Heesen noted several times that the IVCA excels among state venture capital associations and has “hit the nail on the head in tying public policy research to public relations. If politicians understood the industry, at the end of the day you won’t see public policies that hurt us.”

As all politics is local, Heesen advised members to confront the “major problem” of Illinois Sen. Dick Durbin’s stance on the H-1B visa programs. Heesen says the stance would make it more difficult for corporations to hire and employ foreign workers.

In addition to the stand on immigration reform, Heesen noted that the NVCA will not support the current patent reform bill until it adheres more to the best interests of the entrepreneurial community. Regarding carried interest, he said while the industry “dodged a major bullet in 2007 and it is highly unlikely” for anything to emerge in 2008, the real issue to look out for in 2009 and beyond is capital gains.

He noted that two of the three presidential candidates – Illinois Sen. Barack Obama and Arizona Sen. John McCain – “look at things from the long-term perspective in capital gains” and the NVCA is building bridges on both sides of the political aisle. Finally, Heesen expressed dissatisfaction as it relates to SBIR grants and noted that he doesn’t “understand what the SBA is doing”.

The main course of the luncheon was delivered by amusing economist Carl Tannenbaum. His presentation – “A Pregnant Pause: The Economic Outlook for the Remainder of 2008” – put into perspective the current dip in what still very much appears to be a long-term expansion of the U.S. economy. The thesis of his presentation was “after a pregnant pause, this expansion should continue”. The presentation can be downloaded here.

That said, Tannenbaum illustrated the ugliness of what has transpired in multiple markets over the past several months: “What begins in the credit markets can come home to American business,” he said, noting that the average down payment for a home has dipped as low as 3.5 percent. “Sub-prime was the match, but the kindling was there for a long while.”

Specifically as it relates to the VC and private equity industries, Tannenbaum noted that it will be difficult for companies to raise debt financing and go public for the foreseeable future and firms will take a “more inward focus”.

He said the days of blockbuster deals (like Equity Office) are likely behind us and cautioned that the industry should look out for “Robin Hood economics” on the part of the government. Ultimately, Tannenbaum noted, the power and innovation of the U.S. economy will not only survive, but like previous periods, it will emerge stronger after this cycle.

“As signs emerge that it is safe to go outside again, the recovery could be very powerful,” he said.