Micro Offering Safe Harbor Act

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, H.R. 2201 would create an unnecessary and potentially dangerous loophole in Federal and State securities laws by allowing companies to sell unregistered securities without important safeguards that normally apply to such transactions. Specifically, the bill would allow a company to raise up to $500,000 from 35 or fewer investors, subject only to the requirement that each of these investors has a substantive preexisting relationship with the company.

Currently, before a company can offer or sell its securities, it must either register the offering with the Securities and Exchange Commission--that is the SEC--or qualify for at least one of several existing exemptions from registration. These exemptions provide reduced regulatory requirements for businesses conducting the offerings, but are limited to investors who have the financial sophistication to understand the risks, or enough assets to bear losses without the full protections of the securities laws.

Additionally, unlike H.R. 2201, these existing exemptions include several critical investor protections, such as notice to regulators, limitations on advertising, and restrictions on resale. For example, securities offered pursuant to rule 506 of regulation D are restricted, meaning they cannot be resold for at least a year without registering them; that is, re-registering them.

Additionally, the re-registration exemptions available under the crowdfunding rules and regulation A impose limitations on the amounts an individual can invest in a year, thereby placing a cap on potential losses.

H.R. 2201's lack of basic safeguards would leave investors vulnerable to an array of investment scams. For example, a purchaser of securities offered pursuant to H.R. 2201 would be able to immediately resell the securities in secondary transactions. In the past, the failure to restrict the resale of unregistered securities has exposed secondary investors to ``pump and dump'' schemes, a form of fraud that involves hyping up cheap junk stock in order to resell it at a higher price to unwitting investors.

Additionally, investor and consumer advocates, like Americans for Financial Reform, Center for American Progress, and Public Citizen, oppose H.R. 2201 because it would enable a particularly deceptive scam known as ``affinity fraud.'' Bad actors perpetrating affinity fraud could use H.R. 2201 to prey upon religious communities, ethnic groups, and the elderly.

Just a few years ago, the SEC shut down a scheme targeting the Hispanic community in southern California. The perpetrators raised more than $800,000 by representing to close friends and family members that their investment would be used to develop a financial services firm serving the Hispanic community.

The SEC found that, instead of developing the purported business, the scammers ``used a large part of the investors' money to engage unsuccessfully in high risk `day-trading' of stocks; pay personal living, travel, and entertainment expenses; or make other unexplained expenditures with no connection to the purported startup business activities.''

H.R. 2201 would provide a roadmap for bad actors to similarly rip off investors. The bill's $500,000 cap on offerings does not eliminate the need for robust safeguards against fraud and abuse. In fact, these protections are even more important for offerings of this size, given the proliferation of investment schemes in the smaller offering space.

The SEC has found that ``fraud in the micro cap stock markets is of increasing concern to regulators, as such markets have proven to be fertile grounds for fraud and abuse.''

While $500,000 may not seem like a lot on Wall Street, for Main Street Americans, losing even a fraction of that amount would destroy the hope of one day retiring with dignity. Existing exemptions such as those available under the SEC's regulation D, regulation A, and crowdfunding rules provide ample opportunities for companies to raise capital while also protecting investors.

H.R. 2201 would only expose hardworking Americans to a new and wholly unnecessary risk. For these reasons, I urge my colleagues to vote ``no'' on H.R. 2201, and I reserve the balance of my time.

General Leave

Mr. Speaker, I yield such time as he may consume to the gentleman from Rhode Island (Mr. Cicilline).

Mr. Speaker, may I inquire as to how much time I have remaining.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, we have laid out this morning exactly how vulnerable groups and individuals can be taken advantage of with legislation like this. I don't know exactly where this legislation originated, but I can almost guarantee you that we are creating opportunities for individuals who don't have the best interest of our constituents at heart to literally get small groups together, 35, I guess, or less, and sell them on ideas where they are raising funds that probably will not result in profits as expected by those who are investing in these schemes.

No, there are no protections. There is no notice. The SEC will not know when and where these schemes are arising. So I would say to my colleagues on the opposite side of the aisle: When are we going to act as if we have the best interests of our constituents at heart? When are we going to be about protecting consumers rather than opening up opportunities for them to be the victims of fraud?

We have fraudulent schemes that are directed at the most vulnerable people. I know where those people who are organizing these schemes will go. They will go to our churches where well-meaning ministers and parishioners will be taken advantage of.

In these vulnerable communities that are always taken advantage of, we have people who are the victims of payday loans where they are paying 400 percent for moneys that they are borrowing when they are desperate in between paychecks. We have rent-to-own schemes. We have all kinds of schemes where these convenience stores, in places where we have food deserts, are charging extremely high prices for food that is basically being sold for regular, ordinary, good prices in other communities.

In some communities, even in California, the gas taxes are rising. We have the rental market that is going off the scale all over this country with people not being able to afford a decent lease or a decent rental space, and so here we are just opening up another opportunity for folks to be ripped off.

It is going to happen; I can guarantee you that. When you have something like this that is passed by the Congress of the United States, it is going to be taken advantage of, and the way that this is constructed, it almost begs to be taken advantage of.

So do you know what happens when this kind of thing takes place and Members of Congress put their reputations on passing this kind of legislation? When the rip-offs start and people are harmed a few years later, then they are going to come back with legislation talking about how they are correcting the fraud and the rip-offs that we caused in the first place.

When is this going to stop? We have a Consumer Financial Protection Bureau that is struggling every day to protect our consumers. Prior to Dodd-Frank, we had our oversight agencies with the responsibility of protecting consumers, but they didn't have any real protection. So Dodd-Frank reforms helped to create opportunities for Members of Congress to be able to protect their consumers and not to be involved in these kinds of schemes.

But the opposite side of the aisle has spent an inordinate amount of time trying to kill off the Consumer Financial Protection Bureau, and they have done it in so many ways. Not only do they come up with amendments time and time again to try and shut down the Consumer Financial Protection Bureau, they treat the Director of the Consumer Financial Protection Bureau so badly that they almost deny him the opportunity to come before our committee and to be heard.

So I don't know whose side legislators are on who create this kind of crap. I don't understand why it is deemed to be important to open up the opportunity for schemes and to not give the SEC the ability to know when they are getting started, to have the

kind of disclosures, and to have the kind of oversight that would protect the most vulnerable people in our society.

Mr. Speaker, yes, this legislation will probably pass today. The Republicans have the majority votes in this Congress, and I suppose they are going to get all of their people to vote for this bill that is going to rip off some of their constituents, and, again, we won't be able to stop it because, again, they have the majority votes.

But I want the people of this country to know and understand what is happening, who is doing it to them, and why they are having a difficult time. At a time when the rental market is going off the scale and they can't afford to pay the first and the last month's rent to get into a place, I want them to know who is creating the difficulties in their lives when their jobs have not increased their pay, they are still trying to have a decent quality of life for their families, despite the fact that the pay does not match the job that they are doing, and they haven't had the pay increases.

When are we going to show that we stand up for the least of these? When your churches get ripped off--and we are working on some of those schemes now where, even with the responsibilities that the SEC has, we have people who are getting ripped off, and here we come with another piece of legislation. Then what we do is we shade it in terms of this is for small business development. Then we hear from the opposite side about all the other companies who started as little-bitty companies in their garage. Well, they all started without this bill. They didn't need this bill to start.

So why are you doing this? Yeah, you are right; there are a lot of companies, and you have named them, particularly in the high tech industries that started, and they had some of their own money to get started with, and maybe the family helped them, I don't know, but they didn't have this legislation. They didn't need this legislation. Nobody needs this legislation.

This legislation is harmful, and I would ask my colleagues to vote against the bill. If there are any Members on the opposite side of the aisle who really are concerned about their constituents, I would ask them to defy their leadership and vote against this bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, by allowing entities to sell unregistered securities based solely on a preexisting relationship with the investor, H.R. 2201 would create a road map for affinity fraud.

Affinity fraud is a type of investment scam where swindlers prey upon members of identifiable groups such as ethnic or religious communities or the elderly. Often, affinity fraudsters take advantage of preexisting relationships to engender trust and convince victims that a dubious investment is legitimate.

The Securities and Exchange Commission has found that such frauds pose heightened risks to investors because they can be difficult for regulators or law enforcement officials to detect, particularly where the fraudsters have used respected community or religious leaders to convince others to join the investment.

The following cases represent a sampling of recent affinity fraud actions from around the United States.

In August, 2013, the SEC halted an offering fraud scheme where Steven Bruce Heinz, a Utah resident purporting to be an investment adviser, sold phony investment contracts to more than 15 of his former clients, family members, and friends. According to the SEC's complaint, Heinz raised $4 million in investor funds he used to engage in high-risk trading of future contracts and to pay his own personal expenses such as family vacations to Mexico and a $600,000 loan.

Among the investors taken in by Heinz scam was ``the recent widow of a church associate of Heinz who invested with Heinz after he volunteered to assist her with her finances and investments after her spouse died.''

In 2012, the SEC stopped a $7.5 million fraud operation targeting the Persian-Jewish community in Los Angeles. The SEC's assistant regional director stated that Shervin Neman ``deceived members of his own community to raise money in this fraudulent Ponzi scheme. By exploiting investors' trust in him, Neman was continually able to raise more money to pay back existing investors and finance an extravagant lifestyle.''

According to the SEC's complaint, among other things, Neman spent investor funds to pay for his wedding and honeymoon, his wife's engagement ring, luxury cars, and VIP tickets to entertainment venues.

In 2015, the SEC permanently barred John Allan Russell from the securities industry after Russell pled guilty to securities fraud in Colorado State court. The SEC's administrative law judge found that Russell obtained almost $300,000 by selling debt securities to an elderly victim who suffered from dementia and Alzheimer's disease. The ALJ also determined that ``Russell's scheme may have involved affinity fraud because the misconduct began a few years after the victim acted as Russell's godfather at his baptism.''

These cases demonstrate that H.R. 2201's preexisting relationship requirement would not provide any meaningful deterrent against abuse. On the contrary, it would encourage opportunistic conduct targeting communities.

Mr. Speaker, I urge my colleagues to join me in voting ``no'' for this bill.

Given all that the SEC is able to do, they can't keep up with these schemes, and now you are going to open up the door for them to have to wrestle with trying to help people who are victims of these kinds of schemes.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, the North American Securities Administrators Association sent this letter of concern. They said that H.R. 2201 would result in an overly broad Federal exemption that would allow public solicitation and sales to any investor, regardless of sophistication or financial wherewithal, subject only to the requirement that there be a previously existing relationship, a standard that is not difficult to establish.

In practical terms, this means that Main Street investors could be solicited and sold up to $500,000 in private security by bad actors, including persons having been convicted of crimes or subject to one or more previous State enforcement actions, without any disclosure to the investor and without any notice to State or Federal regulators.

There is no valid basis for Congress to prevent State officials charged with protecting their constituents from making decisions about purely local or regional issues that would rely on the exemption established by H.R. 2201.

Further, preemption of State review or even notification for the type of small, localized offerings contemplated by H.R. 2201 would effectively handcuff the regulators best positioned to oversee such offerings.

Public Citizen said this bill ``would permit small offerings with no investor protections, such as notice of the offerings. It will enable a type of affinity fraud, where the seller can unload dubious securities, provided there is some relationship between seller and purchaser. This bill assumes that a preexisting relationship will deter abuse, which is a tenuous foundation, at best. Further, the relationship can begin with the offer.''

They don't have to have a previous relationship. It would start when the offer takes place.

Public Citizen further stated that ``the bill says the relationship must only exist before the purchase.''

Mr. Speaker, I include in the Record letters from these groups, as well as a letter from Americans for Financial Reform.

North American Securities

Administrators Association, Inc.,

Washington, DC, November 7, 2017.

Re H.R. 2201--The Micro-Offering Safe Harbor Act.

Hon. Paul Ryan,

Speaker, House of Representatives,

Washington, DC.

Hon. Nancy Pelosi,

Democratic Leader, House of Representatives,

Washington, DC.

Dear Speaker Ryan and Leader Pelosi: On behalf of the North

American Securities Administrators Association (``NASAA''), I

write to express concern and raise specific objections to

certain provisions of H.R. 2201, The Micro-Offering Safe

Harbor Act, which is scheduled to be considered by the House

of Representatives this week. The legislation would amend

securities laws in ways that could be profoundly detrimental

to investors, and detract from the viability of the

marketplace for offerings from new or smaller issuers that

are compliant with securities law.

The Micro-Offering Safe Harbor Act amends Section 4 of the

Securities Act of 1933 to create a new exemption from

registration. To qualify for the exemption, an offering would

have to meet certain criteria regarding the number of

purchasers, their relationship to the issuer, and the amount

of capital raised. However, as more fully discussed below,

the legislation fails to include critical investor protection

measures and would preempt state regulatory authority.

State securities regulators understand the need of small

businesses to efficiently raise capital and the role strong

investor protection plays in facilitating this goal.

Unfortunately, the changes embodied in H.R. 2201, while well

intended, are ill-advised and potentially quite dangerous.

For example, unregistered securities purchased under the

exemption established by H.R. 2201 would not be

``restricted,'' and could thus be sold immediately, exposing

investors to classic ``pump and dump'' schemes. Furthermore,

NASAA is aware of no evidence to support the proposition that

Congress should create a ``safe harbor'' to permit

unregistered securities offerings to be offered and sold,

including through general solicitation, regardless of

investor sophistication or financial wherewithal. Even as the

bill stands to introduce new and totally unnecessary risk

into securities markets--failing to even disqualify ``bad

actors'' from these markets--the goal of the legislation

remains unclear and its necessity is, at best, not well-

established. It is clear, however, from the terms of the

exemption, and its failure to impose even the modicum of

regulatory oversight that exists for similar ``private''

offerings under SEC Regulation D Rule 506, that offerings

made under the new exemption are likely to be

disproportionately risky and illiquid. This fact alone should

be cause for concern by Congress.

Beyond stark new risks to investors, this legislation

threatens to jeopardize the continued viability of

established markets geared to smaller issuers, many of which

operate lawfully within existing federal and state securities

laws. Such markets include securities sold pursuant to SEC

Rule 506, new federal exemptions established by the JOBS Act,

and exemptions adopted in many states to permit intrastate

crowdfunding. Without effective investor protection measures

a potential effect of H.R. 2201 could be to cause investors

to abandon the markets for smaller issues.

In closing, NASAA reiterates strong opposition to the

preemption of state registration and notice filing authority

in H.R. 2201. There is no valid basis for Congress to prevent

states from making decisions about the local or regional

issues that H.R. 2201 seeks to encourage. Failure to register

or at the very least, to notice file with state regulators

results in unknown sales, by unknown actors of unknown

enterprises and result in no gatekeeper function to protect

retail investors whose only source of recourse for fraudulent

sales are the state securities regulators. At a minimum H.R.

2201 should:

1) Include bad actor disqualifications;

2) Establish a holding period to reduce the likelihood of

``pump and dump'' schemes;

3) Provide at least a notice filing with state regulators

so that in the event of a fraudulent offering, state

regulators can begin an investigation to try and protect

retail investors;

4) Limit the sale amount to retail investors so that

investors are not ``encouraged'' to place all their eggs in

one basket; and

5) Prohibit or restrict general solicitation of what are

clearly high risk securities.

Thank you for your consideration of NASAA's views.

Sincerely,

Joseph P. Borg,

NASAA President and Alabama

Securities Director.

Mr. Speaker, I don't understand why Members of Congress would disregard what the State regulators are saying. State regulators are saying: Don't do this. Don't preempt us. Don't pass legislation that would undermine our ability to protect your constituents.

Yet they are ignoring this altogether. I know that they received this information. I know that they know that the association had cautioned against this legislation. Let me just make sure that everybody knows. It is the North American Securities Administrators Association. They represent all of the States in cautioning against this legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

For my colleagues on the opposite side of the aisle who are bemoaning the fact that small businesses don't have access to capital, they have these relationships with all of these big banks.

Why don't they get to the big banks and tell them they ought to be making loans to small businesses?

I don't hear them, as a part of, you know, their rhetoric, talking about how many of the big banks are not being responsible. And so my colleague on the opposite side of the aisle and my friend talk about what is common sense. I tell you what is common sense. Common sense is not to place vulnerable people in a position where they are going to get ripped off.

Mr. Speaker, H.R. 2201 is a harmful bill that would simply serve as an invitation for investment scams. The bill fails to take into account the numerous other exemptions we have for small-dollar offerings, including under regulation D, regulation A, and crowdfunding rules. These exemptions already permit small businesses to raise capital while also protecting against fraud.

In light of these exemptions, there seems to be no reasonable explanation for the amount of legislative effort that has been wasted on this bill. Instead of H.R. 2201, which is unwarranted and may actually harm investors and the integrity of our markets, the House should be focused on passing legislation that can actually improve the lives of the Americans whom we serve.

Mr. Speaker, I urge my colleagues to vote ``no'' on H.R. 2201. Don't be a part of enacting one more scheme that is going to rip off our constituents, and then, you know, a few years later, come back here and talk about what a terrible thing it is that people are being ripped off by these investors, some of them who are criminals, but nobody knows it. The disclosure does not have to take place. They don't know that they have people who have already been involved in crimes who are coming to them talking about: let me help you earn some profits on this investment.

We know better. Common sense tells us better. If, in fact, we are committed to the proposition that we have a responsibility to protect our constituents from rip-offs, from fraud, from being taken advantage of, we will not support this bill. And I would hope that my friends on the opposite side of the aisle, despite how far they have gone in trying to represent that this bill is something that it is not, would at least change their minds today and support their constituents and vote ``no'' on this bill.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I claim the time in opposition to the amendment, even though I am not opposed.

Mr. Speaker, under the current language of H.R. 2201, investors could be sold private securities by persons who have committed fraud or have violated security laws. Representative Emmer's amendment purports to add a layer of investor protections by adding a provision to so-called disqualify certain bad actors from utilizing the exemption.

While I applaud Mr. Emmer's attempt to add this most basic guardrail to a bill that otherwise creates an unmitigated safe harbor for fraudsters, I wonder why this provision was dropped from a similar bill that Mr. Emmer introduced last Congress.

Unfortunately, this amendment is woefully inadequate to address the otherwise dangerous new exemption created by H.R. 2201. Because the underlying bill requires no disclosure to investors and imposes no obligation to notify regulators of the offering, even if amended, H.R. 2201 would lead convicted fraudsters and lawbreakers to police themselves.

Moreover, the bill ties the hands of State securities regulators, who are the primary watchdogs over small, local securities offerings. If enacted, H.R. 2201 would leave a gaping hole in oversight of the very offerings it permits.

H.R. 2201 is a misguided attempt to support small businesses that is not meaningfully improved by the meager protections of this amendment. For these reasons, I continue to oppose this bill, and I urge all of my colleagues to vote ``no'' on H.R. 2201.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I would like to warn the Members of this House not to take the compliments seriously that are being given by the gentleman who would have you believe that somehow I have totally embraced this amendment because I think it is going to change the fact that there is no disclosure to those who would be investing and no notice to the SEC.

So don't take him seriously when he talks about thanking me for encouraging and embracing. I have not done that. I am going to tolerate this amendment. It is late. It doesn't do what he says it is going to do. The bill is still a bad bill. It is a bill that is going to harm people. It is a bill that targets the most vulnerable people in our society. It is a bill where fraudsters are going to go into churches and convince ministers and parishioners that they are out to help them.

Members of Congress, do the right thing. Today, stand up against another attempt by misguided folks who would have you believe that they are helping people when, in fact, they are opening up opportunities for them to be ripped off one more time, ripped off in ways that could have been avoided.

Mr. Speaker, I oppose this bill. I ask everybody to vote against this bill.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield to the gentleman from California (Mr. McCarthy), the majority leader, for the purpose of inquiring about the schedule for the week to come.

(Mr. McCARTHY asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I thank my friend for that information.

First, I want to start by saying that the majority leader and I and four other Members of the House had an opportunity to visit both Puerto Rico and the Virgin Islands last weekend since we had our last colloquy.

First, I want to thank the majority leader for organizing that trip and including me on it. It was an eye-opening trip. The majority leader and I have done an op-ed, which will be appearing sometime in the near term, on our observations.

One of the things, Mr. Speaker, that I know the majority leader and I had the opportunity to see, we were in Marathon, where you had housing that was built after Andrew and housing that was built before Andrew.

Now, the difference was, after Andrew, that extraordinary hurricane, the building code was changed. We saw the stark difference between housing that survived essentially Maria and Irma and housing that did not, and the difference was, of course, that the housing that survived was built to different standards after Andrew.

The majority leader and I discussed this matter, along with Mr. Bishop, who chairs the committee that oversees both Puerto Rico and the Virgin Islands, and I think all of us are convinced that it would be penny-wise and pound-foolish not to build back, as Florida did, to standards that can withstand storms of this type.

So I wanted to thank the majority leader for his leadership on this issue.

The majority leader took the extraordinary effort to climb down a river bank, go across the river--the river was very low at that point in time--and then up a very long ladder, because people were stranded on the other side. The majority leader went to see them and assure them that we would not forget them.

We were the first codel to go to the interior of Puerto Rico, as opposed to simply go to San Juan or another large city, so I thank the majority leader for his leadership on that issue.

Mr. Leader, let me ask you about tax reform. That, of course, has been the big issue for some period of time now, but now we have a bill that is not on the floor yet, but was released yesterday.

It is clear this bill will cut taxes, in our view, for the wealthy. I don't know the statistics yet, what the division is, whether it is 80/ 20, as the initial proposal was, or perhaps a little less than that that goes to those over $900,000 in income. But, in any event, it also eliminates tax preferences that the middle class families rely on, and, obviously, we think it is going to face hurdles in Congress.

What I wanted to ask was: When does the gentleman expect the bill to be marked up?

Mr. Speaker, I yield to my friend.

Mr. Speaker, I thank the gentleman for his comments. He talks about IPAB. Of course, we add the $17.5 billion to the debt.

The gentleman did not mention the $1.5 trillion in additional debt that the passage of the tax bill will result in, but he did talk about some people who are going to be really advantaged.

So I would like to ask the majority leader: Will those people who will be advantaged or, for that matter, disadvantaged have the opportunity next week to testify in a hearing on the substance of this bill?

Mr. Speaker, I yield to my friend.

Mr. Speaker, he did not answer my question, however. Will people have an opportunity to testify on this bill? The answer is no. No American will have an opportunity to come to a hearing.

In 1968, the gentleman from California, the majority leader, was not here. I was here. We had hearings over months, both sides of the aisle. Over 450 witnesses testified not on tax bills that may have been offered at some time in the future, including the Camp bill.

When the Camp bill, Mr. Speaker, was reported--actually, it wasn't reported. When it was put on the table by Chairman Camp from Michigan, who is now retired, the Speaker's response was, when asked by the press, ``What are you going to do with that bill?'' he said, blah, blah, blah, blah. In other words, what he was saying was all talk. We are not going to do anything with that bill, and that bill never saw the light of day.

It was paid for, Mr. Speaker. It was tough love. I didn't agree with everything in the Camp bill, but I congratulate Congressman Camp for having the courage to put a bill on the floor that was paid for, not creating $1.5 trillion in additional debt that our children will have to pay. They are not here to testify either.

I don't want to really get into a debate on the specifics. We are going to have a lot of time to do that next week, and I intend to do it next week, but he talked about small businesses being reduced to 25 percent. They will be if they make over $500,000.

That is why the NFIB is not for this bill, Mr. Speaker, talking about small business. They are the spokespersons for small businesses, and they are not for this bill.

We will talk about the substance, but the process mirrors the process for the Affordable Care Act: no hearings, no witnesses, very, very little time for the public or the Congress to digest the substance of this bill dropped yesterday. It is going to be marked up on Monday. That is 96 hours to consider a bill well over 500 pages.

Mr. Speaker, I asked about process. The reason I asked about process and regular order is because regular order provides for input from the people we serve, the public, about whether the bill is good, bad, or indifferent and how it will impact them.

We are going to debate it here. We represent those people. But regular order is hearing from them before we act, not after we act.

Yes, we are replicating the Affordable Care Act: put on the table, quickly passed, jammed through, sent to the Senate. And it didn't work, Mr. Speaker. I don't think this will work either.

I was here in 1986, Mr. Speaker, when Tip O'Neill and Ronald Reagan, Bob Packwood, who was the Republican's chair of the Senate Finance Committee, and Dan Rostenkowski from Illinois, the Democratic chairman of the Ways and Means Committee, worked together with Jim Baker, the former Secretary of State but then Secretary of the Treasury, worked with us to

come up with a bill that could be passed. And it was passed, Mr. Speaker, with overwhelming votes from both sides of the aisle. It was the last time we passed tax reform. Since then, we have just passed tax cuts.

Under Ronald Reagan, we passed a tax cut in 1981. The deficit increased under Ronald Reagan 189 percent. Under George H.W. Bush, the deficit increased 55 percent in 4 years, 189 percent in 8 years. Under Bill Clinton, the debt increased 36 percent; George Bush, 87 percent after the 2001 and 2003 tax cuts, and we were promised that they were going to energize the economy and dynamic scoring would come into effect and the country would be rolling in clover. Seven years later, we had the deepest recession anybody serving in this body has experienced, Mr. Speaker, and the debt exploded.

Barack Obama, just by contrast, inherited the worst economy any of us has seen--the worst economy--hemorrhaging 787,000 jobs per month in January of 2009. We had to bring the economy out of that deep recession, and we invested dollars. But even given all that necessity and the $700 billion bill that we passed, that George Bush passed, where two-thirds of Republicans were opposed and which kept us out of a depression, Barack Obama increased the debt by 1 percentage point more than George Bush.

I say to my friend, the reason for having hearings, the reason for having economic experts like Mr. Bartlett, who worked for Ronald Reagan, who said that tax cuts do not pay for themselves. They say $1.5 trillion. I guarantee you, Mr. Speaker--I may not be here when we can find this out--this is going to be far above $1.5 trillion in additional debt, and my children and my grandchildren and my great- grandchildren will be exposed to paying that bill.

It is a shame, Mr. Speaker, that we do not have extensive hearings on this bill in the House and in the Senate. My judgment is the Senate doesn't expect to have hearings on this either. They are just going to try to jam it through, Mr. Speaker, and that is not good. That is not good for this institution. Much, much more importantly, it is not good for the present generation or generations to come.

We will debate, Mr. Leader. I know you are passionate about the substance. You are very knowledgeable about the substance. We talked about it in private, and I admire the passion that you have and the information that you argue. I may differ with your information, but we will have the opportunity to debate that, I think, next week and the week after.

Mr. Speaker, I yield to the gentleman from California.

Mr. Speaker, we are going to debate the substance of the bill; we are going to debate it fully. We think it will not hold up well under that debate. Therefore, we will have a significant difference.

He is right. The best economy anybody in this House has experienced-- the best economy--was the last 4 years of the Clinton administration, period. Guess what we had? We had a little bit of a tax increase. We increased the gasoline tax, and we tried to pay to for infrastructure. We haven't increased it since then.

The Republicans said: You do that, oh, the economy is going to go down the drain. The best economy any Republican has experienced in their lifetime is under Bill Clinton. We balanced the budget 4 years in a row under Bill Clinton, the only President you can mention that balanced.

It never balanced under Ronald Reagan. It never balanced under George H.W. Bush. It never balanced under George Bush. As a matter of fact, as soon as they took office, they made sure we wouldn't have further balances because they cut taxes in 2001 and 2003, but they didn't cut spending.

He talks about President Obama. I know the majority leader will be interested in these statistics. I didn't count January of 2017 because, after all, that was the Obama economy. Trump had not done anything on the economy, but let's start with February 2017.

Under Donald Trump, 232,000 jobs were created. That is great. That is good. I would say that the Obama economy is still working.

Same exact month a year earlier, not 232, but 237,000 jobs were created under Barack Obama.

March 2017, 50,000 under Trump. March 2016, 225,000 jobs created under Barack Obama.

April 2017, 207,000 jobs. Barack Obama was a little down that month, 153,000 jobs.

145,000 under Trump, 43,000.

Then June of 2017, 210,000 under Donald Trump, 297,000 jobs under Barack Obama.

July of 2017, we are getting more recent. Under Trump--now he has been in

office a little longer--138,000. What was it under Barack Obama? 291,000 jobs--double.

August of this year, just a few months ago, 169,000 under Donald Trump; 176,000.

Last month we had hurricanes. I will give the majority leader that. We lost 33,000 jobs. Under Barack Obama, same month a year ago, 249,000 jobs created.

As a matter of fact, under Barack Obama, we created 11,773,000 jobs.

Under George Bush, 2 million--excuse me--lost under George Bush, private sector jobs, a loss, after the 2001 and 2003 tax cuts, lost 1,159,000 jobs. The last 12 months of the George Bush administration, 2001 and 2003 tax cuts, we couldn't change economic policy. We were in charge for the last 2 years, couldn't change it, lost 4,568,000 jobs.

Now, as a matter of fact, I have done a little thing for 68 years. Over 68 years, we had 36 years of Republican Presidents and 32 years of Democratic Presidents. Under Republican Presidents, from Truman to Obama, there were 35,448,000 jobs created, Mr. Leader. Under Democrats, in 32 years, 62,669,000 jobs.

Now, I would like to go on to another subject, as we could go on debating this all day, but I will yield to my friend.

Mr. Speaker, you noticed that he didn't talk about any of the statistics I mentioned about job creation under Barack Obama. He didn't talk about the 62 million jobs that were created in 32 years, as opposed to the 35 million jobs, just half of what we did in less than 4 years than they had as President of the United States.

And what he didn't talk about was--he said: You know, we Republicans were in charge of the Congress the last 6 years of the Clinton administration.

That is right.

And what Bill Clinton said: Let's save Social Security first. Let's not cut out revenues that we need to invest in the education and the growth of our economy.

They weren't for that, but they couldn't do anything about it.

Then, guess what happened. They took the Presidency. They had the House and they had the Senate.

Why couldn't you do what was done under Bill Clinton then, when you controlled everything, I ask my Republican friends, Mr. Speaker? Why couldn't you, when you controlled every organ of government, do what you say was done under the Clinton administration, because you were in the minority, very frankly, or you were in the majority and controlled things? Why couldn't you do it when you controlled everything? Why did you leave us with 4.8 million hemorrhaging jobs as you came out of office, and your economic program was still in place that you put in place in 2001 and 2003, and the deepest recession you and I have experienced in our life times?

And I am older than you are. You didn't answer that. You continue to talk about what is going to happen.

I tell the story about the guy who comes in and he wants to be the left fielder for the Nats, and he says: You know, I am going to hit 350 next year.

I said: But you hit 260 last year.

He says: Well, yeah, I know, but this year I am going to hit 350.

And the other guy comes in and says: I would like the same job. I hit 325 this year and I hit 324 last year. Who do you think you hire?

The whole point is, Mr. Leader--I say to the Speaker--is that performance counts, not just talk, not just promises. Because I will tell you, Mr. Leader, I have been here a long time and I heard the same language in 1981 from David Stockman. He now says it was baloney. I heard the same talk in 2001 and 2003. It didn't work out so well.

So, Mr. Speaker, I am going to go on to another subject because we need to go to another subject, but we need to have this debate because it is critical for my children, my grandchildren, and my great- grandchildren, and for generations to come as to whether this country is, like we did it under Clinton, on a fiscally sustainable path where we are balancing budgets, or whether we are going to go back to the deep deficits.

He didn't respond, 189 percent increase in the debt under Ronald Reagan. One person in America, Mr. Speaker, can stop spending: the President. He can veto spending bills.

In my 37 years, we have never had a veto overridden of a President who vetoed a bill because we spent too much money; not once in the 37 years I have been here, Mr. Speaker.

But I want to go on to another subject that ought to be less controversial because I think the majority of Republicans and I think, unanimously, the Democrats want to see us do what the President, apparently, has asked us to do. And that is, protect the DACA students, the DACA doctors, the DACA teachers.

We have a Dream Act that has been filed. Every Democrat supports it. We want that to come to the floor in this transparent, open process, and I have talked to the majority leader about it.

The President, contrary to Speaker Ryan's advice, rescinded the protections for the childhood arrivals who arrived here through no fault of their own. He said to the Congress, it needs to be done in legislation. He didn't say it needs to be done in legislation with a lot of other things. And the Speaker has said we are going to take one issue at a time. I won't bring out that quote, but the majority leader has heard me use it before.

So I urge the majority leader because I believe he does not want to send these mostly young people who don't know any other country but America, who see themselves as Americans, who have

been educated in our schools, serving in our communities, positive participants in growing America like so many immigrants before them, a nation of immigrants. Send me your tired, your poor, your huddled masses.

We should have the DACA bill on the floor before we leave for this Thanksgiving. Mr. Leader, I said this with respect to the Export-Import Bank, that a majority of your party would vote for that if it came to the floor. We got it to the floor and, as I predicted, a majority of your Members voted for it.

I believe that very close to, if not all, a majority of your party will vote for this, and the overwhelming numbers in this House will vote for that bill.

I would urge my friend to bring it to the floor before we leave for the Thanksgiving break on the 16th of November. I would urge that because we are going to have some very messy 8 days after Thanksgiving, with great workload on our desks; not the least of which is how to deal with the sequester, how to deal with funding government for the balance of the year, what to do with flood insurance, and so many other issues; not to mention our supplemental that we need to do with respect to Houston and Florida and Puerto Rico and the Virgin Islands.

So I urge my friend to work with us to bring the Dream Act to the floor, or bring your alternative to the floor. But let us not leave these people, who the President says he loves, who are positive Americans in everything but paper, who have been here almost all of their lives. Some came at 2 or 3 years of age and know no other country. Let's bring a bill to the floor that we can end before we go on the Thanksgiving break, in a united way--we are going to be divided on the tax bill. We understand that--but in a united way on this, where even Rush Limbaugh says we are not going to send these kids home.

I would hope that you could do that, Mr. Leader. I believe you have it in your heart to do it, and I would hope that we could do it.

Mr. Speaker, I yield to my friend.

Mr. Speaker, let me remind the leader that we passed the Dream Act through the House of Representatives. We brought it to the floor. We had a vote on it.

I know you and the Speaker said there was going to be a working task force on this issue, and it has been, I think, going on for nigh on to a month, but we haven't seen anything on the floor.

Mr. Leader, what I am saying is that I think we agree on this issue. Let us not confuse it with things on which we do not agree. Don't hold hostage these 800,000 young people who are positive--because if they are not positive they couldn't get into the Dream Act--I mean, they couldn't get into DACA. They had to have a sterling performance, be in school, be working, be in the Armed Forces. This is not a free pass to people.

We agree on this, I think. Maybe I am wrong on that, but it seems to me that we agree. The President seems to agree.

Wouldn't it be--as we have done in the past some bipartisan things, and we thought that was good for the institution and good for the American people to see us work in a bipartisan fashion. I think we agree on this issue.

Some of the things you want to attach to it, we are going to have disagreements on. Why don't we enact what we agree upon?

By the way, this has been pending for a long period of time, as opposed to your tax bill. I know you think we have had hearings on it, but, very frankly, that bill changed from Tuesday to Thursday of last week.

We think your bill is a pretty new bill and we would like to have hearings on it. But nevertheless, on DACA, I think we have an agreement. If you bring it to the floor, I think it will get a majority of the votes, a significant majority. I think it will get close to 300, if not over. So I would just urge my friend to see if he, as the majority leader--I was the majority leader--as the gentleman knows, I could bring a bill to the floor or I could keep it off the floor. This is a bill that ought to come to the floor. We ought to give peace of mind to these 800,000 of folks, and we ought to pass this bill and give the House an opportunity to work its will.

Mr. Speaker, if the gentleman does not want to say anything further, I yield back the balance of my time.

Mr. Speaker, I thank the gentleman for yielding.

Mr. Speaker, on Monday, the House will meet at noon for morning hour and 2 p.m. for legislative business. Votes will be postponed until 6:30. On Tuesday and Wednesday, the House will meet at 10 a.m. for morning hour and noon for legislative business. On Thursday, the House will meet at 9:00 a.m. for legislative business. On Friday, no votes are expected in the House.

Mr. Speaker, the House will consider a number of suspensions next week, a complete list of which will be announced by close of business today.

In addition, the House will consider H.R. 3043, the Hydropower Policy Modernization Act, sponsored by Representative Cathy McMorris Rodgers. This bill will continue our efforts to improve America's energy infrastructure by streamlining the FERC licensing process for hydropower projects.

The House will also consider two good jobs bills: first, H.R. 3441, the Save Local Business Act, sponsored by Representative Bradley Byrne. This bipartisan legislation will ensure small businesses and franchises across America receive fair government treatment rather than confusing regulations that harm workers.

Second, the House will consider H.R. 2201, the Micro Offering Safe Harbor Act, sponsored by Representative Tom Emmer. As part of our Innovation Initiative, this bill creates a smarter way for entrepreneurs to start new ventures or grow existing businesses.

Now, lastly, Mr. Speaker, additional legislative items are possible in the House. If anything is added to our schedule, I will be sure to inform my friend and all Members.

Mr. Speaker, I thank my friend for yielding.

Mr. Speaker, I thank the gentleman for yielding, and I am excited about his question, because I am excited about this bill.

For more than three decades, we have waited for tax reform. Many people know the challenge of what they have with the government taking more than they should, and the challenge to see individuals raise their paychecks.

Ways and Means has announced that they will start markups next week. I assume that it will take them probably a week to get through the entire bill, going through regular order as we do, and then I would assume that we would bring that to the floor right after. We would like to get this to the American people as soon as possible.

I am willing to talk about the bill, I am willing to talk about the bill in any different manner, because we spent a lot of time working on this.

The very first thing that is going to happen for the American public, come January 1, they are going to get more in their paycheck, because what we do, we take the standard deduction, because in the current law today, a single individual in America, it is only the first $6,000 they have are tax free. Well, that is going to go to 12. For a couple, it is going to go to 24.

We take seven confusing rates and make it four. It is about cutting them. Every rate is lowered except the highest rate.

Then we go and look at: How can we make America competitive? I started my first business when I was 20 years old. Small business is the backbone of this country. Small businesses work harder than almost anybody else. We lower their rate to 25. That is the lowest it has been in 40 years.

Then all this money that is being pushed overseas that we tax too high so people won't bring it back--and there are trillions of dollars there--we are going to have that money come back. And what are they going to do? They are going to invest in America.

Now, the name of our bill is Tax Cuts and Jobs Act. Just yesterday, I was with a company, Broadcom. We went into the Oval Office. I had worked with this company for quite some time. They started in America. Bell Labs was part of it, and others. Three companies got together. They are technology; they were building; they were growing. Then what they found was, America's Tax Code was so burdensome on them, that for them to compete around the world, they became a company that domiciled in Singapore.

Talking to them just the last month or so, laying out our tax bill, they said: You know what, we are so confident in you passing this, we are going to announce that we are moving back to America.

They have $20 billion a year in revenue. They invest $9 billion every year in R&D and manufacturing, those manufacturing jobs we care so much about.

So yesterday, we were sitting in the Oval Office, and this is exactly what the CEO said. You know what he talked about? He grew up in Singapore. He said: When I turned 18, the greatest engineering school in America gave me an opportunity, MIT, but my parents did not have wealth, but they gave me a scholarship.

He comes to America, gets his education, becomes an American, builds a company. He said it broke his heart he had to leave. He wants to give back to this country that has been so good to him, and he said this tax bill is actually doing it.

So we are creating jobs even before we pass it.

So I am very excited, but, if I may, I wanted to do a little research for you. So we have taken all the IRS tax information, and I broke it down in spreadsheets. So any district that wants to know about it, please come see me, and I will walk you through it.

So I take your district, Maryland's Fifth, currently, 47 percent of your filers in Maryland's Fifth take the standard deduction. They will be better off, because it doubles right off the bat. Another 11 percent of those who itemize their deductions won't have to do that anymore. Instead of spending weeks on their taxes, they will put it on a postcard in minutes. So they are going to get a higher deduction; they are going to get more money. That means even before lowering of the rates, 58 percent of your district is better off from day one.

Now, in addition, we repeal the alternative minimum tax, that AMT. So that costs 13,000 of your constituents in your district an average of $3,750. That is wiped away.

As we lower all the brackets, we will create a great deal of savings for everybody else. So I am excited about this.

I would love to look forward to working with you on it, because just as we just passed the CHIP bill bipartisan and the IPAB with more than 70 Democrats on that, I think this has been a very good week for America.

Mr. Speaker, I thank the gentleman for yielding, and I think this is an excellent question.

So, first of all, you are asking about hearings. I caught you yesterday; I caught you on TV yesterday. You were pretty good. You were asked about hearings. This is what you said: A hearing is when you ask the public to come in and say: What do you think? What are your suggestions? How will this impact you?

Since taking the majority--you know what anniversary it is this week? When we rolled this bill out, it was the seventh anniversary of the Republicans winning on that election day for the majority. This is what we campaigned on.

Now, we have been working quite some time. Dave Camp has retired, but when he was with Ways and Means, he put out a Camp proposal. We have been having numerous hearings in those Congresses and this Congress. It took us to win the White House, it took us to win the Senate, but, you know what, we have kept our promise.

Let me walk you through the rest of what we have done. Since taking the majority, we have held at least 59 hearings on tax reform with witnesses from all sides on everything from simplification, to closing those loopholes that we have talked so much about together, to creating jobs, to accelerating economic growth. That is not to mention the countless town halls and the forums of Members who have held them in their districts all across.

Now, if we need further witnesses on the burden of our Tax Code, look no further than just me. As I told you, I was 20 when I started that first business. You know the three lessons I learned in my first business? I was the first one to work, I was the last one to leave, and I was the last one to be paid.

I remember investing all that I had. It was just a deli. I had six employees. It was early in the morning, the front was all glass, and here pulled up a little truck from the city, and they were knocking on the door 2 hours before I started. I thought maybe they wanted to give me a key to the city for starting a new business. He wanted to give me a ticket for my sign. I thought that was a little odd, because the sign was bringing more people in that paid more sales tax that paid their salary.

I learned the challenges of starting a small business.

What is so great about this bill is there are going to be so many more Americans who are going to take that risk, start a small business, and be successful, with so many more Americans working.

So I am excited about this, because that is what we have been hearing in our hearings--all those hearings we had, all those town halls, all those years we fought so hard to get to this point.

Mr. Speaker, I think this has been a good week.

Mr. Speaker, I thank the gentleman for yielding.

Mr. Speaker, the first lesson, if you ever take debate, if you cannot win the argument on the substance of the bill, argue about process; go to process.

But you know what? This is not the beginning of the process. This is the end of the process. For 31 years, we have been working to get here. We had hearings upon hearings. We have gone to the American people. We went to the American people 7 years ago this week, and they made a very big decision: to change the direction.

We went back in 2014, and they made another big decision, and they made one just a short time ago.

I heard you talk about a lot of Presidents, but I think you missed one. Really, this bill is about growth in this country, about job creation, about raising somebody's paycheck.

The history of America, from the beginning of time until 2006, we always averaged more than 3 percent growth. If you just take the last 8 years, if you take the very best year under Barack Obama--and I will go apples to apples. Let's take Bill Clinton. The growth year under Bill Clinton's worst year is higher than Barack Obama's best year. That is why the middle class is hurting. That is why this tax cut helps the middle class.

What is most interesting, you want to talk about debt? You talked about a lot of Presidents. You can add up all those Presidents, and you know what? Just one President, Barack Obama, added all that money and more to the debt.

What is more interesting to me, if my friend is concerned about the deficit, I want to ask you this: Why did you vote for a budget that increases the deficit by $6.8 trillion over 10 years? Why would you do that this year? Why would you, as a party, bring that forward as your plan.

Do you know what we are bringing forward? We are going right through the rules. We have gone all through the hearings. We know, even before this bill passes, just as yesterday, that the companies are coming back to America; $20 billion a year in revenue, one company has already announced. They are going to put $3 billion every year into research and development and $6 billion into manufacturing.

I think the debate on process is over. This bill is less than 500 pages.

You talk about us bringing it up? Yes, so the whole American public can see the bill and read it. It is much different than when we talk about your ACA--more than 2,000 pages, and I was here. I watched what was brought right to the floor and jammed through. And you are right; the ACA doesn't work.

We believed in doing something different. We made a promise to the American public--3 days for public viewing. It is longer than 3 days.

We made a promise to the American public that we would make sure you keep more of what you earn, we would create more jobs. You know what happened after that last election? We just went through the second quarter of 3 percent growth.

You and I just talked about the number of hurricanes we just watched, the devastation. People say it probably knocked off 1 percent of growth. You know what the Atlanta Fed just came out with? They are predicting, they think we are going to go to 4\1/2\.

Do you know what? The best days of America are in front of us because of the work we have done. Let's not argue about process, because we know we have been through this process for 31 years. We know what the American public has said. We know in the hearings what they have told us, and we have listened. Now I think is the time to have the courage to lead. Let's take what we heard in those committees and put it into a bill, exactly what we just did.

To have the returns before the bill is even passed of jobs coming back, to me, like I said earlier, this is a good week, but this is going to be a great month.

I thank the gentleman for yielding, because you did ask a question in there.

When you talked about Bill Clinton, you asked: What did he have?

Well, when he first came in, he had Democrats in the majority, but all that growth happened because he won a Republican House and a Republican Senate. That is when we turned it around with John Kasich as the budget chair. That is when we balanced the budget in those 4 years.

We had to send him welfare reform how many times?

Three times. He vetoed it all the other times and claimed some glory.

But also there is another question you asked. I love a good debate. I love to pick just facts when you don't want to look at the whole picture. The best thing to even just look at if you want to go: Did the election matter? Did the election matter to the American public?

Well, I heard a lot of pundits on the other side say: Oh my God, if President Trump got elected, the market is going to crash.

You know what? Most everyone in America that invests for retirement invests in the market, and President Donald Trump has given them all a raise because we set new records, more than 60 times; that is because of the belief of what they think he could achieve.

When you look at what he has been able to do with regulation, unbelievable.

The few headlines you didn't announce during Obama, when you were doing those jobs, you didn't say anything about Nabisco leaving the country, or Burger King went and domiciled someplace else. Why?

What was the answer that President Obama would have when companies were leaving America because the taxes were too high? We will pass a law to say they can't.

You know the difference that election has made?

We just proposed a tax bill. Companies are now coming to the Oval Office to say: We are coming back. And all that means is more jobs, more money for Americans.

I understand that we are going to probably have a philosophical difference of agreement. I believe Americans should keep more of what they earn. I know what you said a few weeks ago. My friend cast his vote in favor of a budget that calls for ``$3.9 trillion in revenue enhancements.''

You know who I think needs the revenue?

The American public. That is why we doubled the standard deduction, and that is for every American. On day 1 they will get more in their check.

Small businesses, lowest tax in 40 years. All that money that those companies were being pushed out are going to come back.

We can argue all you want about this, but for 31 years we have had this argument. I think the American public is waiting for us to lead.

Mr. Speaker, I thank the gentleman for yielding. I have great respect for the gentleman.

It is true, we just recently traveled to look at the hurricanes and we had a lot of discussions. We disagree philosophically at times, but I think there is a place that we can find agreement upon.

I listen to you when you speak. I did just hear you ask right before: ``Why couldn't you do it when you controlled everything?''

I kind of ask my friend the same thing. When you controlled everything, the White House, the House, and the Senate, you had a self- proclaimed master legislator as Speaker. You had an opportunity.

But I know this is the window, and I know President Trump wants to get it done. That is why he put out things that he wants to see done as well. We talked about chain migration. We talked about border security.

We have been meeting--the Speaker and I just had a meeting yesterday with a number of Members about this. We would like to solve this problem overall, and I think it is a place everybody can work together, to secure our border, work on the chain migration problem, and solve this problem for others.

Now, I know there is a 6-month time period here, and I don't want to confuse issues because I would like to focus on this issue as well, but I don't want to have the government shutting down over an issue. You and I know we both discussed things like that, and I never think that is productive with whatever we do; but I look forward to continuing working with you to solve this issue.

Mr. Speaker, while government isn't meant to create jobs, with the help of the President, Congress can set Federal policies that establish a pro-worker, pro-business environment that lifts people out of poverty, helps families, and drives our country forward.

One problem today that is impeding job growth is access to capital for small businesses. American businessmen and -women are often unable to get the loans they need to start a new enterprise or to grow an existing one.

Additionally, if a firm would like to publicly sell stock to raise money, it must register with the Securities and Exchange Commission, which costs $2.5 million, on average; an amount most small businesses simply cannot afford.

Small and emerging businesses are a key to the economic engine in America. The Small Business Administration found that these businesses create over half of the new jobs on an annual basis in this country. More importantly, today's small businesses are tomorrow's success story.

Just think of all the great businesses in this country that started with a dream in a garage: Amazon, Apple, Microsoft, Disney, Harley- Davidson, and Minnesota's own Medtronic. We want to empower the entrepreneurs in this country to dream, innovate, and create jobs that grow our economy.

That is why I introduced the Micro Offering Safe Harbor Act. This bill will make it easier for entrepreneurs and

small businesses to raise money from family, friends, and their personal network without running afoul of the vague and undefined ``private offering'' safe harbor provisions in the Securities Act of 1933.

Thus, the Micro Offering Safe Harbor Act helps bring clarity to existing law so that our current and future job creators can easily raise capital within the confines of an easy-to-understand provision without the help of an expert.

This legislation requires three specific criteria to be met simultaneously in order to trigger a safe harbor exemption for a security offering instead of just one or more. These criteria ensure that: one, each purchaser has a substantive preexisting relationship with an owner; two, there are no more than 35 purchasers of securities from the issuer that are sold in reliance on the exemption during the 12 months proceeding; and, three, the aggregate amount of all securities sold by the issuers does not exceed $500,000 during the 12- month period preceding the offering. The bill also exempts any of the aforementioned security offerings from blue-sky laws, while maintaining antifraud provisions at the Federal and State level.

These provisions protect Americans from criminals trying to swindle them out of their hard-earned money, while making capital more accessible to businesses by investors from around the country.

In fact, I will be offering an amendment to enhance these antifraud provisions. This amendment, which incorporates the suggestions made by my colleagues on the other side of the aisle during a legislative hearing in the last Congress, will ensure that individuals who have been disqualified under the ``bad actor'' disqualification standard, as is listed under current law, are prohibited from using the exemption provided under H.R. 2201, establishing yet an additional layer of investor protection.

Entrepreneurs and small-business owners need access to capital in order to achieve the American Dream. Although small businesses accounted for 99.7 percent of all the businesses in the United States last year, only half of them will survive longer than 5 years, according to our Bureau of Labor Statistics.

Lack of capital or difficulty accessing capital is one of the main causes of failure for many of these small businesses. A 2015 survey conducted by BlueVine found that 75 percent of small and emerging businessowners reported their primary source of funding comes from their own personal finances, followed by banks at 16 percent and family and friends at 6 percent.

While banks and credit unions do their best to offer the funding these businesses need to grow and thrive, there are still 3 million fewer small business loans made annually, today, than there were before the 2008 financial crisis. H.R. 2201 seeks to build off the success of the Jumpstart Our Business Startups Act of 2012, better known as the JOBS Act, and will continue to spur capital formation for the true job creators and drivers of our country's economy.

The Micro Offering Safe Harbor Act helps small and emerging companies add another tool to the toolkit, enabling them to confidently find alternative ways of raising these funds without having to pay for costly securities experts and without the fear of lawsuits if they operate within these easy-to-understand parameters.

That is why the Micro Offering Safe Harbor Act is endorsed by the National Small Business Association; the Small Business & Entrepreneurship Council; the National Federation of Independent Business; the Chamber of Commerce; Heritage Action; and Engine, ``The Voice of Startups in Government.''

The House approved an identical version of this legislation during the 114th Congress as part of the Accelerating Access to Capital Act, and language similar to H.R. 2201 was included in the Financial CHOICE Act, which was adopted by this Chamber in June.

Mr. Speaker, the time has come for Congress to come together and help small businesses help themselves by making this important update and improvement to the Securities Act of 1933.

I want to thank Chairman Hensarling; Capital Markets, Securities, and Investment Subcommittee Chairman Huizenga; and all of the staff on the Financial Services Committee for their hard work on this legislation.

Mr. Speaker, I urge my colleagues to support this legislation and hope that both parties will use H.R. 2201 as a way to show their support for more opportunities and better lives for our job creators.

Mr. Speaker, I include in the Record letters from the National Small Business Association, the Small Business & Entrepreneurship Council, the United States Chamber of Commerce, Heritage Action for America, and Engine.

National Small Business Association.

Hon. Tom Emmer,

House of Representatives,

Washington, DC.

Dear Representative Emmer: On behalf of the National Small

Business Association (NSBA), the nation's first small-

business advocacy organization, with more than 65,000 small-

business members representing every state and every industry

across the country, I commend your leadership for introducing

the Micro Offering Safe Harbor Act (H.R. 2201) as it will

have an immediate and direct impact on small businesses

looking to raise capital. NSBA has long supported the kind of

simplification this legislation would bring for small

businesses.

Capital is the lifeblood of any small business, and often

small-business owners need capital at various stages; some at

their startup and others later when they are looking to

expand. Despite this ongoing need, small-business lending

from banks has decreased over the last decade and many small

businesses have few options for obtaining capital. According

to NSBA's 2016 Year-End Economic Report, small-business

access to capital remains stubbornly unchanged since the

previous year, with just 69 percent of small firms reporting

they are able to get adequate financing. This drop has real-

world implications: 41 percent said lack of capital is

hindering their ability to grow their business or expand

operations, and 20 percent said they had to reduce the number

of employees as a result of tight credit.

Therefore, raising capital though securities is an

attractive alternative option for many small-business owners.

However, the current regulatory requirements are quite

onerous for small businesses, often requiring expensive

specialized counsel for even very small securities offerings.

NSBA supports this targeted legislation that creates a safe

harbor for small securities offerings which meet requirements

clearly identified in the legislation. Under the legislation,

these exemptions include offerings in which each purchaser

has a substantive pre-existing relationship with the owners,

where the issuer has less than 35 purchasers utilizing the

exemption in the preceding 12 month period, or where the

total amount raised during the preceding 12 month period is

less than $500,000. By creating three safe harbor exemptions

for ``non-public offerings,'' businesses can operate with

clarity and a clear conscience knowing that they would be

exempted from registering with the Securities and Exchange

Commission (SEC). Additionally, the legislation also exempts

transactions meeting the specified requirements from state

registration requirements, commonly referred to as ``blue sky

laws.''

Raising capital for small businesses from friends and

family already takes place on a regular basis, except those

transactions often lack the legal protections and structure

of securities law. In addition to expanding access to capital

for small businesses, this legislation will bring those

transactions under a recognized legal framework, and make

resolving disputes that arise much more efficient. Finally,

bringing these existing transactions under an existing legal

framework will provide a sound legal basis for subsequent

larger offerings requiring registration with the SEC.

Access to capital continues to be one of the most pressing

issues facing the small-business community. All small

businesses need an injection of capital at one point or

another, unfortunately in the past several years it has

become difficult for small businesses to get the funds they

need to grow and expand. NSBA is pleased to support the Micro

Offering Safe Harbor Act as it will help small businesses

around the country expand and create new jobs in their

communities.

Sincerely,

Todd McCracken,

President & CEO.

Mr. Speaker, I have an amendment at the desk.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, the amendment I am offering today will enhance antifraud and consumer protections for small businesses and startups seeking to take advantage of the micro offering exemption outlined in the underlying bill.

While the legislation itself requires three specific criteria to be met simultaneously in order to trigger a safe harbor exemption for a security offering, my amendment adds an additional layer of protection to further safeguard investors from bad actors.

Specifically, my amendment prohibits the exemption from being available for those who have been disqualified under the bad actor disqualification standard established by the SEC. This language was included with the support of my colleagues from both sides of the aisle during consideration in committee in the 114th Congress, and I am hopeful they will support its inclusion again in the 115th.

I want to reiterate that nothing in the base text of this bill erodes or limits the ability of Federal or State regulators to prosecute fraud, nor would it prevent private common law causes of action for fraud or breach of contract between the interested parties.

This amendment builds upon these existing protections and drives home the point that the Micro Offering Safe Harbor Act is purely focused on helping our small businesses and entrepreneurs access the tools they need to grow and create jobs in an orderly and legal manner.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I will close at this point.

Mr. Speaker, I want to thank the ranking member for her encouragement and her compliments, and I want to just point out that the Micro Offering Safe Harbor Act was actually improved as a direct result of the ranking member's suggestions.

So, again, I want to thank her for her compliments here today, her encouragement in helping us make this an even better bill for entrepreneurs and small businesses across the country. At this point, I would encourage support for the amendment.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, pursuant to House Resolution 609, I call up the bill (H.R. 2201) to amend the Securities Act of 1933 to exempt certain micro-offerings from the registration requirements of such Act, and for other purposes, and ask for its immediate consideration in the House.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, we know that, unfortunately, after 8 years of bad economic policies from the Obama administration, working people did not receive a pay increase. We know that we had one of the lowest labor participation rates in modern history. We know that the economy was limping along at 1\1/2\ to 2 percent economic growth.

But, fortunately, Mr. Speaker, a new day has dawned and now, all of a sudden, we see that, with the policies of Republicans in Congress, with the policies of the Trump administration, we are seeing promising signs. What we are seeing all of a sudden now is 2 quarters, Mr. Speaker, of 3-plus percent economic growth. This means a difference to working families. They are finally seeing increases in their paychecks, increases in their take-home pay.

That is why one of the most exciting policies that are being worked upon today that we hope to see soon is fundamental, pro-growth tax reform for the entire American economy; one that would grow our economy and that makes a Tax Code fairer, flatter, simpler, more competitive; one that would lower rates for families and allow 90 percent of Americans to fill out their forms on something akin to a postcard; something that would help our small businesses and entrepreneurs.

I look forward, Mr. Speaker, to having that legislation on the floor soon. But we have legislation today that is also important to our small businesses and our entrepreneurs, H.R. 2201, by the gentleman from Minnesota.

What is so important about this legislation, Mr. Speaker, is that it would allow our entrepreneurs and our small businesses to more effectively be able to reach out to family and friends to get the needed capital to start their businesses.

A 2014 survey by the Kauffman Foundation found out that over 28 percent of startups raise their funding from their personal network. Mr. Speaker, we have a challenge, and that is the Securities Act does not clearly define what is a public offering or, conversely, a nonpublic offering. So this makes it very difficult for our early-stage entrepreneurial growth companies to go out and do any kind of private placement to raise funds from friends and family.

Now, we know that a private placement is already something that is established in law. But what isn't established is a bright line, safe harbor for these business enterprises to go out and raise these funds.

So what we also know, unfortunately, from our Securities and Exchange Commission is that a registered offering is simply not economically

feasible for a small business, an entrepreneur, an issuer who is seeking to raise less than $1 million.

So too often, Mr. Speaker, we have a number of these enterprises that, frankly, just never get jump-started because they don't have the opportunity for a private offering. That is why it is so important.

I want to thank the gentleman from Minnesota (Mr. Emmer) for his leadership in bringing this legislation to the House floor today.

So it is a simple piece of legislation. Again, it simply allows a bright line, safe harbor for very small offerings. It requires that each purchaser has a substantive preexisting relationship with an officer, director, or shareholder of the issuer.

The issuer must reasonably believe that there are no more than 35 purchasers of the securities, and the aggregate amount of all securities sold by the issuer cannot exceed $500,000 in a 12-month period.

So, Mr. Speaker, we are talking about a very small portion of startups, but a very vitally important section of our startups that need capital.

Mr. Speaker, a few decades ago there was a company where a gentleman borrowed money from his father to import Japanese sports shoes, and he purchased 200 pairs of these Japanese sports shoes. He started a business called Blue Ribbon Sports, and today we know it as Nike.

A few decades ago there was an investor out in Omaha, Nebraska, who borrowed money from seven friends and family members, including his sister Doris and Aunt Alice. Over the next 9 years, this initial investment grew, and this gentleman purchased something called Berkshire Hathaway, the textile company that has now led to the Berkshire Hathaway empire.

In 1994, there was a gentleman who took a loan from his parents, moved to a two-bedroom, small apartment, and launched a company called Amazon.

We want to make sure that the next Berkshire Hathaway, the next Amazon get launched, and that is why it is so critical we enact H.R. 2201.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and submit extraneous material on the bill under consideration.

Mr. Speaker, I yield 5 minutes to the gentleman from Minnesota (Mr. Emmer), the sponsor of the legislation and an outstanding member of the Financial Services Committee.

Mr. Speaker, I yield an additional 30 seconds to the gentleman from Minnesota.

Mr. Speaker, I yield myself 30 seconds, just to say, as I listen to the gentleman from Rhode Island and the ranking member, their comments are very interesting, but everything they described is already illegal. Their remarks acknowledge that the SEC can and does bring actions to enforce the securities laws and shut down fraud when they discover the fraud.

Nothing in H.R. 2201 eliminates the DOJ's ability to pursue criminal prosecutions or fraud. Nothing in it impacts the SEC's ability to pursue civil actions against issuers who engage in fraud under section 17(a) of the Securities Act of 1933. It is just a red herring. It is one of the reasons we have had such poor economic growth under the Democratic regime.

Mr. Speaker, I yield 3 minutes to the gentleman from Missouri (Mr. Luetkemeyer), chairman of the Financial Institutions and Consumer Credit Subcommittee of our committee.

Mr. Speaker, number one, I was very pleased to hear one of the most compelling indictments of 8 years of the Obama administration I have ever heard on the House floor, and I thank the ranking member for it.

Mr. Speaker, I yield 3 minutes to the gentleman from Pennsylvania (Mr. Rothfus), who is the vice chairman of the Financial Institutions and Consumer Credit Subcommittee.

Mr. Speaker, I yield 3 minutes to the gentleman from Colorado (Mr. Tipton), who is the vice chairman of the Oversight and Investigations Subcommittee.

Mr. Speaker, I yield myself 10 seconds just to say I heard the word ``protection'' often used by my friend, the ranking member, but she and her friends on the other side of the aisle had 10 years to protect paychecks, protect savings, and protect economic opportunity and the American Dream, and they failed miserably.

Mr. Speaker, I yield 2 minutes to the gentleman from Ohio (Mr. Davidson), a member of the Financial Services Committee.

Mr. Speaker, I yield 2 minutes to the gentleman from Indiana (Mr. Hollingsworth), another member of the Financial Services Committee.

Mr. Speaker, I yield 2 minutes to the gentleman from South Carolina (Mr. Norman), he is not a member of the Financial Services Committee, but we would be proud if he were.

Mr. Speaker, I yield 1 minute to the gentleman from Wisconsin (Mr. Duffy), the chairman of the Housing and Insurance Subcommittee.

Mr. Speaker, I yield an additional 30 seconds to the gentleman from Wisconsin.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, as always, I listen very carefully to my friend, the ranking member. I know that she started off her closing remarks by saying: We don't need this bill, H.R. 2201, because the big banks can loan to the small businesses.

Well, that is fascinating to me, Mr. Speaker, because of the Dodd- Frank Act, which she so jealously supports, all of a sudden, the risk- based capital standards say that the banks have to reserve more for small business loans than they do for sovereign debt and municipal debt.

So all of a sudden, it is because of Dodd-Frank. In addition, we know that the ranking member supports the Federal Reserve policy of paying interest on excess reserves where the Federal Reserve takes taxpayer money to pay the big banks not to loan money. So if the ranking member was curious why the big banks aren't loaning to the small businesses, which they aren't--and prior to the Trump administration, we know that small business lending by banks was at a 25-year low--it is the very reason, Mr. Speaker, that we need the bill, the legislation of the gentleman from Minnesota (Mr. Emmer) so that we can unlock this.

Again, there is no surprise why, after 8 years of Obamanomics and the thinking from my friends on the other side of the aisle, small businesses have languished and why the economy has dropped down to a 1\1/2\ to 2 percent GDP growth. In fact, I think President Obama is one of the few Presidents in American history never to enjoy a year of 3 percent economic growth.

Now, he may personally have enjoyed it, but the American people didn't, Mr. Speaker. But the good news is that there is a change in administration and a change of attitude. That is why it is so important that we be able to get capital to our entrepreneurs, to our small businesses. Let them thrive again on Main Street.

We hear so often the ranking member decry Wall Street. We are talking about offerings of a half a million dollars. No on in Wall Street would touch that with a 10-foot pole. This is about Main Street, not Wall Street, Mr. Speaker.

It is interesting, as I listen to my friend, the ranking member, decry the fact that someone might be able to raise capital under this particular set of circumstances. Well, I have a news flash for all my colleagues. Already the SEC can grant a private offering for exactly the set of circumstances that my friend, the gentleman from Minnesota, puts into his bill. All the gentleman is doing is creating a bright line, safe harbor, so that the next Nike or the next Amazon isn't stopped from launching their enterprise by having to spend a million dollars on lawyers and accountants trying to navigate this uncertain murky labyrinth of SEC waters trying to determine what is a private offering and what is a public offering. That is all he is doing.

Again, this is already legal. It simply is discretionary to decide what is a private offering and what is a public offering by the Securities and Exchange Commission.

We now, Mr. Speaker, have had two quarters of 3-plus percent economic growth. We are seeing working Americans. We are seeing their paychecks increase yet again. We are seeing hope and resilience in the American Dream yet again, but we have so much more work to do, and that is why H.R. 2201 is so critical.

It takes small businesses today to be the big businesses of tomorrow. They are the creators. They are the job engine of America. They are the drivers of increased paychecks, greater economic opportunity, and a bigger, bolder American Dream. I thank the gentleman from Minnesota for this great legislation. I encourage all of my colleagues to adopt it.

Mr. Speaker, I yield back the balance of my time.