Made in America Manufacturing Finance Act

— 840 — Mandate for Leadership: The Conservative Promise ENDNOTES 1. H.R. 5480, Securities Act of 1933, Public Law No. 73-22, 73rd Congress, May 27, 1933, https://govtrackus. s3.amazonaws.com/legislink/pdf/stat/48/STATUTE-48-Pg74.pdf (accessed February 20, 2023). 2. H.R. 9323, Securities Exchange Act of 1934, Public Law No. 73-291, 73rd Congress, June 6, 1934, https:// govtrackus.s3.amazonaws.com/legislink/pdf/stat/48/STATUTE-48-Pg881a.pdf (accessed February 20, 2023). 3. Mark T. Uyeda, Commissioner, U.S. Securities and Exchange Commission, “Remarks at the 2022 Cato Summit on Financial Regulation,” November 17, 2022, https://www.sec.gov/news/speech/uyeda-remarks- cato-summit-financial-regulation-111722 (accessed February 20, 2023); Hester M. Peirce, Commissioner, U.S. Securities and Exchange Commission, “It’s Not Just Scope 3: Remarks at the American Enterprise Institute,” December 7, 2022, https://www.sec.gov/news/speech/peirce-remarks-american-enterprise-institute-120722 (accessed February 20, 2023); comment letter from David R. Burton to Vanessa A. Countryman, Secretary, Securities and Exchange Commission, “Re: The Enhancement and Standardization of Climate-Related Disclosures for Investors [File No. S7-10-2; Release No. 33-11042; RIN 3235-AM87],” June 17, 2022, https://www. sec.gov/comments/s7-10-22/s71022-20131980-302443.pdf (accessed February 20, 2023). 4. Size would probably be measured best by public float or the number of beneficial owners. 5. See David R. Burton, “Securities Disclosure Reform,” Heritage Foundation Backgrounder No. 3178, February 13, 2017, https://www.heritage.org/sites/default/files/2017-02/BG3178.pdf; David R. Burton, “Offering and Disclosure Reform,” Chapter 11 in Reframing Financial Regulation: Enhancing Stability and Protecting Consumers, ed. Hester Peirce and Benjamin Klutsey (Arlington, VA: Mercatus Center at George Mason University, 2016), pp. 277–315, https://www.mercatus.org/research/books/reframing-financial-regulation (accessed February 20, 2023); Andrew N. Vollmer, “Investor-Friendly Securities Reform to Increase Economic Growth,” Securities Regulation & Law Report, Bloomberg BNA, Vol. 49, June 5, 2017. 6. See, for example, David R. Burton, “Reforming the Securities and Exchange Commission,” Heritage Foundation Backgrounder No. 3378, January 30, 2019, https://www.heritage.org/sites/default/files/2019-01/ BG3378.pdf; Andrew N. Vollmer, “Testimony on Workforce Management Disclosures and Other SEC Issues,” submitted to the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, Committee on Financial Services, U.S. House of Representatives, December 6, 2022, https://www.congress.gov/117/ meeting/house/115227/witnesses/HHRG-117-BA16-Wstate-VollmerA-20221208.pdf (accessed February 20, 2023); David R. Burton, “Reforming FINRA,” Heritage Foundation Backgrounder No. 3181, February 1, 2017, https://www.heritage.org/sites/default/files/2017-02/BG3181.pdf; Hester Peirce, “The Financial Industry Regulatory Authority: Not Self-Regulation After All,” Mercatus Center at George Mason University Working Paper, January 2015, https://www.mercatus.org/research/working-papers/financial-industry-regulatory- authority-not-self-regulation-after-all (accessed February 20, 2023); Thaya Brook Knight, “Transparency and Accountability at the SEC and at FINRA,” Chapter 11 in Prosperity Unleashed: Smarter Financial Regulation, ed. Norbert J. Michel, (Washington: The Heritage Foundation, 2017) https://www.heritage.org/sites/default/ files/2017-02/11_ProsperityUnleashed_Chapter11.pdf. 7. Reorganization Plan No. 10 of 1950, U.S. Code Title 5—Appendix, Reorganization Plans, http://uscode.house. gov/view.xhtml?req=granuleid:USC-prelim-title5a-node84-leaf114&num=0&edition=prelim (accessed February 20, 2023). 8. The board or commission should evaluate the regulatory functions of the National Securities Exchanges, Registered Securities Future Product Exchanges, Registered Clearing Agencies (such as the Depository Trust Company (DTC), the National Securities Clearing Corporation (NSCC) and the Options Clearing Corporation (OCC)), the Municipal Securities Rulemaking Board (MSRB) and the National Futures Association (NFA). This board or commission should have a broad composition and permit minority reports. 9. Boyden Gray & Associates, Comments Submitted on Behalf of Alliance for Fair Board Recruitment Concerning the Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change to Adopt Listing Rules Related to Board Diversity, Amendment No. 1, File No. SR-NASDAQ-2020-081, April 6, 2021 https://www.sec.gov/ comments/sr-nasdaq-2020-081/srnasdaq2020081-8639478-230941.pdf (accessed February 20, 2023); David R. Burton, “Nasdaq’s Proposed Board-Diversity Rule Is Immoral and Has No Basis in Economics,” Heritage Foundation Backgrounder No. 3591, March 9, 2021, https://www.heritage.org/sites/default/ files/2021-03/BG3591_0.pdf. The SEC is contemplating at least two rules that can be expected to require differential treatment based on race, sex, ethnicity, and so on. See Executive Office of the President, Office — 841 — Financial Regulatory Agencies of Management and Budget, Office of Information and Regulatory Affairs, “Fall 2022 Unified Agenda of Regulatory and Deregulatory Actions: Active Regulatory Actions Listed by Agency,” https://www.reginfo.gov/ public/do/eAgendaMain (accessed February 20, 2023); “Human Capital Management Disclosure,” RIN: 3235- AM88, https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202204&RIN=3235-AM88 (accessed February 20, 2023); “Corporate Board Diversity,” RIN: 3235-AL91, https://www.reginfo.gov/public/do/ eAgendaViewRule?pubId=202204&RIN=3235-AL91 (accessed February 20, 2023). 10. 15 U.S. Code § 77z–3, https://www.law.cornell.edu/uscode/text/15/77z-3 (accessed February 20, 2023); 15 U.S. Code § 78mm, https://www.law.cornell.edu/uscode/text/15/78mm (accessed February 20, 2023). 11. S. ___, Jumpstart Our Business Startups Act of 2022, discussion draft, 117th Congress, 2nd Session, https:// www.banking.senate.gov/imo/media/doc/the_jobs_act_4.0discussiondraft.pdf (accessed February 20, 2023); David R. Burton, “Entrepreneurial Capital Formation,” Testimony before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, April 5, 2022, https://www.heritage.org/testimony/entrepreneurial- capital-formation; “Removing Barriers to Small Business Capital Formation and Expanding Investor Opportunities,” Section 6 in Nicholas Anthony, Norbert J. Michel, Jennifer J. Schulp, George Selgin, and Jack Solowey, “Sound Financial Policy: Principled Recommendations for the 118th Congress,” ed. Norbert J. Michel and Ann Rulon, Cato Institute, 2022, pp. 22–27, https://www.cato.org/sites/cato.org/files/2022-10/sound- financial-policy-118th-congress.pdf (accessed February 20, 2023); David R. Burton and Norbert J. Michel, Proposals to Foster Economic Growth and Capital Formation, Submission to Committee on Banking, Housing, and Urban Affairs, U.S. Senate, March 18, 2021, https://www.banking.senate.gov/imo/media/doc/David%20 Burton%20and%20Norbert%20Michel%20-%202021-3-18.pdf (accessed February 20, 2023); David R. Burton, “Improving Entrepreneurs’ Access to Capital: Vital for Economic Growth,” Heritage Foundation Backgrounder No. 3182, February 14, 2017, https://www.heritage.org/sites/default/files/2017-02/BG3182.pdf. 12. The small issues exemptive authority has been in the Securities Act since its initial enactment. 13. The crowdfunding exemption was created by Title III of the 2012 JOBS Act. See H.R. 3606, Jumpstart Our Business Startups Act, Public Law No. 112-106, 112th Congress, April 5, 2021, Title III, § 302, https://www. govinfo.gov/content/pkg/PLAW-112publ106/pdf/PLAW-112publ106.pdf (accessed February 20, 2023). 14. Burton, “Improving Entrepreneurs’ Access to Capital: Vital for Economic Growth”; Rutheford B. Campbell Jr., “The Case for Federal Pre-Emption of State Blue Sky Laws,” Chapter 6 in Prosperity Unleashed: Smarter Financial Regulation, https://www.heritage.org/sites/default/files/2017-02/06_ProsperityUnleashed_ Chapter06.pdf. 15. Andrew N. Vollmer, “Abandon the Concept of Accredited Investors in Private Securities Offerings,” Securities Regulation Law Journal, Vol. 49, No. 5 (Spring 2021), https://papers.ssrn.com/sol3/papers.cfm?abstract_ id=3719280 (accessed February 20, 2023); Thaya Brook Knight, “Your Money’s No Good Here: How Restrictions on Private Securities Offerings Harm Investors,” Cato Institute Policy Analysis No. 833, February 9, 2018, https:// www.cato.org/sites/cato.org/files/pubs/pdf/pa833.pdf (accessed February 20, 2023); David R. Burton, “Congress Should Increase Access to Private Securities Offerings,” Heritage Foundation Issue Brief No. 4899, August 29, 2018, https://www.heritage.org/sites/default/files/2018-08/IB4899.pdf; Andrew N. Vollmer, “Evidence on the Use of Disclosure Documents in Private Securities Offerings to Accredited Investors,” Mercatus Center at George Mason University Working Paper, October 22, 2020, https://www.mercatus.org/publications/financial-regulation/ evidence-use-disclosure-documents-private-securities-offerings-0 (accessed February 20, 2023). 16. For a detailed discussion, see “Micro-Offerings,” Section IId in Burton and Michel, Proposals to Foster Economic Growth and Capital Formation, pp. 15–17. 17. David R. Burton, “Let Entrepreneurs Raise Capital Using Finders and Private Placement Brokers,” Heritage Foundation Backgrounder No. 3328, July 10, 2018, https://www.heritage.org/sites/default/files/2018-07/ BG3328.pdf; Andrew N. Vollmer, “Make It Easy for Startups to Sell Stock,” Mercatus Center at George Mason University Discourse, September 21, 2020, https://www.mercatus.org/bridge/commentary/make-it-easy- startups-sell-stock (accessed February 20, 2023). 18. See H.R. 531, S-Corp Access to Crowdfunding Act, 115th Congress, introduced January 13, 2017, https://www. govinfo.gov/content/pkg/BILLS-115hr531ih/pdf/BILLS-115hr531ih.pdf (accessed February 20, 2023); David Burton, “The Tax Law Makes It Almost Impossible for ‘S Corporations’ to Use Equity Crowdfunding,” The Daily Signal, April 19, 2016, https://www.dailysignal.com/2016/04/19/the-tax-law-makes-it-almost-impossible-for- s-corporations-to-use-equity-crowdfunding/.

— 762 — Mandate for Leadership: The Conservative Promise 29. U.S. Small Business Administration, “Ensuring Equal Treatment for Faith-Based Organizations in SBA’s Loan and Disaster Assistance Programs,” Proposed Rule, Federal Register, Vol. 86, No. 11 (January 19, 2021), pp. 5036–5040, https://www.federalregister.gov/documents/2021/01/19/2021-00446/ensuring-equal-treatment- for-faith-based-organizations-in-sbas-loan-and-disaster-assistance-programs (accessed February 18, 2023). 30. President Joseph R. Biden Jr., Executive Order 14019, “Promoting Access to Voting,” March 7, 2021, in Federal Register, Vol. 86, No. 45 (March 10, 2021), pp. 13623–13627, https://www.govinfo.gov/content/pkg/ FR-2021-03-10/pdf/2021-05087.pdf (accessed February 19, 2023). See also press release, “Small Business Committee Republicans: The SBA Should Stay Out of Elections and Focus on Our Small Businesses,” Small Business Committee Republicans, Committee on Small Business, U.S. House of Representatives, April 4, 2022, https://republicans-smallbusiness.house.gov/news/documentsingle.aspx?DocumentID=404061 (accessed February 18, 2023). 31. Press release, “SBA Administrator Guzman, Biden–Harris Administration Announce Community Navigator Pilot Program Grantees,” U.S. Small Business Administration, October 28, 2021, https://www.sba.gov/ article/2021/oct/28/sba-administrator-guzman-biden-harris-administration-announce-community-navigator- pilot-program (accessed February 18, 2023). 32. John Reosti, “SBA Hasn’t Given Up on Direct Lending,” American Banker, May 2, 2022, https://www. americanbanker.com/creditunions/news/sba-hasnt-given-up-on-direct-lending (accessed February 18, 2023). 33. Goldman Sachs, 10,000 Small Businesses Voices, “22 Years Is Too Long: Support Small Businesses. Reauthorize the SBA,” Open Letter to Congress, November 16, 2022, https://www.goldmansachs.com/ citizenship/10000-small-businesses/US/voices/reauthorize-the-sba-letter/index.html (accessed February 18, 2023). According to Goldman Sachs, the letter “was published in Politico on Wednesday, November 16 to kick of a broader campaign to prioritize small businesses and modernize the SBA in the next Congress” and “was signed by over 3,000 small business owners from all 50 states.” Ibid. 34. See, for example, “Challenge 3: SBA Faces Significant Challenges in IT Investment, System Development, and Security Controls,” in U.S. Small Business Administration, Office of Inspector General, Top Management and Performance Challenges Facing the Small Business Administration in Fiscal Year 2023, Report 23-01, October 14, 2022, pp. 16–19, https://www.sba.gov/sites/default/files/2022-10/SBA%20OIG%20Report%2023-01_0.pdf (accessed February 18, 2023). 35. Ibid., p. iv. 36. Appendix M, “Office of Advocacy’s Legislative Priorities,” and Appendix Q, “Memorandum of Understanding Between the Small Business Administration and the Office of Advocacy,” in U.S. Small Business Administration, Office of Advocacy, Background Paper, Office of Advocacy, 2017–2020, January 2021, pp. 192 and 197, https://cdn.advocacy.sba.gov/wp-content/uploads/2021/02/09101916/Background-Paper-Office-of- Advocacy-2017-2020-web.pdf (accessed February 18, 2023). 37. President Donald J. Trump, Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” January 30, 2017, in Federal Register, Vol. 82, No. 22 (February 3, 2017), pp. 9339–9341, https://www.govinfo. gov/content/pkg/FR-2017-02-03/pdf/2017-02451.pdf (accessed February 19, 2023), and President Donald J. Trump, Executive Order 13777, “Enforcing the Regulatory Reform Agenda,” February 24, 2017, in Federal Register, Vol. 82, No. 39 (March 1, 2017), pp. 12285–12287, https://www.govinfo.gov/content/pkg/FR-2017-03- 01/pdf/2017-04107.pdf (accessed February 19, 2023). 38. U.S. Small Business Administration, Office of Advocacy, What Small Businesses Are Saying and What Advocacy Is Doing About It: Progress Report on the Office of Advocacy’s Regional Regulatory Reform Roundtables, June 2017–September 2018, December 2018, https://cdn.advocacy.sba.gov/wp-content/ uploads/2018/12/20091536/What-Small-Businesses-Are-Saying-What-Advocacy-Is-Doing.pdf April 2020, https://advocacy.sba.gov/regulatory-reform/ (accessed February 18, 2023December 10, 2022). See also U.S. Small Business Administration, Office of Advocacy, Reforming Regulations and Listening to Small Business: Second Progress Report on the Office of Advocacy’s Regional Regulatory Roundtables, June 2017–December 2019, https://cdn.advocacy.sba.gov/wp-content/uploads/2020/04/20141200/2nd-Progress-Report-on-Reg- Reform-Roundtables.pdf (accessed February 18, 2023). 39. U.S. Small Business Administration, Office of Advocacy, What Small Businesses Are Saying and What Advocacy Is Doing About It: Progress Report on the Office of Advocacy’s Regional Regulatory Reform Roundtables, June 2017–September 2018, pp. 32 and 43. — 763 — Small Business Administration 40. U.S. Small Business Administration, Office of Inspector General, Top Management and Performance Challenges Facing the Small Business Administration in Fiscal Year 2023, p. iv. 41. H.R. 748, CARES (Coronavirus Aid, Relief, and Economic Security) Act, Public Law No. 116-136, 116th Congress, March 27, 2020, https://www.congress.gov/116/plaws/publ136/PLAW-116publ136.pdf (accessed February 19, 2023). 42. Sarah McCammon, “Planned Parenthood Asked to Return Funds from Paycheck Protection Program,” NPR, May 21, 2020, https://www.npr.org/2020/05/21/859991359/planned-parenthood-asked-to-return-funds- from-paycheck-protection-program (accessed February 18, 2023). 43. Letter from William Manger, Associate Administrator, U.S. Small Business Administration, to Laura Meyers, Planned Parenthood of Metropolitan Washington, “Re: Notice of Investigation and Request for Records,” May 19, 2020, https://s3.documentcloud.org/documents/6922122/SBA-Letter-Planned-Parenthood-DC.pdf (accessed February 18, 2023). 44. Press release, “Lankford, HSGAC Republicans Demand Details on Illegal PPP Loans to Planned Parenthood Affiliates,” Office of U.S. Senator James Lankford, April 28, 2022, https://www.lankford.senate.gov/news/press- releases/lankford-hsgac-republicans-demand-details-on-illegal-ppp-loans-to-planned-parenthood-affiliates (accessed February 18, 2023). 45. Press release, “Romney, Colleagues Request Information from SBA Administrator Guzman on Illegal PPP Loans Given to Planned Parenthood Affiliates,” Office of U.S. Senator Mitt Romney, April 28, 2022, https:// www.romney.senate.gov/romney-colleagues-request-information-from-sba-administrator-guzman-on- illegal-ppp-loans-given-to-planned-parenthood-affiliates/ (accessed February 18, 2023). 46. 13 C.F.R. §§ 109.400(b)(11), https://www.law.cornell.edu/cfr/text/13/109.400; 123.301(g), https://www.law. cornell.edu/cfr/text/13/123.301; 123.502(n), https://www.law.cornell.edu/cfr/text/13/123.502; and 123.702(b)(6), https://www.law.cornell.edu/cfr/text/13/123.702 (all accessed February 19, 2023). 47. U.S. Small Business Administration, “Religious Eligibility Worksheet for all 7(a) and 504 Loan Programs” SBA Form 1971, http://www.sba.gov/sites/default/files/2020-11/sba-form-1971.pdf (accessed February 18, 2023). 48. U.S. Small Business Administration, “Ensuring Equal Treatment for Faith-Based Organizations in SBA’s Loan and Disaster Assistance Program.” 49. See, for example, Carson v. Makin, 596 U.S. ___ (2022), https://www.supremecourt.gov/ opinions/21pdf/20-1088_dbfi.pdf (accessed February 19, 2023). 50. 28 U.S. Code § 530d, https://www.law.cornell.edu/uscode/text/28/530D (accessed February 19, 2023). 51. U.S. Small Business Administration, “Ensuring Equal Treatment for Faith-Based Organizations in SBA’s Loan and Disaster Assistance Program.” 52. 13 CFR 120.110(k), https://www.law.cornell.edu/cfr/text/13/120.110 (accessed February 19, 2023). 53. U.S. Small Business Administration, “Regulatory Reform Initiative: Streamlining and Modernizing the 7(a), Microloan, and 504 Loan Programs to Reduce Regulatory Burden,” Final Rule, Federal Register, Vol. 87, No. 125 (June 30, 2022), pp. 38900–38910, https://www.federalregister.gov/documents/2022/06/30/2022-13483/ regulatory-reform-initiative-streamlining-and-modernizing-the-7a-microloan-and-504-loan-programs-to (accessed February 18, 2023). 54. Ibid. 55. U.S. Department of Justice, Office of Legal Counsel “Religious Restrictions on Capital Financing for Historically Black Colleges and Universities,” Memorandum Opinion for the Acting General Counsel, Department of Education, August 15, 2019, https://www.justice.gov/sites/default/files/opinions/ attachments/2021/01/01/2019-08-15-hbcu-capfin-2.pdf. (accessed February 18, 2023). 56. U.S. Small Business Administration, Office of Investment and Innovation, SBIR and STTR Annual Report, Fiscal Year 2019, p. 8, https://www.sbir.gov/sites/default/files/SBA_Final_FY19_SBIR_STTR_Annual_Report.pdf (accessed February 18, 2023). 57. S. 4900, SBIR and STTR Extension Act of 2022, Public Law No. 117–183, 117th Congress, September 30, 2022, https://www.congress.gov/117/plaws/publ183/PLAW-117publ183.pdf (accessed February 18, 2023). 58. U.S. Small Business Administration, Office of Investment and Innovation, SBIR and STTR Annual Report, Fiscal Year 2019, pp. 6, 40, and 108.