[House Hearing, 117 Congress] [From the U.S. Government Publishing Office] LEVERAGING THE INFRASTRUCTURE INVESTMENT AND JOBS ACT: THE ROLE OF THE SBA'S BOND GUARANTEE PROGRAM ======================================================================= HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTEENTH CONGRESS SECOND SESSION __________ HEARING HELD JULY 27, 2022 __________ [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 117-064 Available via the GPO Website: www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 48-108 WASHINGTON : 2022 ----------------------------------------------------------------------------------- HOUSE COMMITTEE ON SMALL BUSINESS NYDIA VELAZQUEZ, New York, Chairwoman JARED GOLDEN, Maine JASON CROW, Colorado SHARICE DAVIDS, Kansas KWEISI MFUME, Maryland DEAN PHILLIPS, Minnesota MARIE NEWMAN, Illinois CAROLYN BOURDEAUX, Georgia TROY CARTER, Louisiana JUDY CHU, California DWIGHT EVANS, Pennsylvania CHRISSY HOULAHAN, Pennsylvania ANDY KIM, New Jersey ANGIE CRAIG, Minnesota SCOTT PETERS, California BLAINE LUETKEMEYER, Missouri, Ranking Member ROGER WILLIAMS, Texas PETE STAUBER, Minnesota DAN MEUSER, Pennsylvania CLAUDIA TENNEY, New York ANDREW GARBARINO, New York YOUNG KIM, California BETH VAN DUYNE, Texas BYRON DONALDS, Florida MARIA SALAZAR, Florida SCOTT FITZGERALD, Wisconsin MIKE FLOOD, Nebraska Melissa Jung, Majority Staff Director Ellen Harrington, Majority Deputy Staff Director David Planning, Staff Director C O N T E N T S OPENING STATEMENTS Page Hon. Nydia Velazquez............................................. 1 Hon. Blaine Luetkemeyer.......................................... 3 WITNESSES Mr. Peter Gibbs, President & Former Director of SBA's Office of Surety Guarantees, Foundation Surety & Insurance Company, Bowie, MD, testifying on behalf of the National Association of Surety Bond Producers.......................................... 5 Mr. Ralph Pulver, Regional Underwriting Officer, Traveler's Bond, Hartford, CT, testifying on behalf of the Surety & Fidelity Association of America......................................... 7 Mr. Alan Gravel, President, Willow Construction, LLC, Powder Springs, GA.................................................... 8 Mr. Joel Griffith, Research Fellow, Financial Regulations, Thomas A. Roe Institute for Economic Policy Studies, The Heritage Foundation, Washington, DC..................................... 10 APPENDIX Prepared Statements: Mr. Peter Gibbs, President & Former Director of SBA's Office of Surety Guarantees, Foundation Surety & Insurance Company, Bowie, MD, testifying on behalf of the National Association of Surety Bond Producers....................... 25 Mr. Ralph Pulver, Regional Underwriting Officer, Traveler's Bond, Hartford, CT, testifying on behalf of the Surety & Fidelity Association of America............................ 28 Mr. Alan Gravel, President, Willow Construction, LLC, Powder Springs, GA................................................ 31 Mr. Joel Griffith, Research Fellow, Financial Regulations, Thomas A. Roe Institute for Economic Policy Studies, The Heritage Foundation, Washington, DC........................ 33 Questions and Answers for the Record: Questions from Hon. Flood to Mr. Joel Griffith and Answers from Mr. Joel Griffith..................................... 41 Additional Material for the Record: American Property Casualty Insurance Association............. 43 Glen Rose Veterinary Clinic.................................. 45 Glenroy...................................................... 46 MO-03 Constituents Statements................................ 48 Precision Pattern Co., Inc................................... 50 Significant Labor Shortage Statement......................... 51 Statements for the Record from Hon. Williams, Hon. Tenney, Hon. Donalds, and Hon. Kim................................. 52 LEVERAGING THE INFRASTRUCTURE INVESTMENT AND JOBS ACT: THE ROLE OF THE SBA'S BOND GUARANTEE PROGRAM ---------- WEDNESDAY, JULY 27, 2022 House of Representatives, Committee on Small Business, Washington, DC. The committee met, pursuant to call, at 10:00 a.m., in Room 2360, Rayburn House Office Building, Hon. Nydia Velazquez [Chairwoman of the Committee] presiding. Present: Representatives Velazquez, Mfume, Carter, Houlahan, Craig, Peters, Luetkemeyer, Williams, Stauber, Meuser, Tenney, Garbarino, Van Duyne, Fitzgerald, and Flood. Chairwoman VELAZQUEZ. Good morning. I call this hearing to order. Without objection, the Chair is authorized to declare a recess at any time. I would like to begin by noting some important requirements. Standing House and Committee rules will continue to apply during hybrid proceedings. All Members are reminded that they are expected to adhere to these rules including decorum. House regulations require Members to be visible through a video connection throughout the proceeding, so please keep your cameras on. Also, remember to remain muted until you are recognized to minimize background noise. In the event a Member encounters technical issues that prevent them from being recognized for their questioning, I will move to the next available Member of the same party and I will recognize that Member at the next appropriate time slot provided they have returned to the proceeding. Before I begin, I just want to let the Ranking Member know that our thoughts and prayers are with the people of St. Louis who are affected by the recent historic flooding and I will work with you to make sure that SBA in an expedited way assists the people from St. Louis. Before we begin, I want to welcome our newest Small Business Committee Member from our side. First, we have Mr. Scott Peters from California. He brings his experience serving on the Committees on Budget, Energy and Commerce and Joint Economic Committee to our efforts to strengthen entrepreneurship and the challenges facing America's small employers. Mr. Peters' understanding of the importance of bipartisanship will be integral to his work on our Committee. Welcome, Mr. Peters. And I will yield later on to the Ranking Member for the introduction of Mr. Michael Flood from Nebraska. Last November, President Biden signed the $1.2 trillion Bipartisan Infrastructure Bill into law. The package culminated years of work to reverse decades of underinvestment and revitalize American infrastructure. This effort represents the most significant investment in America's infrastructure in generations. The funds outlined in the bill include $550 billion in new spending, which will help rebuild our nation's roads and bridges, strengthen public transportation, expand broadband to more Americans, and improve drinking water and wastewater infrastructure. Every American stands to benefit from these upgrades. But, crucially, the bill will also boost small businesses as they will play a critical role in rebuilding American infrastructure. Today, I want to examine one of the key mechanisms that facilitate small business participation in government infrastructure projects, SBA's Surety Bond Guarantee Program. Surety bonds are three-party agreements with a surety, a contractor, and a project owner. If a contractor cannot complete a project, the surety is responsible for ensuring that the obligation is met. These bonds help reduce risks in the contracting process and protect project owners, subcontractors, and suppliers. That is why the Miller Act requires all federal construction contracts greater than $150,000 to have a surety bond. This practice has spread outside the public sector as more and more private projects require surety bonds. The SBG program guarantees bonds for contracts of up to $6.5 million, and up to $10 million for federal contracts if a contracting officer deems such a guarantee necessary. Under the program, SBA guarantees bonds to small entities when a bond is required, the businesses cannot obtain it elsewhere, and there is a reasonable expectation they will be able to complete the project they are competing for. The SBG program is vital to disadvantaged businesses that typically have a harder time obtaining a bond from traditional sources. In fiscal year 2021 alone, SBA guaranteed 9,633 bonds for a contract value of approximately $7 billion, which supported more than 34,000 jobs. As projects related to the bipartisan infrastructure bill continue to develop, demand for surety bond guarantees may increase. Given that, this Committee must look for ways to improve the program to better serve more small businesses. For instance, some experts have promoted raising program limits on individual and federal contracts to keep up with increased investment in infrastructure. Questions have also been raised as to whether the SBG program has the resources to adapt to the challenges that come with increased demand. In this respect, advocates believe that there is room for improvement in areas like information technology, staffing, and outreach activities, which could be addressed by allowing the Revolving Fund to be used for administrative expenses. Today, I want to take a close look at how the program is operating and how Congress can ensure it is equipped to meet small businesses' needs as they rebuild America's infrastructure. I would now like to yield to the Ranking Member, Mr. Luetkemeyer, for his opening statement. Mr. LUETKEMEYER. Thank you, Madam Chair. And thank you for convening the Committee meeting this morning. I appreciate your kind words with regards to St. Louis. Yes, it took me a lot of extra time to get to the airport yesterday. I live about 2-1/2 hours from the airport. So between me and the airport there was a lot of flooding and I made my flight by 5 minutes. Thankfully, it was delayed. And so I was able to get here at a reasonable time. Later today, the Federal Reserve will announce its next interest rate hike. The decision to raise rates is directly tied to inflationary pressures our country is facing. As we sit here today, inflation is at a 41-year high of 9.1 percent. This elevated rate did not happen out of the blue. It has been rapidly rising for the last year despite some calling this transitory or temporary. In addition to a CPI reading of 9.1 percent, wholesale inflation, or the Producer Price Index, is running hot at 11.3 percent. These highs are impacting all Americans and all small businesses. From the pump to the grocery store to the energy bill, it all costs more than it should and you are not going to get more for the money you are spending. For instance, the latest number that I saw yesterday was $8,600 is what it is costing more for people to live this year than last year. That means $165 a week more to live to pay the same expenses today as what you were paying last year but getting nothing extra for it. No difference in amounts or quality of what you are getting. That is astounding. For small business, this means a cycle of price increases that cannot be easily offset. The options or tools that they have at their disposal is limited. They can raise prices on their own, which NFIB has found that 86 percent of small businesses have already done. Or small business owners can decrease the goods and services available, use less expensive products, or resign to the fact that revenues will be down. All options are disastrous for a small business owner, their employees, and the communities that they serve. Inflation and the ongoing cost pressures cannot be ignored. In survey after survey, small businesses report that inflation and raising prices are the top challenge facing their company. When I am in district visiting with small businesses, the conversation always begins and ends with inflation. And it is not just rising costs. Rather, there is a multitude of economic headwinds that are hitting main street businesses. From ongoing and persistent supply chain issues that are leaving shelves bare, to an employment crisis where small businesses cannot find workers, current economic conditions remain forbidding. In fact, NFIB found that small businesses anticipating a more robust and healthy business environment has soured every month this year. Simply put, we are heading in the wrong direction. Yet, my democratic counterparts are proposing more spending and potential tax increases on all passthrough small business entities. This will be devastating. Higher taxes on the nation's job creators do not result in growth, expansion, and job creation. In addition to the proposed tax increases, the Biden administration just finished off its first year in office by proposing over $200 billion in regulatory costs. During a time of economic uncertainty that is hallmarked by inflation running at a 40-year high, it is illogical to propose tax increases in an enhanced regulatory environment. Plain and simple, this administration is ignoring the plight of small businesses, from the Small Business Administration's quest to become a voter agency, to Treasury Secretary Yellen's refusal to testify before this Committee. Continued refusal, by the way. The Biden administration continues to disregard and overlook the top concerns of small businesses that produce almost half the nation's GDP and create two out of every three new jobs. While some of my colleagues dismiss these concerns, we will not. I am confident that if we listen and address the needs of our small business owners, including the soaring levels of inflation, our country will grow leaps and bounds. The entrepreneurs, innovators, and startups of our nation can drive our economy forward. In order for this to happen, we need to get out of their way. We need to usher in a pro-growth economy that is focused on less regulation and taxes and do this before we continue to put ourselves in an even deeper recession. Otherwise, this downward cycle will continue. With that, Madam Chair, I yield back. Thank you. Chairwoman VELAZQUEZ. I would like to take a moment to explain how this hearing will proceed. Each witness will have 5 minutes to provide a statement and each Committee Member will have 5 minutes for questions. Please ensure that your mic is on when you begin speaking and that you return to mute when finished. With that, I would like to introduce our witnesses. Our first witness is Mr. Peter Gibbs, the president of Foundation Surety and Insurance Solutions, an authorized agent for SBA's Surety Bond Guarantee Program. His prior work experience includes working at SBA for over 30 years, most recently as the director and deputy director of the Office of Surety Guarantees where he served for 16 years. Under his leadership, the office established federal partnerships with some of the largest surety companies in the world. Mr. Gibbs is also a lieutenant colonel who served 27 years in the U.S. Army Reserve. Welcome, Mr. Gibbs. We greatly appreciate your service and your expertise on today's topic. Our next witness is Mr. Ralph Pulver, a regional underwriting officer for construction services of Travelers Bond and Specialty Insurance based in Hartford, Connecticut. Travelers is a participating surety in the SBA Surety Bond Guarantee Program since its inception, and Mr. Pulver is Travelers expert for the program counting with over 20 years of experience. Mr. Pulver serves on the Board of Directors for the Minority Business Development Institute. He also provides technical support for the Surety and Fidelity Association of America with its initiatives involving small, emerging contractor bond readiness. Welcome, sir. Our third witness is Mr. Alan Gravel, the president of Willow Construction, a small business located in Powder Springs, Georgia. Willow Construction is a heavily civil contractor. The company specializes in the construction of treatments plants and pump stations for local water and sewer authorities. It has also taken on the construction of dams. Mr. Gravel is a civil engineer and Air Force veteran. He founded his company 30 years ago. Welcome, and thank you for your service, Mr. Gravel. And now I yield to the Ranking Member to introduce our final witness. Mr. LUETKEMEYER. Thank you, Madam Chair. Our next witness is Joel Griffith. Mr. Griffith is a research fellow in financial regulations for the Thomas A. Roe Institute for Economic Policy at The Heritage Foundation. With a background in law and financial services, Mr. Griffith's most recent research explores the perils of inflation. Mr. Griffith, I would like to thank you for joining us today and for your continued commitment tracking the top issues and concerns that are confronting the nation's small businesses. Your testimony will certainly be appreciated. I would also like to extend my thanks to all witnesses joining us this morning. With that, Madam Chair, I yield back. Chairwoman VELAZQUEZ. Thank you. The gentleman yields back. Mr. Gibbs, you are recognized now for 5 minutes. STATEMENTS OF PETER GIBBS, PRESIDENT, FOUNDATION SURETY & INSURANCE SOLUTIONS; RALPH PULVER, REGIONAL UNDERWRITING OFFICER, TRAVELERS BOND & SPECIALTY INSURANCE; ALAN GRAVEL, PRESIDENT, WILLOW CONSTRUCTION, INC.; JOEL GRIFFITH, RESEARCH FELLOW, THE HERITAGE FOUNDATION STATEMENT OF PETER GIBBS Mr. GIBBS. Thank you, Chairwoman Velazquez, Ranking Member Luetkemeyer, and Members of the House Small Business Committee, for the opportunity to testify today where I will discuss what I believe is among the most important public-private partnership in government, the U.S. Small Business Administration Office of Surety Guarantees, Treasury listed surety companies, and surety bond producers. My name is Peter Gibbs. I am a small business owner and the founder and president of Foundation Surety and Insurance Solutions, a licensed insurance agency who assists small businesses to obtain surety bonds. I started my agency in October of 2021, and I am a Member of the National Association of Surety Bond Producers. Prior to starting my agency, I served as director of Office of Surety Guarantees at the SBA. I retired in 2021 after serving at the agency for over 30 years. I also retired from the U.S. Army Reserves as a lieutenant colonel, and from 2006 through 2010, I served on active duty at the Pentagon, the Defense Intelligence Agency, and in the Middle East. I strongly believe that today's hearing is vital to make sure that small businesses, especially those that may have difficulties obtaining surety bonds, have everything necessary to better compete for work funded by the Infrastructure Investment and Jobs Act. For over 50 years, the SBA's Surety Bond Guarantee Program has been successful because of the efforts of the SBA, surety companies, and bond producers who work cooperatively to provide bond into companies which otherwise cannot qualify for surety credit due to financial or other reasons. I will first describe the recent changes to the program which over the years have expanded opportunities to small businesses to participate on public and private work projects and have spurred great participation from the surety industry. Recent program enhancements have included the following: Increasing the contract size bond amount from $2 million to $6.5 and up to $10 million for federal contracts; Granting the SBA administrator with statutory discretion to determine the portion of liability assumed by the SBA and the surety company; Increasing the bond guarantee up to 90 percent for participating surety companies; Instituting a paperless application process while approving bond applications in less than 2 days; Raising the streamlined Quick-App Bond application from $250,000 to $400,000; and Reducing the fees charged to sureties and contractors. There is still work to be done, however, to expand opportunities for small businesses especially in the current economic climate. I suggest the following additional enhancements to streamline the program. Ensure that adequate staff levels for the Office of Surety Guarantees, as natural attrition and retirements have reduced staffing levels significantly and position replacements have not been made; Dedicate resources for the investment in information technology infrastructure to increase program efficiency; Explore techniques to manage, mitigate, and transfer risk which may attract participation from the reinsurance industry; Consider adding other surety products to the program, which may be difficult for small businesses to obtain in the marketplace; Establish parity, internal coordination, and communications between SBA's Bond Guarantee Program and other SBA Small Business programs, such as those relating to loan guarantees and business assistance; Enhance the marketing resources and budget available to the program; Provide marketing resources and incentives for federal and state procuring agencies to make small businesses aware of the program; Consider a temporary suspension of program fees paid by small businesses to access the program; and Consider raising the current contract guarantee amounts from $10 million to $20 million, and on non-federal contracts from $6.5 million to $10 million. In the last 50 years, the Surety Bond Guarantee program supported over 55,000 small businesses, 750 surety bond guarantees, and an estimated $150 billion estimated contract value. As impressive as that sounds, I believe that more can be done for the benefit of small businesses with the right enhancements. Thank you again for your consideration and the opportunity to testify before the Committee. I am happy to address your questions. Chairwoman VELAZQUEZ. Thank you, Mr. Gibbs. Mr. Pulver, you are now recognized for 5 minutes. STATEMENT OF RALPH PULVER Mr. PULVER. Good morning. My name is Ralph Pulver. I am employed by Travelers Bond and Specialty Insurance in Hartford, Connecticut, where for the past 20 years I have served as regional underwriting officer in our Construction Services business unit. My day-to-day responsibilities include underwriting contract surety bonds for our construction clients. This includes underwriting support for a dedicated team that services our small contractor clients, including those that are underwritten through the SBA Bond Guarantee Program. I am here today on behalf of the Surety and Fidelity Association of America, otherwise known as SFAA, a nonprofit organization based right here in Washington, D.C., whose Members are primarily insurance companies that provide over 98 percent of the surety bonds written in the United States. Today, I will be addressing three topics. The background on surety bonding and the operation of the SBA Bond Guarantee Program. Secondly, discuss how the SBA program helps small and emerging contractors grow their companies and contribute to the economic strength of their communities. And lastly, the positive improvements to the SBA program. Firstly, Mr. Gibbs and Madam Chair Velazquez, did a very good job of talking about the background of the program and the parameters and so forth, so I will not be redundant there and adding anything onto there. I will tell you that the SBA Bond Guarantee Program currently consist of a Plan A, which is known as the Prior Approval Program, and Plan B, which is otherwise known as the Preferred Surety Bond Program. Travelers participates in the Plan B program. This means that the SBA has reviewed our underwriting and administrative practices and our financial strength and made a determination as to the aggregate limit of bonds that Travelers can underwrite. Under the Plan B program, Travelers does not have to submit individual bonds to the SBA for approval, which streamlines the process. The SBA has given us the authority to underwrite and issue the bonds on behalf of SBA. As a preferred surety, Travelers must also agree to periodic review and audit of those SBA bonds. As of the most recent update from SBA, Travelers is the third largest writer in the Plan B program, averaging about 262 bonds annually and impacting about 85 to 100 contractors each year annually. It should be noted that this ranking is determined by the number of bonds written, not by the amount of the surety bond premium. Under the Plan A and Plan B programs, the emerging contractor must qualify as a small business as classified under the U.S. Office of Size Standards. The size standard is determined by the gross revenues of the company and their affiliates averaged over the last 5 years, as well as the company's industry or class of work. The SBA's regulations provide that a bond must be required in the contract in order for it to be eligible for the guarantee. And, the contractor must certify that they have been unsuccessful in finding surety bond credit in the standard marketplace. The Surety Bond Guarantee Program provides an effective tool for surety companies to favorably underwrite small and emerging contractors that would otherwise not qualify for surety support. Although these emerging contractors may not have the balance sheets that reflect financial strength of larger companies, the surety will still undertake a very rigorous prequalification process focused on the contractor's ability to complete the obligation. Providing an initial opportunity for small and emerging contractors to participate in public bid market is critical for their future success. While there is no time restriction for a contractor regarding how long the SBA supports them, most growth-oriented contractors aim to meet the underwriting standard requirements or traditional surety markets and in effect, graduate from the SBA program. This is what I often refer to as the ``groom and grow'' period, where the small and emerging contractor receives coaching and advice from their surety bond professionals on how to best position their company to obtain surety bond support in the traditional surety marketplace. Undoubtedly, the Infrastructure Investment and Jobs Act will provide increased opportunities for small and emerging contractors, including minority- and women-owned businesses. For some contractors new to the surety bond market, the SBA Surety Bond Guarantee Program helps make that opportunity a reality. Under the leadership of Peter Gibbs and currently, Jennifer Vigil, significant, positive operational and program improvements have been made to the SBA program, including the size enhancements that Peter mentioned earlier. The enhancements to the Mentor-Protege Program, including the size for eligible projects that has been referred to earlier, increasing the guarantee percentage, permanently decreasing fees for the contractors and increasing the quick application, again, that Mr. Gibbs referred to earlier. All these improvements have increased the number of participating small and emerging contractors, surety bond producers, and surety companies, now the largest number of sureties ever participating in the program. I commend the SBA for making these improvements to the program and would like to thank the Committee for your support and leadership on this issue. And thank you for the opportunity to appear before you today. Chairwoman VELAZQUEZ. Thank you, Mr. Pulver. Now, Mr. Gravel, you are recognized for 5 minutes. STATEMENT OF ALAN GRAVEL Mr. GRAVEL. I am Alan Gravel, Chairman of the Board of Willow Construction. I grew up in Louisiana, earned a B.S. in Civil Engineering at Louisiana Tech, and an MS in Environmental Health Engineering at the University of Texas. I joined the Air Force and flew the C-7 Caribou in country in Vietnam and then the KC-135 in Vietnam after that. In 1974, I left the Air Force and moved to Atlanta to work for a civil engineering consulting firm. In 1981, I left that firm to work for a utility contractor. When that company went out of business in 1992, I started Willow with the employees who had worked for me at the old company. Of the 28 or so employees, we now have about six or seven of them who have been with me over 35 years. Willow itself has completed 600-plus jobs worth about $170 million in our 30 year history. We just celebrated our 30th anniversary. In the beginning, we were, like many startups, undercapitalized but we established modest banking and bonding relationships and steadily built our business. In 1997, we bought a tract of heavy industrial property and built a shop and an office, you can see it behind me, and moved from the office where we had been renting. By 2000, we reached our target volume of work and were on reasonably sound footing. In these early days, almost all our work was public bid work that required payment and performance bonds. Between 2000 and 2008, we gradually picked up some private and subcontract work which did not require bonding, but we were still actively bidding bonded work. Our bonding agent at the time was an experienced professional who recognized us as a minimal risk to the bonding company. We had always been able to provide the financial documentation that he needed because of the experience we had had in the previous company. The financial crisis of 2008-2012 ended our steady progress toward financial security. My late wife, Sheri, said to me, ``So let me understand. We are giving up our retirement savings to ensure that all Willow employees have a steady paycheck through the recession?'' And my answer was, yes, that is exactly what we are doing, but if Willow survives then all problems can eventually be solved. Willow lost significant amounts of money in 2009-2012 and essentially broke even in 2013. I depleted most of my retirement savings, and in 2011, we had to sell some of our construction equipment. All salaried employees took pay cuts. We did not have raises for 7 years. We survived and throughout that time, our experienced bond agent, who knew us well, was able to provide bonds at the reduced level of business that we were able to maintain. Things improved starting in 2014 but we had dug a pretty deep hole for ourselves. Our private and subcontract work picked up significantly but when public bid opportunities came along, we had to do some serious negotiation to get our bid bonds. Then, our long-term professional bond agent fell ill and had to retire. His company replaced him with a young man with no experience and things quickly went downhill from there. Howard Cowan and I were friends in college. We had maintained that friendship through all of the years since. When he left the Air Force, he became a surety underwriter and eventually a surety agent. When I left the Air Force, I worked for a consulting engineering company and then a utility contractor. We have always found it amusing that I studied civil engineering and he studied philosophy and somehow we ended up in two parts of the same business. Particularly since Willow had started, I had relied heavily on Howard's advice about bonding and many other things. When bonding became very difficult for Willow, I called Howard. After some discussion he said, ``I have resisted doing this for 30 years, but I think it may be time for me to become your bonding agent.'' He recognized that Willow had a proven track record but for circumstances that were somewhat beyond our control, we did not meet the normal commercial standards for bonding. Howard had a long-term relationship with the underwriters at SureTec. They studied our situation and concluded that Willow was a good candidate for SBA's Preferred Surety Bond Program. Early in the relationship, Howard and the SureTec underwriters visited our office in Atlanta to meet our key people and to get a better understanding of our capabilities. Through SureTec's comprehensive understanding of Willow's operations and their strong partnership with the SBA, we were able to continue bidding bonded work. Through lots of hard work, some good luck, and the SBA- backed bonding program, Willow has recovered our financial stability, and in 2020, we were able to re-enter the commercial bond market. Since then, we have had our third and fourth best years in our 30-year history. We are steadily reducing our debt, upgrading our equipment fleet, and hiring young employees to carry the company into the future. In those dark days of 2010 and 2011, we could have chosen to declare bankruptcy. Instead, we chose to never give up. Had the SBA program not been available, we might have eventually recovered but it would have taken much, much longer and it would have been a lot more painful. With it, we returned to financial health, providing good incomes to our employees, paying taxes, and completing quality projects for our community and the environment. Thank you. Chairwoman VELAZQUEZ. Thank you, Mr. Gravel. And now we recognize Mr. Griffith for 5 minutes. STATEMENT OF JOEL GRIFFITH Mr. GRIFFITH. Chair Velazquez, Ranking Member Luetkemeyer, Members of the House Small Business Committee, thank you for the opportunity to testify. My name is Joel Griffith. I am a research fellow at The Heritage Foundation. The views I express today are my own. Businesses of every size, especially smaller businesses, are struggling with supply chain issues, rising prices, and a shortage of people willing to work. The Biden administration insists that these problems are transitory, and the administration continues to blame the pandemic and the war in Ukraine for these economic woes. Meanwhile, this presidential administration refuses to acknowledge the primary culprit behind our economic turmoil. Senseless COVID restrictions throttle production. Ill-targeted transfer payments that shrink the workforce. The opposition by organized labor to common sense port operations. New environmental regulations that target diesel semi-trucks in California, and record government spending financed by the Federal Reserve. In short, the federal government reduced supply while stoking demand. This is a recipe for the shortages and higher prices that we are facing today. Far too many here in Washington, D.C. continue to blame the pandemic for our economic woes. But it is important to keep in mind that the pandemic itself did not shut down the world. To the contrary, governments across the world shut us down with lockdowns and oppressive restrictions. These erratic, unpredictable, arbitrary tramplings of human freedom made planning by businesses even for the short term nearly impossible. Politicians across the world pushed millions of families and businesses off an economic cliff all the while misleadingly blaming the pandemic. Government policies also created the unprecedented labor shortage that we are experiencing today in the United States, a shortage caused by millions of workers leaving the workforce. Generous federal unemployment bonuses in terms of payout and duration acted as a powerful disincentive to returning to work even as the economy reopened, especially when combined with multiple federal stimulus checks. Many individuals delayed their return to the workforce even after benefits ended, instead choosing to live off the stockpiled cash. Private vaccine mandates and a threatened federal vaccine mandate pushed many others out of the workforce. Now, businesses across nearly every industry are desperate for workers and have expanded their benefit packages. Of course, those failed to keep up with the rise in prices. Nearly half of small businesses are unable to fill open positions. This is more than double the national average, or the historical average. Small businesses, too, are suffering from the supply chain disarray. California, specifically, matters on this because it receives nearly half of all containers coming into the U.S. Yet, in the midst of this supply chain crisis, what did California do? Well, California ordered a continued phaseout of older diesel trucks and organized labor in California continues to resist modernization of their ports in favor of inefficient modes of operation. Labor costs and bottlenecks on the supply chain side could increase even further if the Teamsters Union convinces the Biden administration to change the definition of employee so that businesses can no longer hire independent truckers to transport their goods. Lastly, while governments hampered the supply of goods and services, the federal government has used the Federal Reserve as a piggybank, selling trillions of dollars in debt for newly printed cash, nearly $80,000 per family of four that has flooded into the economy. Our Federal Reserve has doubled its balance sheet from just $4 trillion in March 2020 to nearly $90 trillion just months ago. Unfortunately, today's proposals to expand the Small Business Administration's Lending and Bond Guarantee Programs do nothing to counteract these destructive policies. Broadly speaking, calls to expand the role of the SBA and the credit markets also ignore this reality, that small businesses are being serviced by private credit markets. Only 3 percent of respondents to the January 2022 NFIB Survey reported that their borrowing needs were not satisfied. Only 1 percent of small businesses reported financing as their top business problem. In conclusion, misguided COVID-19 restrictions, combined with Federal Reserve financed government borrowing and spending set in motion the current economic turmoil, the skyrocketing inflation, and the supply chain havoc that are crippling businesses and families. Proposals for yet more government spending, more labor regulations, more attacks on energy production, and massive tax hikes on businesses risk further pain. Thank you. Chairwoman VELAZQUEZ. Thank you. And now I will recognize myself for 5 minutes. Mr. Gibbs, considering the bipartisan Infrastructure Investment and Jobs Act that Congress passed last year, $1.2 trillion, it was great to see in the social media every Member praising the projects that have been funded in their district thanks to the infrastructure legislation. Why is the Surety Bond Guarantee program more important than ever? Mr. GIBBS. I think it is important because it is going to allow small businesses who are having difficulties to get bonded and to take advantage of opportunities because of the infrastructure bill. They will be in a better position to get into the game. They will be able to bid on projects. I mean, there are companies who cannot even, if they cannot get a bid bond, they cannot even bid on a project. So they are left out of the process. So I think small businesses having the opportunity to bid on projects puts them in the game and gives them a fairly equal opportunity to get awarded a project. Chairwoman VELAZQUEZ. Thank you. Mr. Pulver, many small businesses across the country are unaware of the existence of the SBA Surety Bond Program. Based on your knowledge of the program, what can we do to spread the word? Mr. PULVER. Yes. Program awareness, increasing the number of agents and producers that are involved in security the bond aids for contractors, making more sureties aware and making more contractors aware of the program, it could use that to help to your question. Chairwoman VELAZQUEZ. Thank you. Mr. Gravel, your company was able to recover financially with the help of the SBG program. What does the SBG program mean for you, your business, and the personnel you employ? Mr. Gravel, you are muted. You need to unmute yourself. Mr. GRAVEL. We were able to more quickly return to a position where we could give raises, our employees can send their kids to college. We were able to focus on safety and quality issues instead of feeling like we have to cut corners to get by. It means that we can afford to provide healthcare, Section 125 flexible spending programs, a 401(k) retirement plan. It means that the sacrifices that you expect to make when you start a business do not have to last forever. And we are back up on our feet financially in a time period that we could not have accomplished without SBA assistance. Chairwoman VELAZQUEZ. Thank you. Mr. Gibbs, I understand that there are concerns with the capital access financial system which is the IT system SBA uses for the SBG program. Could you please expand on those concerns and what needs to be done to improve that situation? Mr. GIBBS. Yes. So as stated earlier, I spent 18 years in that program. And that system needs a total overhaul. I think it would assist not only the external users but also the internal users of the program. The system is antiquated and it needs to be upgraded. Chairwoman VELAZQUEZ. Thank you. And Mr. Pulver, there have been efforts to increase the bond guarantee thresholds to $20 million for federal contracts and $10 million for all other contracts. And these thresholds have not been increased in more than a decade. Would it make sense to increase those now, and why? Mr. PULVER. It is the position of SFA and their Members that the program works very well at the current levels and that further dialogue around increasing them is something that SFA would like to be a part of. Chairwoman VELAZQUEZ. Thank you. Mr. Gravel, it seems you were not able to access the standard market for bonds due to economic losses experienced following the 2007 recession. So what options would you have had to have to save your company had it not been for SBA's Surety Program Guarantee Program? Would your company---- Chairwoman VELAZQUEZ. Yeah, go ahead. Go ahead. Mr. GRAVEL. Without bonding, without SBA backed bonding we would have had to cut way, way back, more or less start over. I mentioned in my testimony that I have multiple employees who have worked for me for 35, 38 years, like that. Most of those people would probably have had to go to other employers and we would have lost that experience. And that would have slowed our recovery even more. We had just built the building that you see behind me in 1998. We might have been in a position where we would not have been able to maintain those buildings and that property which helps us to function very, very well. Chairwoman VELAZQUEZ. Thank you, Mr. Gravel. My time has-- -- Mr. GRAVEL. At the very least it would have delayed our recovery. Chairwoman VELAZQUEZ. Thank you. And now we recognize the Ranking Member. Mr. LUETKEMEYER. Thank you, Madam Chair. Mr. Griffith, as you can imagine when I am back home visiting small businesses, the topic of inflation comes up every single conversation. It is at the top of everyone's mind. And with that I would like to submit statements for the record with regards to two of my constituents with regards to the comments that they made, Madam Chair. Chairwoman VELAZQUEZ. Without objection. Mr. LUETKEMEYER. Thank you very much. We are now running at a 41-year high with inflation. Wholesale inflation is double digits. Mr. Griffith, you have written about this extensively over the last year. Where do you see inflation going in this country short term and long term? Mr. GRIFFITH. Well, longer term, so long as we continue to empower the Federal Reserve to print the resources to fund our government, we can expect inflation to continue to be exacerbated. And I think it is important to keep in mind that even if the inflation rate comes down from the 9 and 10 percent rate that we are at today to say a more typical 2 or 3 percent, that does nothing to mitigate the fact that families have lost thousands of dollars over the past year. The income does not just recover once inflation returns to normal. All of the families that benefitted from the stimulus checks from all the benefits, they benefitted from that but now they have lost income in excess of what they received. And I am really hoping that these families are able to connect those dots. Mr. LUETKEMEYER. You make a great point there from the standpoint that a figure I just got last week is now $8,600 more to live in this country than it was a year ago, which is about $165 a week that you get nothing extra for, which I mentioned in my opening remarks and follows along with your conversation there. When you talk about the Fed, yesterday in Politico, there was an article with regards to Fed Relies on Dubious Data to Chart the Economy's Course. And then the byline was officials are preparing another huge rate hike likely to convulse economy markets which is kind of like it blows your mind. If they do not have the right economic information that they are going to try to make a move here, it is like what in the world are we doing? One of the things that is in there is that it talks about going in the wrong direction here. So, we actually had, again, since mid-November, this is the highest level of unemployment claims that we have had, 251,000. We are in a recession and nobody seems to on the administration side to want to admit it. So Mr. Griffith, how would you define recession? Mr. GRIFFITH. Well, historically, once you have 2 quarters of negative economic growth, a recession has been declared. That has been the norm. We had negative economic growth in the first 3 months of this year. We are going to know very shortly if we saw the economy contract in the second quarter. Typically, that has been a recession. And the administration can deny the recession all they want but the bottom line is that American families are feeling the impact right now of this economic misery. Mr. LUETKEMEYER. It is interesting that they are trying to redefine recession before the numbers come out which tells you they know where the numbers are going to be. They know it is going to be bad. It is going to be recessionary numbers. And so they are trying to redefine this. And this is not something new. I sit on the Financial Services Committee and I see this every day, especially with the Consumer Financial Protection Bureau. Not only do they reinterpret laws, redefine words, make up words, they also issued press release one time saying it is a problem so suddenly they can go back and say, you know what? We saw on the news that this was going on so all of a sudden then they can go out and have authorization to go after somebody when they created the problem themselves. When you go in and redefine what is going on in the world, I think the American people are not going to be hoodwinked by this. They know things are going in the wrong direction. It is interesting that the administration keeps touting all the jobs they created. If you look at the numbers, we are still 520 some thousand people short than we were prior to the pandemic. So I know your labor participation continues to be low. How does this all factor into inflation, Mr. Griffith? Mr. GRIFFITH. Well, on the job side you are exactly right. We have actually more than a million people that just disappeared out of the labor force. You mentioned rightfully that our total number of people employed is about 500,000 lower than it was a few years ago and that is despite the fact that our population has grown in the meantime. And this is feeding into inflation because companies now are having to increase those labor costs, and those labor costs as they increase are not keeping up with the cost of living. So it really feeds in as a cycle. Mr. LUETKEMEYER. Thank you. Mr. Gravel, thank you for being here. You are an entrepreneur. You are a businessman, and we certainly appreciate you are willing to share some experiences. I congratulate you on being a survivor. I hope that you were able to participate in the PPP program. I hope that was able to be helpful to you. Just one quick question for you. Whenever you are bidding these projects now, with inflation the way it is, how do you continue to protect yourself against the rising inflation when you are bidding a project that may take several months or years to do? Mr. GRAVEL. We basically bid hard dollar projects where we have a hard quote from our suppliers on the major things. Things like pumps and generators and things like that, we will have a hard quote, and some quotes like electrical subcontracts will be hard dollar. So, once we commit our pricing, the supplier is committed to us. Mr. LUETKEMEYER. So the bond process is helpful to you in case something goes wrong you would be able to have a backstop; would that be a fair assessment? Mr. GRAVEL. Well, the costs that we have are fixed, basically, for all of the major part of the cost. Now, there are costs that can go up like fuel, and to some extent our labor costs and that is our risk. They are going to go up during the course of the contract. We just have to build that into our markup and make sure that we are prepared. Mr. LUETKEMEYER. Thank you. I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. The gentlelady from Pennsylvania, Ms. Houlahan, is recognized for 5 minutes. Ms. HOULAHAN. Thank you, Madam Chair. Just confirming that you all can hear me okay. Chairwoman VELAZQUEZ. Yes, we can hear you. Ms. HOULAHAN. Excellent. And I have a series of questions but I actually have a follow up to Mr. Luetkemeyer's question really quickly for Mr. Griffith. You mentioned that there are a million people that still have not returned to our economy inexplicably. Really briefly, what is your hypothesis? Who are those people? Could it be childcare issues? What kinds of things are keeping a million people from coming back to our economy? Mr. GRIFFITH. Part of the situation is that much of the childcare providers have not returned and that is being an impact on parents. But a big part of this, too, is the fact that families, a lot of people were able to earn more off the job than on the job. A lot of those resources were stockpiled. Ms. HOULAHAN. Yes, sir. But right now that is not the case any longer. So a million people are still not back in the economy and part of your hypothesis is childcare might be an issue. Is there anything else right now that might be the issue that we could be doing to be helpful to bring those people back? Mr. GRIFFITH. What we do know is that people are still actually drawing down on their savings. The savings rate has declined but families are still working through that surplus. That has been a drag. And then also if you look at the fact that wages have not come up with the cost of living, that is also a deterrent to those returning to the workforce. Ms. HOULAHAN. Well, it would seem to me that if you do not have any money that you would return to the workforce if you had the ability to return to the workforce. And thank you very much for that. I really, really appreciate that insight. That is a thing that I am also trying to unwrap. If it is okay, I am going to turn my questions over to Mr. Gravel and to Mr. Pulver as well. And again, thank you very much for joining us today. There is definitely no doubt that the passage of the bipartisan Infrastructure Investment and Jobs Act was historic, not just for the larger industry but also for smaller enterprises that we are focusing on today. Since its passage, the project has helped 342 new Pennsylvanian roadway, bridges, and projects this year, and infrastructure development with many more projects to follow during the remainder of this year it is anticipated. So it is clear that the IIJA is an economic engine that is supporting good paying, local jobs. Businesses and communities across our country offer manufacturing to construction across all other industries. And as our panelists, you guys included, have mentioned, the SBA plays a very key role in assisting our smaller businesses and enterprises in accessing these important opportunities. Mr. Gravel, first, thank you very much for your service and for being an entrepreneur. You and I have those things in common. And for sharing your story with us. Would you talk a little bit more about how the increased contract opportunities made available from legislation like the IIJA will benefit small firms like you? Mr. GRAVEL. Right now, virtually all of our work, 90 percent of our work is private. So I do not know to what extent these funding programs might affect that indirectly or not but they are not affecting it directly. Ms. HOULAHAN. And that actually pivots to my next question which is I feel as though there is a little bit of a gap in terms of small business owners being aware of what sort of resources and opportunities are available to them through the IIJA program and through the SBAA. Mr. Pulver, you recommended in your testimony that the SBG program provide marketing resources and incentives. Where is the disconnect, Mr. Gravel and Mr. Pulver, where we could be able to be more forthcoming and people could be able to understand more what is available through IIJA and SBC for smaller businesses like yours. And Mr. Gravel, maybe I could start with you. Mr. GRAVEL. In our particular case, our connection with the SBA was through our agent. And I would support more robust sort of a relationship between SBA and some of the agents. And any way you could enhance that relationship would be good. If we go for bonding, we are going to go to an agent first. That is where we have to go first. We cannot go directly to the SBA. And so the relationship between the agents and the sureties is the most important thing and that is why in our case it worked out so well because our guy, our agent was very much involved in the SBA and knew a lot about it, and through NASB he had become very aware of it. And that is why it worked so well for us. But I think the small companies and, of course, we have been in business a long time now, so we do not really represent new companies anymore, I guess. But there are lots of opportunities out there. There are plenty of people who are advertising all the jobs that are out for bids and things like that. There is no shortage or anything of that sort. Ms. HOULAHAN. Thank you. Mr. GRAVEL. But these people need to know that they can find bonding if they find the right agent and get to know the right agent and develop his faith in them as far as their ability to perform. Ms. HOULAHAN. Thank you, Mr. Gravel. I am afraid I have run out of time. And I yield back, Madam Chair. Chairwoman VELAZQUEZ. The gentlelady yields back. And now we recognize the gentlelady from Texas, Ranking Member of the Subcommittee on Oversight, Investigations, and Regulations, Ms. Van Duyne, for 5 minutes. Ms. VAN DUYNE. Thank you very much, Madam Chair Velazquez and Ranking Member Luetkemeyer for holding this hearing. For over a year, Members of this Committee have called on Treasury Secretary Yellen to meet her legal and statutory obligation to appear before this Committee and speak on matters related to COVID-19 relief loans. While some may view this requirement to be pointless so much time later, I can assure you that the small businesses around this country who have watched their margins shrink in this volatile economy care. What small businesses understand, which this administration apparently does not, is that amidst record high inflation and rising costs of capital, every fraudulent dollar that went to a criminal pocket was a dollar taken away from a deserving small business. For the lifeblood of our economy, this is just another signal from this administration of their indifference to the economic standing of our smallest employers. While President Biden may look the other way of regarding this inflation-ridden economy, we simply cannot. Tomorrow, we will likely see the second quarter GDP report indicate that we have just recorded another quarter of negative growth in the economy, which is typically an indicator of a technical recession. And as if they were anticipating an abysmal report, the White House released a blog post Monday arguing that 2 straight quarters of negative growth no longer indicates a recession. And while Secretary Yellen may not have time to follow the rule of law, she stated in her interview on Sunday that our economy was not in a recession but in a period of transition in which growth is slowing. While this administration would rather debate semantics than admit that their policies have devastated our economy, small businesses are struggling. And even if every major news outlet may hold the water for this administration's economic misdealings, let us set the record straight. As Michael Strain of AEI has pointed out, 10 recessions were declared the last 10 times we have experienced a consecutive quarterly decline. That fact seems straightforward to most people. And if you needed another sign times are getting tougher, retail giant Walmart lowered its profit outlook Monday due to consumers having to redirect money usually spent on leisure goods to afford highly inflated food and fuel costs. Every administration official and Member of this Congress has seen the evidence that this economy is in a rough spot. Hopefully, they are in touch with the communities and constituents they represent to understand the perils consumers have faced over the last year. But unfortunately, based on the actions Democrats are planning to take, I fear they have not. I want to be very clear. Republicans will continue to combat the Democrats' plan to spend hundreds of billions on the new reconciliation package and they will continue to fight their planned increases on the small businesses which they claim to support. I appreciate all the witnesses being here today. And Mr. Griffith, I know you wanted to respond to the last question. In addition to potentially childcare not being available, what impact do you think forcing kids to stay home from school, forcing people to get vaccinated against their will or lose their job, and ridiculously high gas prices have affected these million people who have not been able to get back to work? Mr. GRIFFITH. Thank you for that question. In relation to families with children, a lot of the new data are actually showing that those are the individuals most likely to have returned to work. They need to supply resources to their families. They found a way to get back to work. What we see is that the real drawbacks now over unemployment has been, like I said, the families that are still drawing down on all the resources the federal government provided, well intentioned, maybe, but still, families are drawing down on those resources. And second of all, the fact that working pays less than before. A middle-class family right now, they are earning $3,000 less per year in real terms because of this inflation that was caused by these shutdowns and by all the money printing that we undertook in order to pretend that shutdowns do not have economic consequences. Ms. VAN DUYNE. How much do you think that reckless spending by this administration has contributed to the inflation that the country is experiencing today? Mr. GRIFFITH. Oh, it has definitely exacerbated it. Remember, this started several years ago when Democrats and some Republicans teamed up together to paper over the impact of the shutdowns. But this administration has doubled down on those mistakes. We knew this was going to be a problem. We had left wing and right wing economists that were saying if you print money to pay for massive expansion government spending, there will be inflationary results, and this administration chose to double down on those mistakes. Ms. VAN DUYNE. I have been talking a lot about how much regulations cost. Can you share with the Committee the impact that regulatory costs have had on small businesses, especially in our current economic climate? Mr. GRIFFITH. Regulations in general, and a lot of these regulations are related to the energy sector. We know that over the years the Green New Deal has not been able to be passed by Congress, and prior administrations, including the Obama administration and the Biden administration, they are trying to implement the regulatory package. They are trying to do that through Executive Order and through the rules making process. And that is driving up costs. And on the energy front, that has indirect cost, too, on the manufacturing sector because we are driving up energy costs on a lot of these smaller factories. Ms. VAN DUYNE. I appreciate that. Thank you very much. I yield back. Chairwoman VELAZQUEZ. Time has expired. And now we recognize the gentleman from Louisiana, Mr. Carter, for 5 minutes. Mr. Carter, you are muted. Mr. Carter, you continue to be muted. Mr. CARTER. Can you hear me now? Chairwoman VELAZQUEZ. Yes, we can hear you now. Mr. CARTER. Okay. Okay. Thank you very much. My question is for Mr. Pulver. What private or public resources would you recommend to small businesses for them to gain a better understanding of how the SBG program works? Mr. PULVER. Yes, thank you for the question. It refers back to what we were speaking earlier about with regards to the small business more than often does not have a board of directors. It has a circle of influence, be it their banker, their CPA, their bond professional, their insurance advisor. So looking to those trusted advisors, and particularly the surety bond professional to help them identify opportunities that exist within the Jobs Act or elsewhere is critical, and finding access to the SBA Bond Guarantee Program as well. Mr. CARTER. Part of the problem, I appreciate it, is small businesses have historically had a difficult time in getting bonding, period. And learning of these programs, having technical assistance to get ready for them continues to be a barrier. Any advice or suggestions you would give to a small business person, particularly a DVE or women-owned enterprise that may be watching today on how do they break through these barriers of, someone mentioned a while ago about not even having the bonding to do a basic bid. We know that that continues to be a problem. And as we talk to contractors, having the ability to contract and never getting a contract is two different things. Mr. PULVER. Yes. Again, I am going to refer back to the surety bond professional that understands SBA and the SBA Bond Guarantee Program. Those are few and far between. And getting that guidance from that individual to help make the appropriate investments into their business to prepare it to be bondable and perhaps using SBA as the foundation to getting there. Mr. CARTER. Based on your company's profile, what percentage of SBA guarantee bonds are for these business? Mr. PULVER. I am going to decline that question. I do not have that data. Mr. CARTER. You are going to decline into r you do not have it? Those are two different answers. Mr. PULVER. I do not have it. Mr. CARTER. If you had it, would you share it? I am not sure. You said decline, so I am wondering, does that mean you would have shared or you just do not have access today? Mr. PULVER. Well, I will rephrase that. Earlier I said on an average we have, at Travelers, I am taking the question to be at Travelers, we have between 85 and 100 contractors annually that are benefitting from the program. Some of those contractors move up, graduate, and become ready for bond credit elsewhere. Does that answer your question? Mr. CARTER. A little bit more. But I will draw down. I have your information. I will send something more specific to you that will get at that. This is a question for anyone. What changes do you think could be made for this program to expand bonding capacities for DBEs? Again, I will mention that we know that that is a major barrier. If you had a magic wand and you had this Committee being able to advance any issues that it might be able to make it clear and more available, what suggestion or advice would you give us? Mr. GIBBS. This is Peter Gibbs. My suggestion is the Office of Surety Guarantees needs the resources so they can market the program. A question earlier, you know, not too many people, as the former director of this program, we had three marketing personnel to market a $6 billion program. Right now I believe there is one marketing person to speak to organizations and small businesses, so I think the response is---- Mr. CARTER. Are you saying, I am sorry, you say one marketing person within SBA to promote this SBG program? Mr. GIBBS. The Office of Surety Guarantees. Yes. We have one marketing person. They need the resources so that they can go to all these organizations, conferences, to small businesses, to agents, to surety companies. They just do not have the resources to spread the word of this program. Mr. CARTER. Under your leadership when you worked for the organization, you may or may not remember this, but tell me if you just had to guess, the percentage of small, disadvantaged enterprises being able to fully take advantage of SBG and bonding capacity. Is that number 20 percent, 30 percent, roughly? Mr. GIBBS. I do not know what that percentage is. I am sorry. Mr. CARTER. I mean, and I will not hold you to any science, but it is short. Is that a fair assumption? Mr. GIBBS. Yes. Mr. CARTER. Okay. And what changes do you think the program---- Chairwoman VELAZQUEZ. Time has expired. Mr. Carter, time has expired. Mr. CARTER. My time has expired? Chairwoman VELAZQUEZ. Yes. Mr. CARTER. I am sorry. Thank you, Ma'am. I yield back. Chairwoman VELAZQUEZ. Now we recognize the gentleman from Texas, Mr. Williams, Vice Ranking Member of the Committee. Mr. WILLIAMS. Thank you, Madam Chair. There is no question that small businesses across the country are hurting as they try to manage the various economic headwinds during the Biden administration. I am a small business owner. I employ about 300 people back in Texas. I am a car dealer. I have been in business 51 years. I remember 1971. I remember 1981. I remember 1988. I remember 2008. And this president is really putting it on us compared to what we saw in the past. And I recently received a letter from a constituent in my district, Mr. Michael Jones, who is the owner of Glen Rose Veterinary Clinic that I would like to share with you all today. Mr. Jones wrote, he said, ``The past few months have been particularly challenging as I have been struggling to keep up with the rapid price increases as a result of supply chain disruptions and increased gas prices.'' And on top of this he is having trouble keeping up his employees' wages since inflation is eating away at all of their hourly rates. The economic realities have left him with no choice but to pass these costs along to his customers in order to keep his business running. So before I get on with my questions, I would like to submit this letter, Madam Chair, for the record. Chairwoman VELAZQUEZ. Without objection. Mr. WILLIAMS. Thank you. Thank you for that. And unfortunately, Mr. Jones's experience in Glen Rose is becoming all too common for small businesses across the country. There again, I am a small business. I get it. I know what he is going through. I know it is hard to hire people. Supply chain is a disaster. Try that in the automobile business right now. So I know what he is going through and what small businesses have happening. We have an administration that has no small business experience, no business, making rules they have actually no reference to go from. So Mr. Griffith, what specific actions can the administration and Congress take to combat these economic challenges small businesses are facing right now? Mr. GRIFFITH. Well, I think one of the things Congress could do would be to take a second look at what has been proposed in the Pro Act. The Pro Act would actually apply basic California labor standards to the rest of the country and would make it very difficult for independent truckers, for instance, to work. And that is something that Congress right now is actively considering imposing. This would really put small businesses in a bad situation and harm a lot of independent workers. Mr. WILLIAMS. Well, and you know, 75 percent of the workforce, 75 percent of the payroll is small business but, yet, we have one party that wants to help. We have another party that wants to hurt. So it has been over 4 years since the 2017 Tax Cuts and Jobs Act passed Congress and was signed into law by President Trump. This historic tax reform ensured that American small businesses and workers were provided opportunities to grow and compete. Unfortunately, many of the important provisions in this bill will expire in the next few years, and rather than working to extend these important provisions and make it easy for small business and easy for main street that prove successful in jumpstarting main street, the Democrats continue to discuss new taxes on passthrough entities and S corps. What a time to be raising taxes; right? It is unbelievable. So Mr. Griffith, can you discuss how the additional 3.8 percent tax that the Democrats keep reviving would hurt small business? Mr. GRIFFITH. Well, it is going to discourage these business owners from actually saving and reinvesting that capital. Instead, they are going to be incentivized to consume that capital. It is going to harm not just the business owners but it is going to harm those people who rely on those businesses to create new jobs. Mr. WILLIAMS. Well, they are going to have to raise prices; right? They are going to get in defense mode. Instead of spending, they are going to have to hold for taxes. So it is a disastrous, backwards economy. And Americans are seeing Help Wanted signs everywhere in the windows of businesses across the country. A recent survey by the NFIB found that 50 percent of all business owners reported job openings it could not fill. These overwhelming staffing shortages are hindering business operations and limiting owners' abilities to keep up with current demand while preventing business growth. We have talked about this. Why do you believe, Mr. Griffith, that there are so many open jobs across the country right now, and how should the administration encourage Americans to return to work? Before you answer that, we have talked a little bit about it, but they might be able to encourage workers to go to work if we cut taxes. Let people make more money. Let people understand that there are jobs out there and employers like me, let's hire people, put them back to work because we have got a generation of kids that think a career is a $15 minimum wage or it is an unemployment check. We need to fix that. So what would be your advice? Mr. GRIFFITH. Well, two of the leading factors right now of people not going back to work, (1) People are still drawing down on the savings that they accumulated with all the generous government benefits. But also, work pays less today because of all this government spending and money printing. The typical person is earning around 10 percent less today in real terms than they were just 1-1/2 years ago. Work pays less. Mr. WILLIAMS. Right. And they want more money because they are trying to stay up with inflation and small business cannot afford to do it. So it creates a problem. So I guess at the end of the day I would certainly have less government and I would cut taxes again because it works and put money in the hands of these people so they can start spending again. With that in mind, Madam Chair, I yield my time back. Chairwoman VELAZQUEZ. The gentleman yields back. And now we recognize the gentleman from Pennsylvania, Mr. Meuser, Ranking Member on the Subcommittee on Economic Growth, Tax, and Capital Access. Mr. MEUSER. Well, thank you very much, Madam Chairwoman. I thank the Ranking Member Luetkemeyer as well. Thank you very much to our witnesses. And I am also pleased to say that I have a number of small business owners from Pennsylvania's District 9 here attending. So thank you all as well. So, Mr. Griffith, you know, facts are stubborn things. I am appreciating the fact that you are bringing out the facts. And, you know, there is a saying, ``In God we Trust but everybody else bring their data.'' So why do we not stick to the data and priorities? Small businesses are clearly under great pressure. This topic of access to capital is very important but it is simply not the priority right now. Inflation is. And there is also a saying that goes, ``When you are in a ditch, the first thing you do is stop digging.'' But I am not so sure the Biden administration understands this because the things that got us here are part of the plan moving forward, such as continued spending, a continued assault on our domestic energy, continued regulations. The CBO puts it over $200 billion just in the last 18 months. And no pro-growth or pro-production proposals. You know, pro-production would increase supply to meet demand as opposed to trying to diminish demand with higher taxes, which incredulously is being considered by the Biden administration and our friends in the left. So right now inflation is at 9.1 percent. In laymen's term, 9.1 percent is about 1/12th of your income or revenue for a year; right? So, in other words, 1 month of every year, 1 month of this year, income and revenue will be evaporated for every business and every family because of inflation. That robs people of a lot. And it is not looking much better moving forward. I mean, right now we have as much as 46 percent of families struggling to pay bills. One year ago, according to surveys, it was 60 million people struggling to pay bills as they would denote. Now it is 90 million, right, again, with no end in sight. We are also about to be informed that we are in a recession, regardless of whether or not the administration wants to admit it or how they want to redefine it after the historical definition that has existed. And inflation as we all know plays no favorites; right? It affects construction. It affects farmers. It affects manufacturers, service, families, everyone in the U.S. So some of my small business constituents stated that their focus right now is on fighting headwinds rather than growing their business. Another stated that, a family farm owner, fertilizer is up 300 percent. It should be no wonder why food prices are through the roof as they are. Others state how they cannot hire. Projects are being delayed, construction projects and other, and one of my constituents informed us that the infrastructure bill that was passed will now provide 30 percent less projects because of the level of inflation that has taken place. So we really have some serious issues to address. And Mr. Griffith, let me ask you this. Will continued regulations, continued excessive spending, continued assault on our domestic energy industry, keeping gasoline prices near $4.80, and new taxes, again, remarkably, they are considering new taxes on small business, is that going to help us turn the corner and provide small businesses relief? Or are there better solutions than that? Mr. GRIFFITH. No, this war on production right now that you see with this administration will make matters far worse. And you mentioned something very important. Fertilizer costs. Well, what goes into fertilizer? It takes a lot of energy to actually produce that fertilizer. So when you see our administration declaring war on fossil fuels, declaring war on affordable natural gas, we are remaking ourselves in Europe's image and Europe is even in a far worse situation than we are in terms of energy costs and in terms of agricultural production. So if we continue down this road, declaring war on production at the same time that we are going to continue spending trillions of dollars that we do not have, we are promising to make matters worse. And there is an alternative, and the alternative is to actually incentivize production and get government spending under control. That will make it possible for American families to have a higher standard of living once again. Mr. MEUSER. All right. I would love to ask the other witnesses the same question but I am out of time. Madam Chair, I yield back. Chairwoman VELAZQUEZ. The gentleman yields back. And let me take this opportunity to thank the witnesses on this very important topic that is the Surety Bond Guarantee. Maybe next time when there is a bill to cut taxes we should all be committed to make sure that small businesses are not an afterthought, sunsetting those taxes while corporate American runs away with the biggest cut in the history of this country. For small businesses to benefit as much as possible from this once in a lifetime infrastructure investment, they must be well-equipped to engage in the federal contracting process. By finding ways to improve and modernize the Surety Bond Guarantee Program, we can help more small businesses take part in this historic effort. I look forward to taking the insights we have heard today and working with my colleagues to ensure this program meets the needs of small firms, especially the disadvantaged businesses that need it the most. Without objection, Members have 5 legislative days to submit statements and supporting materials for the record. And if there is no further business to come before the Committee, without objection, we are adjourned. Thank you. [Whereupon, at 11:15 a.m., the committee was adjourned.] A P P E N D I X [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]