WASHINGTON - (June 16, 2010) - As part of his ongoing oversight of AIG, Senator Chuck Grassley is questioning the nominee to be Deputy Attorney General at the Justice Department, James Cole, about his involvement with the company.

Grassley's questions for the record center around the nominee's work as an independent consultant appointed by the Justice Department and the SEC to monitor activities at AIG following major fraud settlements in 2004 and 2006.  He continued this role as independent consultant at AIG in the years leading up to the financial crisis and the taxpayer bailout of AIG.

Grassley said that during his time monitoring AIG, it appears Cole issued several best practices documents regarding compliance with SEC rules and regulations.  While the documents related to Cole's work have not been made public by the Department of Justice, one document purported to be part of his work as an independent consultant specifically outlined best practices on derivative transactions. In the document, it appears that the nominee recommended establishing a derivatives committee to review derivative contracts entered into by AIG, but the recommendation expressly exempted derivative transactions entered into by the AIG financial products corporation, the subsidiary responsible for the 2008 meltdown at AIG that led to a $180 billion taxpayer bailout of AIG.  Instead, the recommendation said derivatives entered by AIG Financial Products would be independently reviewed by AIG Financial Products itself

"It looks to me like Mr. Cole let the fox guard the hen house.  He's been nominated for a very important position at the Justice Department, and I want to know why he allowed such an exemption as an independent monitor," Grassley said.

Grassley is also questioning Mr. Cole about allegations that he may have allowed AIG executives to amend, modify or review the reports before they were submitted to the SEC and the Justice Department, which raises questions about how independent his monitoring was.

Grassley has conducted some of the most aggressive oversight of the government's implementation of the financial bailout, including executive compensation, severance payouts, and documentation of how taxpayer dollars have been used.


WASHINGTON - (June 16, 2010) - Sen. Chuck Grassley of Iowa, ranking member of the Committee on Finance, with exclusive Senate jurisdiction over taxes, today released new numbers from the Internal Revenue Service, showing the agency has hired more than 1,000 military veterans each of the last three years.

"The IRS deserves credit for recognizing the value of military veterans," Grassley said.  "By seeking out these men and women, the agency is getting capable employees to serve the taxpayers and the country in a new capacity from their military service."

Beginning in 2008, Grassley succeeded in persuading the IRS to increase its hiring of veterans. At Grassley's urging, the agency hired more than 1,000 veterans in 2008 and 2009, per a verbal commitment Grassley secured from the IRS commissioner during his Senate Finance Committee confirmation hearing. Today, the IRS gave Grassley a full accounting for Fiscal Year 2009 and the first eight months of Fiscal Year 2010 (the fiscal year ends Sept. 30):

  • FY 2008: 1,203 or 7 percent of new hires (364 were disabled veterans)

  • FY 2009: 1,669 or 9 percent of new hires (528 were disabled veterans)

  • FY 2010 to date: 1,109 or 10 percent of new hires (398 were disabled veterans)

The text of the IRS' update is available here.  Grassley initiated the veterans hiring' effort after realizing that the Treasury Department, including the IRS, lagged behind other federal agencies in hiring newly returned veterans, even though the department had significant vacancies.

Beyond IRS hiring, Grassley in May joined the Finance Committee chairman to introduce tax legislation that would create job opportunities for veterans returning home from military service and help businesses create jobs.  The bipartisan Veterans Employment Transition Act will reward employers who hire qualified veterans who have recently completed their service in the military with up to a $4,800 tax credit for disabled veterans and up to a $2,400 tax credit for other qualifying veterans.  The bill eliminates the administrative burdens that make the current Work Opportunity Tax Credit provision directed toward unemployed veterans difficult for small businesses to use.  As a result, servicemen and women who have been recently discharged will be able to provide documentation from the Department of Defense without having to go through the tax credit's current certification process, which can be lengthy.

In 2008, Congress made permanent several provisions to provide tax relief for American troops and their families that Grassley helped to advance.  The Heroes Earnings Assistance and Relief Tax Act of 2008, the HEART Act, was a bipartisan effort that incorporated most of the provisions in the Defenders of Freedom Tax Relief Act of 2007, which Grassley co-sponsored and promoted.  The HEART Act also made permanent and expanded upon some of the tax relief measures that Grassley coauthored in 2003, while chairman of the Finance Committee.

"Military service makes taxes complicated and sometimes unfair," Grassley said.  "People shouldn't suffer a tax hit to serve our country.  Military men and women should have fair treatment under the tax code. It's a no-brainer."

Last year, Grassley welcomed the enactment of legislation he cosponsored to help members of the military benefit from the first-time homebuyer tax credit.  Before this correction, members of the military were penalized by the credit's structure.  The correction gave military personnel serving outside of the United States more time to qualify for the credit.   It also eliminated the repayment requirement for military personnel forced to sell as a result of official service.  The legislation also excluded from tax any payment to military personnel to compensate them for loss in home value resulting from base closure.

Apart from tax work, Grassley recently has worked to address the ongoing and growing backlog of veterans' claims at the Department of Veterans Affairs (VA).  He also cosponsored successful legislation that will ensure timely, sufficient and reliable funding for the VA health care system.  This legislation was supported by all major veterans' organizations as well as the chairman and ranking member of the Senate Veterans Affairs Committee.  Grassley also has worked to include several beneficial provisions in the Caregiver and Veterans Omnibus Health Services Act.  This new law corrects a number of deficiencies in how the U.S. cares for veterans with traumatic brain injuries, enhances VA support for family caregivers, and expands mental health services.  In 2009, Grassley received the American Legion's Distinguished Public Service Award for his work on issues important to veterans.


WASHINGTON - June 15, 2010 - Chuck Grassley today said that the U.S. Department of Justice has awarded a $246,826 grant for the Iowa Residential Substance Abuse Treatment for State Prisoners Program.

The Iowa Governors Office of Drug Control Policy will use the funds to develop and implement substance abuse treatment programs in state and local correctional and detention facilities and to create and maintain community-based aftercare services for offenders.

"Substance abuse treatment can help lower the recidivism rate of released prisoners," Grassley said.

Each year, thousands of local Iowa organizations, colleges and universities, individuals and state agencies apply for competitive grants from the federal government.  The funding is then awarded based on each local organization or individual's ability to meet criteria set by the federal entity.


Friday, June 11, 2010

Grassley Looking for Information on Detained Illegal Immigrants Gaining Access

to Taxpayer Funded Entertainment, Internet

WASHINGTON - Senator Chuck Grassley today asked for additional information from the federal agency that detains illegal immigrants about its plans to provide those who it has detained on immigration charges with access to free email and phone access and new recreational activities including bingo, dance lessons and art classes.                      

Grassley said his concerns follow a June 8 Houston Chronicle article that said, "Immigration and Customs Enforcement officials are preparing to roll out a series of changes at several privately owned immigration detention centers, including relaxing some security measures for low-risk detainees and offering art classes, bingo and continental breakfast on the weekends."

"Taxpayers will not tolerate Uncle Sam using their money to provide dance lessons and bingo to those who knowingly broke our laws," Grassley said.

Here is a copy of Grassley's letter to the Immigration and Customs Enforcement Assistant Secretary.

June 11, 2010

The Honorable John Morton

Assistant Secretary

Immigration and Customs Enforcement

500 12th Street Southwest

Washington, D.C. 20536

Dear Secretary Morton:

I'm writing with serious concerns about your agency's latest changes to detention policies that will allow illegal aliens access to recreational activities and increased communication opportunities, giving detainees an overly-comfortable place to reside while they are prosecuted for breaking the law.

According to the Houston Chronicle, illegal aliens could now be given access to bingo, art classes, and continental breakfasts on weekends.  The article also states that ICE plans to eliminate lockdowns and lights-out for low-risk detainees, allow visitors to stay as long as they like in a 12-hour period, and allow low-risk detainees to wear their own clothing or other non-penal attire.  More disturbing is the report that ICE will now be providing e-mail access and Internet-based free phone service to detainees.

I realize that there are many low-risk detainees under the control of ICE, but reducing the standards for these lawbreakers will create a moral hazard and reduce the deterrent effect that prison time is supposed to have.  Even one ICE official stated the new management standards reinforces the idea that detention is "not about punishing people for a crime they committed."   These detainees, low-risk or not, broke the law in order to enter or remain in this country, and could have more entertainment and access to the outside world than other inmates in U.S. jails.  Giving illegal aliens access to computer training and tutoring, as well as dance lessons, cooking classes and movie nights, will only encourage illegal aliens to ignore the law and take more risks to defraud our immigration system.

According to the same article from the Houston Chronicle, many working in these facilities will fear for their safety if detention standards are lowered.  One union leader states that while some of these detainees have no serious criminal history, many may be former gang members. Gang members and the like will now have an easier time to ply their trade in this setting, jeopardizing the safety of the other detainees and correction officers.

Finally, taxpayers would be very disappointed if the reports are true since they are financing detention and removal efforts.  Expending taxpayer dollars to give illegal aliens access to bingo, dance lessons and the internet is a slap in the face to hardworking Americans who foot the bill.  It's even more frustrating given that so many Americans are unemployed and looking for work while illegal aliens are getting free tutoring and computer classes to advance their own lives.

For these reasons, I urge you to reconsider lowering detention standards.  I would also appreciate a copy of the internal memo obtained by the Houston Chronicle in addition to a briefing to discuss this report no later than Friday, June 18. Please contact Kathy Nuebel Kovarik of my staff at 202-224-3744 about this matter.


Charles E. Grassley

United States Senator

Hello.  I'm Chuck Grassley working in the U.S. Senate for the people of Iowa.   This week, the United States Senate considered a resolution to block the EPA from regulating carbon dioxide and other greenhouse gasses.   The resolution of disapproval had broad bipartisan support.

I was an original cosponsor of this resolution because I'm concerned that EPA bureaucrats are making policy decisions that should be made by elected representatives of the people.  Congress should decide whether or not to impose limits on greenhouse gasses, not faceless bureaucrats.  The problem is that the EPA has been moving forward without congressional approval.  This is bad news for two reasons.

First, the job of a federal agency is to carry out the laws passed by Congress.  Congress is directly accountable to the American people.  The EPA is not.  When agencies that aren't accountable to the public bend existing laws in order to pursue an agenda behind closed doors, Congress must stop them.  An unelected bureaucracy shouldn't make policy decisions, especially when the decisions could have a major impact on an economy that continues to sputter.

Second, regulating greenhouse gasses under the Clean Air Act would be less efficient and more costly than a new system that is specifically designed to address greenhouse gasses.  The Obama administration has already acknowledged this fact.

The EPA is trying to bully Congress by saying, "Either you pass a bill that will raise costs for American Families or we'll pass regulations that will be even worse."

It is up to Congress to decide whether a new carbon tax makes sense.  We shouldn't let the EPA implement economically devastating regulations, particularly at a time of economic recession.  Iowa's energy intensive economy, especially agriculture and manufacturing, would be hit particularly hard if the EPA goes it alone.

Congress must continue to work to make sure that the EPA does not overreach on its responsibilities, and our resolution helps to put the EPA on notice.

Senator Chuck Grassley issued the following comment after the Senate failed to pass a resolution that would have blocked the EPA from moving forward with regulations on carbon dioxide and other greenhouse gasses.  Grassley was an original cosponsor of the resolution.

"Our economy is sputtering and by not passing this resolution, Congress is ceding policy decisions that could have serious economic ramifications to a bureaucratic agency that is not accountable to the American people.  The EPA is simply trying to bully Congress by saying, 'Either you pass a bill that will raise costs for American families and destroy jobs or we'll pass regulations that will be even worse.'  The Obama administration has acknowledged this, but is still pushing forward.  EPA's go it alone policy is a big problem for Iowa families and businesses who will be hit particularly hard because of Iowa's energy intensive economy, especially in agriculture and manufacturing."

Opening Statement of Sen. Chuck Grassley

as Prepared for Delivery

Hearing, "The U.S. - China Economic Relationship: A New Approach for A New China"

Secretary of the Treasury Timothy F. Geithner, testifying

Thursday, June 10, 2010

Today's hearing provides an opportunity for the Committee to engage Secretary Geithner on the outcome of last month's Strategic and Economic Dialogue in Beijing.

I have serious concerns about the direction that China's government is taking with respect to its economic and trade policies.

I want to hear from the Secretary specifically what these meetings accomplished, and what the Secretary sees in the way of next steps in our bilateral relationship.

For example, what are China's intentions with regard to its currency exchange rate?

I emphatically disagreed with the Treasury Department's decision in April to delay issuance of its currency report.

The time is long past for the Treasury Department to admit publicly what everyone else already knows?namely, that China is manipulating the value of its currency in order to gain an unfair advantage in international trade.

Treasury obviously felt differently, and I'd like to hear what this delay in issuing the report has accomplished.

I worry that, by delaying the report, Treasury has raised expectations that won't be met.  Is the Chinese government going to make a significant adjustment to its exchange rate, just because our Treasury Department held off on issuing this report?  I doubt it.

I also want to hear about the Secretary's discussions regarding China's so-called indigenous innovation policy, which is a government policy to give preferences in China's procurement market to products that contain intellectual property developed in China.

Our Ambassador to the World Trade Organization has described this policy as one of several Chinese policies indicating, quote, "a policy direction that seems designed to limit market access for imports and foreign investors and pressure enterprises to localize research and development in China, as well as transfer technologies," end quote.

In other words, instead of doing everything it can to comply with the letter and spirit of its World Trade Organization obligations, the Chinese government appears to be looking for ways to evade those rules, or to find loopholes and gaps in the rules that it can exploit.

This is a troubling development that, in my view, calls for some careful rethinking about our overall approach to China on trade matters.

For example, if China continues to refuse to make a serious offer to join the Government Procurement Agreement in the World Trade Organization, we should take a harder look at our own procurement rules as they apply to the procurement of goods and services from China.

Separately, if China chooses to apply a "national economic security" test when it reviews foreign investment through mergers and acquisitions, perhaps we should do the same with respect to Chinese investments in the United States.

The point is, if one of the major beneficiaries of the world trading system engages in a pattern of refusing to play by the same rules as everyone else, then we should reconsider the rules that we apply to that country.

I look forward to hearing from the Secretary his intentions for prompt action to address these important issues.

WASHINGTON - JUNE 9, 2010 - Chuck Grassley today asked the U.S. Department of Agriculture to consider a late fee for agriculture producers who missed a sign up deadline for the Direct and Counter-cyclical Payment Program and the Average Crop Revenue Election Program.

Grassley said the different sign up deadlines for the farm programs have caused some confusion among producers. Under the 2002 farm bill, farmers who missed the filing deadline were given the opportunity to sign up for the program with payment of a late filing fee.  This year, there is no such option.

"Several farmers contacted my office when they learned of the earlier sign up deadline.  Unfortunately, they learned too late and instead are shut out of the program," Grassley said.  "The FSA might be able to help a number of producers if it would consider allowing a late filing fee for family farmers who have missed this year's sign up."

Here is a copy of the text of Grassley's letter to Secretary of Agriculture Tom Vilsack.

June 9, 2010

The Honorable Tom Vilsack


U.S. Department of Agriculture

1400 Independence Ave SW

Washington, DC 20250

Dear Secretary Vilsack,

I understand that the Farm Service Agency (FSA) recently conducted its annual Direct and Counter-cyclical Payment Program (DCP) and the Average Crop Revenue Election Program (ACRE) signup.  This year's signup concluded on June 1, 2010, which tracks the 2002-2007 signups for DCP which also closed on June 1st of each of those respective years.

Because of the late passage of the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill), signup for DCP was extended until September 1, 2008.  In 2009, because of the introduction of ACRE, an August 14, 2009 deadline was set.

2010 marks the first time FSA has returned to a June 1st deadline.  I believe a June 1, 2010 deadline is fully appropriate.  However, under the Farm Security and Rural investment Act of 2002 (2002 Farm Bill), farmers who missed the deadline but chose to pay a $100 per farm late filing fee were given until September 30th to do so.  This late filing fee option is no longer offered by FSA.

I am concerned that since this is the first year that FSA is again using the earlier deadline of June 1, not all eligible producers have had an opportunity to visit their county office and signup for the two programs.  Producers in my state who missed the June 1, 2010 deadline have contacted my office about their inability to signup this year, many of whom are willing to pay a late fee to do so.

I respectfully ask that FSA reconsider its decision not to allow a late filing fee for family farmers who have missed this year's signup deadline.


Charles E. Grassley

United States Senator

Grassley Seeks Accounting of Treasury, IRS' Use of Whistleblower Information on Potential Tax Evasion

WASHINGTON -- Senator Chuck Grassley today asked the Treasury secretary and IRS commissioner for an accounting of what U.S. government officials have done with information provided more than three years ago by a whistleblower regarding tax evasion.  The U.S. Department of Justice acknowledged that former UBS employee Bradley Charles Birkenfeld's information was pivotal in exposing a multi-billion dollar international tax evasion scandal involving a private Swiss bank, yet it may be that the IRS is doing very little with the information yielded from this effort.

Grassley said the information provided by Birkenfeld includes the names of UBS AG employees and their e-mail addresses and cell phone numbers, which could be used to identify their clients in the United States.  Swiss legislators today took a step to unravel a U.S.-Swiss treaty that would allow for the disclosure of more client information to allow U.S. officials to review cases for potential enforcement of U.S. tax laws.

"The action by Swiss legislators today to try to unravel an international treaty emphasizes the need for U.S. authorities to exhaust the information they have on U.S. taxpayers who use offshore accounts to evade taxes," Grassley said.  "Honest taxpayers deserve to know what's happened with what could be very valuable leads, and if it's nothing, they deserve to know why.  It's a matter of tax fairness and law enforcement.  And the IRS shouldn't wait for international agreements to fall into place when tax evaders can be identified through other appropriate tools."

In December 2006, as chairman of the Senate Finance Committee, Grassley won enactment of his proposal to make the IRS whistleblower program more effective than before in cracking down on tax cheats and collecting taxes owed to the Treasury.  Improvements included offering more generous financial incentives to whistleblowers.  Since then, he has monitored implementation of the improvements and urged expedient, effective handling of whistleblower information.

Grassley was the lead Senate author of the 1986 whistleblower amendments strengthening the federal False Claims Act, which have become one of the nation's strongest tools to identity and prevent fraud against the Treasury.  To date, those provisions have helped to recover $22 billion for the federal Treasury that otherwise would have been lost to fraud.  The False Claims Act does not cover tax fraud; hence the need for an effective IRS whistleblower office.  Additionally, Grassley succeeded in getting enacted a federal incentive for states to adopt whistleblower provisions as part of state laws on false claims as part of the Deficit Reduction Act of 2005.

The text of today's letter follows here.

June 8, 2010

The Honorable Timothy F. Geithner

Secretary of the Treasury

Department of the Treasury

1500 Pennsylvania Avenue

Washington, DC 20220


The Honorable Douglas L. Shulman


Internal Revenue Service

1111 Constitution Avenue NW

Washington, DC  20224

Dear Secretary Geithner and Commissioner Shulman:

I am writing to express my concern about continued tax evasion by taxpayers using secret Swiss bank accounts, particularly accounts at UBS AG.  Swiss lawmakers voted today to block the treaty the United States hammered out with Switzerland last year.  While I understand that today's vote in the lower chamber of the Swiss Parliament is not the final word, I am worried that the Internal Revenue Service ("IRS") is doing next to nothing to identify tax evasion by U.S. taxpayers utilizing these accounts while waiting for ratification of the treaty.

It has been over three years since Mr. Bradley Charles Birkenfeld approached the Department of Justice, IRS and the Securities and Exchange Commission about potential tax evasion facilitated by UBS AG on behalf of U.S. clients.  The attached letter from Mr. Birkenfeld's attorneys outlines a number of steps that the IRS could have taken with the information he provided in March 2007.  It seems this information would allow the IRS to trace individuals in the U.S. that had UBS bank accounts.  In addition, this letter also provides information about UBS USA, a wholly-owned subsidiary of UBS AG, and its involvement in UBS AG activities here in the U.S.

Using this information to identify U.S. clients would appear to be more productive than simply pursuing agreements and treaties with the Swiss, especially since those avenues seem limited to specific individuals.  It does not appear that you would need a treaty, or other agreement with the Swiss government, to pursue the records of UBS USA.

As a result, I would like a detailed listing of all steps IRS has taken with the information that Mr. Birkenfeld provided.  Please note that I am not asking for information about any individual taxpayer so I do not expect section 6103 to preclude you from responding to my request.  I would also like to know what IRS is doing to ensure that, if and when it receives a complete list of UBS AG account holders, the IRS will not be precluded by the statute of limitations from auditing those individuals.

Today's vote in Switzerland only underscores the need for the IRS to encourage whistleblowers to come forward.  Mr. Birkenfeld blew the whistle on just one bank. What is the IRS doing to encourage more whistleblowers to come forward about offshore bank accounts?

I appreciate your prompt attention to this matter and ask for a written response by June 18, 2010.  Please contact me or my staff at (202) 224-4515 with any questions.


Chuck Grassley

Ranking Member

Sen. Chuck Grassley, ranking member of the Committee on Finance, with jurisdiction over tax policy, today made the following comment on an Associated Press "fact check" report that the Administration's tax credit purported to help small businesses afford health insurance for their employees won't help some of those small businesses, despite portrayal of the tax credit as broadly available.

"Small business owners have been told to expect help right away, and now some of them are starting to do the math and finding out the help isn't for them.  The authors of the health care reform bill should be clear with people that the tax credit is limited and that only a pretty narrow category of small business owners will see any benefit.  Also, this tax credit, for those it will help, is available for only two more years after the health exchanges are up and running in 2014.  The Congressional Budget Office estimates that in 2016, only three million small business employees out of 159 million Americans with employer-sponsored private coverage would actually benefit from the small business tax credit for health insurance.  That's less than two percent of those with employer coverage benefiting."

The text of the Associated Press "fact check" story follows here.

FACT CHECK: Tax cut math doesn't add up for some

May 20, 2010 - 03:08 AM US/Eastern
Associated Press Writer

WASHINGTON (AP) - Zach Hoffman was confident his small business would qualify for a new tax cut in President Barack Obama's health care overhaul law.

But when he ran the numbers, Hoffman discovered that his office furniture company wouldn't get any assistance with the $79,200 it pays annually in premiums for its 24 employees. "It leaves you with this feeling of a bait-and-switch," he said.

When the administration unveiled the small business tax credit earlier this week, officials touted its "broad eligibility" for companies with fewer than 25 workers and average annual wages under $50,000 that provide health coverage. Hoffman's workers earn an average of $35,000 a year, which makes it all the more difficult to understand why his company didn't qualify.

Lost in the fine print: The credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages.

It's an example of how the early provisions of the health care law can create winners and losers among groups lawmakers intended to help?people with health problems, families with young adult children and small businesses. Because of the law's complexity, not everyone in a broadly similar situation will benefit.

Consider small businesses: "The idea here is to target the credits to a relatively low number of firms, those who are low-wage and really quite small," said economist Linda Blumberg of the Urban Institute public policy center.

On paper, the credit seems to be available to companies with fewer than 25 workers and average wages of $50,000. But in practice, a complicated formula that combines the two numbers works against companies that have more than 10 workers and $25,000 in average wages, Blumberg said.

"You can get zero even if you are not hitting the max on both pieces," Blumberg said.

Hoffman used an online calculator to figure his company's eligibility. At least three are available: from the House Energy and Commerce Committee, which helped write the legislation; from the progressive Center for American Progress; and from the National Federation of Independent Business, which is seeking to overturn the law in federal court. All produced the same result.

"I think (the administration's) intentions are good, but the numbers and applications don't come out to what they intend," said Hoffman, part owner of Wiley Office Furniture, a third-generation family business in Springfield, Ill.

The Treasury Department, which administers the new credit, did not dispute the calculations.

"The small-business tax credit was designed to provide the greatest benefit to employers that currently have the hardest time providing health insurance for their workers?small, low-wage firms," said Michael Mundaca, assistant secretary for tax policy. "Small employers face higher premiums and higher administrative costs than large firms and in many cases cannot afford to provide coverage."

Small business owners are a pivotal constituency in the fall congressional elections, and Democrats are battling to win them over. Major benefits of the health care law?competitive insurance markets, more stable premiums and a ban on denying coverage to those in poor health?don't take effect until 2014. But the health care credit is available starting this year.

It can be a boon for smaller companies paying lower wages. Betsy Burton, owner of The King's English Bookshop in Salt Lake City, estimates that she will get a credit of roughly $21,000 against premiums of about $67,800. She has 11 full-time equivalent employees averaging $26,100.

"What it means is that I can afford to carry this insurance and insure people's families," said Burton. "I was afraid that we were fast approaching a time when I would have to choose between insuring my employees and closing my doors."

Burton believes offering health insurance is the right thing for an employer to do?and also makes good business sense because it helps her retain valued employees. Except at the beginning, she has provided coverage for most of the 33 years the bookstore has been in business.

Slightly more than a third of companies with fewer than 10 employees offered coverage in 2008, down about 10 percent since the start of the decade, according to an Urban Institute analysis.

Hoffman, the furniture store owner whose business missed out on the credit, says he understands that lawmakers writing the health care legislation had a limited amount of money to work with. But his company's premiums rose 15 percent this year, and it's a struggle to keep paying.

To get the most out of the new federal credit, Hoffman said he'd have to cut his work force to 10 employees and slash their wages.

"That seems like a strange outcome, given we've got 10 percent unemployment," he said.