Veterans Get Cost-Of-Living Adjustment

First off, let me wish the United States Marine Corps a very happy 236^th birthday. And to all of our veterans out there, (hope you had) a great Veterans Day. Thank you for your faithful service to this country.

As promised, here is a quick rundown on the key legislation from last week.

Last Wednesday, the House unanimously passed a cost-of-living-adjustment for veterans. This is the first time vets have seen a COLA since 2009 and it’s long over due. The President finally signed it into law yesterday, so it’s official. There will be a 3.6 percent COLA next year.

The House also passed two more bipartisan pieces of legislation designed to facilitate sustainable, private sector job creation.

The first is aimed at helping small companies raise private capital. It doesn’t involve government grants, or loans, or guarantees or anything that is going to cost the taxpayers money. It allows small companies to take care of themselves.

In short, when small businesses are thriving and want to dramatically increase the amount of capital they have to invest, they have two options. They can borrow money from banks or they can decide to offer shares to the public at large.

It’s the same basic process that we hear about with big companies “going public” all the time, and raising hundreds of millions, if not billions of dollars by selling shares. Yet it’s pretty rare to hear about smaller companies “going public”.

That’s primarily because the legal costs of “going public” are astronomical. In 1992, the Securities and Exchange Commission (SEC) set a rule that said any company that issues shares in excess of $5 million must register with SEC and file all of the necessary paperwork, reports, filings, legal disclaimers, etc.

Despite being such a low number, that $5 million threshold was actually an improvement because the SEC was raising it from the previous threshold of $100,000.

Why was it helpful? To be plain about it, if a company wanted to be able to sell $100,000 worth of shares, they’d have to spend hundreds of thousands on lawyers and accountants to be able to complete all of the paperwork.

The $5 million increase in 1992 was helpful, but it is still prohibitively low for many small firms, particularly in investment-heavy industries like technology. For instance, $5 million won’t get you very far in biotech engineering or high-tech manufacturing. In fact, this particular filing level was only used 78 times between 1995 and 2004 and only three times last year.

We need a lot more than three small companies raising private capital for investment each year if this economy is going to get going. So, last week, an overwhelming, bipartisan majority in the House voted to raise the threshold to $50 million. The vote was 421-1. Seeing as how 99% of the American people’s representatives thought this was a pretty good idea, let’s hope Harry Reid decides to let the Senate at least debate it .

The second bill we passed was similarly designed, but affecting a separate group of small businesses. Under current law, any company with assets in excess of $10 million that has issued shares to more than 500 people must register with the SEC. That makes that small company subject to the same kind of regular reporting requirements as giant Fortune 500 companies. A small company that is trying to raise money to invest needs every nickel to pour back into research, manufacturing, marketing, staff, etc. They don’t need to be spending precious capital jumping through pro forma hoops with federal agencies just for the sake of doing so.

The House passed this second bill 420-2.

The media hasn’t been doing a very good job covering these sorts of bills. They prefer to focus instead on the rancor and division in Congress. That’s fine. They’re free to do it. But I don’t think it’s particularly helpful for anything other than their ratings.

In any case, that’s why I do this newsletter. Are these bills going to be the game-changer that we need to turn the whole economy around? Of course not. But if you’re a person who’s unemployed right now and you get hired because a company that previously couldn’t afford to raise private money now can, you better believe it’s a game-changer.

That’s the kind of thing that Republicans in Congress are doing to help spur the economy. Small companies can’t get loans. So instead of trying to fix it by borrowing trillions from China and giving it away to companies that bureaucrats in DC like, we’re making it easier for the best companies to succeed on their own. That’s the difference in approach and that’s why these bills are going to work.

As always, I’d love to hear what you think about all of this and anything else that’s on your mind. And in the meantime, make sure to give Harry Reid a call and let him know he’s got two more job-creators sitting in his inbox. 

Editor's Note: Richard Nugent is the U.S. Representative for Congress' 5th District of Florida. To find out more about him, visit his website at Nugent.house.gov.