GROWING OUR ECONOMY AND PROMOTING ENTREPRENEURSHIP
Promoting economic competitiveness and opportunity in the 21st century must be America’s top priority. A strong economy produces good paying jobs, grows the middle class, and allows people who worked hard their entire lives to retire with dignity. Unfortunately, during the last several decades we have seen stagnating wages and falling incomes for the majority of Americans. For far too long, our economic policy has been driven by special interests that have made the system cater to them, while working and middle class families have been left behind. As we slowly recover from the Great Recession, the wealthy are doing better than ever while thousands across the South Bay are struggling like never before. We need a coherent economic vision that will provide economic opportunity to all Americans willing to work hard.
Just look at our antiquated tax code – it was written for a 1960s economy and is failing us today. It incentivizes companies to locate overseas while giving oil companies tax breaks and subsidies. At the same time, an impossibly complex bureaucracy has piled on burdensome and duplicative regulations that have stacked the deck against small businesses and entrepreneurs.
Our country needs bold leadership to ensure America maintains its position as the most productive and innovative nation on earth. My comprehensive economic agenda will increase our manufacturing and exporting capacity, reward entrepreneurs who take risks and keep our economy dynamic, help small businesses thrive and grow, and create good-paying jobs in the industries of the future – all while strengthening our middle class.
Championing Advanced Manufacturing
U.S. manufacturing is an important source of good paying jobs that offers workers a significant wage premium. Manufacturers make nearly 20 percent higher average weekly earnings than other workers with similar levels of education. And manufactured goods comprise about 65% of all U.S. trade, making them crucial to reducing America’s growing trade deficit. Our economic policy needs to draw on the strengths of America’s workers – by far the most productive and innovative in the world.
We need to expand manufacturing and tie it to technology process development – practices I studied while traveling the country to meet with small business owners during my two-year stint as assistant deputy secretary in the U.S. Department of Commerce. My book, Entrepreneurial Nation: Why Manufacturing is Still Key to America’s Future, details strategies for how government can help businesses of all sizes grow and export. I was especially struck by how many successful manufacturers stressed the importance of innovating at every stage of the production process. When everything from the design team to the production team is integrated, feedback flows freely. In Silicon Valley, we have a unique advantage. In 2012, the San Jose metro area was ranked first in the nation for advanced manufacturing. Nearly two out of five local jobs are related to manufacturing, more than double the national average.
- Incentivize manufacturers to locate in the U.S. While many traditional manufacturing jobs have disappeared in other parts of the country, Silicon Valley has grown its advanced manufacturing output. Apple, for example, is bringing the production of some Macintosh lines back from overseas.
But our tax incentive system is upside down. Today, many corporations are incentivized to move profits and facilities offshore. That has to change. We should actively encourage companies to locate here in the U.S. and create a tax structure that rewards them for investing and creating jobs here in America. We should also allow U.S. companies to bring their overseas profits back at a reduced rate if they invest a significant portion into expanding payrolls and building new manufacturing capacity.
- Promote free and fair trade. Ninety-five percent of the world’s consumers live overseas, yet only about one percent of American companies export. In addition to making American businesses – especially small businesses – more competitive, free and fair trade grows the economies of participating nations.
We need free trade agreements that are fair to U.S. workers and industries, and that include high environmental standards. As a former senior official in the U.S. Commerce Department focused on trade and manufacturing, I knows what it takes to open up markets to American products and understand how to promote American exports abroad. I’ll work tirelessly to improve America’s manufacturing policies and increase our global competitiveness.
- Increase funding to the Manufacturing Extension Project. California’s decline in manufacturing jobs is particularly sharp. A quarter of businesses have disappeared in the last decade, taking jobs, tax revenues, and future development potential with them. Without a strong base of manufacturing here in Silicon Valley, we lose the infrastructure to develop better products and innovative technology. The same is true for former manufacturing hubs across America.
We need to increase funding to the Manufacturing Extension Partnership (MEP), an effective initiative at the Commerce department, to strengthen our manufacturing sector. MEP is a nationwide network that works with small and mid-sized manufacturers to create and retain jobs, increase profits, and save time and money. For every federal dollar invested in MEP, it generates $20 in new sales and growth and $20 in new client investment, totaling $2.5 billion annually.
- Expand training for advanced manufacturing careers. The growing industry of advanced manufacturing – including 3-D printing and robotics – offers workers higher pay and greater job security. But high tech manufacturers also must have thorough technical understanding of their machinery and tools, which requires training.
Americans need more opportunities to learn the skills necessary to fill available advanced manufacturing jobs – current estimates count 3 million openings. One solution is more partnerships between manufacturers and junior colleges. For example, PG&E works with more than 30 California community colleges to train employees for the future energy workforce. In Silicon Valley, where many advanced manufacturing jobs are available, companies should partner with excellent community colleges – Mission, De Anza, Foothill, and Ohlone – to train the next generation of workers. This instruction is necessary for first time job seekers, laid off workers, and individuals whose hours have been reduced. These public-private partnerships match students with good-paying jobs and provide a well-trained workforce for local advanced manufacturers.
Entrepreneurs and the Innovation Economy
Entrepreneurs laid the groundwork of our country – Thomas Jefferson, George Washington, Alexander Hamilton, and Benjamin Franklin all operated businesses that helped position America as the most innovative place on earth. As a nation, we should continue to reward ingenuity – we always have here in Silicon Valley. Fairchild Semiconductor International, Inc., founded in 1957 in San Jose, was the first tech company in the Valley. Fairchild’s employees eventually branched off in search of a better way of doing things and to design new products. People shared ideas, but also competed to produce the best products. For our economy to thrive today, it is crucial that entrepreneurs continue taking risks to start new companies.
- Provide an incorporation tax credit. It’s misguided to tax people who are taking the risk of starting new ventures – especially when we offer subsidies to profitable, mature industries. The federal government should give businesses a tax credit to cancel out the variable incorporation fees they accrue in their state. This tax credit will incentivize more small businesses to incorporate, bolstering our economy.
- Extend research and development tax credits to start-ups. The R&D tax credit supports innovative research and job creation in sectors with the potential for long-term growth and security. Currently, the R&D tax credit can only be taken against a firm’s income tax liability – it’s rare for early stage businesses to qualify. I support a new R&D tax credit that allows startups to apply their credit to revenue or payroll taxes. In the early stages, a credit of even $30,000 can help keep business afloat long enough to reach profitability.
- Provide access to capital early on by facilitating crowdfunding. Since the recession, less credit has been available to small businesses. To boost economic growth, we need to make it easier for entrepreneurs to access capital so that they can build their businesses, hire more employees, and begin exporting products overseas.
Crowdfunding is one solution. It makes generating revenue and reinvesting profits possible without large dollar investors by allowing smaller investments from many individuals. Crowdfunding also democratizes investing, enabling an individual in the rural Midwest, for example, to participate in investment rounds in Silicon Valley. However, the Securities and Exchange Commission (SEC) has yet to expand crowdfunding by allowing individuals to invest via traditional equity models. I will push the SEC to lift its ban on crowdfunding, unleashing a new wave of entrepreneurism across America.
- Increase funding to the U.S. Patent and Trademark Office (USPTO). The General Services Administration’s decision to indefinitely postpone opening Silicon Valley’s regional USPTO is nonsensical. The USPTO is completely self-funded and should be kept outside the appropriations process. Regional offices are needed across the country to speed up the patent process, which will lead to more homegrown innovation. In Silicon Valley, which leads the nation in patents awarded, a regional office is absolutely essential. Without regional patent offices and more funding to the USPTO, our unsustainable backlog will continue to grow, putting our economic competitiveness at risk.
Congress must act immediately to help the USPTO issue higher-quality patents in a more expedient fashion, and move forward with opening regional offices. We also must prioritize better aligning the USPTO with international patent authorities to allow American businesses to export intellectual property more easily. The federal government should be helping our dynamic companies thrive, not holding them back with needless bureaucracy and red tape.
- Limit patent trolls. As an intellectual property attorney in Silicon Valley, I know that patents are at the cornerstone of the innovation economy. The existence of Patent Assertion Entities (PAEs) or “patent trolls” threatens innovation and cripples startup ventures that do not have the resources needed to litigate frivolous lawsuits. Instead of producing anything with the patents they control, patent trolls wait for alleged infringers to make large investments before asserting patent rights.
Congress must provide patent infringement defendants with an affirmative defense allowing for the complete dismissal of this kind of “gotcha” litigation. By removing the cloud of uncertainty created by such unethical conduct, businesses would be free to hire and invest based on their new intellectual property.
- Increase government investment in research, development, and innovation. Programs like ARPA-E work to advance high-impact energy technologies that are too early for private-sector investment. The spillover benefits of government investment in R&D are enormous. The Defense Advanced Research Project Agency (DARPA) and the National Institutes of Health are making long-term investments that will bring new products to market, including alternative sources of energy. The sequestration cuts to programs like NASA and federal research initiatives will slow down our economic recovery– and put us behind other countries increasing their research investments.
- Improve university technology licensing practices. The federal government invests $147 billion in research and development. Ninety billion of that sum funds faculty research projects and training for graduate students and post-doctoral fellows at institutions of higher learning, but return on investment is small. The emphasis university researchers place on generating patents, licenses, and startups results in prioritizing output over outcome. When patents are awarded, licenses issued, or startups established, there’s no guarantee that the products will yield revenue.
To increase the rate of return on federal investments in university research and to promote innovation, universities need to be more transparent and accountable. Higher learning institutions should provide more detailed financial performance data so we can better judge how well they are commercializing their research ideas and whether alternative models would produce better results.
Supporting Small Businesses
While big businesses advocate for their interests with powerful PACs and armies of corporate tax attorneys, small businesses are left at a significant disadvantage. Here in California, we have piled on burdensome regulation and as a result, many businesses are leaving. Small businesses are essential to our economy, representing 99.7% of all employer firms and employing more than half of private sector employees. They are also essential for creating jobs – 64% of new jobs were generated by small businesses over the past 15 years.
- Help small businesses navigate the burdensome regulatory regime. Too often when I talk to small business owners in this district, I hear a frustration with California’s duplicative regulations, red tape, and high taxes. The permitting process to open a business in California can take eight months or longer – in Texas, it takes six weeks.
Strong regulations are critical for protecting our workers and the environment, but there are also legislative actions we can take to make California and the country more supportive of small business. Federally, we should implement metrics for determining which regulations are actually necessary, and which strain businesses without benefiting workers, consumers, and the environment. The regulations deemed ineffective or unnecessarily burdensome should be scrapped.
The government needs to leverage existing technology to streamline the compliance process. A small business owner should not have to deal with 50 different forms from as many agencies. I support the creation of a one-stop-shop online to allow business owners to easily navigate the bureaucracy and spend their time and energy on what they do best – running their business.
- Improve mentorship opportunities. As I’ve talked to small business owners across Silicon Valley, I’ve heard the same thing repeated over and over: having an established mentor before starting a business is essential. The skills needed for success are often learned through experience on the job – having a good idea isn’t always enough. We should provide grants to community colleges to develop partnerships with business owners to mentor the next generation of small business leaders through outreach, meetings, and career advice.
- Ease tax burdens. The complexity of our tax code disproportionately affects small businesses – 85% of small business owners agree that tax laws are too complicated and should be overhauled. Additionally, 78% say a tax system with lower rates and fewer tax preferences would stimulate small business. As a member of Congress, I will prioritize reducing excessive small business taxes so that small businesses can continue fueling our economy and creating more jobs for American workers.
Improving our Infrastructure
Silicon Valley commuters spend an average of 39 hours per year stuck in traffic – that’s about $800 dollars spent on excess fuel consumption for every commuter. In addition to being bad for our environment, such long commutes increase congestion on our roads and decrease the productivity and qualify of life for Silicon Valley residents. Any discussion about growing the economy should include strategies to improve our infrastructure to help families commute to work and businesses get their products to market.
- Increase financing for infrastructure projects. Improving our infrastructure is a bipartisan issue that will create jobs while improving our commerce abilities – labor unions and corporations alike favor greater investment in infrastructure. When our bridges, roads, power grids, rail networks and other systems got a “D+” on the most recent annual national report card issued by the American Society of Engineers, it’s clearly time for us to improve – and create jobs in the process.
I support President Obama’s proposals to update our infrastructure through a combination of public and private investments. His plan includes offering tax breaks and loans to stimulate private investment, opening an infrastructure bank that would use $10 billion in public money to leverage private investment, helping state and local governments borrow money for new projects with bonds, and opening up investment through pension and retirement funds by eliminating the tax penalty.
- Expand BART’s reach. I strongly support the BART Silicon Valley project, a $900 million grant agreement with the Federal government that will extend BART 16.1 miles from Fremont into Santa Clara County. Once completed, the project will reduce commuters’ travel time and generate new jobs as housing is built around new stations in the South Bay. Estimates show that throughout the duration of the project, 2,400 temporary jobs and 7,000 jobs will be created, and BART Silicon Valley is expected to generate between $4.4 billion and $6.9 billion in economic activity in Santa Clara County over the next 25 years. As a member of Congress, I will advocate for infrastructure projects and negotiate grant agreements between federal and local governments to pay for them.
Growing the Clean Energy Economy
Preserving the environment is no longer an abstract debate, but one we must immediately address to protect our planet and the health of our future generations. But the environmental threats we face also generate new opportunities for us to invest in green and alternative energy technologies of the future, which will create new jobs for middle class workers and bolster America’s competitiveness around the world.
- Create jobs in wind and solar. Three decades ago, the U.S. led the world in the development of renewable energy. Unfortunately, we’re now losing the race to countries like Germany and China. Renewable energy has the potential to create tens of thousands of construction and manufacturing jobs in our country, while simultaneously bringing down energy costs. Wind and solar are particularly promising forms of alternative energy that could boost local and regional economies.
Germany leads the world in total solar power capacity per capita, and 2011 estimates indicated that its solar industry had created 100,000 new jobs for German workers. Meanwhile, the U.S. ranks 20th worldwide in solar. China doubled its cumulative wind capacity every year between 2006 and 2011 to lead the world’s wind power market, while our economic slowdown and lack of long-term energy renewable policy caused a 43% decrease in our wind energy installations.
I will implement long-term policies to incentivize renewable energy initiatives. In Germany, the government has reduced costs of things like permitting and inspection to make it easier for customers to acquire alternative energy – the cost of implementing a residential solar energy system costs about 40% less in Germany. We should be cutting costs in a similar way. Additionally, I support increasing government investment in green R&D projects so that alternative energy prices will decrease for the average consumer.
- Increase investment in Advanced Research Projects Agency-Energy (ARPA-E). ARPA-E gives American energy researchers funds for developing new energy technologies. The rate of success and job creation from government investment in ARPA-E has been high, and the payoffs will increase as ARPA-E’s work accelerates our ability to bring breakthrough technologies to market that are good for the environment.
- Support and expand energy-from-waste (EfW) facilities. The U.S. generates an extremely large amount of trash – 390 million tons per year. The Newby Island Landfill in Milpitas alone is permitted to accept up to 4,000 tons of municipal solid waste every day, which releases potent greenhouse gas pollution as it decomposes.
I will work with community leaders to install EfW facilities at the Newby Island Landfill, which will decrease pollution and the impact on our local environment while providing a new source of low cost energy. EfW facilities, which burn garbage in a controlled environment that generates electricity, are an underutilized method of decreasing waste production to create energy.