A new report from the Competitive Enterprise Institute tallies the huge and growing cost federal regulations impose on American businesses and families – $1.939 trillion annually – and offers a set of reforms aimed at making our government more accountable.

“Rules made by federal agencies impose a cost of government that extends well beyond what Washington taxes,” said Wayne Crews, author of Ten Thousand Commandments: A Snapshot of the Federal Regulatory State. “Federal environmental, safety and health, social, and economic regulations grip the economy, making it needlessly harder and more expensive to run a household or business in this country.”

Exacerbating the problem is the more recent “whole of government” mandate initiated by the Biden administration that directs federal agencies to prioritize progressive political goals, like “equity” and climate change, unrelated to and on top of the agency mission set by Congress.

“Congress should start preparing now for substantial reforms to wrangle regulations back under control and put Congress back in charge,” said Crews.

The report urges the 118th Congress to begin now to lay the groundwork for specific reforms to:

* Vote on rules – Require congressional approval of significant or controversial agency rules before they become binding.

* Stop crisis policymaking – Pass an Abuse of Crisis Prevention Act to prevent abuse of “emergency” declarations.

* Cut the unnecessary – Identify which federal agencies or programs to eliminate or at least shrink their budgets.

* Exercise oversight – Launch hearings on the proper watchdog role of the White House Office of Information and Regulatory Affairs (OIRA) in reviewing the costs and benefits of proposed regulations;

* Require assessment – Prevent the current and future administrations from weakening a longtime requirement that the White House Office of Management and Budget assess the economic impact of new regulations;

* Require report cards – Require annual regulatory transparency report cards that help the public find out important information, like which agencies failed to track their costs-versus-benefits to society.

* Sunset rules – Pass legislation requiring an expiration date so rules don’t just exist in perpetuity for no reason.

* Empower a commission – Set up a regulatory reduction commission to identify unneeded regulations to eliminate.

* Automate rejection – Creating an “Office of No” tasked with making a case against new and existing regulations.

Ostensibly, to help prevent financial crimes the US Department of the Treasury is demanding more information from thousands of businesses in the US.

As of January 1, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is requiring more information about companies considered to be reporting companies or limited liability companies (LLCs), corporations, and businesses established through filings with the Secretary of State.   

Called the Corporate transparency Act (CTA) the new regulation claims the intention is to stop tax fraud, money laundering, and financing for terrorism by capturing more ownership information from US businesses and companies that operate in the US. Details that must be reported are business information, legal name, trademarks, and beneficial owner information.

Almost any kind of LLC will have to report, including farms and ranches organized as LLCs.

Existing companies have one year to file the report with FinCEN, and new companies are required to file within 90 days of creation or registration.  FinCEN has made a Small Entity Compliance Guide available to help small business navigate the reporting requirements. 

The IRS announced this fall that it is “staffing up” its enforcement operations. They are fast-tracking the hiring of more than 3,700 internal revenue agents across the country. It is the IRS’s second major hiring initiative under the Inflation Reduction Act, which gave the agency roughly $60 billion to rebuild its workforce and modernize over the next ten years.

This “staffing up” is a second one by the IRS, which launched one in early 2023, under authorization of the Inflation Reduction Act which approved the hiring of 80,000 IRS employees, and included funding to arm agents for the first time. About $45.6 billion of the $60 billion was earmarked for “enforcement.”

The IRS claims that the hiring will only replace some 52,000 employees expected to retire in the coming decade and will leave the agency with about the same number of employees (94,000) it had in 2010.

The push is on in Montana for four –day school weeks as Montana schools struggle to find staff amid a teacher shortage in the state. School Districts are finding that four-day weeks relieve the stress on over-burdened teachers who are employed, reduces absents, and the need for emergency authorizations. Last year 222 Montana Schools went to a four-day week, about a fourth of the state’s schools. The length of each school day is extended to meet state requirements. Part of Montana’s teacher shortage is attributed to the wages paid to teachers.

The National Education Association rans Montana last in the country when it comes to average starting teaching salaries. The average teacher salaries are also near the bottom compared to what’s paid nationally. With four day weeks having been first adopted by some schools since 2017, data is available to gauge impacts.

Math and reading proficiency has been seen to decline, but graduation rates have increased.  Costs for schools have declined, but short weeks have pose problems for parents in finding care for children or transportation to take advantage of other services provided through the schools, such as free lunch programs.

* In 2021, Montana passed Senate Bill 399 which made several changes to the state’s tax code effective in 2024. The law consolidated the state’s seven tax brackets for individual income into two and reduced the top marginal rate from 6.75 percent to 6.5 percent. In 2023, the legislature further reduced this rate to 5.9 percent. Additionally, individual taxpayers will be required to use the same filing status on both federal and state returns.

* Montana will also begin taxing capital gains income at lower rates than ordinary income. Capital gains will now be taxed at rates of either 3 percent or 4.1 percent.

By Diana Setterberg, MSU News Service

Microbes and bacteria and biofilms – oh my! Though most of us go about our daily business without thinking much of the invisible lifeforms that exist all around us, Montana State University assistant professor Chelsea Heveran is looking for ways to use them to meet sustainability challenges in the building industry.

The journal Matter recently published a paper by Heveran, who teaches in the Department of Mechanical and Industrial Engineering in MSU’s Norm Asbjornson College of Engineering. She is the lead author of “Make engineered living materials carry their weight,” which she calls a “perspective piece” exploring the concept of incorporating engineered living materials, or ELMs, into building materials to significantly reduce carbon emissions and environmental costs during manufacture of things like concrete and cement.

The multi-disciplinary team has been awarded a $3 million Future Research Manufacturing Research grant from the National Science Foundation

“We want to use the functionalities of living cells to help make building materials more sustainable,” Heveran said. The article states that manufacturing the materials used in structures accounts for more than 25% of global carbon emissions, and that one way to reduce the impact is to replace some of their traditional components with materials made by, or including, microbes. Already, one Colorado company is manufacturing light-duty cinder blocks with a mineral formed from photosynthetic algae through a method requiring far less carbon than traditional processes, Heveran said.

So far, though, engineers have not figured out how to keep cells alive for the long term in structures capable of bearing heavy loads. Heveran’s paper suggests that engineers could learn much by studying how living bone functions.

“Bones, which both maintain living cells for decades and support structural loads, often provide mechanical function for an entire lifetime without undergoing mechanical failure. Such a long service life is almost unheard of in engineered devices such as vehicles and machines,” Heveran said. “Bone is able to maintain excellent material properties for much longer than most engineering materials because of the coordinated repair and replacement activities performed by resident bone cells.”

Could engineers design ELMs to function similarly?

“We could get closer to meeting the sustainability potential of engineered living building materials if we can surmount the twin challenges of keeping cells alive longer and generating materials to be stronger,” Heveran said. “Right now, the stiffest engineered living materials that we have can only be used for relatively low-load applications.”

Heveran says that cells used in bone-inspired engineered living materials do not need to be bone cells – common soil microbes that are associated with biomineral production in nature, such as calcite and vaterite, could perform the desirable functions in engineered living materials. Instead, bone can serve as an inspiration for how vascular-like networks can help keep cells alive in rigid materials for a long time so that they can perform desirable functions, like sensing and repairing cracks.

An outspoken adversary of COVID vaccines, Dr. Joseph Mercola, Florida, recently announced, “The Weaponization of Finance: Get ready for a rough ride.” It follows the cancelling of all of his business’ bank accounts in July by Chase Bank, as well as the cancellation of all the accounts held by Mercola’s key staff members.

The story is not new to Montanans, who have heard the story of gun and ammunition manufacturers relocating to Montana because of the discrimination they experienced from financial institutions in other states.

Mercola predicts “the time has arrived when, if you have a view that goes against the official narrative, you’re cut off from basic financial services.” His experience he believes is “just the start” of what is in store for any business or organization that stands in opposition to approved political narratives. He pointed out that his Mercola Market bank accounts were cancelled as well the “personal accounts of my CEO and CFO …and the accounts of their spouses and children.” This occurred despite the fact that a new Florida law specifically prohibits financial institutions from denying or canceling services based on political or religious beliefs.

Chase Bank responded to Mercola’s charged saying they cancelled the accounts because there was “unexpected activity” on one account and the action was typical of procedures followed in anti-money laundering purposes.

No money laundering charges have ever been brought, said Mercola, who added that in a real money laundering case, they seize your accounts outright. “They don’t instruct you to take your business elsewhere.”

Later, Chase Bank replied to an inquiry by Florida Chief Financial Officer Jimmy Patronis, that the accounts were closed because Mercola’s business had “been the subject of regulatory scrutiny by the Federal government … for engaging in illegal activity relating to the marketing and sale of consumer products.”

Mercola said that the last contact he has had with the Food and Drug Administration was in 2021 warning him not to recommend vitamins, etc. “to mitigate, prevent, treat, diagnose or cure COVID-19.” “We responded to the FDA’s letter and no further action was ever taken, because we had not, in fact, violated the law,” said Mercola. He went on to state, “…something else prompted Chase Bank to close our accounts, and the most likely reason appears to be the bank’s relationships to the technocratic control network that is trying to usher in a one world totalitarian government.”

Mercola’s concerns about financial weaponization are shared with the attorneys general from 19 states which earlier this year, accused JPMorgan Chase of “closing accounts and discriminating against customers due to their political or religious beliefs,” according to Business Insider. They reported, “the bank had canceled major organizations’ checking accounts and had asked screening questions focused on religion and politics before reinstating them.”

The accounts for the National Committee for Religious Freedom were cancelled and then informed they would reopen the account “if it provided a list of its donors, a list of the political candidates it intended to support, and details of the criteria used to determine its support and endorsements.”

Newsweek also had a report in April from Nebraska’s state treasurer, John Murante, who said he is disturbed by JPMorgan Chase’s “disturbing track record of debanking clients for biased or arbitrary reasons,” including fossil fuel companies and firearm manufacturers. Murante said Chase also conditions its services on whether company employees agree with customers’ political or religious activities.” He specifically identified that Chase cancelled accounts of  “… former ambassador Sam Brownback, the Arkansas Family Council, Defense of Liberty, and retired general Michael Flynn, Jr — for holding mainstream American views.”

The Hill.com has also commented on concerns on what it called “redlining,” “… against legal industries, for political and ideological reasons and blaming it on vague risks to the banks’ reputations.” As an example, The Hill stated, “Six of the largest U.S. banks already have committed not to fund new exploration and production projects in the Arctic….Debanking fossil fuel firms could lead to a disastrous energy shortage in the United States.”

Former U.S. Attorney Frank Keating writing for The Hill explained why banks were rejecting politically incorrect industries. “Officials at both the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) threatened banks with regulatory pressure if they did not bend to their will. . . Gun and ammunition dealers, payday lenders and other businesses operating legally suddenly found banks terminating their accounts with little explanation aside from ‘regulatory pressure.’”

Near the end of the Trump administration, The Hill said, “…the government should adopt a proposed new regulation to stop it…. In more general terms, banks are incapable of making qualitative judgments based on notions of morality. A situation in which banks refuse service based on possibly ephemeral perceptions of morality and societal good is a divergence from the open and generally capitalist system to which we have strived since our nation’s founding.”

The Hill in 2021 reported on Trump’s Fair Access Rule, put forward by The Office of the Comptroller of the Currency (OCC) which “finalized a controversial rule banning large banks from rejecting businesses based on their industry,” which was praised by Republicans who had criticized banks that dropped clients in the firearm industry or that pledged to stop funding Arctic drilling projects. Those banks included Citibank, Morgan Stanley, Goldman Sachs, Bank of America, Wells Fargo and JPMorgan Chase.

Democrats argued that the Dodd-Frank fair access principles are meant to protect people of color and low income communities who’ve faced decades of banking discrimination — “not powerful corporations with ample financial sector options.”

Banks also objected. “The rule lacks both logic and legal basis, it ignores basic facts about how banking works, and it will undermine the safety and soundness of the banks to which it applies,” said Greg Baer, president and CEO of the Bank Policy Institute, a research and advocacy group for big U.S. banks. 

Even free market advocates disagreed with the regulation. John Berlau, a senior fellow at the Competitive Enterprise Institute, told Reason (magazine) that “the rule’s broad wording would do more than merely prevent large banks from discriminating against unpopular businesses. It would also force small banks into relationships with businesses they are not equipped to handle.”

Berlau argued that preventing banks from discriminating against certain industries “violates their right to free association and would hurt niche banks that specialize in specific industries, like farming, industrial lending, or financial technology, forcing them to lend to businesses with which they are less familiar.”

Reason Magazine later reported, “The Biden administration has rolled back a Trump-era regulation meant to protect politically disfavored businesses, like gun manufacturers and cryptocurrency exchanges, from being categorically denied banking services.”

By Aikta Marcoulier, SBA Regional Administrator

The pandemic confirmed the essential role that small businesses play in our daily lives.  It sounds cliché, but locally owned small businesses truly are the heart and soul of our cities and towns. The holiday shopping season is a crucial time for small retailers and restaurants that depend upon the boost in sales earned between Thanksgiving and Christmas.

Not so long ago, it was an annual holiday tradition to travel downtown and shop at one of the many locally owned main street businesses. Brick-and-mortar businesses would promote their best deals of the year in hopes of luring shoppers to make a purchase, or at least browse their shelves full of merchandise. Today, online shopping has quickly become the preferred way Americans buy their holiday gifts.  Recent estimates show that more than 80 percent of shoppers make regular online purchases throughout the year.  

Given the dramatic shifts in the retail environment over the last twenty years, those holiday scenes and traditions are in danger of passing into the realm of nostalgic folklore.

To better compete, small business owners have become very innovative in the way they sell and promote their products and services.  An encouraging transformation born out of the pandemic is that many entrepreneurs pivoted operating models to include e-commerce platforms, or changed product offerings, to meet the new demands of the online consumer. Some are even bringing back the retail traditions of the past by providing personalized one-on-one assistance to customers and the selling of locally produced niche items found nowhere else in town. Cottage businesses have started in record numbers as people realized their dream of small business ownership could begin in their basement or garage.

The success of this year’s holiday shopping season will have a huge impact here in Montana and across the nation. Montana’s 130,000 small businesses generate almost 50 percent of the jobs in our state, employing 253,000 Montanans.  As you shop locally at one of the 13,000 retail small businesses, you’re not only proving unique and memorable gifts, but you are also helping boost Montana’s economy and directly supporting local families. If you are leaning more towards creating memories verses traditional gift giving, consider one of the 7,000 small businesses that offer entertainment or recreational activities.

Small businesses are the backbone of our democracy, and the solution to our most challenging economic problems. If you’re an entrepreneur and need advice, please consider exploring the tools and resources of the U.S. Small Business Administration and its partners. SBA’s resource partners include the Montana Small Business Development Center (SBDC) network with 10 locations throughout the state, our statewide Procurement Technical Assistance Centers, the Women’s Business Centers in Bozeman and Missoula, and SCORE. Each of these partners can help identify strategies to become more competitive and viable in what will likely be an ever-shifting business landscape.

In addition to our formal partners, small business owners can get involved with local support organizations such as chambers of commerce, business districts, and neighborhood associations. These organizations are actively involved in coordinating events and promotions to attract foot traffic to their small business members including local bazaars and shop small/dine small/entertain small, focused festivals.

This holiday season, please join me in making at least one purchase from a locally owned small business in your city or town.  These business owners are the true heroes of our communities, and they deserve our support, thanks, and appreciation.

The Internal Revenue Service (IRS) recently announced a delay to the reporting requirement threshold for transactions on payment platforms including Venmo, PayPal, and Airbnb. The delay will keep a $20,000 transaction threshold for 2023 and introduce a new significantly lower threshold phased-in starting in 2024. Despite the delay, this new rule will add to the harmful tax-related paperwork burden for small businesses and increase government overreach.

After the phase-in year, the mandate will require payment platforms to send a Form 1099-K to the IRS and users if their transactions total more than $600 for the year. The new requirement raises concerns that the IRS will not be able to differentiate between money received as payment for work and money that was received to split the costs of goods or services, creating confusion.

“For example, if you buy concert tickets and your friend sends you money electronically to pay for theirs, the IRS may treat this as income to you and tax it,” explained NFIB President Brad Close. “Multiply this by tens of millions of transactions, and you can see the magnitude of the problem facing small businesses. Small businesses expect the additional confusion and lower threshold will add to their already harmful paperwork burden and increase government overreach.”

The IRS does not have the authority to pick the threshold – only Congress has the authority to remove or change the 1099-K reporting threshold. While the ‘transition year’ $5,000 threshold temporarily relieves an unnecessary reporting burden and confusion for some, what small businesses need is for Congress to provide a complete fix by removing the new $600 threshold rule that will start in 2025.

In March 2021, the American Rescue Plan implemented this $600 threshold. For the 2023 tax year, the IRS will require payment platforms to generate 1099-K forms using the longstanding threshold of $20,000. Small businesses receiving 2023 1099-K forms from these platforms will see them in the mail or electronically in early 2024, similar to the tax-related forms received from banks regarding savings accounts.

For the 2024 tax year, the IRS will require these platforms to generate 1099-K forms at a threshold of $5,000 in transactions. Based on the November 2023 IRS announcement, in early 2025, every small business that has more than $5,000 in transactions on platforms like PayPal, Venmo, and others, will start receiving 1099-K tax forms for additional tax liabilities.

NFIB is calling on Congress to remove the new, lower threshold and return to the longstanding $20,000 threshold for 1099-K reporting and will continue to advocate for a repeal.

By Tu-Uyen Tran, Senior Writer, Federal Reserve Bank of  Minneapolis

Trends in the Ninth District’s construction industry are splitting along clear lines: For industrial and infrastructure projects, business is up. But the same can’t be said for residential and commercial construction, according to a recent Minneapolis Fed survey.

“There has been a real drop off in single family homes,” a concrete subcontractor in Greater Minnesota said. High interest rates have made homes much less affordable for many people, he said.

Yet, the same survey respondent expects work to pick up outside of housing. Federal and state governments are “dumping a lot of money” into public works projects, he said.

In the residential and commercial construction sectors, more survey respondents reported lower revenue than higher revenue. But the opposite was true in the industrial and infrastructure sectors.

The survey was conducted in partnership with dozens of construction and other trade organizations in early November. More than 300 respondents took part in the survey.

Compared with a year ago, revenue decreased for 61 percent of the residential sector and 41 percent of the commercial sector. Only about a third of the industrial and infrastructure sectors said the same.

The residential sector began to diverge from the other sectors in the middle of 2022, around the time interest rates began to soar, according to earlier Minneapolis Fed surveys. The commercial sector soon followed.

Survey responses suggest that homebuyers and commercial developers are more sensitive to interest rate hikes. One reason the infrastructure sector is less sensitive is that the clients are often governments.

A Twin Cities architect said most of the revenue growth her firm has enjoyed has been from out-of-state federal government contracts. “If it were not for those we would be sorely under sales and profits, and likely considering layoffs.”

In some areas, government spending incentivized private spending. A supplier of construction materials in western South Dakota said commercial buildings and hotels are being built in anticipation of growth at Ellsworth Air Force Base. The Air Force plans to house its new B-21 stealth bombers there in the next few years.

The challenge of labor

When survey respondents were asked to name their top challenges, 66 percent in the residential construction sector pointed to high interest rates.

Far fewer respondents in commercial, industrial, and infrastructure sectors considered interest rates to be so challenging. In those sectors, labor availability was the top challenge for the largest number of respondents. Even in the slower-growing commercial sector, 44 percent said labor availability is a top challenge while 42 percent identified rate hikes.

This difference likely stems from hiring challenges. A majority of respondents in all sectors except residential said their firm is still hiring (Figure 3). These positions include new permanent workers, seasonal workers, and replacements for workers who quit. Workers in skilled trades are more in demand than those without specialized skills; respondents said skilled workers received bigger pay hikes.

“This is the biggest challenge we have had for the last three years that I can remember,” said a South Dakota general contractor specializing in commercial construction. “Wages are going up and people’s skillsets are declining.”

In the residential sector, less than half of respondents said their firm is hiring. Despite some warnings of potential layoffs, the majority of those not hiring are hanging on to the workers they have.

Inflation was a top challenge a year ago for a majority of respondents in all sectors. In this survey, it was only a top challenge for a majority of the residential sector.

Pessimism in the residential sector

Looking ahead over the next six months, optimism outweighs pessimism in all but the residential sector, where 46 percent don’t expect business to improve. The infrastructure sector reported the best outlook, with 48 percent expressing optimism. In the commercial sector, optimism narrowly beat pessimism 39 percent to 35 percent; the remaining responses were neutral.

The outlook is gloomy for homebuilders, because many may soon run out of work and new contracts are scarce. Sixty-seven percent of the sector said their project backlog had decreased. Sixty percent reported fewer requests for proposal (RFP) from private clients, who dominate the sector.

“We have no backlog currently,” said a Montana homebuilder. “In years back we had 10 to 20 houses in our backlog, which makes up about 10 to 20 percent of our yearly sales.”

Other sectors also reported decreased prospects for future work, but not to the same extent. In the commercial sector, for example, 44 percent said backlogs decreased and 51 percent said RFPs for private projects are fewer. The bulk of projects in the commercial sector are funded by private developers.

Public projects are much more stable. A majority of respondents in all sectors reported the same or greater number of public RFPs. That’s a boon to the infrastructure sector, where a large amount of public funding goes.

In North Dakota, a general contractor specializing in infrastructure said, “We can pick and choose our projects.”

Will the federal government open the gateway to confiscating the property of inventors and innovators in the US by giving itself the power to invalidate federally-funded patents upon a whim?

Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan, commented, “President Biden’s proposed framework for march-in use under the Bayh-Dole Act amounts to an announcement that the U.S. government can invalidate patents and other intellectual property whenever it pleases. Make no mistake, the framework is not just about drugs, which is bad enough. It will chill innovation across the economy, dealing a major blow to small businesses and startups in particular, and across sectors.”

 “The 1980 Bayh-Dole Act was designed to ensure that federally-backed basic research wouldn’t just languish in laboratory archives, as much of it did before 1980. Thanks to the bipartisan law, businesses can license promising early-stage discoveries and develop them into revolutionary commercial products. Since Bayh-Dole’s passage, around 68% of licenses have gone to small businesses or start-ups.

 “The system created by Bayh-Dole has worked exactly as planned. The law has supported the creation of more than 15,000 new start-ups – many of them small businesses – while contributing an estimated $1.3 trillion to the US economy.

 “Until yesterday, the so-called march-in rights created under Bayh-Dole were conceived as an emergency provision. In cases where a company was either unable or unwilling to turn a licensed patent into a practical product, the government could revoke that license and reissue it to another firm better equipped to do the job. The circumstances justifying march-in are so limited that the government has never exercised the power in the more than 40 years Bayh-Dole has been on the books.

“Yesterday’s announcement is a sharp departure from decades of precedent businesses have come to rely on.

“If the Biden Administration finalizes this ill-conceived plan, the economic incentive to translate federally-funded science into commercial technologies will evaporate. Start-ups and investors won’t waste their time and money developing state-of-the-art products if federal officials can cancel their IP rights at will and without legal justification.

 “This proposal must be scrapped.”