Advocacy Forum

By U.S. Arlen Specter

As I travel around Pennsylvania, I hear how the current economic crisis is making it difficult for small manufacturers to survive and continue to create jobs.

As a senior member of the Senate Committee on Appropriations, I have long been a supporter of the Manufacturing Extension Partnership (MEP), which has been a valuable asset in maintaining the competitiveness and growth of American industry in the global marketplace.

Although the manufacturing sector lost more than 1.2 million jobs in 2008, manufacturing represents more than 12 percent of GDP. The MEP program is an important tool to promote American manufacturing.

As I do each year, I recently met with Pennsylvania manufacturers and representatives of the Pennsylvania Industrial Resource Centers (IRCs). In that meeting, we discussed the benefits of the MEP for the 18,000 small manufacturers throughout the state of Pennsylvania. These centers offer valuable consulting services that help manufacturers utilize new technologies, increase efficiency and retain higher-wage manufacturing jobs.

The MEP leverages federal resources and returns private sector investment.  Nationwide, the impact of the MEP is substantial. In fiscal year (FY) 2008 alone, the MEP helped to create or retain more than 57,079 jobs, generate more than $10.5 billion in sales, and provide cost savings of more than $1.44 billion.

In recent years, the Administration has sought to cut funding for this important program, and I have consistently fought to restore those cuts. The President proposed to fund the program at $46 million for fiscal year (FY) 2008 – a cut of $60 million from the previous year. I sought $113 million and Congress provided $89.6 million, an improvement over the Administration’s request.  For FY09, I advocated for a $122 million appropriation, and Congress provided $110 million.

I will continue to advocate for adequate funding for the MEP. For FY10, I am supporting the fully-authorized level of $131.8 million, an increase over the amount requested by President Obama. On April 25, 2007, I cosponsored an amendment to the America Competes Act, which increased the authorization level that can be made available for the program in future years. Additional modifications to the authorized amount may be considered in the near future, and I will continue to seek adequate funding for this important program.

I supported the economic stimulus because, without it, I believed the nation faced the risk of a far deeper and longer recession. In the absence of government intervention, many economists were predicting a depression on the order of 1929.

The American Recovery and Reinvestment Act, while far from perfect, will create or save up to 3.5 million jobs. It contains $288 billion in tax benefits to jump-start the economy by encouraging businesses to invest and consumers to spend. The United States Chamber of Commerce supported the bill, as did the National Association of Manufacturers.

The bill singles out small businesses and middle class taxpayers as catalysts in the recovery effort. It eliminates the threat of the alternative minimum tax (AMT) in tax year 2009 for more than 20 million middle class taxpayers by indexing the AMT exemption amount for inflation. The move will save individuals and small business owners from a pending $70 billion tax increase.

The Making Work Pay tax credit will put up $400 ($800 for couples) into the pockets of 95 percent of American workers. According to the White House, nearly five million Pennsylvanians will be eligible.

This bill has broad goals that will be measurable and visible. It will invest extraordinary amounts of money in the nation’s crumbling infrastructure and, in the words of one columnist, “rebuild America in a way that creates a world-class platform for a sustainable 21st century economy.”

To guard against waste and inefficiency, the bill contains strong oversight provisions. In all, it sets aside $206 million for the inspector generals of the 22 government agencies that will spend the money.  President Obama’s naming of government watchdog Earl Devaney, Inspector General of the Interior Department, as Chairman of the new Recovery Act Transparency and Accountability Board, further reinforces the commitment to careful stewardship. The President himself has repeatedly stated that the money will be spent wisely and as intended or not at all.

What are some of the things this legislation will do for business?

It will make it easier for businesses to invest and create jobs by allowing an immediate 50 percent bonus depreciation on new capital assets purchased in 2009 and by continuing the increased allowance for small business expensing at $250,000. To take account of individual circumstances, the legislation grants businesses in a loss position the option to accelerate AMT and R&D credits in lieu of bonus depreciation.

The bill extends the net operating loss carry-back period from two to five years for small firms; delays a burdensome three percent withholding tax on payments to businesses that sell goods or services to the government; increases the small business capital gains exclusion to 75 percent; and reduces the 2009 tax liability for individuals with adjusted gross incomes of up to $500,000 when more than 50 percent of that income is derived from a small business. Finally, the bill would help businesses strengthen their balance sheets by deferring for five years phantom tax liabilities resulting from restructured debts in 2009 and 2010. Separately, $730 million is provided for the Small Business Administration to expand lending opportunities for small firms.

The bill takes a forward look at the workforce of the future by providing $3.9 billion to train dislocated workers and prepare workers for careers in high growth and emerging industries.

I believe that this bill, while not perfect, is a necessary step towards reigniting growth and putting America back on its feet. I will continue to support efforts that bring jobs into the Commonwealth and help Pennsylvania businesses remain competitive.