WASHINGTON — President-elect Barack Obama has shelved a proposal to slap the oil and gas companies with a new windfall profits tax because oil prices have dropped so much in recent months, the transition team confirmed today.

"President-elect Obama announced the policy during the campaign because oil prices were above $80 per barrel," a transition aide said. "They are currently below that now and expected to stay below that."

Obama's proposal had called for using the proceeds from the tax to give American consumers an energy rebate worth up to $500 per individual or $1,000 per married couple.

The transition aide could not immediately say whether the rebate plan has been put on hold as well.

The policy shift came to light after officials at the American Small Business League noticed that the windfall profits tax language had been removed from the transition team's Web site in what the group called "an unceremonious and abrupt manner."

Lee Fuller, vice president of government relations for the Independent Petroleum Association of American, applauded the change.

"Certainly, the judgment to withdraw the concept of a windfall profits tax is an important recognition that developing America's oil and natural gas would be seriously damaged by such a tax policy," Fuller said.

david.ivanovich@chron.com

Source:  http://www.chron.com/disp/story.mpl/business/6143060.html

As President-elect Barack Obama hunkers down with the brightest minds in the country to craft a plan to restore market stability, economic growth and national confidence, federal programs already exist that, with renewed interest and only a modest investment, could help lead us out of our worst recession in 80 years.

The U.S. Small Business Administration is a proven federal enterprise whose programs are fully capable of stimulating local economies around the country. Unfortunately, disdain for the SBA by the Bush administration — compounded by the diversion of funds to finance the Iraq war — siphoned off discretionary dollars in the federal budget. As a result, many SBA programs are on life support.

Tried and true incentives have been among the hardest hit during the past eight years. They include SBA loan guarantees, access to federal contracts for small businesses and business development assistance.

Small businesses are the source of half of all the nation's private sector employees and contribute more than 50 percent of U.S. non-farm gross domestic product. Yet, at $463 million this year, the SBA budget is less than half that of what it was during the last year of the Clinton administration ($1.1 billion in 2000).

The SBA reports a 30 percent drop over the past year in the number of loans it has issued, and a 13 percent decline — from $20.6 billion to $17.96 billion — in dollars borrowed. This continues a trend of annual declines under the Bush administration, the likes of which were last seen in the early 1970s.

As the premier advocate for mom-and-pop businesses, the SBA can provide the biggest bang for our buck in jobs preserved and jobs created.

Here's what we need to do:

• Breathe new life into SBA-guaranteed, private-sector lending. Federal help to financial institutions under the $700 billion bailout package should be tied to an ironclad pledge by banks to dedicate a sizable percentage — say, a minimum 25 percent of their loan capacity — to small businesses. If lending institutions use the SBA guarantee program, they will have minimal risk as these loans will be secured by the full faith and credit of the U.S. government.

• Transfer $5 billion of the $700 billion for other SBA investments: infrastructure, local brick-and-mortar initiatives, and support for veterans, women and minority-owned small businesses. These chronically underserved sectors of the economy are disproportionately impacted in a downturn.

• Invoke an "emergency powers" approach to the crisis, as is done in the event of natural disasters, and immediately roll back the punishing increases in SBA lending fees. Eliminate deleterious auditing assessments and other disincentives imposed on lenders and borrowers. In addition, the byzantine application process must be streamlined. Finally, extended payback terms should be allowed during this period of economic uncertainty.

• Facilitate sales by small businesses to the largest purchaser of goods and services — the United States government. The SBA needs tough enforcement mechanisms to reverse the big-business bias at government agencies — the departments of Defense and Justice are big offenders — that systematically ignore goals to reserve more than 23 percent of federal purchases for small firms. Loopholes must be closed on large businesses that acquire small firms holding multiyear contracts designated for small businesses. All federal dollars linked to contracts issued to small enterprises should be re-bid if those firms are acquired.

• New emphasis must be placed on the SBA's Small Business Investment Company (SBIC) program, its nationwide network of 1,100 Small Business Development Centers (SBDCs) and the Service Corps of Retired Executives (SCORE) mentor program. SBICs route private venture capital to worthy small enterprises. SCORE, with its retired business professionals and university-based SBDCs provide one-on-one counseling to those with the raw talent but not necessarily the acumen needed to navigate the challenges that start-ups inevitably face.

A reinvestment in the neglected Small Business Administration and an expansion of its already viable programs will yield positive results sooner rather than later, restore confidence on Main Street and underscore for the nation's last pioneers — job-creating entrepreneurs – that the incoming administration understands that a robust small business community advances the promise that is America.

Forbes, who lives in Round Rock, is a former New York congressman and a past senior official at the U.S. Small Business Administration.

Source:  http://www.statesman.com/opinion/content/editorial/

A small business advocacy group is accusing President-elect Barack Obama of backing away from his campaign promises before he even takes office.

The American Small Business League, which had supported Obama during the campaign, said it has noticed a disturbing pattern in which some of Obama's tax and small business proposals that had been prominent during the election campaign have been removed from the transition team's official Web site, Change.gov.

One such tax proposal was to enact a windfall profits tax on the oil and gas industry to provide a $1,000 emergency energy tax rebate to American families. Another campaign promise would have ended the diversion of federal contracts for small businesses to corporate giants such as Dell and Lockheed Martin, a key rallying point for the group.

"In terms of these small business issues, say for example, restoration of the SBA budget, staffing, business contracting, and those types of issues, we've worked with the Obama campaign, but we haven't seen any movement to coming to some kind of plan or a strategy," said ASBL spokesman Christopher Gunn. "We haven't seen the type of substance we've been looking for in terms of the small business community in this time of economic recession."

Earlier this week, Obama and his advisors signaled another possible change in tax policy: that he may not raise taxes on people who earn more than $250,000 per year when he takes office to pay for his health care program and middle-class tax cuts. Instead, he may simply allow the Bush tax cuts to expire at the end of 2010.

The group pointed to the fact that the promise about the windfall profits tax was displayed prominently at the top of the economy section of Obama's campaign Web site prior to the election. That same information was transferred to Obama's transition Web site, but was recently removed without warning (pre-change, https://www.asbl.com/documents/Economy_Change.pdf ; post-change, http://change.gov/agenda/economy_agenda/).

One reason for the change on the Web site could be the steep drop in gasoline prices in recent months, which has dampened the argument for taxing the oil and gas giants on their excess profits. But Gunn believes that gas prices will eventually creep back up to the levels seen earlier this year.

Source:  http://www.webcpa.com/article.cfm?articleid=29977

DAYTONA BEACH -- If one goal of the federal government's $700 billion emergency economic aid package passed in October was to restore access to credit, local retailers are not feeling an improvement.

"We are trying to work with a new vendor to get iPods in the store and approval is just taking forever," said Jan Arnett, owner of Z-Best Furniture Electronics & Appliances in Palm Coast with other stores in St. Augustine and Orange Park.

So, for short-term credit, Arnett uses his business credit cards to buy inventory and then pay off the cards as the products sell. He also has abandoned plans to build a new store in Ormond Beach until the economy recovers and traditional commercial credit is cheaper.

Nejma Peter, owner of Nejma's Boutique, was preapproved for a bank loan to build a three-unit retail shop behind her Flagler Avenue store in New Smyrna Beach. Plans had also been approved, but the bank withdrew its approval recently because it did not have the money to lend, said Peter, who also has a shop in DeLand.

"I was upset at first, but now I feel lucky that I was not caught with new shops that no one wants to rent," she said.

A lack of access to credit became critical in late summer as banks and lenders tightened, slowed or stopped lending because they became too overwhelmed with debt from holding distressed mortgages and foreclosed homes they could not sell. That sparked a financial market meltdown, economists said, and threatened the lifeblood of many small businesses, said J. Craig Shearman of the National Retail Federation.

"It is essential for businesses to have access to reliable sources of credit to buy inventory and make payroll," he said. "It is also important that consumers have access to credit cards and to make installment payments."

Money from the $700 billion package was supposed to buy mortgage-tainted securities from banks and lenders so they could be stabilized and would resume lending to revitalize the declining economy.

That did not happen.

Instead, the federal government used $125 billion to buy shares in nine major banks and another $37.56 billion for shares in another 21 smaller banks. The goal was to infuse banks with cash to lend, but there are no requirements that banks use the cash that way, said Lloyd Chapman of the American Small Business League.

"There is nothing in the package for the nation's 27 million small businesses that employ about 56 percent of American workers, especially retail owners," he said. "It was passed in a hurry so no one had time to read it all."

U.S. Treasury Secretary Henry Paulson announced about two weeks ago another bank infusion is planned as a quicker, more-efficient way to free up auto and student loans and back the issuance of credit cards.

"It's a complicated and fluid problem, and steps need to be taken right away. If that helps, we are all for it," said Bill Rys of the National Federation of Independent Businesses.

But a slowdown of spending is a bigger problem than lack of access to credit for most small businesses, which primarily deal with community banks that are not as burdened with risky mortgages and have more money to lend, Rys said.

Local retailers agree.

"We have been in business for 32 years, and this is the first year we have not seen positive growth," said Russ Dotson, who runs his family's Dale's Shoes in Daytona Beach. "We don't deal with the banks but with our vendors, and we have good relationships with them so we are not having a problem with credit."

"We are getting traffic in, but business is down 40 percent from last year," said Gus Gibbs, owner of Gus Gibbs Clothing and Collectibles in DeLand. "We have been here 31 years and have good credit with smaller banks and our vendors."

To combat a lack of shoppers, most retailers are cutting operational expenses and ordering less merchandise for the critical holiday shopping season

It's too early to tell if the government's plans and efforts are succeeding, said Barton Weitz, executive director of the University of Florida's David F. Miller Center for Retailing Education, who calls the future retail picture "grim."

"It has not filtered down to where the banks are making new loans," Weitz said. "To improve their chances to get new credit, retailers have to retool their business plans to reflect the times and show banks concrete ways they plan to cut costs. It's not going to be good for the next six to 12 months."

bob.koslow@news-jrnl.com

Source:  www.news-journalonline.com