expenses for building owners, and
increases tenant comfort. By drastically reducing energy
consumption, we are also supporting our nation's energy
independence goals.
Many of our customers manage market-rate buildings in the
private sector. At the same time, we are very proud to have
helped our home State of Massachusetts identify over $300
million of potential energy savings in affordable housing. We
also help local governments better understand their utility
expenses. That includes the City of New Orleans and Los
Angeles.
We are proud participants in the American system of
entrepreneurship. It has allowed a company like ours, with
innovation and hard work, to thrive and to transform society
for the better. We are a mission-driven for-profit enterprise,
meaning we believe business should provide meaningful value in
a self-sustaining way.
Our model of innovation relies, however, on a supportive
public sector. Government has been vital to the efficiency
industry. Every American household knows the value of buying an
Energy Star appliance. The same thing is happening today with
buildings themselves. The EPA's Portfolio Manager tool provides
a mechanism for buildings to receive Energy Star scores. This
drives the construction of more efficient buildings and
investment in efficiency retrofits. The government is
essentially helping the market work the way it was meant to
work, by presenting consumers with clear information and thus
catalyzing economic activity.
The shutdown has prevented the EPA from offering its Energy
Star services. Anyone relying on these tools is being forced to
defer decisions regarding building efficiency upgrades. These
upgrades create local jobs that cannot be outsourced. These are
the jobs of the new economy, and building efficiency can add a
trillion dollars and create 3.3 million job years to the
economy. The shutdown is directly slowing the growth of this
vital sector of our economy.
We have invested significant resources into creating
technology to integrate with Portfolio Manager. We have had to
delay one contract and have been fielding concerned calls from
current and potential customers that may result in further
delays. For companies like ours, the investments we make in
product development, marketing, and sales come from a very
limited set of resources and we are sensitive to unexpected
changes in cash flow.
Entrepreneurs and small business owners already face
tremendous odds, and government has a role to play in fostering
success. The current shutdown adds a significant amount of
uncertainty to the market, which increases our risk and makes
it more difficult for us to grow our business.
Thank you.
[The prepared statement of Mr. Singh follows:]
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Chair Landrieu. Thank you, Mr. Singh. I am glad that
Senator Shaheen came in right before your testimony. She has
been the leader on building efficiency here in the Senate. We
recognize her leadership and thank you very much.
Ms. Robertson.
STATEMENT OF SALLY B. ROBERTSON, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, BUSINESS FINANCE GROUP, INC.
Ms. Robertson. Thank you, Chairman Landrieu. I wanted to--
--
Chair Landrieu. You have to press your button and speak
into your mic, if you would. Lean forward. There you go.
Ms. Robertson. Sorry. Thank you very much, Chairman
Landrieu. It is a pleasure to be here today and I thank you and
the members for the opportunity to speak. I also wanted to let
you know how much we appreciate the example that you have set
in this committee for the rest of Congress in working together
and compromising to bring back 504 debt refinancing, which is
in the best interest of small business.
The impact of--well, first, I am Sally Robertson. I am the
President of Business Finance Group. We are a nonprofit
Certified Development Company providing 504 financing in
Maryland, D.C., Virginia, and West Virginia. I am also the
Chairman of the National Association of Development Companies
and our 270 CDC members do 95 percent of the 504 loan volume in
the country.
The government shutdown has had a very large impact on 504
lending. Clearly, there are no new loan applications being
approved. One thing that is often overlooked is that we are
fixed asset financing, and so borrowers enter into contracts to
buy fixed assets. Those borrowers have deposits at risk. If
they are unable to meet settlement deadlines because they do
not have financing in place or because other post-approval
documents have not been approved by SBA, they are at risk of
losing not only those deposits, but all the feasibility costs
that they have poured into these projects. And to say these
borrowers are also expanding their businesses and they are
losing opportunities for growth if we are not able to get their
applications released so that they can close on their
transactions. Additionally, 504 businesses create jobs and none
of those jobs are going to be created.
We fund our projects through a bond sale process. Should
the Federal Government default on its obligations, we have no
idea what value that full faith and credit guarantee of a U.S.
agency will be in the marketplace. We risk much higher rates
for our borrowers forward into the future, and we are very
concerned that our November bond sale may not occur if SBA does
not return to work very shortly. Our deadline is now for SBA to
be moving packages forward into the bond sale process. Hundreds
of loans are already closed on a nationwide basis in
anticipation that sale will occur. Should it not occur, those
loans are going to have to be re-closed at somebody's cost,
unfortunate that small businesses would have to pay for it.
And then we run the risk of what is the perception of our
bank partners if they do not receive their paydown in a timely
fashion? Are they going to charge small businesses more for
interim loans in the future? And if investors feel our sale is
not a dependable, timely product, are they going to continue to
buy it at the same rates? I think we are looking at much higher
costs for our small businesses, and that would be a tragedy, I
think, for a 504 program which is so valuable for small
businesses that are expanding and creating jobs.
Thank you very much for the opportunity to talk today and I
would be happy to answer questions.
[The prepared statement of Ms. Robertson follows:]
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Chair Landrieu. Thank you very much, Ms. Robertson, for
that detailed explanation of how this program affects so many
entities.
Mr. Ford.
STATEMENT OF ANTWAYNE FORD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, ENLIGHTENED, INC.
Mr. Ford. Good afternoon and thank you very much, Madam
Chair and committee.
Hello. My name is Antwayne Ford, President and CEO of
Enlightened, Incorporated, as well as the Chair of the D.C.
Chamber of Commerce and on the President's Council for the U.S.
Black Chambers. Enlightened is a technology firm specializing
in cybersecurity, system integration, and software development,
and have realized great growth over the last 14 years, serving
primarily the Federal Government. I am here to tell you how
this government shutdown and the fight over the debt ceiling
are continually causing company layoffs and reduce production
on government contracts.
As a small business owner, I am deeply impacted by the
events that have unfolded over the last two weeks that have
forced our employees and their families to cope with the
realities of this government shutdown. They now know what it
means to have their jobs and financial security placed in
jeopardy by events that are wholly outside of their control.
As a result of the shutdown, Enlightened has made difficult
choices in the way we manage our human capital. Permanent
layoffs due to government shutdowns have become commonplace,
forcing us to say goodbye to some of our best and brightest
employees. We were forced to immediately furlough two employees
due to the loss of work at the Department of Justice and
another 25 in the 14 days since October 1. Those not presently
affected by the layoff live with the real danger of losing
their jobs. Meanwhile, they watch their elected representatives
battle one another in a war of uncompromising positions. Not
only do I fear losing established personnel, but my company
faces an equally daunting challenge of attracting new talent to
a field in a government that has become an increasingly
unreliable employer for us.
There are long-term effects to this temporary shutdown. In
the short- and long-term, Enlightened will suffer. With 70
percent of our workforce sourced from the Federal Government,
it has become impossible to depend on a reliable stream of
solicitations from Federal agencies that may or may not have
been canceled, reopened, or canceled again, or postponed
indefinitely. Our existing contracts where work has been
praised face the real possibility of not being renewed.
Enlightened cannot afford to wait and wait and wait while our
government leaders in Congress negotiate our livelihoods.
Enlightened is providing services to several Federal
agencies. However, one customer in particular, OPM, is critical
to my success. Enlightened is assisting OPM with modernizing
systems that provide background checks for Federal Government
employees and their contractors. To date, this contract has not
been affected, but if it is stopped, Enlightened would not be
able to recover. This could be the death blow for the company.
As an IT and cybersecurity service provider, I am
concerned. Several agencies have made contingencies for some
productive measures during government shutdown. Their plans
call for heavily scaled down their IT teams to maintain and
manage and protect government IT infrastructure. Contingencies
are seldom as strong as the original.
Agencies that we do do work for, such as the Department of
Veterans Affairs, Health and Human Services, HUD, and OPM, have
had layoffs to cyber professionals that protect the nation's
infrastructure. Most other Federal agencies are expected to
have a similar handful of IT security staff and other essential
personnel to run the infrastructure and this is a problem.
With the potential that the government will default on our
Federal debt, Enlightened would not receive any payments from
our Federal contractors, accounting for 70 percent of our
business. In turn, we would not be able to pay our employees,
our bills, nor our line of credit. And just like Congress
elected to shut down the government, we, too, would be forced
to shut down and go out of business with no financial guarantee
available to recover. Small businesses cannot borrow when there
is no collateral.
I am here today testifying before you representing the
effect your decisions are having on everyday hard working
Americans and small business owners like myself and countless
other Americans. We have to end this before the backbone of
America breaks. This backbone is small business owners. The
backbone is entrepreneurs. The backbone is hard working
Americans. Let us put America back to work.
[The prepared statement of Mr. Ford follows:]
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Chair Landrieu. Thank you.
Mr. Withee.
STATEMENT OF CHARLES WITHEE, PRESIDENT, THE PROVIDENT BANK
Mr. Withee. Yes. Thank you, Chairwoman Landrieu, and thank
you to my Senator Shaheen for having me here today. I am Chuck
Withee, the President of the Provident Bank, a commercial
community bank up in New Hampshire and Massachusetts. We, too,
are a small business--we are 130 employees--so we share in the
concerns, the deep concerns of the small businesses around the
table here.
And the 7(a) loan program and the 504 loan program are the
backbone of what we do at the Provident Bank. Oftentimes, very
promising businesses come forward, have a lot of promise but do
not have all of the attributes that traditional lending serves
and we use these programs to help them get over the finish
line.
Currently, we have 12 loans representing $2.7 million in
limbo, just like Mr. Leh had indicated, very similar stories
and very tragic stories because these companies are not large
corporate America that have lots of cash on the balance sheet
to sustain. They live day-to-day. They wonder how they are
going to make payroll. They wonder how they are going to keep
the lights on. And we are there to try to help with that. This
government shutdown is impeding that process.
I am also very concerned about the shutdown temporary move
forward. I hope it happens. I hope it happens today. But I am
concerned, also, with what is coming up. February is the next
deadline. This creates a lot of uncertainty. There are a lot of
people that are affected by this. That uncertainty is going to
affect that in the future, and you can rest assured that that
uncertainty is going to have an impact on our economy given the
size of small business in that economy, and that is really why
I am here today, folks. Thank you.
[The prepared statement of Mr. Withee follows:]
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Chair Landrieu. Thank you very much, particularly focusing
on the uncertainty, which is very important.
Mr. Paul.
STATEMENT OF RONALD D. PAUL, CHAIRMAN, EAGLE BANCORP, INC.
Mr. Paul. Chairwoman Landrieu and distinguished members of
the committee, good afternoon. My name is Ron Paul, no
relationship to Senator Paul nor Congressman Paul.
[Laughter.]
Mr. Paul. I am Chairman and Chief Executive Officer of
EagleBank, a well capitalized, profitable $3.5 billion
community bank headquartered in nearby Bethesda, Maryland. We
are a very active lender with strong loan growth of 21 percent
in 2012, a $3 billion loan portfolio, and we pride ourselves in
having an average loan size of under $2 million. Our mission is
focused on lending to small businesses.
We are very active in SBA lending. We are a preferred SBA
lender and rank number one among banks headquartered in
metropolitan Washington, D.C. Nationwide, SBA lenders close
nearly $100 million in loans every day. Right now, the program
is frozen. At EagleBank, we have over 30 new SBA loans in
process totaling $37 million, but we cannot proceed because the
SBA has closed its doors. And when they reopen, there will be
uncertainty as to when loans will be ready to close, since we
do not know how big of a backlog there will be.
Among others, government contractors and their
subcontractors and vendors are not being paid. If you are a
small business, a janitorial service or an IT consultant, you
typically do not have capital and reserves to carry your
employees and overhead. The result: Closed offices and laid off
workers.
The furloughed workers at a security company and the
restaurant across from a government center and each of their
employees just lost all their income. They no longer have
disposable dollars to go to the local hardware store or local
restaurant or local clothing store. Remember, this lost income
can never be recovered. The government leases millions of
square feet from the private sector. If the shutdown continues
into November, these rent checks will not come in, but the
developer's loan payments are still due, potentially resulting
in loan defaults and credit quality issues throughout the
banking industry.
Another consequence of the shutdown is the impact on
nonprofit organizations. Because of the shutdown's tourniquet
on funding, one of EagleBank's customers, a youth center in the
District of Columbia, had to furlough 90 of its staff of 145
people. The ripple effect is enormous. That is just dealing
with the shutdown.
Now add all the potential consequences of not raising the
debt ceiling in time. If Congress does not act within days,
interest rates will go up, resulting in the likelihood of small
businesses being less able to borrow money and at higher costs.
Investment values will come down. Confidence will be severely
shaken. And the nationwide uncertainty resulting from any
short-term ``kick the can down the road'' and non-legislation
will be devastating. Consumer confidence, already shaken, will
dramatically fall.
At EagleBank, we have let our customers and the local
community at large know we will work to help them in their
short-term cash flow needs, but every customer we work with who
does not make a loan payment timely results in us having less
cash to lend to our other customers. As interest rates rise
because of concerns over the stability to the United States,
the value of our investment portfolio and, therefore, our
ability to borrow to fund loans, goes down.
It is our hope, for the sake of small businesses and their
workers nationwide, the fuel of the nation's economy, that
Congress can find a way to reopen the government and enable
people to get back to work.
Thank you for the opportunity to speak today and I look
forward to any further questions.
[The prepared statement of Mr. Paul follows:]
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Chair Landrieu. Thank you very much.
I am going to start with one question and throw it out, and
if you want to be recognized, just stand up your placard, and
then I am going to ask each colleague to take a turn, as well.
Let me acknowledge Senator Hagan and Senator Shaheen that
are here. We did opening statements. Would you prefer to wait
for the questions? Okay.
You know, some of our colleagues--first of all, let me say
that all of your testimony was very, I think, critical to the
immediate issue at hand and very compelling, giving me and the
members that are here and others that are watching a great deal
to think about.
I have heard some people in Washington describe the
government shutdown as a pinprick to the economy. I did not
hear that today from any of you. Would any of you like to
comment and just elaborate and underscore that what is
happening is a great deal more than a pinprick, or how would
you describe what is happening to you if it is not a pinprick?
Go ahead, Mr. Griffall.
Mr. Griffall. I would be happy to address that. I have seen
a number of studies, and particularly the tourism industry is a
major driver in 44 of the 50 States, and as an economic driver,
the U.S. Travel Association released a new analysis that shows
that this pinprick is now costing this travel industry $152
million per day, and that is growing very quickly, and it is
affecting as many as 450,000 Americans who have jobs in this
industry.
The National Tour Association did a quick survey after it
started and showed that effects were felt in all but four of
the States by their 3,000 members, and these effects are
dramatic, immediate, and unrecoverable.
But more importantly, this type of manmade crisis does
create immediate effects for small businesses and all of their
employees, but it creates long-term effects which everybody has
talked to here that can even further depress the travel market
going into the future. Travel is our number one services
export, and we have a number of emerging markets, such as China
and Brazil, that are increasingly coming to America. We have
finally started a Brand USA Program. This is about two years
old and it is just starting to make an effect. This will have
long-term, lasting negative effects on all of those markets,
and certainly all of the thousands of small businesses that are
parts of this industry.
Chair Landrieu. Mr. Leh, how would you describe it? Does it
feel like a pinprick to you?
Mr. Leh. No, it is definitely not a pinprick. I think what
is really important to convey as a small business owner is
you--when you go and borrow large sums of money, you put up and
collateralize everything that you own in the world. Everything
that I worked for my entire life is behind that loan. With the
uncertainty that is being created right now, if interest rates
go up one percent on the size loan that I am dealing with, over
the life of my loan, that is $76,000. That is an employee. That
may be me not being able to cover the bank note. That may be me
losing my house. That is just one percentage point.
So, we go through this game in Washington where every time
it is time to decide whether or not we are going to raise the
debt ceiling, we argue about it. It is ridiculous and it has an
immediate impact on our ability to not lose everything that we
have put forth and risked.
So, in my particular situation right now where I had an
excellent program to finance, if the interest rates go up two
percent, I may not be able to do it anymore.
Chair Landrieu. Thank you, Mr. Leh. Excellent.
Ms. Robertson. We are going to do this quickly and then I
am going to turn it over and then get Mr. Paul, and then we
will ask some more questions.
Ms. Robertson. Sure. Very quickly, I am at ground zero in
terms of the government shutdown, being right here in the heart
of the D.C. and the metropolitan area. We see in the newspaper
yesterday two large defense contractors announced that they
were going to reduce their upcoming layoffs to 5,000 people.
Those people are not going to get back pay once they are gone.
They are going to have to pay for benefits out-of-pocket. They
are not going to have money to spend on day care, on
entertainment. All of that trickles down to our Main Street
businesses.
And the reality is that the conversation has been going on
for months about the shutdown, about the problems, about the
debt ceiling. CEOs have been taking that into account for
months. They have been making quiet cutbacks. They have been
making layoffs. They have been making furloughs. So our economy
has been suffering for months in this particular area.
Our lending activity is down 30 percent from last year.
That is a very large number. That is small businesses that are
not buying buildings, that are not buying equipment to expand,
that are not going to create jobs.
So we think that this is much bigger than a small pinprick.
We think it is a very major problem.
Chair Landrieu. Thank you.
Mr. Paul.
Mr. Paul. Thank you. I do not also believe it is a
pinprick. I think it is the beginning of a hemorrhage. I think
that what we have experienced over the last couple of weeks,
the number of phone calls that the bank has received from
hundreds and many, many of our borrowers, making sure that they
have their lines of credit that are available to them, has
resulted in the bank making sure that we have our own liquidity
that is available to us to continue to fund these lines of
credit.
I think that if you fast-forward this, if we should get
this passed through February, what is going to happen between
now and February, I think, is going to be equally as ugly as
what has happened over the past couple of weeks. We have a
situation right now that the consumer is going to be sitting
and saying, you know what? We are not going to go out for
dinner. We are not going to go to the movies. We are not going
to go to a show. We are not going to buy a house. New home
sales will dramatically be impacted because you will have
people over the next three months that are going to be so
paranoid about what is going to happen.
I think it is an absolute embarrassment to this country. I
think that the trickle-down effect has yet to be felt. I think
the economy that is finally starting to get on its feet will be
devastated as a result of this kicking the can down the road.
Thank you.
Chair Landrieu. Let me get the other three of you, but
about the pinprick, stay on that, but also talk about some
people around here are saying, well, we will pay the Federal
workers back pay and that will supposedly solve the problem or
make the problem go away. So when you answer this, talk about
that because I think that is missing a big point, that some of
your small businesses, they are not going to be in that payback
discussion. I do not think they are included in that.
Ms. Smith, is that what you are hearing?
Ms. Smith. Yes, I am hearing that, as well, and yes, it is
more than a pinprick. We have companies decreasing in revenue.
We have many small businesses that may have to close their
doors. Small businesses, we are the lifeline of the economy and
the key to recovery. So, yes, it is definitely more than a
pinprick.
Chair Landrieu. Mr. Withee, and then Mr. Ford, and then I
am going to go to the others for questions.
Mr. Withee. Yes, I would agree it is much more than a
pinprick unless it is a very large pin.
[Laughter.]
The majority of the employment in this country is by small
businesses like the people we have around this table and like
many of the clients I have at the bank, and two-thirds of the
economy is consumer-driven. It was mentioned just a moment ago
about the uncertainty creating problems with that part of the
economy, and I believe that is real and I believe that is
large. So this really is not a pinprick.
Chair Landrieu. Mr. Ford.
Mr. Ford. I certainly agree, and to your point, Senator,
small businesses will not be paid for the work that we have
lost now. That is lost revenue. That is going away. That will
not return. If we look at contracts that we have, as soon as we
do go back to work, those contracts will have to be modified
because those contracts have deliverables that are time-based,
so that means those contracts need to be modified which further
delays the process because have to get new contracts, and
again, that will not be paid.
If you are an 8(a) company--we are a graduated 8(a)
company--if you are an 8(a) company, that time that is lost is
lost. You will not get that changed. So if I am an 8(a)
company, I would be concerned because that time is not coming
back.
If we look at the concept of a pinprick, we are talking
about when we had to lay people off and you have to look in the
eyes of somebody that you know you have a family--I know about
the kids of the people that we had to lay off. These are people
that came to our corporate picnics. That is not a pinprick.
When you are talking about people who may have to go on
assistance of a government that they do not trust anymore, they
also lose confidence in small businesses, which are the
innovators of America. That is not a pinprick.
We look at the fact that, I think as you talked about, my
line of credit is based on the creditworthiness of myself and
my partners. Everything I have had over the 14 years has been
put into this business. My home has been put into this
business. That is what my banking friend here used as
collateral. If I go out of business, everything that my three
kids that I am working for goes away immediately. This is not a
pinprick.
Chair Landrieu. And nobody is going to reimburse you for
this.
Mr. Ford. No.
Chair Landrieu. There is no bill to reimburse----
Mr. Ford. There is no bill for this at all.
Chair Landrieu. All right. Senator Heitkamp.
Senator Heitkamp. I am struck because we are talking not
only about the shutdown, but we are also talking about this
uncertainty about the debt limit and what interest rates--how
they all affect all of you.
Now, on top of hearing that it is a pinprick, I am sure you
have also heard that there are a number of amateur economists
out there who have been telling us all that the debt limit can
be managed by simply paying our interest. The debt limit--those
are false days and we do not need to worry about it. We
recently had a hearing in the Banking Committee where we heard
from the Realtors who told us that they believe that if we miss
this default deadline, home mortgages will go up at least one
percent, if not more, and we are already seeing our Treasuries
being discounted, maybe as high as almost 70 basis points.
And so my question is to all of you that we include in this
discussion, as you have, about what the debt limit means and
this constant uncertainty, and I really would appreciate
comments on the proposal, which a lot of you have referenced,
of only going out to February as opposed to looking at a long-
term deal and really encourage you to encourage us to look at
something much longer than that to give you the certainty that
you need. And so anyone who wants to comment on the debt limit,
I would appreciate that.
Chair Landrieu. Mr. Singh.
Mr. Singh. Being that we are in a start-up world on the Web
where things are venture-backed, uncertainty is a part of what
we sign up for, in some sense. But we do assume that the full
faith and credit of the U.S. Government is something we do not
have to be uncertain about. The decisions that investors make,
and the decisions that the capital markets make, reflect on
what start-ups get founded. They reflect on whether they happen
in this country or whether they happen somewhere else where
there is more confidence.
I find it to be--especially when this is manufactured
crisis leading into manufactured crisis, that these are things
that we can control. It is somewhat callous, I suppose, to call
it a pinprick to the people who are directly affected; whether
that means they are on government assistance and they cannot be
part of the economy because they do not have any income anymore
or whether they get laid off from their job.
But, also, further down the line, all those people are
engaged--all these small businesses are directly affected by
the products that other small businesses are producing. So
there really is this domino effect where it is not just the one
business shutting down. It is the five or six other businesses
down the chain that it affects.
Chair Landrieu. Ms. Firestone.
Ms. Firestone. Thank you. I think my comments are more
related to the short-term fix. My company was awarded a very
large contract in October and, as a result, it is expected that
we will hire a lot of people, which is great for the economy,
but do I have the confidence to hire new staff knowing in three
months we face another shut down, then what happens to a
business I have worked 16 years to grow? We have a large
payroll and hire doctors, nurses, and analysts. There is a lot
of competition for that talent. And now I am faced with having
to hire, which is a really good problem, but on the other hand,
how are we supposed to handle that in three months if we have
to let them go?
Chair Landrieu. And, Ms. Firestone, just for the record,
what would you pay a doctor or some of your medical
professionals, like the range of what you are offering people
in that contract?
Ms. Firestone. Our average salary for our nursing staff, we
do--we have nurses across the country--is somewhere in the
range of $70,000 is an average salary, and the physicians, as
I--it is probably twice that.
Chair Landrieu. Unbelievable.
Mr. Griffall.
Mr. Griffall. As I have stated many times, it is just hard
to overestimate the pain this causes to a lot of people. But if
we do not assure the American people, and particularly the rest
of the world, that this is not going to be a recurring event,
we will have absolutely no confidence in traveling to America
or even dealing with America if we get a little farther than
that, and that has been a giant issue.
Haybina Hao, who sells tourism to China--she used to be an
employee of mine, she now works for the National Tour
Association--she said, ``compared to other countries that
utilize creative ways to lure Chinese tourists, the U.S.
shutdown will shatter the confidence of international travel
companies, and that has been shown again and again, that when
we have bad events here, it creates long long-term effects that
will obviously affect all of us.''
But most importantly, we need to assure everybody that this
is not something that is going to continue, because if we have
to do that every single time we go through this process, we
will have no confidence to buy anything in America, but more
importantly, travel is a seasonal business. Most of the
companies I deal with, which are all small businesses, make
their money very quickly in three or four months. Those
businesses have to have that profit in order to make it to the
next year. So not only are we not going to be paid back wages,
these companies may not survive to the next year when they are
already planning for that travel season.
Chair Landrieu. Well, I know there is never a good time to
go through what we are going through, but you can think about
the particular months of November and December--October,
November, and December--being very substantial retail months,
which everyone is aware of. You do not need a special degree to
understand that. And that is the season that we are coming to.
Let me get Mr. Withee and then we are going to turn to
Senator Shaheen for her question.
Mr. Withee. Okay. Mr. Singh is absolutely right. Investors
and bankers make decisions on certainty and predictability, and
you can just walk down the hall and talk to your friends at the
FDIC and the OCC if you want clarification on that. But before
the shutdown, our bank, like Mr. Paul's bank, experienced
record loan growth, and we are a commercial lender, really, by
trade, and that means that small business had a lot of
confidence and wanted to invest and wanted to borrow to do that
investment.
I am very concerned about this temporary fix, because that
confidence is going to go away. And what has started to become
a real energized recovery is going to be stalled and, I fear,
worse than that, that you can lull back into recessionary
times, which would be really unfortunate because I heard
earlier the term ``manufactured,'' and this is a manufactured
problem, and that is too bad and I would like to see it end.
Chair Landrieu. Senator Shaheen.
Senator Shaheen. Thank you very much, Chair Landrieu, and
thank you for holding this hearing, and thank you to each and
every one of you who are here representing your businesses and
the small business communities in your States.
I have heard from so many small business people in New
Hampshire, which has 96 percent of our employers are considered
small businesses, who are experiencing the same kinds of
challenges that you have talked about today. I want to
especially recognize Chuck Withee, who is the President of
Provident Bank, which has four branches in New Hampshire and
does a great job of lending and participating in the SBA
lending program, so thank you for being here, as well.
I want to make a point of saying to all of you that I think
everyone of us here are as frustrated and upset about the
irresponsible and reckless behavior on the part of some members
of Congress that have led us to this point. We all believe we
need to start the government back up immediately, that we need
to put in place a long-term solution to raise the debt ceiling
so that we can reassure not only people in this country but
around the world that America is going to pay its bills, and
that we should end these manufactured crises and get on with
the business of governing the country. So please know that
every one of us here is working toward that end and very
distressed, as I know all of you are.
Chuck, I want to go back to your initial testimony where
you talked about some of the loans that are being held up
because of the shutdown. Do you also have new borrowers who are
coming in the door who you cannot help? And when you look at
the kinds of projects that they are looking for help on, do you
expect those will be able to continue after the shutdown, that
you will be able to help them, or are we looking at a long-term
impact for the people that you are working with?
Mr. Withee. Well, that is a great question. We are seeing
continual need for the SBA loan program. Just because of the
shutdown does not mean people were not coming in after. The
numbers I gave you were actually in the process and were
stalled. There are a number of folks looking at business
acquisition opportunities, permanent working capital and
equipment that are stalled, as well.
What do I see? I see perhaps some of those still coming
through, but others not, because day in and day out, if it is
for permanent working capital and weeks on end go by,
opportunity goes by, as well.
I also worry about one in particular that is the purchase
of another business, owners that are retiring. They could sell
out to a large concern. If they sell out to a large concern,
then the employment goes away, basically. But if they sell out
to another like-kind small business, they are likely to keep
the employees. Well, you know, a purchase and sale can lapse
and renegotiation can occur and then all of the sudden, the
game is changed for both small businesses, and everybody around
this table knows what I am talking about. So, you lose
credibility if you cannot deliver, right, so that is a big
problem.
Also, we embarked on a microloan program. In fact, we hired
a specialist to take this on and was literally about to launch.
And it is really $10,000 to $100,000 loans for the micro small
businesses of the world, and everybody around this table knows,
at some point, you were there. And we had a very abbreviated
process. We were about to launch it literally, literally, this
week, and we have stalled that because it is based on the use
of the 7(a) loan program. And that is real. That is a real
issue. And that is problematic. Do I see that coming back,
Senator Shaheen? I do, because we really want it, but it is
predicated on the U.S. Government getting back to work and the
SBA loans being available.
Senator Shaheen. Thank you very much.
Chair Landrieu. Senator Cardin.
Senator Cardin. Let me thank you all for your comments and
putting a face on the issue. You hear the numbers, you hear the
thousands of people and hundreds of thousands of people and
millions of people, but until you can put a face on it so
people can recognize it is their neighbors, it is their
community that has been impacted, it makes it difficult. So, I
would just urge you to--I would be interested to more of the
specifics about those companies that have not been able to
complete their loans and the impact it has on their economic
growth and their future.
You talk about consumer confidence, which is a driving
force in our economy. There have been studies done that show
that as a result of this manufactured crisis, consumer
confidence has been more adversely affected than in any of our
natural disasters, that is worse than the attack on our country
on 9/11 as far as the consumer confidence issues.
And the challenge here, and what I really want to get you
engaged, is that, yes, we want to make sure government is open.
We want to make sure we do not default on our obligations. But
the best case scenario right now, knowing where we are on this
date, is that we will work out some short-term solution keeping
government open and paying our bills and to negotiate,
hopefully, a budget agreement. If that happens, the pressure is
going to remain on Congress to get a budget agreement so that
we eliminate this short-term governance from crisis to crisis.
Consumer confidence will only be restored if they believe that
we have our act together here.
So, I would just urge you not to leave the debate later
this week, if we are successful in getting government open and
not defaulting on our debt, but to get engaged in the process
of working out a budget agreement for this country. And I agree
with those of you who said, look, you have got to come
together, Democrats and Republicans. Democrats are not going to
get their way. Republicans are not going to get their way. But
those who say they will not compromise are the ones who are
driving this country on the brink of disaster. We have got to
be able to make the system work and compromise and get things
done. So, I would just urge you to do this.
Let me just reinforce the point that you made, Mr. Withee,
in that the small company that will not get its microloan and
may have discovered a new way of innovating in cybersecurity or
a new way of innovating in the service industry, that is
competitiveness that is forever lost in America. And that young
scientist who might have gone into NIH and might have gotten an
award this year, but because of the government shutdown that
award was not coming, who chooses to go to a different field or
a different country, that is lost forever in this country. So
we have hurt ourselves. There is no question about the
permanent damage that has been done to individual businesses
and to the competitiveness of America.
But we all have a responsibility to figure out a way to get
beyond this. And as frustrating as it is for you, believe me,
it is just as frustrating as it is for us. I agree with Senator
Shaheen. I really do not understand how people could deny
government staying open and paying our bills, why they would
want to put that threat on America. But we are where we are.
So, I guess my comment, if anyone wants to further identify
the type of companies, I think that would be helpful. Put more
of a face on this. Let us know the types of businesses who
cannot get loans as a result of this and what that means in
Rockville. Make it as personal as you can to your community.
That would be helpful to us.
Chair Landrieu. Mr. Paul.
Mr. Paul. First, thank you for all the great work that you
do in our great State of Maryland.
One topic that I think is important, as you have all heard
from the small business owner, is that they have put up
everything that they have in order to borrow those funds. Well,
as we all know, in 2008 and 2009, when the value of real estate
plummeted, there was very little equity remaining in their
homes. So now, which I believe will happen over the next few
months, especially if we are just kicking a can down the road,
consumer confidence is going to drop. The value of homes are
going to go down and that home equity is going to dissipate. So
what happens to that customer, what happens to that borrower,
that is looking to start its own business, or maybe a current
borrower that is currently looking for that SBA loan right now
that does not have the equity in their home any longer? So, all
of a sudden, that equity that they have always been able to
leverage against, which is what this country has built itself
upon, being able to borrow through the net worth of what you
have, which is primarily your home, goes away.
So, I just believe, and I am not an economist, but I
certainly speak to enough that I do believe, interest rates
will go up. I think whatever appreciation we have seen in real
estate values are not necessarily as a result of real estate
values going up, but the fact that you have interest rates
going down and, therefore, their ability to buy homes has
increased. But when that equity drops and interest rates go up,
I think that you will be back to a recessionary discussion in
terms of the slowdown in our economy.
And you are absolutely right. This is not a Democratic,
this is not a Republican, issue. This is a U.S. issue. And I
think that the embarrassment that we have caused ourselves, who
knows whether or not the--we all know, listening to Chairman
Bernanke in terms of how we artificially have dropped interest
rates, where we have only been able to artificially drop
interest rates because our international friends have been
willing to buy our debt, are they going to continue to buy our
debt under the current circumstances that we are in? I think
not at these current levels. It is just not worth the risk. So,
therefore, I think that will be one more reason that rates will
go up. So, I think this is as much of a macro issue as it is a
micro issue.
Chair Landrieu. Thank you. Ms. Robertson and then Mr. Ford,
in answer to Senator Cardin's question about the face on people
and the impact.
Ms. Robertson. Thank you. I have a couple of 504 stories
that I would like to share with you. One is a borrower in
Owings Mills, Maryland. They are constructing a new Holiday Inn
Express, which will create 20 new jobs. They have been through
all the due diligence for a new construction project. Their
loan application is sitting at SBA waiting for approval. They
cannot break ground. This is a business dependent on the
tourist season. If they do not break ground shortly, their
hotel will not be built in time to take advantage of the
tourist system [sic]. They are going to be facing major losses
their first year in business. That is certainly a very
detrimental thing for small business.
I have--a couple of my colleagues shared a couple of
projects in Massachusetts. One is for an existing 504 borrower
that is purchasing a second location for expansion. They are
buying a building that is currently in foreclosure, so it is an
unutilized building, so it is bringing a building back into the
economy. They have posted a $149,000 deposit that they will
lose along with the opportunity to buy the building at this
discounted price and 25 new jobs that would have been created.
We have another in Hyannis, Massachusetts, that is a
printer buying a larger facility. He needs a new and bigger
printing press that will not fit in his current space. He has
got a $35,000 deposit on the building and another $35,000
deposit on the printing press. If he cannot close by November
4, he loses the building and then he has to cancel the order
for the press because he has no place to put it. So, there is
$70,000 he has lost, two jobs for his business, and those are
good paying pressmen jobs.
So, there is a lot of impact all over the country for small
business owners. I mean, we can come up with a lot more
stories, but it is just incredible.
Chair Landrieu. Well, and I would just add--and Mr. Ford, I
will get you in a minute--the loss of the machinery and the
buildings is heartwrenching and really devastating to families,
but the loss of faith in their government, it is hard to
measure.
Mr. Ford.
Mr. Ford. I will be quick on these other populations.
Senator Cardin, you talked about technology. We are looking at
programs, the STEM program, where we as a country are woefully
behind in the technology area. Those programs are not being
funded. People that are doing research and development in
cybersecurity, where we want to protect our country, those
companies are going out of business.
Small Business Innovation and Research, SBIRs, that have
done incredible things to advance this country are not being
performed right now, and so those companies that are focused in
those areas right now are companies that are going out of
business. Companies that are moving the needle for this country
are not being supported. Those are some of the faces that are
being impacted by this country.
Chair Landrieu. Senator Hagan. And we are going to close at
four o'clock. We have about ten more minutes.
Senator Hagan. Thank you, Madam Chairman.
This is a very important meeting and I think everybody
here, and I hope the nation, understands how we feel that this
is a manufactured crisis that does not need to take place. And
it is, from my standpoint, very disturbing to hear the stories,
the real stories, that are happening across the United States
each and every day, especially with our small businesses.
Mr. Singh, your comment about the risk that you take in
your business is a risk that you are willing to take, it is a
calculated risk that there are going to be good days and bad
days, but you should not have to calculate into that risk
whether the United States Government is true with its full
faith and credit of the debt and the borrowings that we owe.
Like, that should not be a part of the equation at all or ever.
And, Senator Landrieu, your comment, too, along with Mr.
Griffall about, from a tourism standpoint, the seasons, you
know, in North Carolina right now with the national parks
closed, there is a report that has just come out that said the
Great Smokey Mountains National Park, just the first ten days
of that closing has affected $33 million in lost revenue just
in the Western part of North Carolina. You add that to the
fishing off the coast of North Carolina and the campgrounds
that are closed in our national parks and the number of
visitors that were going to go hike in our national parks, stay
in the local hotels and restaurants, and they are not doing
that. I mean, why go when all of those areas are closed for,
once again, an irresponsible, manufactured crisis? This is not
the floods in South Dakota or the snow. This is something that
we should be able to take care of without a second thought.
Ms. Smith, in North Carolina, we have the third-largest
military footprint in the nation, and I know we have got about
eight percent of our population is employed as civilians by the
Department of Defense, 416,000 jobs. Following Secretary
Hagel's decision to recall most of these furloughed workers, do
you have any understanding of how the Department of Defense is
providing guidance on any--on how they intend to proceed with
new contracts that are currently in the pipeline?
Ms. Smith. I know some contracts are put on hold. We have a
job fair on the 22nd of October and we are getting ready for
some of these contracts that are going to come out real soon. I
mean, then the furlough happened and we are just going to go
ahead and just hold the resumes because there is nothing else
we could do with them. So, a lot of contracts are definitely on
hold. That is what we are getting.
Senator Hagan. And, once again, that has such a detrimental
impact to small business.
Chair Landrieu. Yes, it does. Does anybody want to comment
on the Department of Defense, and I think the reason the
Senator asked, not only is it important, of course, in her
State, but it is such a huge buyer of goods and services. And
what I think we are trying to get people to understand is even
if every Federal worker came back to the Department of Defense,
but if you do not give a signal to your contractors, which are
your partners, I think, in this--in every department, but
particularly in this department it is significant. Maybe, Mr.
Ford, you want to comment, and then Mr. Paul, and then I am
going to end with one question.
Mr. Ford. Yes. I mean, I think--as you know, being a DOD
contractor, the excellence that you need to provide is high. We
are talking about protecting the warfighter. The uncertainty
that we face is what services that they need to support. I
mean, as we look at as warfare has changed, it is the reliance
on people and technology and processes that DOD requires to
ensure that our warfighters have the best that they have to
offer. But when we talk to our DOD clients, they are telling
us, you need to wait because we do not understand what we can
do, and that is the most difficult part, because we have been
engaged over the last year to 18 months in what types of
services we can offer to them and they obviously like various
contractors--we would not be here--but they do not know how to
proceed.
I guess, as Mr. Singh said, we do not mind uncertainty, but
it needs to be certain on one side or the other that you know
you need the services, you do not know when, and you do not
know how, and that is just very difficult----
Chair Landrieu. And we do not have a budget.
Mr. Ford. And we do not have a budget.
Chair Landrieu. We do not have a budget and have not had a
long-term budget.
Mr. Paul, and then I will get Senator Shaheen for a
question----
Mr. Paul. Just very quickly----
Chair Landrieu [continuing]. A comment.
Mr. Paul [continuing]. We all know how important the
construction and homebuilding industries are to our economy,
and the BRAC realignment that has taken place in the State of
Maryland is enormous. We have a number of construction jobs
that have taken place in areas throughout the State of
Maryland, and what we see very quickly is a drop in draw
requests that are happening from the homebuilders, because they
are not being able to have the home construction and the home
sales taking place. So, clearly, right away, we are seeing in
just over the past few weeks a drop in their draw requests due
to demand in housing.
Chair Landrieu. Senator Shaheen.
Senator Shaheen. Thank you, Madam Chair.
I just wanted to make a point for all of you who are
involved with government contracting with the Department of
Defense that this is not the first hit that folks have gotten,
that this comes on top of sequestration, those automatic cuts
which have already had a huge impact in the State of New
Hampshire. The defense base accounts for 17,000 employees,
about $1 billion in payroll and economic activity. So it is a
huge impact and this is really a double whammy.
Chair Landrieu. Excellent point.
I am going to end with two questions, very briefly, and the
first to Mr. Singh, and if anyone else wants to chime in. I
think a lot of people up here, besides thinking this is a
pinprick that is not really hurting anyone, it will go away
shortly and we will be back on the road, which I think you all
have dispelled in your comments today very well, but a lot of
people are also saying, well, shutting down the government is
saving the taxpayer money. Could you please explain from your
perspective how that is absolutely--this is not saving the
taxpayer any money, talking about maybe a few of the businesses
that you know that are now closed down that, if let to operate,
could actually save the taxpayer money, but they are being held
back.
Mr. Singh. Sure. I mean, I think, first off, if you are
going to give back pay to all of the people you are just not
letting work, then that is not really saving a whole lot of
money. It is just making their lives harder.
We work with building efficiency and we are seeing that for
a lot of folks who might want to get loans to invest in
improving their buildings, they are not going to be able to get
loans so easily right now. They are not going to want to think
about it. There is an entire network of small businesses that
want to help improve efficiency in this country. If they cannot
rely on small businesses, they cannot basically vitalize or
revitalize this sector of the economy. You know, we rely on
growth as our mechanism for moving things along. We cannot just
say everything is okay as is, particularly in these areas where
our country really needs improvement, not just from an economic
perspective, but from an environmental perspective, from a
social perspective.
All we are doing is delaying our ability to implement
change and to implement improvements. We have found that for
folks we are talking to who would be interested in engaging
with these sorts of activities you know, they might still be.
We think they still will be in the future, but it is just on
hold for a while and we do not really know for how long.
Chair Landrieu. Ms. Firestone, let me get you to answer
that and then I am going to end with one question to Mr.
Griffall.
Ms. Firestone. Thank you. I think one of the ways, as you
saw in my testimony, we save money every day that we work. We
are in the business of efficiency. And just to kind of give a
face to how deep this ripple effect is, we have injured
civilian employees who are unable to get doctors to treat them
because they do not trust that they are going to be paid by the
Federal Government. So, as long as we cannot implement our
programs, we cannot do what we do best, save money, save lives,
and improve productivity.
I was just handed a statistic that astounds me as far as
the pinprick. There was a study that just came out from the
Economic Policy Institute that said that they are predicting
about 900,000 were lost since 2009 as a result of sequestration
and budget uncertainty. To me, that is not a pinprick. Thank
you.
Chair Landrieu. Thank you.
And let me put into the record, and then I will end with
one question, this is, ``The Government Shutdown Could Be
Expensive for Taxpayers.'' It says, ``The answer might not be
what you expect. Many experts estimate the shutdown will cost,
not save, taxpayers and the bill could be steep. The last
government shutdown in 1995-96 cost $1.4 billion. That is more
than $2 billion in 2013 dollars.''
Now, that is just a short-term shutdown. That is not the
default on the good faith and credit of the United States. That
is not the lack of a long-term budget. It is a very serious
situation.
Chair Landrieu. And my final question, because so much of
the press has been focused about big cities, and around the
beltway. Mr. Griffall, the testimony that I read in preparation
for this hearing tells a little different story. It is not just
the pain in big cities, in suburbs, but can you talk about
rural areas and what you are seeing from some of your folks.
And I think there was pretty riveting testimony about a small
little town in Utah where they had, like, only 500 people in
the town and they have already lost 60 percent of their
revenues, the whole town.
Mr. Griffall. Unfortunately, that is an easy question to
answer. Yes. This, I guess, if you looked only at big cities,
you would certainly see a lot of government losses, and they
are very real. A lot of people are hurting.
But in the tourism industry, most of the beautiful, scenic
areas in America are in rural areas and the gateway cities to
the national parks, national monuments, and national recreation
areas typically are built around these absolutely fantastic
scenic areas, and there are many towns, and I will talk about
out West at this point, but believe me, they extend all across
the country, everywhere from Michigan to North Carolina to
Louisiana, but there are many small towns very specifically
hurt by this.
And the town you referred to, Senator, was Springdale,
Utah. They are literally on the edge of Zion National Park.
Their entire business is, unless you are a retired Californian
and moved there, is the entrance to the national park. And this
national park was closed.
I will make a real quick footnote that if you are wondering
why the taxpayers are suffering from this, the taxpayers of
Utah, through the good leadership of our Governor, Governor
Herbert, have now donated $1.7 million or so to the Federal
Government to open these national parks for ten days because it
was recognized that many of these towns in Southern Utah have
no other source of income. And they--I can go to Springdale,
Utah, Tusayan, Arizona, right outside the Grand Canyon, you do
not go there unless you are going to the Grand Canyon. And when
they shut that road through there, which they did after a
couple of days, Tusayan, we as a small tour company had to
cancel four different tour programs for the Best Western in
Tusayan. That means that money will never be recovered by them.
Nobody else was coming there to take those rooms.
Moab, Utah, I talked to Marian DeLay. She is the Director
of the Travel Council there and she did her own informal
survey. They have 500 businesses in Grand County, Utah, that
are tourism-related, and those are all small businesses, and
she estimated in the first ten days of this shutdown they lost
$10 million in revenue. Now, these are small businesses and
they will not recover that.
Chair Landrieu. Small businesses in small towns very
focused, very focused----
Mr. Griffall. Absolutely. Mariposa, California--it goes on
and on. There are plenty of them.
Chair Landrieu. Well, thank you all. Our time has come to
an end. I really, again, appreciate the members.
Senator, do you just want to add?
Senator Shaheen. Well, I was just going to pick up on what
Mr. Griffall said about Zion National Park, because we have a
small business in New Hampshire called New Hampshire Gold which
is a maple syrup company. They have four employers [sic]. They
have their products in the store at the entrance to Mount Zion
and they are very concerned about the lack of revenue because
of the shutdown of the park. So----
Mr. Griffall. Well, and shutting down New Hampshire in
October----
Senator Shaheen. Is also a big concern.
Mr. Griffall [continuing]. Is pretty obviously a very, very
difficult thing.
Senator Shaheen. But, as everybody has pointed out, it is
not just the immediate effect. It is that ripple effect that
goes across the economy----
Mr. Griffall. Across the economy.
Senator Shaheen [continuing]. That is really at stake here.
Chair Landrieu. Your voices have been very important for
the businesses you represent and a very important sector of our
economy. Thank you very much for giving your time and your
effort and your thought.
This record will remain open for two weeks. I am hoping the
government will be open in two weeks to receive this testimony,
and our committee will continue to work where we can.
Thank you, and the meeting is adjourned.
[Whereupon, at 4:10 p.m., the committee was adjourned.]
APPENDIX MATERIAL SUBMITTED
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