NFIB's Letter to the Hill on Cap and Trade (H.R. 2454)

June 24, 2009

Dear Representative,

On behalf of the National Federation of Independent Business (NFIB), the nation’s leading small business advocacy organization, I am writing to express our opposition to H.R. 2454, the “American Clean Energy and Security Act of 2009.” At a time when our nation faces near 10 percent unemployment and stalled economic growth, now is not the time to impose an $846 billion energy tax on small business. Instead of investing in their businesses and creating new jobs, this cap and trade proposal will force small business owners to pay higher energy prices.

NFIB opposes H.R. 2454 because it will increase energy costs for all consumers. Today, small businesses are focused on keeping their doors open, maintaining their workforce, and paying their bills; they are not asking for new energy mandates or a new energy tax. Even though our economy is still struggling, our data shows that small business owners are regaining some optimism, albeit slowly. Now is not the time to cripple economic growth with an aggressive expansion of government mandates. After dropping to one of the lowest levels ever recorded, the NFIB Index of Small Business Optimism rose in both April and May, which may be a signal that our economy is starting to slowly improve. Still many of the index’s other factors, including hiring and sales, remain very low, meaning that while optimism is improving, a major change in the business environment - such as increased energy costs - could have an especially negative impact on small businesses. The Cap and Trade proposal has the potential to cripple economic growth from a further expansion of government involvement in the economy.

According to the NFIB 2008 Small Business Problems and Priorities data, the cost of natural gas, propane, gasoline, diesel, and fuel oil ranks as the second most severe problem small business owners face. Higher energy costs mean a higher cost of doing business, and small business is especially sensitive to increases in cost. According to the Congressional Budget Office, the federal government will raise approximately $846 billion in new revenue by forcing entities to participate in a cap and trade program – money that would otherwise be in the taxpayer’s pocket. Under the guise of this legislation, allowance holders are likely to increase their prices on small business and individual consumers. In fact, one major energy corporation has already petitioned to increase rates, citing expected increased compliance costs as a result of this legislation.

To address the immediate energy needs of small business, we support increased domestic and offshore drilling for oil and natural gas, as well as the expanded use of nuclear power. Unfortunately, none of these crucial needs are addressed in H.R. 2454. Additionally, the legislation will disproportionately impact small businesses that operate in states that rely on coal to generate their electricity needs. Furthermore, NFIB strongly opposes the inclusion of the Davis-Bacon Act in this bill. Davis-Bacon prevents many qualified small and minority-owned businesses from even bidding on public projects, because the complexities and inefficiencies in the Act make it nearly impossible for small businesses to compete. By including such language in H.R. 2454, Davis-Bacon will only drive up taxpayer energy costs even further.

NFIB strongly supports the independent actions of business to become more energy efficient. According to NFIB’s 2006 National Small Business Poll on Energy Consumption, over the past three years, over 43 percent of America’s small business owners have taken steps to reduce the amount of energy their businesses consume. Our members believe that the free market is best suited to develop new energy efficient technologies and renewable sources of fuel, and our nation’s job creators stand ready to do so without the heavy hand of government mandates.

 As small business owners grow more optimistic about the economy, a large, unfunded government mandate and a national energy tax are the last things small business and the overall economy needs. NFIB urges your opposition, and passage of H.R. 2454 may be considered an NFIB Key Vote for the 111th Congress.

Susan Eckerly
Senior Vice President
Public Policy