▶ 0:16:27Good morning everyone and I now call the committee on small business to order. Without objection, the chair is authorized to declare a recess of the committee at any time. I now recognize myself for my opening statement. I want to say welcome and thank you for being here for today's hearing. A voice for small business. How the SBA office of advocacy is cutting red tape. I want to thank our witness, Dr. Casey Mulligan, the chief counsel of SBA's office of advocacy for appearing before us today. This hearing comes at a critical time for small businesses nationwide.
▶ 0:16:58Main Street endured inflation, burdensome regulations, and rising interest rates at the hands of the Biden Harris administration. It is estimated that the total cost of regulations is now over three trillion a year, equal to 12% of the entire US economy. To put this in perspective, the cost of regulations in the US exceeds the entire economy of the United Kingdom. To make matters worse, the Biden administration's regulatory onslaught cost over 1.8 trillion due to new regulations.
▶ 0:17:26Now more than ever, we must ensure that the federal government doesn't make it harder to do our job uh to to create hardship for job creators, make it easier easier for them to sur thrive and what is where the SBA office of advocacy comes in. So the office of advocacy is an independent voice for small businesses within the federal government and fights against burdensome regulations under the regulatory flexibility act or the RFA. Federal agencies are statutoily required to ensure that regulations have a limited impact on small business.
▶ 0:17:56However, last Congress, this committee investigated agency compliance and simply put agencies skirt the law and end up implementing a mountain of crippling regulations on Main Street America. Despite their best efforts, the Office of Advocacy lacks the legislative authority to hold the agencies accountable for ignoring the RFA and that must change. Under President Trump, the Office of Advocacy has been pivotal in repealing Burnsome misguided regulations.
▶ 0:18:22This includes their work with Finan to roll back the Burnsome beneficial ownership information reporting rule. I'm happy that so many of my colleagues are dedicated to fighting crippling regulations, including those who have joined my bill HR 796, this 1071 repeal to protect small business lending act, which was reported favorably out of the committee on financial services.
▶ 0:18:43So, I genuinely hope that the hearings this like this will show how important it is to remove regulatory barriers that stifled American entrepreneurship, which should have bipartisan support. I look forward to discussing how we can strengthen the office of advocacy's role and how Congress can give it tools it needs to continue advocating for Main Street. I want to thank you Dr. uh Mulligan uh uh again for being here today. And with that I yield to my friend and distinguished ranking member from New York, Miss Velasquez.
▶ 0:19:12Good morning and thank you Chairman Williams and welcome to the committee Dr. Mulligan. Uh the office of advocacy plays a unique role within the federal government serving as the independent voice of small businesses and promoting the concerns of small firms before both federal and state policy makers.
▶ 0:19:36Advocacy's important work when done in a thorough and independent matter uh manner as the Congress intended can help prevent well-meaning rules from unintentionally harming small competitors. Small businesses need a strong advocate right now.
▶ 0:19:56Over the past year, small firm have lost government contracts, experienced supply chain chaos, and endured a constant state of confusion a amid President Trump's tariffs, rising prices, and avalanche of policy changes.
▶ 0:20:16Manufacturing jobs have fallen every month since April 2025, extending Trump's losing straight that cost 58,000 jobs. I would like to enter into the record a Wall Street Journal editorium entitled, "Where are those manufacturing jobs?" The oped contends that tariffs are the primary factor leading to job losses and the broader decline
▶ 0:20:47in the economy. That is why it is important to have an independent office that will serve as a strong and credible voice for small businesses within the administration. No one that will echo whatever the administration wants to hear.
▶ 0:21:05I have concerns over the growing lack of independence between the office of advocacy and SBA, particularly in light of SBA initiatives that task advocacy with cutting a hundred billion dollars in regulations and setting up a deregulatory strike force. That is not the role of an independent office, but one more akin to a political arm of the administration.
▶ 0:21:36This administration does not fully understand the long-term cost of rolling back regulations in pursuit of short-term gains. It is important to understand the full picture. Regulations can benefit small businesses and the unchecked removal of regulations can increase uncertainty.
▶ 0:21:58We have heard testimony time and time again that smart well-crafted regulations provide clear rules of the road for small businesses, offering center certainty and ensuring that they can compete on a level playing field. Smart, well-crafted regulations promote innovation, especially in the energy and manufacturing sectors.
▶ 0:22:26With that said, I understand certain regulations can be honorous and difficult for small employers to comply with, but deregulation is not the answer. The chainsaw approach will roll roll back important safeguards and cause uncertainty for small firms. Thank you, Mr. Chairman, I now yield back. Gentle lady yields back. I will now introduce our witness. Our witness today is Dr. Casey Mulligan. Dr.
▶ 0:22:54Mulligan is the chief counsel of the Office of Advocacy at the US Small Business Administration in Washington DC. Dr. Mulligan is responsible for representing the independent voice of small businesses before federal agencies, Congress, and the White House, and brings a deep background in economic research. Prior to work at the SBA, Dr. Mulligan served as a chief economist on the White House Council of Economic Adviserss from 2018 to 2019 where he provided economic analysis on federal regulatory initiatives, healthcare, labor markets, and tax policies. Dr.
▶ 0:23:23Mulligan earned a bachelor of arts from Harvard University and a PhD from economics from the University of Chicago of Chicago. U I'm looking forward to our meaningful conversation today. And are you a golfer? Got a mulligan there. Yes, sir. Couple times on the first te. I got you. Okay. So before recognizing the witnesses, I'd like to remind you that your oral testimony is restricted to five minutes in length. Uh if you see the light turn red in front of you, it means your five minutes has concluded and you should wrap up your testimony.
▶ 0:23:53If you go don't keep going, you'll hear this. Okay. Uh so with that, uh and I now recognize you, we're glad to have you here, doctor, uh for your fiveminute opening remarks. Chairman Williams, Ranking Member Velasquez, and members of the committee. I'm honored to discuss advocacy's role in cutting red tape for small businesses. My testimony does not necessarily reflect the views of the administration or the SBA.
▶ 0:24:20The Biden administration finalized 12,000 rules that would cost almost 6 trillion with a T. Against that backdrop, President Trump was elected to stop the quote everexpanding morass of complicated federal regulation. Close quote. He directed agencies to identify regulations that impose undue burdens on small businesses. Advocacy is well positioned to help agencies follow that direction.
▶ 0:24:48During my nomination hearing, I committed to meet small businesses where they are. I've done so together with our regional advocates who gather small business perspectives nationwide and bring them to policy discussions here in Washington. For years, small businesses burdened by regulations remain silent, fearing retaliation. Now they tell advocacy that this administration is the first to listen and understand. One even said advocacy quote quite literally saved Christmas close quote.
▶ 0:25:18We also help cut foreign regulation. When Canada blocked a US firewood manufacturers's exports, we coordinated with USDA, state, and Congress to resolve it. Shipments resumed, making it America's only exporter of that type of firewood. Agencies and the White House offices have increasingly come to advocacy for input on regulatory policy.
▶ 0:25:42The office has flagged approximately 300 regulatory issues for this administration where deregulatory action would help small businesses. Many of these rules giving are giving large organization an artificial advantage over smaller ones. Take the output the outpatient prospective payment system that pays hospitals more for the same services than it pays independent physicians. Small businesses also flagged the proposed OSHA heat rule.
▶ 0:26:11It would impose sweeping one-sizefits-all and often absurd requirements on workplaces where heat is above certain temperatures. During a meeting with advocacy, an Arizona watermelon farmer understood that the rule would require shade structures even though harvesting occurs at night in the dark where there's no sun to be shaded. In contrast, well-designed deregulation increases competition and productivity. President Trump's first term was a case in point.
▶ 0:26:39prescription drug f prices fell for the first time in decades. Deregulation sharply reduced internet access prices. The RFA's competition channel is a reason for both of these changes. Another indicator of agency's unprecedented engagement with advocacy is compliance with the RFA's agenda sharing requirement under 5USC section With only one or two exceptions, agencies in the prior administration completely
▶ 0:27:09failed to comply. In contrast, during my first five months as chief counsel, more than 60 agencies have sought advocacy input on their regulatory agendas. This is an increase in compliance of at least 3,000%. While regulators are quick to sanction businesses that violate their requirements, they too often fail to follow the rules that Congress set for them.
▶ 0:27:34A frequent practice practice has been to unlawfully certify important rules as supposedly not having a significant economic impact on a substantial number of small entities. Such certifications are a pathway to capriccious enforcement actions against small entities and they are also obstacles to oversight. My recent report, unlawful disregard for small business regulatory burdens, examines thousands of certifications in Orwellian fashion.
▶ 0:28:0265% of the major rules from the Biden administration were nonetheless said to lack significant effects on small entities or otherwise not require considering those effects. Small businesses were saddled with cost between 200 and 600 billion dollars without acknowledgement of the The report identifies genres of certification fiction and that's what it is. Including rules that acknowledge heavy paperwork burdens but certify anyway.
▶ 0:28:30rules that threaten entire business categories through product bans and rules that with detailed cost estimates that are ignored for RFA purposes. The report is not merely a critique of past process failures. It is a practical road map for finding and fixing red tape that is already on the books. To that end, advocacy has published a most wanted roster of regulations notorious for their unnecessary burdens on small businesses. Thank you for the opportunity to testify today.
▶ 0:28:58As chief counsel for advocacy, I will continue to listen and work toward better policy for all small businesses. I would be happy to answer any Thank you. That's perfect. And we'll now move to the member questions under the five-minute rule. I reckon now recognize myself for five minutes. Uh Dr. Mulligan, the office of advocacy is intended to operate independently from the SBA.
▶ 0:29:21Yet his statute requires the SBA administrator to provide advocacy with office space, equipment, communication facilities, and other support. So question is, how do you navigate this statutory requirement to receive necessary support from the SBA while ensuring that advoc advocacy maintains its independent voice in analyzing and advocating on behalf of small business? Thank you for your question.
▶ 0:29:45Um, you know, I my testimony and my reports have documented that the red tape problem is massive and one office is not enough. And President Trump has a number of offices really making great contributions. The office of managed range budget, the National Economic Council, and my uh landlord, you might say, uh, the SBA is is another one.
▶ 0:30:11and they're very much the administrators hearing from small businesses uh hears about these red tape problems and really is is a great partner. Um and I welcome great partners whenever I can get them. You know, in terms of setting the direction for the office that comes from me. I have the only hiring authority. I mean, Congress is very clear that um the administrator does not need to consent or approve my hires.
▶ 0:30:39And of course, especially in my office where we don't have machines and things like that, the people are everything. So, the hiring decisions are really crucial for putting together a great team uh to advocate for small businesses. Um, as we said today, the Office of Advocacy was created to be the voice for small businesses in the federal government.
▶ 0:30:57Uh, can you discuss how advocacy is uniquely positioned to hear directly from small business owners and specifically what concrete steps your office has taken since President Trump took office to expand outreach, gather meaningful feedback, and ensure small business concerns are effectively represented in federal policym I mentioned a number of regulatory uh partners in the administration. One of the unique things advocacy have is is it outreach. Significant fraction of my staff is not in Washington.
▶ 0:31:28They don't have an office or a desk here. Every day they're out uh listening to the small businesses. And one of the things that we did, I believe we set a record with no close second place in filling the regional advocate positions, making sure there was somebody in place there. Um and we put together quite a training program for them and they're very well integrated with what we're doing here in Washington.
▶ 0:31:50So um that outreach is is crucial to the whole mission of advocacy and really to having good government The uh this committee has sound the alarm on many of the burdensome regulations from the Biden Harris administration. Regulations like 1071 rule beneficial ownership reporting requirements and the independent contractor rule added unnecessary burdens and cost to main street America. And advocacy has taken proactive steps to fight back against many of these regulations.
▶ 0:32:18So my question is, can you tell us about those efforts and how advocacy will continue to identify and remove burdensome regulations? Um, thank you for your question. We the first step always is listening to the small businesses and they raise with us every one of those rules that you mentioned. Um, I suppose you've heard from your constituents about them as well.
▶ 0:32:42And we the next step is we communicate with the agencies who are we don't make the rules at advocacy. There's other agencies that make them. We communicate with them um and let them know what we've heard. Um one thing that's been a really a blessing in this administration often before I can do that, they're coming to advocacy and saying [clears throat] the different cabinet agencies, hey, what what are you hearing from small businesses? How can we do better with our regulations?
▶ 0:33:10Um, and so a number of agencies, including some that that you mentioned, really approached advocacy and and we were ready based on our outreach to let them know what small businesses are Let me go quickly on my last question. The regulatory flexibility act supposed to provide critical protection for small business. And last Congress, the committee's investigation found that agencies often skirt requirements and act costly regulations to the detriment of small businesses so quickly.
▶ 0:33:37What factors limit advocacy's ability to ensure agencies are complying fully? Well, I suppose in the prior administration that the administration itself wasn't very supportive and President Trump has been very supportive of what we're trying to do and that's big reason why we had the 3,000% increase in compliance. Um, you know, if you want something more robust when President Trump's no longer our president, I think some statutes like the ones you mentioned, the proof it act, I think would be helpful. Well, thank you for that.
▶ 0:34:06And I now my time is up and I now recognize the ranking member for five minutes of Thank you, Mr. Chairman. Uh Dr. S Mulligan, the office is the office of advocacy an independent office. It is the office of advocacy. Um and we refer to our Is it independent? Just say yes or no. The word independent is not in the statute.
▶ 0:34:34We call ourselves an independent voice uh in the executive branch for small business. Did you circulate to the office of management and budget, white house or small business administration for clearance your Uh no, they get it the same time that you guys get it. Mhm. Um, Congress intended that the chief counsel have a great deal of latitude and not be a yes man for the agency.
▶ 0:35:05Prior to being confirmed, were you working as a senior advisor on economics to the SBA administrator reporting to her chief of staff? Yes or no? I don't remember the title, but yes, I did work in a role. Okay. Thank you. In her side of the office. Yes. In my view, this is a direct conflict of interest for a nominee to an office which is statutoily required to be independents of the SBA.
▶ 0:35:33Moving forward, will you commit to representing the views and interests of small businesses even when those views directly conflict or with or oppose actions taken by the Trump administration? Yes or no? I already do that. I'm sorry. I already do that. Yes. In de in December, the Wall Street Journal editorial board warned that tariffs are contributing to manufacturing job losses.
▶ 0:36:0258,000 jobs since January. Have you conveyed these concerns to the White House and what respond have you received? And thank you for your question. Um I have so many dealings with the White House I don't know how to summarize them in in this short time. Let me but you don't recall you know everyone I recall so many things and the impact I recall a dozen of things.
▶ 0:36:32I don't have time to dozen let me tell you one story. So during the shutdown um no no no I just want to hear if you have Okay. Because the US Chamber of Commerce believes broad-based tariffs raise prices for consumers and businesses and are especially a big problem for small businesses that do not have many resources to understand them.
▶ 0:37:00Given the negative impact tariffs are having on small businesses, why hasn't advocacy taken a more visible role in pushing back against these policies? Thank you for your question. my office under my leadership has achieved a 3,000% increase in compliance and I understand that. I am not discussing compliance.
▶ 0:37:29I'm asking you a question about tariffs. I'm answering your question with all due respect. I'm answering your question and the I work with the agencies. I need to persuade them. I cannot make any rules. I cannot change any rates. I cannot do any of that stuff. I need to be persuasive. And I think my methods have been very effective as you can see from the compliance changes. I understand that you're recommending some different methods uh to persuade that. Those aren't my methods and that's not what I'm doing. Okay. So, Chief Counsel, in your book, you're hired.
▶ 0:37:59You state that tariffs are taxes. Do you believe that tariffs are taxes? Yes or no? Tariffs are a revenue source. Uh, president calls them external revenue as opposed to internal revenue. And his policy and I was there there in Milwaukee in the summer of 2024. Uh, help him, you know, get that to be on the platform. a yes or no answer on what you wrote in your own book.
▶ 0:38:29The platform is different than the policies that we had in the first Trump We are discussing the impact of tariffs on small businesses and consumers. You stated in your book that tariffs are taxes and now you polic No, it's not a different interpretation. It's a different policy. President Trump's policy and it's very clearly stated in the platform. Anyone can read it right now.
▶ 0:38:57The Republican platform is to reduce internal revenue and replace it with external revenue. And that's been his policy. That is a different policy than the first administration and it has different effects because it's a different policy. We know that small businesses are very burdened by internal revenue and that is part of President Trump's policy to relieve them from that burden. I think you are changing your tune based on the fact that you're working for the administration. That is not what you put into this book.
▶ 0:39:25I yield Lady yields back. Uh I now recognize Mr. Alford from the great state of Missouri for five minutes. Thank you, Mr. Chair and uh ranking member for holding this. Mr. Mulligan, would you like to respond to the ranking member? Anything you'd like to say after that last comment? Yeah, thank thank you for your question and that opportunity. Um, policy needs to be analyzed carefully. I've done that for my entire career. I'm not a young man. I've been doing that a long time.
▶ 0:39:53And, you know, the policies may have the the same label, but different things. Uh, they're different policies. And policies in the Trump 2 administration, I analyzed the Trump two policies, and the policies that we had in the platform in Milwaukee are not the same policies as before, and they need a different analysis. It would be dishonest to do it any other way. Very good. Uh, as you know, this committee really stands as a staunch advocate for Main Street America under the leadership of our chairman.
▶ 0:40:23Uh, that's what this has been about since I've been on this committee. I think all of us up here are firmly committed to make sure that Main Street America is fairly justly uh supported uh that we help help small businesses start and grow.
▶ 0:40:42If we do not our champion attitude for main street interest, we risk losing the small businesses that are really integral the fabric of America. The last four years, small businesses have been under attack from an administration determined to crush Main Street under the boot of big government.
▶ 0:41:04In the previous administration, federal agencies finalized over 1,000 regulations costing taxpayers a whopping $1.8 trillion in That's not a small number, $1.8 trillion. And this is the same as the entire federal discretionary budget for fiscal year 23. It is unacceptable that federal agencies can put this burden on the taxpayers of this country. And that's why the taxpayers spoke when they elected Donald J.
▶ 0:41:33Trump, who appointed administrator uh, to take the SBA in a new direction. In just the first 100 days, reforms from the SBA Office of Advocacy have saved small businesses more than $ 48 billion in regulatory cost. Thank you. Thank you for that. And since taking office, the president has saved over $111 billion in regulatory costs.
▶ 0:42:00That is a savings of about 200 uh $325 per American. Money that instead of being wasted in useless compliance to support bureaucratic bloat will stay in the pockets of Americans. Dr. Mulligan. Um, the advocacy office does exist as the voice of small businesses to make sure that any bureaucrats in the beltway must consider Main Street when creating regulations.
▶ 0:42:28What current regulations are you hearing about from small businesses across the country that really need attention the Thank you for Thank you for your question. Um there are there are so many as you mentioned getting into your top three housing. We have a uh a most wanted list that we put on our website. the OSHA heat rule that I mentioned in my testimony is in there.
▶ 0:42:56The um requirements um for nursing home staffing is is another one that that's in there. Um the filing of quarterly payroll forms is another one on our most wanted wanted list. It could be annual or something we should look into making it annual instead of quarterly.
▶ 0:43:20Uh I am also on the uh appropriations committee subcommittee for FSG and um uh I know the office of advocacy requests an additional $4 million. This is not an appropriations hearing. I understand that. But uh that could not be included in the House Mark this goound. Um can you please speak to what advocacy would be able to do for the taxpayer with additional funding? And we have 40 Yeah, thank thank you for your question. We are a small office.
▶ 0:43:50There are thousands of regulations um and making sure that we follow through and not just identifying but follow through and removing those regulations that need to be removed. Reform the ones that need to be reformed. It would be helpful to have another additional staff than just a few dozen that we have. Well, I'd like to have a continued conversation with you and Dave Joyce, our uh subcommittee chair on this. Uh let's make that happen. Thank you so much for your service for looking out for Main Street America. And with that, Mr. Chairman, I yield back. Gentleman yields back.
▶ 0:44:20Uh I now recognize Mr. McGarvey from the great state of Kentucky for 5 minutes. Thank you, Mr. Chairman. I just want to point out one thing quickly. Um, you know, when we're talking about rules and regulations, the first Trump administration issued 1,313 rules and regulations. The Biden administration issued 1,167 rules and regulations, less than Trump won. I'm very interested in making sure that our small businesses don't have a regulatory burden. I just want us to be honest about the data and the numbers when we're talking about them. So, Dr.
▶ 0:44:48Mulligan, um, one thing I want to talk with you about is in your written testimony, [clears throat] you use the words regulation and regulatory 55 times. You never once mention the word tariff. Zero times do you talk about tariff. That's frustrating to me because right now if you want to come to Louisville, Kentucky and walk around and talk to small business owners with me, that is the number one thing they are talking about. And you are supposed to be the small business's voice and advocate here in Washington. So the concern isn't just anecdotal.
▶ 0:45:19It's not just somebody telling me at their business what this is doing to them and their customers. All of the data bears this out. Um, and even though you don't mention tariffs at all in your written testimony, you have talked about tariffs before and you've talked about the damage that a tariff policy specifically when there is no strategy involved does.
▶ 0:45:40I I can point you to chapter eight in your book, You're Hired, where you say a tariff is simply attacks on imports, where you say, quote, "The most damaging protectionist measures measures are import prohibitions and their equivalents, tariffs that are so high that imports stop altogether." You also said, quote, "Tariffs are taxes on top of all the other taxes and regulations of our economy, and they quote reduce employment, real incomes, and GDP." Your last point is actually proving correct right
▶ 0:46:10now. And in the wake of President Trump's tariffs, according to his own Bureau of Labor Statistics, the unemployment rate has increased to 4.6% last year. And the number of unemployed people increased to 7.8 million over the last year. The Chamber of Commerce has reported that a majority of small businesses expect to raise prices and have less revenue than usual. So less disposable income is going to come back into our local economies and stimulate growth.
▶ 0:46:37And of course it is making things harder for small businesses from Louisville across this country. Um what are are you all hearing the same thing from small businesses about tariffs that we're hearing? Thank you for your question. There were a number of incorrect premises with all due d on my on our quoting you. We but he there's Biden did not make 1,000 regulations.
▶ 0:47:00He made 12,000 and uh about 8,600 of them are on my on my Yeah, but I ask you, are you hearing about tariffs from small businesses? Are I will take your silence as an answer. Yes, of course you are. Because that's what they're talking about. That's what is hurting. For example, the the fishermen I wore my fish tie today. The fishermen from Massachusetts, they came we visited them. They visited us. And one of the things they raised is how the Europeans are stealing our fish and selling it back to us. That's not an exaggeration.
▶ 0:47:31And they were asking, could there be a tariff so that we could fight have a president who fights back against terrible trade deals? Has your office done crushing our small businesses from What what what work has your office done to help small businesses with the burden they are facing from tariffs? Are they doing anything? You're supposed to be the advocate. You're right. I I am the advocate. Um and I my job number one is I lift What have you done? because we've got limited time. What have you done? Two things.
▶ 0:48:01Listen and and make sure the policy makers are hearing what I'm Right? Because you know the president when he went in front of the Supreme Court said this is regulatory. Right? He called tariffs regulation. That is the point of his argument to the Supreme Court. He said that he quote has the power to regulate. That was the specific word they use on international trade. And what I'm hearing from you today is that you are basically ignoring what's happening with our small businesses with the tariff problem because you've changed your opinion that you used to write about now that you're working for the administration.
▶ 0:48:30Our small businesses need you more than you need to be loyal to this administration. Um you didn't have much good to say about your book about Peter Navaro, the president's trade guru and quote unquote unique China expert. Uh Mr. Navaro is the principal author of our country's current tariff policy. You called him, these are your words, you called him borish and doubledeing. You wrote that you were quote stunned by how misinformed he was in policy discussions. You accused him of economic illiteracy.
▶ 0:48:57You even pointed out that he was so out of touch that he went around Capitol Hill making a big stink about a bill, and I'm not making this up, that he named the FART Act. Setting aside your personal differences with Mr. Navaro, you seem to have diametrically opposed views on tariffs and what he does. Do you think he's the right man to be leading our trade policy right now? Thank you for your question. and it loaded in a ton of quotes, false premises, quotes. They're called quotes. A number of quotes that you quoted from that book were about Ronald Reagan's policy.
▶ 0:49:24If you look at that chapter that you're quoting from, there's a picture of Ronald Reagan next to a picture of Donald J. Trump. And there's a whole discussion in that chapter is about Reagan's import prohibitions and Reagan's policies and how President I must have the old I must have the old copy, not the new copy. There's only one copy and I I wrote that chapter. It's very much about Reagan versus Trump. and you were attributing. You're ignoring the question about Peter Navaro. What about Peter Navaro? I didn't ask about Ronald Reagan. Gentleman's time is up. I yield back, Mr. Chairman.
▶ 0:49:58I now recognize Mr. Finstead from the great state of Minnesota for 5 minutes. Thank you, Chairman Williams. Uh, thank you for holding this important hearing today and thank you to our witness, Dr. Mulligan, for being here. I'm excited to be here today to discuss the important role the SBA Office of Advocacy plays in ensuring small businesses have a strong voice in government. For many small businesses, especially those in rural communities like the communities that I represent in southern Minnesota, federal regulations can be confusing and costly.
▶ 0:50:25The SBA office of advocacy serves as a vital resource for engaging with small business owners and it holds agencies accountable to the Regulatory Flexibility Act since 2009. And we've heard this a few times already. Federal government regulations have cost small businesses uh $732.2 and probably more egregiously has added uh four 483.8 million hours in administrative time to our small businesses.
▶ 0:50:53The Biden administration alone accounts for $450 billion of these costs and nearly 280 of the administrative uh hours. 280 million of these hours. I introduced the pro it act uh to give small businesses a seat at the table during this regulatory process and provide them with a muchneeded regulatory relief by giving teeth to existing law the RFA the regulatory flexibility act. So with that uh Dr.
▶ 0:51:19Mulligan the pro it act passed this committee the judiciary committee and the full house of representatives last Congress. This year, I reintroduced this legislation with the hope that it again passes the House and hopefully spurs the Senate uh for action. With the chairman's permission, I would like to offer a letter received this morning from the US Chamber of Commerce for the record that supports the Prove It Act. So, Dr.
▶ 0:51:41Mulligan, as the House considers the Pro It Act, I wanted to know your thoughts on this legislation and hear how you believe it uh could help small Thank you for your question. the um fictional certifications is even even bigger problem than was thought and this committee was early to identify it as a serious problem and that legislation such as the proof it act is directly trying to solve that problem and I that's a problem that needs solving uh
▶ 0:52:12if we don't solve it um you know in this um President Trump's extremely supportive of small businesses but I he's not always going to be our president and after that I think we need some legislation to prevent these fictional certifications. If if if if fictional certifications continue, we have several problems with that for small businesses. Number one, it undermines the regulatory review process.
▶ 0:52:36So that protection for small businesses to be able to go back and look at old regulations and take them out when when they're outdated, etc., will be undermined. Another key issue um is be able to understand the rules to follow. Back in the old days, Martin Luther said the common man should be able to read the word on his own. Well, we have something that in like that in the federal government, small entity compliance guides, but the agencies avoid that by through these false and fictional certifications.
▶ 0:53:02Um, and last but not least would be particularly for some of these special agencies like EPA that when you have a false certification that the pro it act would prevent um it bypasses the panels and the great feedback we would get for small businesses and make better rules. The ranking member talked about well-crafted rules. The way to craft them well is to listen to the small businesses. Thank It's probably a simple yes or no, but uh Dr.
▶ 0:53:29Mulligan, you understand that small businesses, 95% of the businesses in in in my district are small businesses. We're talking mom and pops, 10, 15, you know, in some cases two, three employees. you understand that they don't have time day in and day out because at some point in the day they're the CFO, they're the CEO, they're the janitor, they're the mechanic, they're the cook, you name it, they're doing it all in that day.
▶ 0:53:52You understand they don't have the time to keep up with the thousands upon thousands of regulations that a big bloated government puts on to our small businesses. You get that, Yes, I do. All right. So a tool like the prove it act is is something that will provide opportunities for common sense to prevail for our small businesses again. So how how would the prove it act aid your office uh to influence or challenge agency rules that underestimate uh their impact on small businesses?
▶ 0:54:24Well, the pro it act gives additional role to small business voice maybe delivered through the office of advocacy um in terms of questioning these fictional certifications and going ahead with a rule that acknowledges the cost that it creates and helps with the compliance and finding alternatives less costly alternatives of achieving the same goals. I appreciate what you do. Thank you for being here today. And uh Mr. Chairman, I yield back. Gentleman yields back. I now recognize Miss Sculton from the great state of Michigan for 5 minutes.
▶ 0:54:54Thank you, Mr. Chair, uh, Madame Ranking Member, and, uh, Dr. Mulligan for joining us, uh, here today. Great to have a fellow MD Midwesterner, uh, in our presence. Uh, the topic of the day is tariffs. How do we combat the terrible impact that tariffs are having on our small business? You are here because we are looking to you to help us protect small businesses.
▶ 0:55:19I have here five different letters that I would like to enter into the record from small businesses across the country who reached out to this committee desperate for help to try and combat the the devastating impact of this administration's tariffs policies on their small businesses. One small business owner, Lynn Fletcher O'Brien from McLean, Virginia, wrote in and and she actually used and and and people here use the words they are they're targeting us. They're attacking us.
▶ 0:55:45They they see this administration as literally targeting small businesses. Lynn Fret Fletcher O'Brien writes in and and talks about actually punishing small businesses. Talks about a a a procedure that Customs and Border Protection employs where officials are actually destroying items when they can't properly assess the value because of this chaotic tariff policy.
▶ 0:56:12She said, "I'm urging you to push for tariff relief that doesn't punish small American businesses and consumers. You're in the office of advocacy. They're looking to you to help in West Michigan. Our agricultural sector in particular is struggling. Rural America is struggling. President Trump's tariffs, including many businesses in the agricultural he is punishing these businesses.
▶ 0:56:39Michigan is not the o is not only the the nation's second largest producer of apples. In my district, Grand Rapids is the apple capital of the state. As a result of the president's tariffs, fresh apple exports have declined by 58% this year. West Michigan produces nearly 3/4 of Michigan's harvested apples in 2024. So, you can imagine how devastating these tariffs have been to my district's food and agricultural small businesses. Dr.
▶ 0:57:08Mulligan you said that you know when my colleague Mr. McGarvey was asking you what are you doing about it you said you making sure that individuals have information about it is that all is that all that you are doing is that all that the office of advocacy can do can to help from small businesses feeling like they are being punished by this Thank you for your question. Um advocacy has two basic roles.
▶ 0:57:32the outreach, the listening, in other words, um listening to small businesses, and I'd be glad to look at the letters that that you're putting in in the record. Um I think every small business voice counts. Great. We have them here for your review.
▶ 0:57:47The second role is to communicate to the agencies and I try to be persuasive um in terms of making sure they know what the small business concerns are and urging them to seek policies that um promote success of small businesses. I found the partnership in the administration to be incredible.
▶ 0:58:10Um, as I said in my testimony, they're coming to me before I can go to them in many cases, including in in the tariff area. I had uh an entrepreneur from Chicago came to Washington and I met with her and she mentioned she's sells coffee, purchases imported coffee, says coffee is getting pretty expensive. Um that was during the shutdown. So I couldn't meet with the people at that time. But it's the very first day the shutdown was over.
▶ 0:58:36I was told to come to the White House and share what I've been hearing share what I've been hearing. And before I could share that Chicago entrepreneurs story, the commerce principal said, "Hey, we are cutting the tariff on coffee and and some other items immediately." Um so that's that's the kind of experience that I've had. They they are very eager to hear about small businesses and to take fast action to make things better. And and what action is that?
▶ 0:59:05I mean, we we are still seeing these small business owners writing in and saying, "We feel like we're being punished here." I mean, what would you say to Lynn in in her letter here who says, "Please, you know, do something about these policies that are punishing us." Thank you for your question. Uh I would be glad to read the letter. I don't reply to letters I haven't read. I I mean I'm reading some administrator from you right now. YOU KNOW, SHE'S I'm reading it verbatim. She says, you know, I I'm urging you.
▶ 0:59:33This certainly can't be the first time you have heard from someone who feels and and I would I would question whether you truly are listening. If you're telling me you have never heard from people who say, I just got done explaining about the Chicago entrepreneur who was importing the coffee. I I heard from her. I went I went to the I was called to the White House to share what I'm hearing. and and you share with them that people feel like they are being punished and I shared what the Chicago entrepreneur said, not what you are saying.
▶ 1:00:01So, have you shared with the White House that American small businesses feel like they are being punished by this tariff I have not heard a business tell me that they're being punished. You you do not feel that this you have not heard from any small businesses that feel that time is up devastating impact on their small business. And I'm glad I entered these into the record. We encourage you to come to West Michigan and talk to small businesses who are experiencing devastating consequences of this tariff Lady yields back.
▶ 1:00:29I now recognize Miss King Hines from the Northern Mariana Islands for 5 minutes. Uh thank you, Mr. Chairman, and uh I want to thank you, Dr. Mulligan, for making time to be with us today. So as the chairman has stated, I represent the northern Marana Islands and uh you know 99% of our problem out of we have 99 problems. 98% of our problems are can be directly attributed to rules federal rules and regulations.
▶ 1:00:58Uh we have one industry which is the tourism industry. And um just the other day or a few days ago on my way back here I was informed by one of u our largest employers in private sector that they're considering closing down. Right.
▶ 1:01:16And um you know this is an issue that I' the economy of the cinema is something that I'm deeply passionate about and I've been communicating the challenges that we are having to the federal government as early as um during the tenure of Secretary Pete Buddhaj right because when tourism is is is uh your primary do rules and regulations have a very significant impact.
▶ 1:01:45So, I don't really have any questions for you, but I do have an ask. Uh because all too often these federal policies have mainland firms in mind or mainline small businesses in line. So, you know, um I would ask for you to consider or committing to, you know, a direct outreach to small businesses in the CNMI, whether it be through virtual or whatever means, right?
▶ 1:02:12Um, I also ask that you know your research and economic don't just lump us all in with region 9. And I think that's the region that we fall under, right? Because we're we're not like the West Coast. We are a remote uh island community.
▶ 1:02:30And also, it would be amazing if you guys could track and report the real world impacts so that we can start actually getting ahead of some of these issues so that we can prevent a complete economic collapse of the CNMI which I which I don't think anybody at the federal government uh wants. That's it. Thank you for your time. I yield my time. Gentle lady yields back. Uh, I now recognize Miss McCyver from the great state of New Jersey for 5 minutes.
▶ 1:03:01Thank you, uh, chairman and ranking member for convening this hearing and thank you to our witness, Mr. Mulligan, for appearing before the committee today. The SBA office of advoc advocacy was created by Congress to be an independent voice for small businesses before the government to make sure the real world cost of government policies are actually understood and to ensure small business owners have someone in their corner when they are competing with big businesses. That mission is especially important right now.
▶ 1:03:29Small businesses are facing some of the toughest economic conditions since the Great Recession. Costs are up, margins are thin, and uncertainty is high. At the same time, Trump's administration has made deregulation a central policy priority, and has directed its office of advocacy to gut key services to small businesses under the guise of cutting red tape across the federal government. When done thoughtfully, regulatory reform can help small businesses grow.
▶ 1:03:59I think all of my colleagues here can agree to that. But when it is rushed or done without transparency, it risks shutting small businesses businesses out of the very processes meant to protect them. I have listened to the corner the concerns of actual small businesses in my district and nationwide across a range of industries. Their concerns are very clear, Dr. Mulligan.
▶ 1:04:22They tell me that what is hurting them most right now is persistent inflation, tariffs, and rising health care costs after the Republican majority let the enhanced ACA tax credits inspire. Small businesses need to know that the office of advocacy is fulfilling its statutory role as an Dr. Mulligan advocate.
▶ 1:04:44They also need to know whether the SBA's work is focused on the real economic conditions small businesses are facing or if it is serving a more partisan interest. Dr. Dr. Mullikin Congress intentionally structured the Office of Advocacy as an independent entity within the SBA so that it could speak candidly even when that means disagreeing with the administration.
▶ 1:05:13I want to inform you, Dr. Mullikin, that it's okay to disagree with the administration. Will you certify here that you did not have to clear the statements you made here today by any organ of the White House, especially the Office of Management and Budget and SBA? Thank you for your question.
▶ 1:05:34Um, as I mentioned earlier, the OM, Office of Management and Budget, they get a copy of my testimony at the same time that this committee does. That's your answer? Yes. That's I would not call that clearing. That is a courtesy copy. Guess what, guys? I'm going to the Hill. I'm going to be part of a hearing and here's what I'm going to be saying. Did you have to get approval? Yes or no? No, I did not get approval.
▶ 1:06:03I I sent it to you before they could possibly open their mouth and comment on that. That when I say your name, that means I'm reclaiming my time. How can America's small businesses trust you to speak truth to the administration when you can't couldn't even speak to us here today without their approval? Well, that's loaded with false Thank you for your question, but it is loaded with false premises. Um, I did not need their approval for my testimony today. Dr.
▶ 1:06:29Melikin, can you describe clearly on the record how you define independence in your role as chief counsel and what concrete safeguards are in place to ensure your offices positions are not directed or constrained by this Yeah, thank you for your question. Um, the Office of Advocacy was really blessed with special statutes from from Congress. Um, they're so special. I have them laminated. I carry them with you.
▶ 1:06:59You obviously have a lot of things laminated right there in front of you. So, so actually this is the only laminated thing in front of me. Well, you have all your statements Um and these special statutes include being open during the shutdown. That was special. Um if you want to call that impendent, that's fine. It's not in the statute, but um the hiring authority. It used to be in the old days to hire people, the chief counsel needed the cons consultation and approval of the administrator. That's no longer true. I have that in my laminated statute.
▶ 1:07:28Um the reporting rules that there should not be clearance from OM and the other uh federal agencies. That's that's another special rule that the office has and we appreciate that and we follow Mr. Mulligan, that concludes my questions. I will say that that question specifically should not need a laminated document for you to respond to. With that, Mr. Chairman, I yield back. Gentle lady yields back. I now recognize Miss Vanine from the great state of Texas for five minutes.
▶ 1:07:58Well, thank you very much. And Dr. Mulligan, I want to appreciate your testimony today. Um, you have a really important job. I mean, I'm listening to my my colleagues on the other side of the aisle and man, it sounds like you have the most important job in for small businesses in the government. Like, your job is to be the massive advocate. Can you tell me a little bit about your predecessor in your position?
▶ 1:08:22Since this is such an important job under the the Trump administration and everybody on my Democratic colleagues recognize the fact that this is such an important job that small businesses have this advocate voice. Can you tell me about your Uh thank you for your question. We have an empty chair right here. That's what it was for nine years. Uh President Biden didn't even bother to nominate somebody for this I think it's an important job. I enjoy doing it and I'm blessed that President Trump asked me to do this job.
▶ 1:08:51Well, I recognize that and I recognize that we've finally re, you know, realized that we need to have a voice uh for our small business, our small businesses because it seems like dur during the four years of the Biden administration, they got absolutely crushed. How many additional regulations did you say that that the Biden administration put down our small If we just count the final rules that were published in the Federal Register, it's 12,025. 12,020 in four years. And what what was the cost of all those?
▶ 1:09:20I mean, there's so many it's a little bit hard to say, but my best estimate is uh for the entire economy uh $6 trillion with a T. Wow. Okay. And that crushed small businesses, right? Because they they're at at a disadvantage when you're looking at corporations because corporations actually can have like an entire regulatory agency or entire regulatory department, a division. Small businesses don't have that.
▶ 1:09:43So, they're relying on on on folks like you to be able to say, "Look, when when we have these regulations that we think are little that are coming out of these agencies, this can crush us." I mean, it's averaging what was that, $50,000 an employee is what the small businesses were having to pay in addition to during the the Biden administration.
▶ 1:10:01It's it it is it is absolutely astonishing to me that after the previous four four years of that administration that we are finally having advocacy from our Democrat colleagues for small businesses. The $1.8 trillion that they added. We're hearing about tariffs and crushing the economy. I'm sorry. What was the GDP growth last quarter? Uh thank you for your question. I believe it was 4.3% annualized rate. Wow. Okay.
▶ 1:10:29and and we finally have wages now that are outgrowing inflation, right? So, this is great for our for our small businesses. Um, and the unemployment that that they were talking about, what sector was that unemployment in the increase in unemployment? It's the public sector, right? It was government jobs, right, that that we had lost. But in the private sector, didn't we see an increase? Didn't we see more small businesses hiring? Yes, that's correct. I mean, one one very important statistics that we're seeing is new business applications.
▶ 1:10:59They were skyrocketing uh in 2025 to historic levels. We've never seen something um like that. Um a lot of people say, including the previous administration, that those sort of applications, employee identific employer identification number applications are quite an important predictor of future employment growth.
▶ 1:11:21So, it seems like this administration actually gets it, that we are helping on the tariff side to make sure that our small businesses are able to compete globally, that we are helping them on the tax side with the one big beautiful bill and the 199A on on pass through recognizing that we want them to be able to compete with corporations. And then I actually have a bill that that was passed off the the House floor. It's the uh HR 2965, the Small Business Reduction Act of 2025.
▶ 1:11:46And basically what that says, it's it's a bill that any new rulemaking by the SBA is at no cost to small businesses. Now, it's not saying that you can't have additional regulations as necessary as needed. But what it does say is you're going to have to cut some that are duplicative, that are unnecessary, that don't even reflect the intent of the law.
▶ 1:12:05Can I ask you how we can make that permanent that we can actually codify the decrease in regulations on small businesses and how do we create like a systemic culture of regulatory discipline where agencies will have to review with regulatory Yeah, thank you for your question. Um, just a few seconds we have less. I think regulatory budgeting is worth looking at. President Trump did that in the first term EO13771 and he's has do doing it again in this term. That's something that could be in the statute that Congress could be involved with.
▶ 1:12:34not just setting the money budget, but also setting the regulatory budget. Okay. Fantastic. I I I appreciate that. What have has your office in in like the 10 seconds that you've got, what would you say are the top three things that you've gotten accomplished since you've been here? Um I think this being part of the regulatory agendas, saying what rules we're going to add and subtract and reform, that is huge. Um and very very gratified that so many agencies have asked for our input. Fantastic.
▶ 1:13:03Thank you very much for what you do and appreciate your testimony here today. [snorts] Gentle lady Leo's back. I now recognize Dr. Morrison from the great state of Minnesota for five minutes. Thank you, Chairman Williams and ranking member Velasquez for holding the hearing. Thank you, Dr. Mulligan, for being here to testify. Since you represent the Office of Advocacy, which is intended to be the voice of small businesses, I am sorry to be redundant this morning, but I have to begin by asking you about the number one concern that I'm hearing from small businesses in my district, which of course are the tariffs. Dr.
▶ 1:13:33Melan, during your testimony, you said that when regulation tilts markets toward incumbents and away from new entrance, it directly undermines the small businesses that drive American innovation and job creation. Do you agree that allowing large tech companies like Nvidia and Apple to negotiate directly with the president for tariff exemptions tilts markets towards incumbents? Yes or no question.
▶ 1:14:02I'm not familiar with the premise of the question, so I'm not sure how to analyze I I haven't been part of the president's discussions with uh large businesses. I my attention is on the small businesses. I'll just give you one more chance. Uh, do you agree that allowing large tech companies like Nvidia and Apple, we're all aware this happened, to negotiate directly with the president for tariff exemptions tilts markets towards Thank you for your question. I'm I'm not familiar with the policy.
▶ 1:14:31I can't really opine on something I'm not familiar Okay, we'll move on. Do you think tariffs are helping small businesses stimulate job creation? Thank you for your question. Um, probably the quickest way to answer would be to go back to what I've heard about European terrible trade deals. U, I've heard these, again, this is not my opinion, my study. This is what I hear from the small businesses.
▶ 1:14:58Um, Europe Europe has a bunch of um supply chain regulations that are going to cost small businesses a trillion dollars with a T. And we didn't even get to vote for those people. Um, President Biden was weak. Dr. Mulligan, I'm sorry to interrupt you, but I'm not asking about Europe. I'm talking about American small businesses. Dr. Mulligan, I'm reclaiming my time respectfully. What I've been hearing repeatedly from small businesses is that they are the ones bearing the brunt of President Trump's tariff war.
▶ 1:15:26They are the ones being forced to eat the costs or lay off staff while larger corporations are able to lobby the president and receive exemptions. I really hope that during the coming months, uh, the Office of Advocacy does more than it has done this past year to protect small businesses from the impact of tariffs and ensure that small businesses are able to not just survive, but to grow and prosper. You know, during our first small business committee hearing last year, I asked uh Mr.
▶ 1:15:52Carl Hutter, the CEO of Clickbond, a small family-owned manufacturing business, how we can strike the right balance with regulations to encourage small businesses to thrive. His response was very clear. Our small businesses, he said, need predictability, clarity, and workability. Dr. Mulligan, during your time here today, you've made it clear that this administration has a very ambitious deregulatory agenda. In other words, we're going to see and we are already seeing a great deal of change and uncertainty in the regulatory space.
▶ 1:16:21What is the Office of Advocacy doing to help small businesses navigate the uncertainty deregulation brings with Uh, thank you. Thank you for your question. Um the we have our constitution and presidents serve uh two terms at most and so the executive branch turns over.
▶ 1:16:44Um what's more proven to be more durable are the statutes and so one of the things that the office of advocate does is advocate for small businesses here on the hill in writing statutes. And this congress has been quite productive in that regard. 22 Congressional Review Act um disapprovals passed and those are things that are last beyond the current uh administration and that that's providing uh much wanted certainty for our small businesses. Thank you uh Dr. Mulligan.
▶ 1:17:15I did not hear how you're helping small businesses advocate navigate the uncertainty that deregulation brings. But one final question I'm a physician by trade so I am very familiar with the pain and frustration caused by administrative burden. I'm sympathetic to the concerns that uh raised by small business owners that extensive regulations can be ownorous and burdensome. But I also recognize that regulations are critical to keeping people safe and healthy and keeping our air, land, and water clean.
▶ 1:17:43I hope we can all agree that finding that right balance between protecting Americans health and safety while ensuring that small businesses can flourish is a goal worth pursuing. In the midst of the Trump administration's calls for deregulation, what steps will your office take to ensure there is that balance struck between this deregulatory agenda and protecting the health and safety of our small business owners and their employees? Thank you for your question. Yes, the balance is quite important.
▶ 1:18:11Uh you need to listen to the small businesses. The false certifications are not achieving balance. That's ignoring co costs and pretending they don't exist. You can't balance something that you're ignoring. So no comment on the air, land, and No, there is a balance between the mission. This is in the RFA itself. The mission of the regulator. Thank you. I yield back, Mr. Chair. I now recognize Mr. Downing from the great state of Montana for five minutes. Well, thank you, Mr. Chair, and thank you, Dr. Mulligan uh for being here today.
▶ 1:18:41Uh I represent uh Montana's uh second district, central and eastern Montana. Uh very rural and small businesses are are very vital to our rural communities. and uh being somewhat of a a glutton for punishment. I come out of the private sector. I've created a lot of I I've run a lot of small businesses in everything from manufacturing to distillation to securities to insurance to manufacturing.
▶ 1:19:04And uh I've personally seen how heavy-handed and unreasonable regulation can stifle growth and make it difficult especially in small businesses in being successful. And a lot of that if you're boots on the ground watching how that's everybody cares about bad actors. Everybody cares about protecting consumers. I always say bad actors are bad for industry. Nobody wants bad actors in their business. And so the the thought that you know deregulating is going to you know create this you know petri dish of bad actors I think is misplaced.
▶ 1:19:34We do need to have reasonable sideboards but we also need to allow small businesses to be successful. And uh you know one of the things that that caught my attention here is about raising the barrier to entry uh for competing in an industry and how that difference how how that's different between larger companies uh who can manage the costs and the administrative burdens caused by this regulation and Main Street really can't. And Dr.
▶ 1:19:58Mulligan in your testimony you mentioned this artificial advantage that government regulation creates for large businesses over small ones. Can you elaborate on the negative impact this artificial advantage has on economic Yeah, thank you for your question.
▶ 1:20:13I I think a vivid example um that's worked out in some detail in a letter I sent to uh uh [snorts] com uh Commissioner Oz um over at CMS about what's happened to independent physicians. They used to be a majority of physicians and now they're quite a fairly small minority and a lot of these regulations that that we're discussing are are part of the issue.
▶ 1:20:39Um the the fact that the big hospitals when they employ the position physicians they get extra government money that the independent physicians don't. That's been a factor in driving down the capability of independent physicians to stay in their small business mode. Right. Right. By the end of 2024, the Biden administration had imposed $1.8 trillion in regulatory costs on American businesses.
▶ 1:21:04In your view, how much has the regulatory environment changed since President Trump's swearing in and what impact has it had on small business? Yeah, thank you for your question. It's an 180 degree turn. U such a such a huge change. I mean, there was so much regulation. And I think six trillion is is the best estimate that we have of the Biden regulations, just four years worth of them.
▶ 1:21:28Um, and now we're there are some new regulations coming out, but a lot more regulations being being taken away. Um, you know, what's what's been the impact on small businesses so far? I think it's been over 100 billion um reduced costs uh as a result of President Trump's uh agency's actions. Well, thank you. And under your leadership, in what ways has the Office of Advocacy influenced rulemaking under the Trump administration in support of small businesses?
▶ 1:22:00Um really the the two steps I like to talk about is listening. We continue to listen. That's that's my favorite part. Um I learned so much talking to the small businesses and hearing what they experience, then relaying those experiences and trying to put it in practical terms for the agencies. You know, here's some rules you should look at. Um, here's what the small business are saying about the reasons to reform those rules. Right. Thank you. Um, well, I really appreciate your testimony here today. And on that, uh, Mr. Chair, I yield back the remainder of my time.
▶ 1:22:29Gentleman yields back his time. I now recognize Mr. Cisneros from the great state of California for 5 minutes. Uh, thank you. Thank you, Mr. Chairman, and I want to thank you and the ranking member for holding this uh, hearing today. Um, Dr. Mulligan, in your response to the ranking members letter from November, you declined to answer her question about the number of submissions related to tariffs because it was not in the scope of the hotline.
▶ 1:22:54After my colleagues across the aisle rejected my amendment to the bill that would codify the hotline, I introduced my own bill that would increase the scope of the hotline to get advocacy an explicit role in hearing concerns from small businesses regarding tariffs. Is this something you would support? Uh thank you for your question. I haven't been able to read your bill. I'd like to study it before uh declaring my support or resistance. Well, I mean it's a simple question, right?
▶ 1:23:21Would you support the hotline reporting the information on tariffs that you want to take a bigger concern in that something you would support? Thank you for your question. And I uh what I am clear on, one of the reasons our offices had such great successes um in just 5 months is we use the right tool for the job. Something my parents taught me, the right tools for the job. And the right tool for the red tape hotline is red tape. That that's the job that you use the red tape tool for.
▶ 1:23:48So I wouldn't uh advocate, you know, using a hammer when you need a screwdriver or a Well, it's a it's a simple thing, right? To include more information right there. tariffs are obviously hurting small businesses and to gather that information to report it to the committee is something that I hope you would support and I hope you'll take a look at my bill and do that because it seems to align with what you said in the past which is um it's consistent with your statement where you asked this committee to consider legislation that gives the office of advocacy a more official role in trade
▶ 1:24:18policy. So with that I'll move to my next question. Uh, I hope you agree that the regional advocates are crucial because they serve as direct liaison between local and small businesses and federal regulators. Region 9 covers California and several other states and territories. I would like to read you the bio of the region 9 advocate for the office of advocacy website. It reads vacant bio coming soon. Mr. Chairman, I ask uh for unanimous consent that this region 9 advocate bio is entered into the record.
▶ 1:24:51Dr. Dr. Mulligan, are you aware how many small businesses are in the state of I don't have the exact number off the top of my head, but I'm I would guess it's uh in the millions. 4.3 million. 4.3 million small Now, Dr. Mulligan, why there is no regional advocate for California's 4.3 million small businesses? When do you expect an appointment to be made for region 9 advocates to ensure California's 4.3 million small businesses have their voice heard?
▶ 1:25:21Uh thank you for your question. Um the we set a record over all other presidencies before in terms of getting our outreach advocacy team or regional advocacy team filled in. We still do need to fee in region 9. Um you know there was a long delay in my confirmation. I wasn't allowed to interview people for that position. But as soon as the Senate finally finished the job I was interviewing people and wouldn't surprise me if it's just a matter of days or weeks that we have that position.
▶ 1:25:49you have somebody that you've already talked to that you've I've talked to a number of people. It's it's a big priority to hear from small businesses everywhere. So, you have somebody in the pipeline that should be there and so within the next few days I should hear a name that somebody's been appointed to this. There's a lot of red tape and hiring people. So, I it's hard to commit to a day, but it is a priority and I interview and I'm I'm pushing. Well, I guess we're here to hear about cutting the red tape. So, how do we kind of make this? Do you make those cuts so that you can make this?
▶ 1:26:18It it's look, I served in the previous administration. I know what it takes and I know how it can be difficult sometimes, but the this needs to be a priority, right? And this is like California has 4.3 and that's not including the other states in the region that add businesses to this, too. And they deserve to have an advocate for them that is supporting them. Um, you know, we've had previous discussions before you came on board. It just did not seem to be a priority of this administration to put somebody in charge there.
▶ 1:26:47And look, we've seen numerous times where the president has singled out California because it does not support him. And so I hope you are arguing or telling the administration to look beyond the political disagreements and that we need to support our small businesses and we should have a region 9 director and that they start making this a priority. And with that, Mr. Chairman, I yield back. Uh gentleman yields back. I now recognize Mr. Muer from the great state of Pennsylvania for five minutes. Thank you, Mr.
▶ 1:27:17Chairman. Uh, thank you very much, Dr. Mulligan. Appreciate your testimony. Appreciate the idea of well, getting to know you better uh and working with you. I too am a small business advocate. I think uh we all are um up here and um it's quite important to say the least.
▶ 1:27:34uh you know recently the NFIB put out uh some data that and of course they've got tens of thousands of members that small business optimism is way up almost 10% since last November. So over the course of a year or November of 23. So over course of President Trump's first year we're up in optimism over 10%.
▶ 1:28:00And that's largely due, let's face it, to the taxes that all Republicans voted for in the 199A. W without that t those tax reductions, small businesses taxes would have gone up 25%. Approximately, maybe slightly more in some cases depending upon level of income being earned. And uh that's enormous. I mean, many small businesses of course said they would be out of business um if if if that weren't the case. Yet all Democrats felt it was in their interest to vote against it.
▶ 1:28:30That's amazing. I mean, would you say that's a small business advocate that would vote to increase small business taxes by nearly 25%. Thank you for your question. Um, we hear a lot from small business. Maybe the top thing, the internal revenue burden on on small businesses, that's that's tough uh for so many of them. Um, and so they would have problems with uh any any new statute. That would probably send some products overseas, wouldn't it?
▶ 1:29:00As well, right? Even in spite of the so-called tariffs and I I want to get to that, but the work you've done on regulations is is so very important. I would like you to make a side note where we need to codify some whether the regulations what whatever if you were sitting in my seat, what would you work on codifying? And we can talk about that that afterwards. I won't just ask you to name it off the top of your head, but permitting, energy costs, energy costs have been unbelievably important for small business.
▶ 1:29:28Uh they've come down 30%. Something of that nature over the course of the last 14 months. Uh workforce improvements. Um no tax on overtime is now kicking in, no tax on tips. Um you know, there's a big difference. Under President Trump, we we started rethinking trade, right? And we we were taught, oh, free trade, free trade, free trade. What did that do to US manufacturing, okay? Sent it overseas.
▶ 1:29:55I mean, like a like a a giant sucking sound as as we heard before. Uh Japan had 100% tariff on us. Uh China had all kinds of tariffs on us. Everything was being made in China. Now we're bringing it back. And you know what? Many people don't understand because I was in small business for a long time too. The um many small businesses best customers are large businesses, right? Right. So when those large businesses start sending their products overseas, guess what? It flattens. It destroys um the uh uh the small business.
▶ 1:30:25So So the these so-called tariffs, by the way, you know, we had our shock and awe. We got the whole world's attention. Uh now they've come down considerably. And frankly, my office, we're small business advocates. We're not getting the calls on it. Initially, yeah. What's going to happen? uh particularly certain sectors. But would you say that in in the small business world and in the calls that you're getting and by the way your red type tape hotline, I'd suggest you rename it the blue tape hotline. Just a suggestion.
▶ 1:30:54Uh but uh if you would what what sort of calls are you getting the these days to your uh to your hotline? Um thank you for your question. Um we we get a variety of regulations there as I mentioned 12,025 there's a there's a whole variety regulations related to pro procurement is fairly common one um a lot of health food and drug administration type of regulation CMS HHS
▶ 1:31:26uh paperwork around IRS we hear a fair bit about that while we I have 45 seconds left what would you suggest suggest that we work on codifying that you're working on and [snorts] how else can we um support your Thank you for your question. I would like to get together with you a afterward and because I think it is important President Trump won't always be our president.
▶ 1:31:48Congress can do things on on a more durable basis and we do hear from small businesses that they do appreciate when Congress comes in and provides durable solutions. Well, I absolutely welcome you up to Pennsylvania's ninth congressional district. It's not a it's a it's a lovely ride. Uh maybe we [snorts] can do that sometime in the near future. With that, Mr. Chairman, I yield back. Mr. Chairman, gentleman yields back. Mr. Chairman, yes, ma'am. A correction here is not red uh blue tape, is blue wave that is coming.
▶ 1:32:18I now recognize uh Mr. Tran from the great state of California for five Good morning. Thank you uh chairman and ranking member for convening today's important meeting. Uh Dr. Milligan, welcome. Thank you for being here. Uh while the future rates of tariffs are still uncertain and the costs are becoming clear, analysts estimated tariff cost small business owners an additional 25,000 per month from April to September.
▶ 1:32:44Small business bankruptcies are up 10% this year and up 23% in November alone. According to data from ADP, small businesses lost 120,000 jobs in November while larger ones continued gaining. I'm deeply concerned because the data is showing that the US bankruptcies and employment levels are reaching levels not seen since the great recession. What are you hearing from small businesses about the overall impact of tariffs on their businesses?
▶ 1:33:16Uh thank you for your question. You know, one of the key uh duties of the office advocacy, in fact, it was the first one even before the RFA is economic research. And appreciate you're pointing to some of the statistics. That's something we try to track very carefully. Um, one of the things that we've noticed, um, very large increase in new business applications in 2025. Um, and we know that's essential for innovation.
▶ 1:33:41Um, the new companies, not just small ones, but the new the small new ones, the new small ones, whichever we want to call it. And there's a real boom in that area. And we're researching to understand more about exactly what parts of our economy, what parts of the country that's that's occurring. But that's uh something we're tracking pretty closely. Great. and and what steps have you uh taken to make sure that you convey these concerns and these views with the White House and the administration? Uh thank you for your question.
▶ 1:34:09I'm I'm meeting with them regularly as I mentioned in my testimony. They're reaching out to our office and saying, "What input do you have?" Um so this is happening literally every day. I guess with the exception during the shutdown, it was a little quiet because the people on the other end of the phone weren't able to talk. Um but my office was open. Okay. Dr. Mulligan, according to the US Census Bureau, over 30% of small businesses are minority owned and 42% are owned by women.
▶ 1:34:37Uh my first question to you is how will the office your office ensure that the outreach will reflect the geographical and demographic composition of small businesses throughout the country? [clears throat] Uh thank you for your question and there are variety of things we do. One of the keys was very quickly try to fill in these regional advocate jobs. Um, and I understand region 9 is empty, but as I said, as soon as I was constitutionally allowed to start working on that, I've been working on that.
▶ 1:35:04Um, I would like to see all regions filled and I want to visit myself, all the regions. Um, so that regional is is one thing that's pretty easy to track and it's important that I hear from all parts of the country, not just specific states or uh, you know, hot geographic areas. The whole country counts. Great. and and you're planning to have listening sessions or roundts to listen to to these folks all all throughout the country. [clears throat] Yeah, thank you for your question.
▶ 1:35:33We uh roundts is one of our favorite activities. Um also just crossing thresholds. Um I' I've gone out to different parts of the country and I um visit visit a business uh go to the Iowa State Fair, cold call on businesses who are small businesses who are there. Um, so we try to use all the tools that we have because again that's something that a lot of the other agencies in Washington don't have this outreach.
▶ 1:35:59So we need to do outreach well and I appreciate your interest in it and we're going to do everything we can to to listen because that that's the what's really missing here in Washington. That's great. And I I welcome you to come out to uh my my cities out in Southern California to listen to the small businesses and their concerns out there.
▶ 1:36:16Um then my my final uh ask of you is can you commit to providing uh this committee with a breakdown of your outreach efforts including location, participant types, business sizes, sectors and demographics so that Congress can evaluate the effectiveness of your outreach and determine whether you are meeting the needs of the entire small business community.
▶ 1:36:39Um I thank you for your question and be very happy to for the entire committee to be aware of what regions we're uh making contact with. Thank you Dr. Bulligan. And with that chairman I yield back. Thank you. Uh gentleman yields back. Now uh at this time we're going to stand in recess because of the uh u briefing we have at the CBC with Secretary Hegsith and Secretary Rubio. I ask that members please return after the briefing to continue member questions.
▶ 3:10:07Thank everybody for hanging in there with us and we'll now resume member questions under the fiveminute rule. I now recognize my friend from Maryland, Mr. Oshki for five minutes. Thank you uh very much m very much Mr. Chairman. I want to thank you our ranking member uh and Dr. Mulligan for today's conversation. Uh, I also, as I mentioned, Dr. Mulligan, want to appreciate uh your outreach to our Maryland fishermanmen and you mentioned the tie earlier in in the briefing. So, I do appreciate your outreach to us on that important issue.
▶ 3:10:35I'm going to actually open my remarks um this afternoon by acknowledging that I'm I'm a Democrat who's willing to um admit that it was it was wrong and it was a mistake for the Biden administration not to name someone to fill your role in the past. And I think it's important that members of our own parties are willing to do that. So just as I'm willing to make that admission here, I know that we don't have as many members on the other side of this recess.
▶ 3:10:59But I think it's really important that Republican members of this committee and this Congress also be willing to acknowledge when there's a disconnect or disagreement with the Trump administration. And so I just want to put that on the record. Um, and I say all that because I know I often hear from small business owners who are impacted by misguided regulations that limit their ability to thrive in this economy. So, we're looking for even the smallest of ways that we can make progress together.
▶ 3:11:26And unfortunately, the Trump administration has in many places made cost go up and not necessarily in small ways, but in massive crushing ways. As we talked about earlier, tariffs was a huge issue we were discussing. And the Center for American Progress estimates that between April and September of 2025, small businesses paid about $25,000 more per month for imports compared to those in the same period of 2024.
▶ 3:11:56Tariffs on key commodities like steel and aluminum have added new layers of red tape, not fewer. And while I appreciate the outreach on the fisheries, this is an area where I feel like the office of advocate advocacy could do better to substantively address these issues. Moreover, tariffs, as awful as they've been, are sadly not the only problem.
▶ 3:12:16The Republican majority of this Congress, with the fullthroated support of President Trump, sat on the sidelines as tax credits to keep healthcare affordable expired. Now, why does this matter? It matters because half of all adult enrolles in the Affordable Care Act marketplace either own a small business or work for one. The Republican resistance to addressing these health care costs have led to on average a 75% increase in premiums.
▶ 3:12:44That's over $4,750 for the average American family. It's why I hope that my colleagues this week will join me in voting to roll back this short-sighted Republican tax on hardworking Americans and small businesses by extending these credits. Students at the University of Maryland School of Business recently came together to survey the impact on federal policy changes on the Maryland business economy.
▶ 3:13:11When asked about the most significant challenges they faced as business owners in 2025, Maryland business owners said answers like Doge, federal policy changes, and our own government working against us to kill our industry. So, we have some real challenges ahead. I look forward to working with the chairman and you to find legitimate solutions that are for the small business owner. Uh, chief counsel, I I know earlier you mentioned advocating for businesses.
▶ 3:13:39Uh I guess my first question is what if anything has your office done to calculate the impact of tariffs on small businesses? Uh thank you for your question and we the two big steps I've been engaging in my first five months are number one listening to the small businesses wherever they are um whatever they have to say and then communicating that to those who make the rules.
▶ 3:14:09My office doesn't make So do you have anything quantified though that you're using in terms of advocating for those small businesses? we a project you know I've only been here five months. One of the projects um I've been quite interested in is the revenue burden on small businesses. Believe it or not, there's not a summary statistic of that and we're we've hired some very good people to work on that. We're not finished yet.
▶ 3:14:35Um and revenue consists of uh particularly the internal revenue, but there's an external revenue component to it, too. Yeah. I just I hope that we would have that kind of data before the administration would choose to make those choices and certainly want to support you so you have that kind of data so you can argue against these tariffs that are hurting the average American business, the average American in the same way that we know that these healthcare costs are crushing small businesses. And I want to work with you to help quantify that so that we can advocate for solutions. Our health care system costs have also gotten out of control.
▶ 3:15:05Uh but in the in the in the meantime, we have to have a solution to address the fact that these are really tax increases crushing our businesses and Americans across this country. I thank you again for your presence. Look forward to working with you. And with that, Mr. Chairman, yield back. Gentleman yields back. And I'd like to let everybody know that Representative Schmidt is running up the hallway. I'm happy to take a few more minutes if you want to take if you'd like to take one more minute, I'll give it to you. I appreciate that, sir. Thank you very much.
▶ 3:15:34Um I know another area where we've talked a little bit about are the reductions uh and the roll backs to the induction indu inflation reduction act. Um President Trump has chosen to suspend a lot of those. There have been uh particularly green energy businesses across this country who have seen that. I'm just curious uh Dr. Mulligan what your engagement with has been like with those affected industries and what you're hearing and how you're helping them navigate uh those roll backs. Uh thank you for your question.
▶ 3:16:03I'm not sure I organized my interactions under different statutes like the inflation reduction act, but one that does come to mind again that fisherman fishermen are so unbelievably regulated. Um, and they've repeatedly expressed to me concerns uh environmental concerns around the inflation reduction act with especially the wind farms and they're turning out hot water in places that not supposed to be hot water. It's hurting the whole fishing operation.
▶ 3:16:29Um, and I think Secretary Bergam has been very quick to take action and to investigate that and stop any further uh damage to the fishing grounds due to uh wind I appreciate that. I appreciate the uh the extra time, Mr. Chairman. And again, Dr. Mulligan, I'll just uh say I look forward to working with you to actually getting those quantifiable numbers around both the tariff impacts as well as the health care cost increases that we're trying to do something about this week. And I thank you so much. Gentleman yields back.
▶ 3:16:58And do we have a Dr. Schmidt sighting or he fall down in the hall or? Well, I will just take this time too to Okay, he's coming in. Okay. Uh, want to thank you for coming to witness today. We appreciate it very much. Uh, I'm a small business owner myself.
▶ 3:17:20I'm in the car business back in Texas and regulations and all the things with both sides have talked about today are are damaging to to the industry and we appreciate you continue to speak up and fight for us very much so. All right. Okay. Huh. Will you want to say anything, Mr. Witness? We want to talk about those mulligans you get on the first hole or Well, well, thank you for thank you for your question.
▶ 3:17:48And it is I small businesses have are very appreciative that now there's bipartisan agreement that the advocacy is an important office and the chief counsel role needs to be filled. Um and they are thrilled that I'm out there with my people listening to them. They feel heard. They feel like this is a real opportunity for change and everything your committee's contributed to that process. We appreciate that. Well, thank you very much. We have a bipartisan committee pretty much on just about everything. We just want Main Street to thrive.
▶ 3:18:18I want to thank you again for your being here today, your testimony. Without objection, members have five legislative days to submit additional materials and written questions for the witness to the chair which will be forwarded to the witness. I ask the witness to please respond promptly if that happens. No further business without objection. The committee is adjourned.