[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]





                    IMPROVING THE OFFICE OF ADVOCACY

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                     WASHINGTON, DC, JUNE 21, 2000

                               __________

                           Serial No. 106-66

                               __________

         Printed for the use of the Committee on Small Business




                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
67-488                     WASHINGTON : 2000


                      COMMITTEE ON SMALL BUSINESS

                  JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
DONALD A. MANZULLO, Illinois             California
ROSCOE G. BARTLETT, Maryland         DANNY K. DAVIS, Illinois
FRANK A. LoBIONDO, New Jersey        CAROLYN McCARTHY, New York
SUE W. KELLY, New York               BILL PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio               RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania           DONNA MC CHRISTENSEN, Virgin 
DAVID M. McINTOSH, Indiana               Islands
RICK HILL, Montana                   ROBERT A. BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania        TOM UDALL, New Mexico
JOHN E. SWEENEY, New York            DENNIS MOORE, Kansas
PATRICK J. TOOMEY, Pennsylvania      STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina           CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana                DAVID D. PHELPS, Illinois
JOHN THUNE, South Dakota             GRACE F. NAPOLITANO, California
MARY BONO, California                BRIAN BAIRD, Washington
                                     MARK UDALL, Colorado
                                     SHELLEY BERKLEY, Nevada
                     Harry Katrichis, Chief Counsel
                  Michael Day, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 21, 2000....................................     1

                               WITNESSES

Glover, Jere W., Chief Counsel for Advocacy, Small Business 
  Administration.................................................     4
Kerrigan, Karen, President, Small Business Survival Committee....     7
Mastromarco, Daniel R., President, The Argus Group...............     9
Morrison, James, Senior Policy Advisor, National Association for 
  the Self-Employed..............................................    12
McCracken, Todd, President, National Small Business United.......    15
Cole, Keith N., Partner, Swidler Berlin Shereff Friedman.........    16

                                APPENDIX

Opening statements:
    Talent, Hon. James...........................................    39
Prepared statements:
    Glover, Jere W...............................................    43
    Kerrigan, Karen..............................................   128
    Mastromarco, Daniel R........................................   139
    Morrison, James..............................................   149
    McCracken, Todd..............................................   158
    Cole, Keith N................................................   167

 
                    IMPROVING THE OFFICE OF ADVOCACY

                              ----------                              


                        WEDNESDAY, JUNE 21, 2000

                          House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.


    The Committee met, pursuant to call, at 10:20 a.m., in room 
2360, Rayburn House Office Building, Hon. Jim Talent (chair of 
the Committee) presiding.
    Chairman Talent. Our hearing today focuses on an agency 
that is of great importance to small business but remains to 
much of the outside world one of the lesser known agencies in 
the Federal Government, the Office of Chief Counsel for 
Advocacy.
    I have called today's hearing to review the current 
situation at the Office of Advocacy and whether its efforts at 
independent advocacy are hampered by its relationship in both 
the Small Business Administration and the executive branch and, 
if so, what changes should be made to strengthen the office's 
role as a nonpartisan, independent voice protecting small 
business from regulatory excesses in the Federal bureaucracy.
    In 1976 Congress established the Chief Counsel for Advocacy 
within the Small Business Administration. The initial purpose 
of the Chief Counsel was to complete a study on small business 
and its impact on the American economy. Subsequent to the 
completion of that study, the primary mission of the office was 
to represent the views and interests of small business before 
other Federal agencies whose policies affect small business.
    In 1980 the duties of the Chief Counsel were broadened 
considerably when he was assigned the task of monitoring agency 
compliance with the Regulatory Flexibility Act, that statute 
which requires Federal agencies to consider the impact of 
proposed and final regulations on small businesses and other 
entities.
    Nothing in the act creating the Chief Counsel spelled out 
that the Chief Counsel was to be independent of the President. 
Nevertheless, the authority to issue reports to Congress 
without submitting them for clearance by OMB and the ability of 
the Chief Counsel to file briefs in Federal court opposing the 
views of the executive branch led many in the small business 
community to conclude that the Chief Counsel should be an 
independent voice for small business in the executive branch.
    Yet the independence of the Office of Advocacy often hangs 
by a slender thread. In past years the Office has seen 
Administrators use special hiring authority granted to the 
Chief Counsel in the statute creating the Office to impose the 
Administrator's personnel decisions on the Chief Counsel. In 
other instances the authority and ability of the Chief Counsel 
to file amicus briefs in cases of extreme importance to small 
businesses has been called into question by various parts of 
the Justice Department.
    Today the office operates under the terms of a statute that 
authorizes the Chief Counsel to file amicus briefs under the 
Regulatory Flexibility Act, and an Executive Order mandating 
that all disputes among executive branch agencies be resolved 
through mediation by the Department of Justice. In this 
hearing, the Committee is going to examine various mechanisms 
for enhancing the voice of small business within the 
government.
    This is a nonpartisan issue, since the regulatory problems 
facing small business do not respect political party lines 
since, I may add, any tension between the Office and the 
executive branch goes back through the last at least three 
administrations.
    Any enhancement to the Office of Advocacy must start from 
the proposition that it must be able to do what is best for 
small business. Our colleagues in the Senate believe that one 
solution is to provide the Chief Counsel with the line item in 
the budget, a line item that currently does not exist, which 
would enable the Chief Counsel to negotiate with the 
Administrator for resources.
    The Chief Counsel's role in the government is unique, and 
the Chief Counsel should not have to rely on the goodwill of 
the Administrator to obtain needed resources. Clearly, this 
idea has some merit. I hope we can explore it in further detail 
today. But I am not convinced that the approach adopted in the 
Senate provides the Office of Advocacy with the necessary 
independence required to reach optimal effectiveness as the 
voice of small business. A separate line item in the budget 
does not eliminate what many perceive to be the primary problem 
with enhancing the role of the Office of Advocacy. The Office 
would still remain in the executive branch. It does not take a 
genius to understand that when a movable office, the Chief 
Counsel, meets an irresistible force, the President, the 
movable object moves.
    In my view, a good solution would be to remove the Office 
of Advocacy from the auspices of the executive branch, but not 
establish it as an arm of Congress either.
    There is another alternative: the establishment of an 
independent collegial body like the Board of Governors of the 
Federal Reserve or the SEC. These agencies are not subject to 
the regulatory authority of the executive branch.
    For example, Executive Order 12,866, which specifies the 
regulatory oversight authority of the Office of Information and 
Regulatory Affairs, exempts these independent collegial bodies 
from the strictures of the provisions. Similarly, the Paperwork 
Reduction Act recognizes that special place in the bureaucracy 
by allowing them to override the OMB disapproval of their 
recordkeeping or reporting requirement. No executive branch 
agency like the EPA or the SBA has that power.
    Finally, the commissioners of those agencies who were 
appointed by the President, confirmed by the Senate, do not 
serve at the pleasure of the President.
    Today we have a panel of witnesses, all of whom are 
intimately involved with the small business issues and the 
function in the Office of Advocacy. I expect they will have 
diverse views on mechanisms to improve the functioning of that 
office, enhance its capabilities as the final bulwark in the 
Federal Government against regulatory bureaucracy, and provide 
for a truly independent Office of Advocacy.
    [Chairman Talent's opening statement may be found in 
appendix.]
    Chairman Talent. We are looking forward to the testimony of 
the witnesses but, of course, I want to recognize the Ranking 
Member, the distinguished gentlelady from New York for her 
opening statement.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Today we focus on ways to improve the effectiveness of the 
Office of Advocacy in the Small Business Administration. We 
will look at how the office can be a more effective advocate 
for small business but make technology more independent and 
giving it more control over its operating budget. The Office of 
Advocacy plays a very important role for small business. 
Itworks to reduce the burdens it faces from Federal policies, to 
research the economic impact of those policies, and to publish data on 
the contributions of small business to our economy. In a nutshell, 
Advocacy's goal is to encourage policies that support the development 
and growth of small business.
    We all know the incredible job the Office of Advocacy has 
done to protect the interests of small business within the 
Federal Government. From saving small businesses $3 billion in 
regulatory reform to implementing the SBREFA process, the 
Office of Advocacy has done whatever is necessary to protect 
this bedrock of our economy from sometimes overreaching Federal 
policies.
    And as the voice for smaller firms, this office has stood 
firm to ensure that small business has the right to compete on 
a level playing field.
    This hearing provides a unique opportunity to this 
Committee to take a good look at how we can strengthen Advocacy 
within SBA and help it continue to provide a powerful and 
independent presence for small businesses in America. As part 
of that effort, we must ensure that Advocacy is given the 
necessary resources, both financially and politically, to get 
the job done. Furthermore, we must provide more autonomy for 
Advocacy so that its motivations and decisions are truly 
independent; independent from agency policy, from politics, 
from special interests, from anything that might keep it from 
acting solely in the interests of small business. Advocacy must 
be free to act, without fear or favor, to resolve controversial 
issues in a timely manner.
    And while we examine the best ways for Advocacy to achieve 
this independence, we should also consider any additional tools 
it might need and what new roles it might play to better serve 
small business.
    We know, for instance, that Advocacy has an excellent track 
record in fighting for small business in areas such as 
regulatory compliance. Perhaps it also needs new tools to make 
agencies comply with Federal contracting standards. And maybe 
with more tools, it can reduce the sometimes overwhelming 
amount of paperwork that small business must wade through.
    Everyone recognizes the need for the Office of Advocacy, 
even the agencies with which it works. We all have a vested 
interest in ensuring that Advocacy is well equipped to help 
small business in this evolving technology-driven economy, 
because we know that small business is our future.
    Mr. Chairman, I would like to thank you for convening this 
hearing today. I would also like to thank the panelists for 
their testimony and for their commitment to protecting small 
businesses in our country.
    Chairman Talent. I thank the gentlelady.
    Thank you for your comments and I in large measure agree 
with them. I think we are all pretty much in agreement that we 
want the Chief Counsel to be an independent voice. And the 
question is whether we need to do anything to enhance that.
    And our first witness on that issue is the Honorable Jere 
Glover who is the Chief Counsel for Advocacy for the Small 
Business Administration. Jere, we are glad to have you here, as 
always, and grateful for your service. Let me just say this 
examination into the independence of the Chief Counsel's office 
shouldn't be taken by anybody as a reflection on your 
independence, because you brought a period of stability and 
effectiveness to that office that had been lacking, if I may 
say so, before you came on board. And I want to thank you for 
your years of hard work on behalf of small business and your 
appearance before the Committee today. So please proceed.

STATEMENT OF JERE W. GLOVER, CHIEF COUNSEL FOR ADVOCACY, UNITED 
              STATES SMALL BUSINESS ADMINISTRATION

    Mr. Glover. Thank you very much especially for those kind 
words. I am certainly pleased to be here and talk about the 
Office of Advocacy. As in the previous 36 times that I have 
testified before Congress since becoming Chief Counsel for 
Advocacy, my testimony is my own. It has not been shown to, 
cleared by, or reviewed by anyone prior to submission to the 
Congress.
    There are a number of unique things about being Chief 
Counsel that makes this job fun and exciting. Let me just 
mention three of those. The first is the hiring authority; the 
second is the ability to make a difference; and third is the 
independence.
    On the first, the Office of Advocacy was given special 
legal authority to hire and, quite frankly, fire its employees. 
This is unique in the government. It allows us to make sure 
that we hire people who are committed to small business, who 
share the Chief Counsel's commitment. It also allows us to hire 
the right experts, the right professionals to get the job done.
    The second issue is the ability to make a difference. There 
are far too many jobs in government where at the end of your 
tenure you haven't made a real difference. That certainly is 
not the case with the Office of Advocacy. We have accomplished 
so much that I can't even keep up with all of it. The hardest 
thing that I have had to do in this job is to get the 
recognition the office deserves. You may recall that in 1995 
Congress introduced legislation to zero out the funding for the 
Office of Advocacy. It was supported by some key leaders of 
this Congress. That attack on Advocacy was turned away by a 
close vote, thanks especially to the former Chairwoman of this 
Committee, through her leadership.
    A year later the office was strengthened, and new and 
exciting power was added to the office. My deputy, Kay Ryan, 
and I have worked for 10 Federal agencies. Five were 
commissions. I even worked for the Office of Advocacy before as 
Deputy Chief Counsel, and I have worked for this Committee. I 
have never worked in a place where I have been able to 
accomplish as much as I have here.
    How do you measure Advocacy's accomplishments? Since that 
unfortunate congressional episode in 1995, we have tried very 
hard to measure our successes. Certainly the 22 letters 
attached to my written testimony--and I have another 10 that 
came in after we submitted our testimony yesterday--are 
indications of that.
    I asked my staff on Friday if they would contact some of 
the folks we have worked with on regulations to send us a 
letter discussing the regulatory accomplishments that Advocacy 
and they together have done together. I wanted factual 
statements. This meant that the associations, their 
memberships, their organizations, thought enough of the Office 
of Advocacy in 3 days to send a letter.
    Is that an appropriate measure? No. We have better measures 
of success. One of the most significant accomplishments for the 
Office of Advocacy has been to actually determine the 
regulatory savings from the Office of Advocacy's actions and 
from the Regulatory Flexibility Act. In 1 year, over $5 
billion. This does not include regulations that were not 
proposed, nor does it include regulations that were delayed and 
their impacts not felt by small business. The fact that we are 
able to measure this is something we are very proud of; not 
just that we did it but that we will be able to measure it in 
the future.
    Your Committee, this Committee, should be very proud of 
these savings. Without judicial review of the Regulatory 
Flexibility Act, without the SBREFA panels, and quite frankly 
without saving the Office of Advocacy from being zeroed out, 
these savings would not have occurred.
    Back to why the job is fun and why I wanted to do this job. 
One is great staff--and let me simply tell you I have the best 
staff in government; the authority to get something done for 
small business, and, finally, independence. With the exceptions 
of the businesses that I started and ran, I have never had more 
independence in a job than I have as Chief Counsel. Before 
taking this job, I was happy in the private sector. And I 
wanted to make sure that the SBA administrator, Erskine Bowles, 
and the President understood the independence of the job and 
that I would be taking independent positions. My Senate 
confirmation made it very clear that the Senate expected me to 
be independent, and I believe that I have been. No 
administration official, no Administrator of SBA has ever 
questioned or tried to compromise my independence.
    How do you measure independence? Is that even the standard 
to use to measure the Office of Advocacy's accomplishments? I 
would rather offer regulatory savings for small business as a 
far better measure.
    Returning to independence, is the measure the number of 
confrontations Advocacy has taken contrary to the 
administration? I have personally testified 36 times as Chief 
Counsel. Rarely am I asked to come up and support the 
administration's position. To date, I have taken 25 positions 
that were different from the administration. Is that the 
measure? Or is it the 10 or so times where I have taken 
independent positions and later had the administration change 
its position and come over for small business? Is it the number 
of times that we fought with Federal agencies, or is it the 
number of times that we have had regulations changed to lessen 
the burden for small business?
    My job is not to yell, but to be listened to. The earlier I 
get into a policy discussion at the agency or in Congress or in 
the administration, the better the outcome. My job is to 
provide data and information so that the agencies make informed 
decisions. Informed decisions virtually always come out to the 
benefit of small business.
    Judicial review and the SBREFA panels have made a real 
difference. I have to achieve consensus at both ends of 
Pennsylvania Avenue. There are times that I take positions that 
no one else supports initially. I have taken positions that no 
one in Congress--that few in Congress, no one in the 
administration, and even most small business groups didn't 
support when I started taking those positions.
    Bankruptcy and patent reform are issues where we got 
involved very early. There is a theoretical argument that more 
independence when supported from the executive branch is 
beneficial. But are we substituting a perceived additional 
independence for a dependence on a consensus within a collegial 
body, commissions, where a chairman must get at least one vote 
to sign off for every decision? Are you guaranteeing that there 
will be dissenting opinions in almost every decision? Are you 
creating a bureaucracy that is slow-moving and expensive?
    There are a number of questions that I think should be 
answered before creating a new commission. And I have a number 
of questions which I would like to submit for the record 
concerning that.
    In the Senate I testified, as I believe the other previous 
Chief Counsels had, that they had been independent. Where is 
the factual basis for the finding in staff discussion draft 
legislation at page 3 and 4, findings number 9 and 10, the 
current law does not provide the Chief Counsel with sufficient 
independence to protect the interest of small business, or that 
the Chief Counsel has not been able to fully execute without 
undue and unreasonable constraints? Neither I nor, to my 
knowledge, have the other Chief Counsels testified that they 
have been subject to such undue constraints.
    There are a number of organizational problems which I think 
should be addressed. One is the line-item budget. The second is 
what happens between Chief Counsels. Clearly when the office is 
vacant, when there is not a Chief Counsel in place, there is no 
independence. You cannot ask a career employee to take the 
kinds of positions that a Chief Counsel, Senate-confirmed, 
takes. And that is clearly a problem. And of course, there is 
the question of the ability to administer the Regulatory 
Flexibility Act.
    This is one issue that the law should certainly clarify. I 
think the most important thing about the Office of Advocacy is 
making sure there is at least one person, and hopefully a whole 
staff like I have, that get up every day thinking, what can I 
do for small business today?
    Chairman Talent. Thank you, Jere.
    [Mr. Glover's statement may be found in appendix.]
    Chairman Talent. Our next witness is Karen Kerrigan. Karen 
is the President of the Small Business Survival Committee. 
Please, Karen, go ahead.

STATEMENT OF KAREN KERRIGAN, PRESIDENT, SMALL BUSINESS SURVIVAL 
                           COMMITTEE

    Ms. Kerrigan. I am chairman now.
    On behalf of the Small Business Survival Committee and its 
more than 60,000 members, I am pleased to have the opportunity 
to testify in regard to this important issue for small 
business. Increasing the effectiveness of the Office of 
Advocacy will yield tremendous benefits to America's small 
businesses and entrepreneurial sector as well as American 
taxpayers and consumers.
    Again, I am Karen Kerrigan, Chairman of the Small Business 
Survival Committee. We are a nonpartisan, nonprofit small 
business advocacy and watchdog organization, headquartered here 
in the Nation's capital.We remain very optimistic about 
advancing initiatives for small businesses that have yet to be 
taken up by the Congress or signed into law by President 
Clinton, as well as accelerating an understanding within 
government about how it affects the success of the small 
business sector through regulation and legislation.
    Our optimism stems from the fact that this Committee has 
done such a wonderful job in focusing its efforts on the issues 
that matter to small business. We are so pleased with your 
leadership, Chairman Talent. You have made a real difference 
for small businesses by focusing on issues are significant 
areas of concern or opportunity for entrepreneurs and their 
work force.
    And, Congresswoman Velazquez, it has been a delight working 
with you and your staff. Let me applaud you on your recent New 
York Times op-ed to repeal the death tax. We sent that out to 
our entire membership. Your support has been just critical in 
building bipartisan support for repeal.
    The topic of the hearing today is another example of your 
collected commitment to small business, and again we are 
pleased to be a part of this. Our organization has testified on 
the Office of Advocacy in the past. We are in support of their 
activities and we are eager to work with the Chairman and all 
members of the Committee and the Office itself to improve 
Advocacy with the goal of making it a more effective voice and 
entity for small business. The Office has been a positive voice 
for small business.
    And the issue before us today is how do we best leverage 
their presence, their mandate, their resources to best serve 
the interest of small business, and is that possible working 
within their current structure? There are numerous occasions 
that we have interacted with the Office ofAdvocacy, from events 
such as the White House Conference on Small Business to issues such as 
telecommunications access charge reform, or new rules governing the 
commercial mail-receiving agencies otherwise known as the ``PO Box 
dispute,'' and several environmental regs. Our interactions with 
Advocacy have been positive experiences. They indeed have a tough job 
on their hands as the Federal Government's departments and agencies 
continue to crank out new rules and regulations at a very rapid pace, 
as noted in my written testimony, citing a report by the Competitive 
Enterprise Institute that over 4,500 new rules and regulations are in 
the pipeline this year. Of those, 963 will have a notable impact on 
small business.
    Upon a review of the statute that established the Office, I 
noted that the Office had wide discretion in terms of their 
activities they could implement or pursue for interests of 
small business within the government. From conducting research 
as they currently do, to making legislative and other proposals 
for alternate tax structure; doing the same for eliminating 
excessive or unnecessary regulations, and developing proposals 
for changes in policies and activities of any agency of the 
Federal Government.
    There really appears no limit--nonfinancial, that is; Jere 
is sitting right next to me here, so I have to watch what I 
say--to ensure that the Office of Advocacy carry out its 
mandate and goals of helping small business.
    From my review of the Office of Advocacy's last annual 
report to the Congress and President, as well as observing 
activities over the past several years, it appears that their 
function has really tilted heavily toward addressing small 
business concerns after a rule has entered the pipeline and 
determining whether agencies are adhering to SBREFA. This 
certainly is their role, along with convening panels to hear 
the concerns and receive input from affected small businesses.
    The Office has made a difference, albeit with varying 
results, in the convening of these panels to ultimately 
impacting rules and educating the agencies of their obligations 
under SBREFA. While we believe this is productive work, our 
preference, and we believe the preference of small business, 
would be to devote a share of the staff's time working on 
Capitol Hill to push for what small businesses really want, and 
that is regulatory reform and relief, expending more effort on 
the front end to enact meaningful reform. And supporting 
Members of Congress who have sponsored legislation while 
publicly endorsing their efforts would relieve Advocacy and, 
more importantly, small businesses from addressing these issues 
on the back end.
    We believe Advocacy's support would carry tremendous weight 
on the Hill and with the President in current attempts to pass 
broader regulatory reform legislation. We believe it is 
entirely appropriate and necessary for Advocacy to devote staff 
time and resources working with the business community to 
advance the recommendations of the White House Conference on 
Small Business not only as it relates to regulatory reform 
issues but also legislation that was desired by delegates to 
the Conference on tax, labor--there is a whole host of issues 
and health care. This list, at least the top 10, are a 
blueprint for what should be Advocacy's agenda and priorities 
for the year.
    Mr. Chairman, I list other recommendations for the office--
some of them managerial, some practical--in my written 
testimony, and pose questions regarding Advocacy's lack of 
action or activity on some small business issues currently 
being debated on Capitol Hill. I have also asked our small 
business leaders for their input and recommendations about how 
to improve Advocacy, and that feedback is just coming back to 
our office. So I hope that we can have the opportunity to 
forward those to you as well.
    As a small organization ourself, we understand that 
resources are an issue here. We grapple every day on how to 
target our resources to make a real difference for small 
business. But we also realize that if we are always on the 
defense. We are basically losing the game, which is why I 
encourage Advocacy to pursue a strategy of offense as well.
    Lastly, in terms of the draft proposal that would pull the 
office out of the Small Business Administration and make 
Advocacy a three-member commission, SBSC certainly supports 
efforts to make the agency more independent. After all, most 
small businesses aren't thinking about Republicans versus 
Democrats when they are trying to make payroll every day. The 
total independence of the Office of Advocacy has tremendous 
appeal to SBSC. Since we only recently have been able to review 
the draft proposal and the concepts in general, we are only at 
the early stages of discussing what this would mean for small 
businesses.
    I cited questions in my written testimony that we are 
asking ourselves and that we are asking our small business 
leaders. Reaction, initial reaction from our small business 
leadership has been from extremely positive to somewhat 
cynical. I do have ardent supply-siders that belong to my 
organization. There is that cynical view of government and what 
it actually can do for small businesses.
    We certainly believe the proposal is worth our time and 
attention, and again we are exploring with our small business 
leaders this option. Certainly the Office needs a higher 
profile. We are in total agreement that politics should not 
restrain them from pursuing the interests of small business.
    I look forward to discussing these issues with you and the 
Committee and to find solutions so that all of us may better 
serve those who represent America's small business sector. 
Thank you again, Chairman Talent, for your ongoing leadership 
and creativity. I look forward to answering any questions from 
you or other members of the Committee. Thank you.
    Chairman Talent. Thank you, Karen. I am sure we'll have 
lots of questions.
    [Ms. Kerrigan's statement may be found in appendix.]
    Chairman Talent. Our next witness is Daniel Mastromarco who 
is President of The Argus Group in Alexandria, Virginia. I am 
mixing up the order I am calling on people just to sort of 
surprise them a little bit.

  STATEMENT OF DAN R. MASTROMARCO, PRESIDENT, THE ARGUS GROUP

    Mr. Mastromarco. Okay, I will give Mr. Morrison's testimony 
for him. I thank you. With the legacy here left by Jere and 
Karen, who yielded such time as they consumed, I should have 
plenty of minutes remaining.
    Chairman Talent and members of the Committee, I ask that my 
full statement be admitted into the record. I appreciate your 
holding this hearing and thank you again, and your able staff, 
particularly Barry Pineles, for wanting to improve the 
environment for Advocacy.
    Let me begin by offering a rather blunt observation. It is 
doubtful we are going to read about this hearing in tomorrow's 
Washington Post. It is even more doubtful that you would find 
that a revelation. Daily battles which pit Federal agencies 
against small firms are more fun to read about than procedures 
for good government that prevent these battles from occurring. 
But if observers truly appreciated the potential of the Office 
of Advocacy, this hearing would dominate the front page.
    As important as many individual fights are, they are merely 
skirmishes in a cavalcade of battles in an interminable war as 
government regulates more than any period in our history. I can 
see, for example, on the chart, that Jere had pointed out, 
savings of $83 million from the Departmentof Treasury alone. 
This is approximately .4 percent of the amount of regulatory burden 
that the Internal Revenue Service imposes on the American people, 
approximately $250 billion.
    We must never be so embroiled in a fight that we forget 
about the battle plan, we forget how to fortify our defenses, 
and forget what we need in our arsenal.
    My comments do not critique any steward of Advocacy, 
although I am kind of surprised that every letter that 
complimented the Office of Advocacy seems to be dated June 
20th. On many issues Jere has done a fine job. He has 
surrounded himself with able staff such as Russ Orban, Charlie 
Ou, Ken Simonson, and others. These individuals are paid partly 
in inspiration.
    Mr. Chairman, Advocacy serves a function that cannot be 
fully served by the private sector. I know this because I have 
been an advocate in the private sector and I have also spent 6 
years on the staff of the Office of Advocacy. But to perform it 
well, the Chief Counsel should not have to choose between being 
a cheerleader on critical issues, a humble plaintiff, or an 
unemployed political operative.
    Does anyone really think he has true independence today? 
Start with the fact that he or she is nominated by the 
President, serves at his discretion, listens to recommendations 
made for his staff, and is subservient to the administrator of 
the SBA fiscally and authoritatively, whose job is to enforce 
the President's policies.
    The counterargument is that an insider can better influence 
policy. It is like saying the fox is guarding the hen house, 
but the fox can understand the way the other foxes think and 
therefore can prevent the attacks. The chief advocate is a poor 
cousin influencing broader administration policy, however.
    To show the bipartisan nature of the problem, President 
Bush went one step further than politicizing the Chief Counsel; 
he made the equally political decision not to fill the slot 
with a confirmable candidate for years. Shockingly, no one at 
the White House saw the rush to have an independent advocate 
interfering with regulatory policy. As a result, small business 
policy defense foundered, research lagged behind, talented 
people were replaced by appointees who could not find a home in 
a ``real agency''. It lost direction, it lost respect, it lost 
morale, and it damn near lost its appropriation, as few in 
Congress could remember its capabilities or could invisage its 
proper role.
    Death by policitization is a bad fate for the Office, but 
death by neglect may be worse.
    So what do we have to do to make the Office a center of 
excellence where the best and the brightest go to advocate 
sound policies for small business; as Jere said, each day 
waking up and determining what they can do to help small firms? 
Your draft legislation and that proposed by Senator Bond seek 
the right result: true independence. It is not a sufficient 
condition, but it is a necessary condition. Both recognize 
organic legislation on which the Office is now built won't 
serve to guarantee this result. But neither legislative 
alternative is perfect. The Senate bill only shifts masters 
from the administrator to the OMB, far from a firewall, as 
Senator Bond said; it leaves the Advocate against the wall and 
in the line of fire.
    Advocacy should be given legal authority to issue 
certifications or determine if the Initial Regulatory 
Flexibility Analysis was adequate. Advocacy staff should also 
be physically separated from the SBA. They share nothing except 
a common roof.
    Moreover, whether a Commission or a Chief Counsel approach 
is adopted, the Presidential appointments must be subject to 
Congressional oversight with a definitive term of office.
    Point 2: Allow the Chief Counsel to hire professionals 
without going through the normal competitive hiring procedures.
    Point 3: Increase authorizations of funding for intramural 
and extramural economic research and for Advocacy. Ironically, 
Members of this Committee, the Internal Revenue Service used to 
argue with appropriators that with additional funding it could 
save taxpayers billions of dollars through better enforcement 
tools. It worked. If the Congress agreed to fund the Office to 
the degree it saves resources imposed in the private sector, it 
would be flush with capital.
    Point 4: Enact regulatory improvements. There is ardent 
interest in giving Congress more authority to oversee 
rulemakings, increase the review panels, and require public 
benefit-cost analyses. View these regulatory changes as part of 
an overall package that strengthens the weapons of Advocacy.
    Point 5: Ensure better coordinated research functions. More 
creative means should be employed to leverage the resources of 
other agencies, for example, through the use of fellowships. 
Economists must be assigned to support advocates instead of 
performing research that is academic only.
    Last, stop funding regional advocates. Ever wonder what a 
regional advocate does? They are like the three people standing 
at a road construction site while one digs.
    Pay the Office and its mission the highest compliment. 
Engross yourselves not only in the question of how many dollars 
should be spent, but in a more essential question: How might we 
structure the Office to achieve its goal? Think of yourselves 
as authorizing a defense bill, but this time it is the defense 
of the American entrepreneurs that is at stake.
    Chairman Talent. Thank you Mr. Mastromarco.
    [Mr. Mastromarco's statement may be found in appendix.]
    Chairman Talent. Jim Morrison and senior policy adviser of 
the National Association for The Self-Employed. Jim.

 STATEMENT OF JAMES MORRISON, SENIOR POLICY ADVISOR, NATIONAL 
               ASSOCIATION FOR THE SELF-EMPLOYED

    Mr. Morrison. Good morning. And thank you Mr. Chairman, 
Ranking Member Velazquez, for inviting me here to appear here 
today. I am James Morrison, the Senior Policy Advisor for the 
National Association for the Self-Employed. On behalf of all 
our members and the Nation's 15 million self-employed, we 
commend the Committee for holding this hearing. We again 
commend the Committee for its distinguished record on 
regulatory oversight throughout the last several years on 
behalf of small business, including the very thoughtful 
proposed legislation that is before us this morning.
    Today's hearing focuses on the Office of Advocacy. Can it 
become more effective? Should it be more independent? By and 
large, the Office has been quite effective when it has been led 
by strong Chief Counsels. Most years it comments on dozens of 
proposed regulations, getting changes in many of them, and even 
getting some of them withdrawn altogether. Its economic 
databases are the best anywhere on small business. They have 
been very helpful in setting economic policy and developing 
legislation. Its technical studies have been invaluable in 
responding to regulations. Most small business regulations that 
have dealt with the Office of Advocacy, including our own, have 
a very high regard for it.
    Can it be improved? Sure. Advocacy's core mission is 
finding excessive and burdensome regulations. It gets its 
authority to do this from the Reg Flex Act and SBREFA. 
Strengthen Reg Flex and SBREFA, and Advocacy can do more. And I 
think the time has come to do this, because in recent years we 
have been hitting against some of the limitations of those 
laws.
    In the recent American Trucking Association case, the 
appeals court refused to give so-called deference to Advocacy's 
views on how an agency should comply with the Reg Flex Act. In 
fact, the court ruled very much against Advocacy's views on the 
issues in that case. That is rooted in a technical problem with 
the way the Reg Flex Act and SBREFA were drafted. The 
Committee's proposed bill I think very effectively solves that 
problem. It authorizes Advocacy to issue regulations governing 
agency compliance with Reg Flex and SBREFA and it requires 
agencies to give great weight to Advocacy's views, which means 
the courts will too. These are very good provisions in the 
draft legislation and we urge the Committee to approve them.
    That recent ATA decision also highlighted a loophole in the 
Reg Flex Act that we hope the Committee will be able to close. 
Agencies are not required to weigh an indirect impact of their 
rules on small business. So in this case, the EPA could hand 
its rule off to the States to implement and ignore the 
subsequent effects on small business because the results were 
``indirect.''
    Indirect impacts that agencies can readily foresee or that 
they hear about as they draft their rules should be included in 
the analyses required by Reg Flex and SBREFA. The Advocacy 
review panels that were created by SBREFA have been a very 
helpful innovation. We hope that the Committee succeeds in its 
efforts to bring the IRS under the review panel process. That 
would increase Advocacy's effectiveness.
    Two other SBREFA innovations were the National Ombudsman 
and the Regulatory Fairness Boards. These were placed under the 
SBA administrator, which has proven awkward. The SBA 
administrator is not otherwise engaged in the overall Federal 
regulatory process. Advocacy is. The Committee's bill would 
shift those entities to Advocacy. That is a good idea and we 
support it.
    We would also like to see a renewed emphasis on the Reg 
Flex requirement that agencies review their existing 
regulations every 10 years. As the Committee knows from its 
hearings on this issue, very few agencies have even lifted a 
finger to comply with this law. Advocacy could be more 
effective if it had new tools to crack down on this abuse.
    And no discussion of Advocacy's effectiveness would be 
complete without consideration of its budget. Instead of rising 
to meet the new obligations created by SBREFA, Advocacy's 
budget actually has declined. In 1991 the Office had 79 
professionals. Today it has 47. They attempt to police about 80 
Federal agencies. In 1999, those agencies spewed out over 8,000 
proposed and final rules that were sprawled across 70,000 pages 
in the Federal Register.
    Advocacy helps a broader swath of small business than 
anything else that SBA does, but it gets less than one-half of 
1 percent of SBA's budget. And that is down, too, by the way, 
from the 1\1/3\ percent that Advocacy used to get, one-half of 
1 percent.
    Today the Committee is also considering the question of 
Advocacy's independence and whether it should approve draft 
legislation replacing the current Office with a three-member 
commission. The commission would have some advantages. We would 
probably not see vacancies among the commissioners that last 
over 3 years, as we have seen with the Office of the Chief 
Counsel. Advocacy's clout might approach that of OMB's, at 
least within the subject area of small business.
    Advocacy would have more freedom to set its own policies 
without reference to White House and administration 
preferences.
    But there are also disadvantages. Advocacy increasingly 
gets into the regulatory process early, before Federal Register 
publication with many agencies; notably, EPA and OSHA, the 
review panel agencies, but other agencies as well. To some 
extent, this reflects a level of trust and mutual respect that 
comes from having senior administration political appointees 
talking to one another. Taking that away by removing Advocacy 
from the executive branch would make the process a great deal 
more adversarial, a lot more formal and full of lawyers, and a 
lot more time consuming. Crucially, it would probably spell the 
end to informal Advocacy involvement in agency rulemakings 
prior to the Federal Register publication except where that 
early contact was mandated by law.
    If the commission exercised any sort of veto over executive 
branch regulations, there would certainly be constitutional 
issues raised regarding the separation of powers. Even without 
such a veto, an independent commission's involvement in 
Advocacy's review panel process at EPA and OSHA could be 
legally problematic.
    A commission might be less political than Advocacy, but 
political influences would never be banished entirely. The 
commissioners would be political appointees with allies and 
loyalties. They would inevitably think about life after the 
commission, including future political activities.
    The setup of the commission raises other concerns. Under 
the current setup, Advocacy needs one strong leader. Under the 
commission, it would need at least two. Most independent 
commissioners, most independent commissions that are effective 
in Washington, have large staffs dealing with highly technical 
regulations that the commissioners themselves promulgate and 
administer, covering specific industries. This is the pattern 
at the FCC, the NRC and the SEC, for example. But such would 
not be the case with this proposed commission. Rather, this 
commission would be constantly trying to stay current with 
other agencies' regulations promulgated and administered by 
them, regulations that span the entire range of American 
business and regulations that flow at firehose rates.
    There is no parallel in government for such a commission. 
And absent strong leadership, it could descend into confusion. 
Yet the structure of the commission doesn't really communicate 
decisiveness. Having every major decision determined by a 
majority vote of three lawyers in a scheduled meeting does not 
to me suggest an ability to set crisp priorities and to react 
rapidly. Add to this an inherently adversarial relationship 
with the other agencies--well, it might work. It is an 
interesting idea, but I think it is a stretch.
    It would also be a stretch for many groups in the small 
business communities to support a new agency. After years of 
calling for smaller government, asking for a new agency because 
it suits small business could expose these groups to charges of 
political hypocrisy. Yet, ignoring the bill would make the 
small business group seem uninterested in the problems of 
overregulation. Not a great position to be in.
    Our recommendation would be to enact incremental changes 
that would strengthen Advocacy's effectiveness now, without 
foreclosing future options like the commission. And let's keep 
working on the commission idea.
    The changes we suggest are giving Advocacy a separate 
authorization along the lines of the Senate-passed bill; 
mandating that Advocacy's views be given great weight by other 
agencies as in the commission bill; authorizing Advocacy to 
issue regulations governing agency compliance with Reg Flex and 
SBREFA, as is also in the commission bill; closing the indirect 
impact loophole; passing H.R. 1882, which would put IRS under 
the review panel process; placing the Ombudsman and Regulatory 
Fairness Boards under Advocacy, as again in your commission 
bill; expanding Advocacy reviews of existing regulations under 
section 610 of the Reg Flex Act; and assuring that Advocacy's 
appropriations are adequate for its mission.
    Mr. Chairman, that completes my testimony. I will be happy 
to take any questions.
    Chairman Talent. Thank you Jim.
    [Mr. Morrison's statement may be found in appendix.]
    Chairman Talent. And now the suspense. There are two 
witnesses left. Todd McCracken, President of National Small 
Business United.

STATEMENT OF TODD McCRACKEN, PRESIDENT, NATIONAL SMALL BUSINESS 
                             UNITED

    Mr. McCracken. Thank you, Mr. Chairman, it is a pleasure to 
be here today. Again, my name is Todd McCracken, I am President 
of National Small Business United. I am very happy to be here 
to share our views about improving the SBA's Office of Advocacy 
in ways that that office could be further improved and 
strengthened. This office is, we have all said today, is 
crucial to the small business community and it has performed at 
A consistently high level, particularly when a permanent Chief 
Counsel is in place. However, we believe it is time to 
strengthen the Office of Advocacy and further raise its profile 
within the Federal bureaucracy and outside.
    The Chief Counsel for Advocacy has always been intended and 
perceived by most to be an independent voice for small business 
housed within the SBA. But that independence doesn't actually 
exist in the law. This tug between legal reality on one hand, 
and perception and expectation on the other, is one way that 
the office is a unique institution within the Federal 
Government. Certainly maintaining this independent role while 
being a Presidential appointee within an agency is one of the 
ongoing difficulties of this job.
    In the past, we have always believed that this balancing 
act produced the best outcome for small business. In previous 
testimony before this Committee, we have not advocated for 
increased independence for the Chief Counsel. After all, we 
believe Chief Counsels could be more effective in advocating 
for small business in the regulatory process if they are 
perceived by agencies as part of the administration rather than 
an outside bomb thrower.
    Yet a very healthy degree of autonomy is also called for, 
for the Chief Counsel to have the confidence of Congress and to 
ensure that the Chief Counsel does not feel pressured to just 
go along with another agency within the administration.
    Balanced properly, this situation can create a win-win 
scenario that everyone seems to be after these days. But this 
balance is a difficult one that every Chief Counsel must seek 
to maintain but which they cannot maintain alone. They must 
have an engaged and supportive partner in the SBA 
administrator. Over the last 25 years they seem to have done 
well in that regard.
    We would be kidding ourselves to think that there haven't 
been tensions. We believe the past and present Chief Counsels 
have managed to work through most potential problems in a 
reasonable way. Nevertheless, events of the last few years have 
convinced us that the balance we have relied upon may have 
moved too far away from independence. The Office has had to 
fight to maintain funding within the agency and has been 
potentially affected by personnel freezes stemming from 
problems in the rest of the agency. Also, SBREFA has given 
greater responsibilities to the Office, which would put them in 
a somewhat more adversarial position with the other agencies.
    Given these and other developments, we have broken with our 
past stand and feel it time to impart a greater degree of 
independence to the Office. The Senate Small Business Committee 
has included in the SBA reauthorization bill a proposal to give 
the Office of Advocacy greater independence, primarily by 
requiring a separate line-item appropriation for the Office. We 
fully support this approach and hope this Committee will move 
forward this year to also adopt this language while we continue 
to debate and explore other alternatives for strengthening the 
Office. There is nothing in the Senate proposal that would 
substantially contradict other proposals, should they be 
enacted some time in the future.
    The Committee staff has furnished us with a copy of a draft 
bill which would create a Small Business Advocacy Commission. 
To the extent that the goal was to create a fully independent 
agency advocating for small businesses, this is an excellent 
bill. The lines of authority are clear and well thought out, 
and the creation of three distinct bureaus is a very sensible 
step, recognizing the key importance of these roles within the 
Office.
    But I believe the small business community should be very 
clear about what its goals will be in embracing such a change. 
There is little doubt that the agency's job would become 
simpler with fewer inherent conflicts, though as Jim pointed 
out, the commissioners will have their own political axes to 
grind and these biases will undoubtedly affect commission 
decisions and fewer of the balancing acts that I described 
before. This clarity of purpose might make us all feel better 
and more confident that there is no, or at least less, 
administration influence on the Office, but will it make the 
Office more effective in carrying out its duties on behalf of 
small business?
    We are not yet convinced that the benefits of full 
independence completely outweigh the benefits of having an 
advocate within the administration. The Senate approach would 
move the Office closer to independence without this fundamental 
realignment. It would seem to us wiser to begin with this more 
incremental approach, while recognizing that a more fundamental 
overhaul could prove beneficial in the future.
    The SBA Office of Advocacy is one of those inspired 
functions of government that actually works pretty well. 
However, it is now time to improve and strengthen the Office. 
We believe that the Senate bill is the best first step in this 
direction and should be enacted in the short term.
    Chairman Talent's bill has much to commend it as well, 
especially if we reach the conclusion that the more modest 
measures of the bill have not worked. But first I believe we 
should give those changes the trial period they need while 
continuing the debate about how we can create a more effective 
Office, and how we weigh the relative benefits of full 
independence. I thank you for the opportunity to be here this 
morning.
    Chairman Talent. Thank you, Todd.
    [Mr. McCracken's statement may be found in appendix.]
    Chairman Talent. And our final witness is Keith Cole who is 
a partner--I am not going to try and pronounce everybody's name 
in the firm. Keith, thank you for being here.

   STATEMENT OF KEITH COLE, PARTNER, SWIDLER BERLIN SHEREFF 
                            FRIEDMAN

    Mr. Cole. Thank you, Mr. Chairman, members of the 
Committee. My name is Keith Cole and I am a partner in the law 
firm of Swidler Berlin Shereff Friedman, located here in D.C. I 
very much appreciate the opportunity to testify at today's 
hearing.
    I would like to state for the record that I am not 
testifying today on behalf of my law firm or any particular 
client but solely on my own behalf. My testimony is based on my 
expertise as a former regulatory affairs counsel to the Senate 
Small Business Committee and my experience in the private 
sector since leaving Capitol Hill.
    While in the private sector I have followed closely the 
Office of Advocacy's efforts to implement and oversee agency 
implementation of the Regulatory Flexibility Act. Over the 
past5 years I have been involved in a number of rulemakings which the 
Office of Advocacy has actively participated in. These include both 
high-profile rulemakings, like the EPA's rule revising the Ozone and 
Particulate Matter Clean Air Standards, as well as other less 
controversial rulemakings.
    My overall impression is the Office of Advocacy does a good 
job raising with the various Federal Government agencies the 
deficiencies of the Reg Flex analyses prepared by these 
agencies. I have observed as a current advocate, Mr. Glover, 
has pursued some of these issues to the very highest levels of 
the executive branch in an effort to make the voice of small 
business heard, and I believe we should thank Mr. Glover for 
those efforts. However, I have also observed that the Office of 
Advocacy must to some extent pick and choose its battles. Part 
of this is due to resource constraints which face any 
organization, but resource constraints alone are not the full 
story.
    As an office within the Small Business Administration, the 
Office of Advocacy is part of the administration team. And, as 
others have noted, there is no current statutory basis for the 
independence of the Office.
    When other players on the administration team propose 
regulations that run counter to the interest of small business, 
or shirk their duties under the Reg Flex Act, the Advocate 
faces conflicting pressures. Does his loyalty lie with small 
businesses or with the administration team? And even if his 
loyalty is truly with small businesses, without a statutory 
basis to protect the advocate's independence, each advocate 
must consider the long-term effects of pushing too hard on 
behalf of small businesses in any particular rule making.
    As an advocate from within the team, the Office of 
Advocacy's powers depend to some extent on remaining part of 
the team. Will the other players on the administration team 
continue to agree to work with the advocate in future 
rulemakings if the advocate goes beyond what the administration 
considers to be a ``reasonable'' amount of advocacy for small 
business.
    Looked at from this perspective, it may be in the best 
interests of small businesses for the advocate to occasionally 
pull some punches. According to this view, in the long run, the 
interest of small businesses generally will be maximized if the 
advocate would not push too hard or too often for the interests 
of particular small businesses.
    While SBREFA has increased the tools available to Advocacy, 
it has not reduced the conflicting pressures facing the Office. 
In fact, the strength and tools provided by SBREFA may in some 
ways act to increase the pressures on Advocacy. Especially in 
high-profile situations, the advocate continues to risk a long-
term loss of influence on the administration team if he or she 
pushes the small business agenda beyond a certain point.
    The chief lesson that I have learned over the last 5 years 
is that given the lack of statutorily defined independence of 
the Office of Advocacy, and its hybrid role in trying to be an 
independent advocate while remaining a team player, there are 
always going to be tensions between the interest of small 
businesses affected by a pending rulemaking and the long-term 
interest of the small business community in having an effective 
advocate in executive branch rulemakings.
    Let me now turn to comment on the discussion draft. First, 
Mr. Chairman, let me commend you and your staff on the work 
that has gone into this document. The draft clearly reflects 
many hours of research into the formulation of other 
independent commissions and earlier examples of the transfer of 
functions between governmental agencies. There are many lessons 
to be learned from these examples and the draft, I believe, 
does an excellent job of incorporating that experience into 
this effort.
    As to the reorganization of the Office of Advocacy as 
proposed in the draft, I believe that with two important 
caveats, enactment of this legislation could bring significant 
benefits to the small business community. I don't believe we 
would see drastic changes overnight, since the Office of 
Advocacy functions fairly well today. However, over the long 
term I believe the benefits will be readily apparent, provided 
two conditions are met: First is adequate funding, and second 
is finding the right people to serve on the commission and its 
staff.
    Let me elaborate on my reasoning in a little more detail. 
First, I believe that the structure of an independent 
commission will go a long ways towards eliminating the 
conflicting pressures felt by the current Office of Advocacy. 
The discussion draft would provide the statutory independence 
for the commission that the Office of Advocacy currently lacks.
    With its independence firmly established in the statute, 
the commission will be free to zealously advocate the cause of 
small business in all rulemakings, subject only, of course, to 
resource constraints. By removing the advocacy functions from 
the Small Business Administration, the draft allows the SBA to 
focus on what it is good at, while providing the commission 
with a more focused mission on behalf of small business 
advocacy.
    Second, the draft establishes several new important 
functions for the commission, and I can go into those in more 
detail during questions.
    Third, I believe that the transfer of the duties of the 
regulatory enforcement ombudsman to the commission is 
appropriate. The ombudsman was established with great hopes by 
SBREFA in 1996; however, I must say that I have been 
disappointed by the effectiveness, or lack thereof, of the 
ombudsman to date. I view this as a troubled program in need of 
reform, and I believe the changes made by the draft would bring 
new life and energy to the position of ombudsman as well as to 
the Regulatory and Enforcement Fairness Boards.
    Lastly, I believe that the expanded rights of the 
commission to file comments and participate in agency 
adjudications will allow the small business community's voice 
to be heard in areas where it has not been heard before.
    While there are a number of minor issues that I would want 
to work on with staff prior to its enactment, overall I think 
the discussion draft is a big step in the right direction. I 
think the concern about the commission's access to information 
and ability to engage early on in agency decision-making can be 
resolved through proper drafting of the provisions of this 
legislation.
    I would urge you to introduce it and move for its early 
enactment. However, I want to reiterate that resources and 
people will be keys to making the commission a real success. I 
don't know of any way for Congress to legislate the quality of 
the people who serve on the commission, but I want to stress 
the issue of resources.
    First, I would suggest working with the Parliamentarian and 
the Appropriations Committees to ensure that the commission is 
funded from the same Appropriations Subcommittee, that is, 
Commerce-State-Justice, that currently funds the Office of 
Advocacy within SBA. This would minimize but not eliminate the 
find, quote, ``new funding'' for the commission.
    Second, I would work to get a strong buy-in by the 
appropriators on the concepts of the commission. And finally, I 
would consider whether any independent funding mechanisms could 
assist in providing the commission with the resources adequate 
to fulfill its mission.
    Thank you very much, Mr. Chairman.
    Chairman Talent. Thank you, Keith.
    [Mr. Cole's statement may be found in appendix.]
    Chairman Talent. We will go to questions now. I appreciate 
all the testimony and the comments, some of which were very 
provocative.
    Let me go a little bit into this. Jere, how many Chief 
Counsels were there during the Bush administration?
    Mr. Glover. There were two Chief Counsels that served at 
some time. There were a number of acting Chief Counsels that 
wandered through.
    Chairman Talent. Wandered through. I think I should have 
said ``acting chiefs or Chief Counsels.'' I think there are--
staff tells me there were five. It is interesting that if we 
ask people who were around in that period of time, they 
probably would have a difficult time. They would probably 
disagree as to exactly how many there were because, as you 
said, they just wandered through.
    Mr. Glover. We chose not to put their pictures on the wall 
in the office. The budget for frames didn't permit for that.
    Chairman Talent. So basically the whole administration, 
that there really wasn't a Chief Counsel for Advocacy.
    Mr. Glover. Frank Swain held over for a period of time, and 
the last 6 months there was someone appointed.
    Chairman Talent. Frank was a good fellow, and he was only 
in there in the first few months and then he was gone.
    Now let's go over amicus briefs. I understand your point 
about if you negotiate hard with the Department of Justice, you 
often don't need to file an amicus brief. And in all these 
areas I want to reiterate what I said at the beginning: that 
you, with your independence and strength, have brought real 
meaning I think to the Office. But obviously you see--you are 
going to see the line I am getting at here. The question is 
whether you have done it despite the institutional arrangement, 
whether you have overcome that; or done it because of the 
institutional arrangement. My argument is that you have done it 
despite it, really. Amicus briefs, you filed one in the 
Northwest Mining case; 1998, right?
    Mr. Glover. Right.
    Chairman Talent. Before then, there was one other instance 
in 1994 when you threatened to file one. It did get some 
changes from the Department of Justice. That was in 1994.
    Mr. Glover. From the Federal Communications Commission.
    Chairman Talent. That is right, the FCC. Then according to 
our research, there was one other time when the Chief Counsel 
was going to file an amicus brief, that was in 1986. What 
happened?
    Mr. Glover. There are people who know more about that than 
I do. My understanding is he got a lot of pressure and pulled 
back.
    Chairman Talent. He withdrew it under mysterious 
circumstances. But what we were told is that he was informed he 
could either file the amicus brief or continue as Chief 
Counsel, but not both. And surprisingly I guess, or not, he 
decided to withdraw the amicus brief, which I don't blame him 
for that.
    Mr. Glover. The Department of Justice certainly raised 
similar arguments with me. And I said--they raised some very 
interesting arguments. I said, those are wonderful arguments; 
why don't you brief them?
    Chairman Talent. Exactly. I think if you have a strong 
enough person and he has close enough ties to the White House, 
that almost any institutional arrangement--it doesn't matter 
whether we have--because, see, if you have--your objections to 
a commission, for example, that it would be hard to pull people 
together and you would have to have the other commission 
members to go along--well, if you have a strong person as 
president of the commission, that goes.
    Mr. Glover. I have worked for a bunch of commissions. And I 
will tell you that the talent of commissioners varies, and the 
ability to make decisions is something that is frightful.
    Chairman Talent. What I am getting at, after looking at 
this, is the things that make the current arrangement work 
tolerably would make a commission arrangement work very well. 
On the other hand, when you don't get a strong Chief Counsel or 
even if they are a strong person, if they don't have the 
necessary ties to the White House, then this current 
arrangement doesn't work at all, whereas a more independent 
arrangement would work. The fact of the matter is that even 
under your stewardship, only one amicus brief has been filed.
    Mr. Glover. That is correct.
    Chairman Talent. Now the Department of Justice is always, I 
mean, by hypothesis, going to be defending the government's 
position. So they are always going to be arguing or trying to 
mediate you out of filing an amicus brief.
    Mr. Glover. Absolutely.
    Chairman Talent. The very fact that there is a mediation 
arrangement seems to me to be a compromise, to some extent, of 
your independence, the fact that you have to go through this 
mediation, even if you don't want to.
    Mr. Glover. Let me make this clear. There is a mediation 
procedure for other Federal agencies. We don't go through that. 
I have simply said that is not appropriate for us. We do notify 
the Justice Department after we have made a decision to go 
forward. As any lawyer of the court, you have an obligation to 
try to resolve disputes short of litigation and as efficiently 
as you can. And we try to do that. And we have told the Justice 
Department, and we have told the Federal agencies about our 
decision to go forward--we will then discuss it with them, and 
if we can resolve it, we will. But we do not go through the 
mediation procedure, we don't think that is appropriate.
    Chairman Talent. The statement you made in your testimony, 
which I think is a little bit revealing, and the fact that you 
make it because, as I said before, you have had a very strong 
voice, an independent voice on behalf of small business, you 
say at any time--I should add further that any time the Chief 
Counsel has to disagree publicly with the Administration or the 
Congress, the disagreement must lack acrimony to ensure that 
the doors remain open to future policy deliberations, often on 
the same issue.
    Now I certainly agree, when you have to disagree publicly 
with the Congress, it should always be that way. We are, in no 
way, here debating the Office of the Advocacy from the 
Congress. That is an entirely different thing. But I am not 
sure, Jere, I always want your disagreement to lack acrimony. I 
hear what you are saying. We had a hearing, I guess, now a 
month or 2 ago where Mr. Mikrut came here from the Treasury 
Department to defend the Department's position regarding 
installment sales and regarding the cash versus accrual basis. 
And we had--the members of the committee on both sides of the 
aisle had a number of disagreements with Mr. Mikrut, which did 
not lack acrimony, and appropriately so.
    What I am trying to point out to you, and maybe some of the 
other witnesses here, as you know, while mediation and 
compromise and negotiation is a good thing, sometimes it is 
good to show a little fang, too. And you can do that, I agree 
with you, it is very difficult for you to do that if you are in 
the same administration subject to the same authority. Even 
you, much less a weaker person. Go ahead and comment.
    Mr. Glover. Well, there is certainly a number of instances, 
and you mentioned one in which, shortly before your hearing, 
there was lack of acrimony between my conversation with him, 
and quite frankly, with his bosses. Certainly that was not 
acrimonious at all. It is, quite frankly, quite poignant and 
quite specific. We do have those conversations, obviously, with 
the head of OSHA. For example, we make sure that in the fight 
for ergonomics and for the health and safety rule, we have been 
very tenacious and we are very tenacious. We are not mean 
spirited. We try to always be fair in our presentations. We try 
to argue from a factual basis, from a legal basis. And we, 
quite frankly, don't issue a lot of press releases when we win 
because that doesn't help the next battle, the next fight.
    So, to some extent, when we talk about recognition of 
Advocacy's accomplishments, we don't go and brag when we finish 
a fight. But there are tenacious fights, those that are on my 
staff know there is probably no one more tenacious in a battle 
than Kevin Bromberg with the Environmental Protection Agency. 
So I don't want to overstate the fact that we wish to have 
good, pleasant relationships. That is not always possible, and 
quite frankly, we often do end up very, very tough.
    Chairman Talent. I will say this also to the other 
representatives of the small business associations here, I'd 
like a Chief Counsel who is in a strong enough statutory 
position that the heads of these agencies want to avoid 
acrimony with you. I like the position where they say to 
themselves, you know, what if we go ahead with this without 
calling in Jere Glover, and maybe modifying it if he asks us 
to, he is going to call a press conference and rip us up one 
end and down the other, and we are going to look pretty bad.
    And we don't have that situation now because as a practical 
matter--I believe you have pushed it as far as you can push 
independence, Jere. I think you have done about as good a job 
as you can do. You had a list of accomplishments, and I am not 
going to quibble with them. I just am very concerned, and 
historically, there are times we have not had strong Chief 
Counsels, and we have all seen what has happened there. Even 
when you do, there is a limit to what you can accomplish, that 
is what I am getting at.
    The bone I have got to pick with you is when you say there 
is no evidence and no testimony to support the commission idea. 
We have had some here today. I could come up with evidence if I 
wanted to call a whole bunch of witnesses over, to some extent, 
with this Administration and the past administrations as well, 
about how people get appointed and how decisions are made. And 
I want to have a series of hearings hauling out all the dirty 
linen.
    I guarantee you, and I think you know I could get that 
stuff on the record. That isn't my style. I don't want to 
embarrass people. And I like to recognize when people do a good 
job as you have done. Everybody familiar with this agency knows 
the extent to which there has been interference, especially by 
past administrations.
    I just went through what happened in the Bush 
administration. We went a whole administration without a Chief 
Counsel, basically. So that evidence is there. The question is 
my judgment, whether this idea, the commission idea for fixing 
it, introduces more problems in terms of depriving you of 
flexibility and the rest of it than it does assisting it.
    Mr. Glover. I mentioned I prepared a number of questions 
and comments which I would like to submit for your staff, 
because I think it is a staff discussion draft, and I think it 
is important to resolve some of those issues if we go forward 
with the commission. But I think--and if I thought a commission 
were better--for small business, I would be very comfortable 
and very happy to say so. Perhaps I am, by nature, by 
personality, too independent to the idea of me having to get 
other people to agree with what is right for small business, I 
think would be terribly frustrating for me. Because I already 
have, in some cases, Congress in some cases, the administration 
in virtually every case, the agencies to fight. If I got to 
fight to get another vote, that is one fight I don't want to 
have to take.
    Mr. Mastromarco, let me ask you a question. Let's go to the 
regional advocates. Okay. Now, your experience, as you watched 
the agency over the years, is how much of them have a political 
background as opposed to a small business background?
    Mr. Mastromarco. Close to 100 percent.
    Chairman Talent. Have a political background. And that is 
administration after administration.
    Mr. Mastromarco. Yes. Well, they are just political plumb 
positions. That is their purpose.
    Let me, if I can, extend a little bit of the remarks that 
Jere made. Sometimes it is not necessarily the positions that 
the Chief Counsel takes that is as important as those he does 
not take. It is a question of when he gets involved in issues. 
On the legislative front, for example, the Congresswoman had 
mentioned earlier her support for the elimination of death 
taxes, which amounts to a Federal-leveraged buyout of family 
businesses. I am not aware that Jere has taken a strong 
position for repeal on the Hill. It is those types of issues, 
where they have a decision between getting involved, and not 
getting involved that is very important. I agree with Jere 
that, he is, of course, a lovable guy. That is part of the 
reason why he can be convincing. He also tends to be 
independent when needed. I don't think ``acrimony'' is quite 
the right word. I think ``aggressiveness'' might be, perhaps, a 
better word.
    Chairman Talent. You know, Dan, let me end run you for a 
second. I hear everything that you are saying. But sometimes 
some of these agencies just go after small business people.
    Mr. Mastromarco. Absolutely.
    Chairman Talent. What if they went off the environment? 
Let's say the Sierra Club would be acrimonious, okay. If they 
went after a lot of these other special interests, they would 
be acrimonious and I don't blame them. I think for us to 
institutionalize people, this Committee has tried to do this, 
we get a little acrimonious when we have to, and the gentlelady 
maybe a little more than I do sometimes. And, you know, it 
works. If they know you are willing to do that, it works a 
little bit. So let's not shy away. I hear what you are saying. 
There is never an excuse for being uncivil. We have tried 
always to be civil.
    Mr. Mastromarco. That is what I was saying. It does work. 
Aggressiveness worked. It is part of my essential DNA and why 
we were successful when I was with the Office of Advocacy, we 
took very aggressive stances on unpopular issues.
    Chairman Talent. Jere, we will let you have a comment to 
that if you want. But let me ask today something first. Today 
you mentioned something--well, maybe we can take just to the 
line item now and see how that works and then do a commission 
idea later on. Let me tell you why I disagree with that. There 
is a window to do this sort of thing. When that window closes 
as a political matter, it--and you are getting a new 
administration, no matter which party wins, because then it is 
not a political thing.
    I mean, if we establish this commission this year, we have 
no no idea whether it is going to benefit a Republican or 
Democratic president. In other words, if you are a Democrat 
sitting here, you are thinking, well, if we establish this 
commission, there will be greater independence, and then from 
my perspective, saying to the same thing about the Democrats. 
So once we get a new president, there is no way we are going to 
get this done, because whoever that administration is going to 
say I don't want this new commission out there fighting my 
appointees.
    There is a pretty decent chance that I think an outgoing 
president might sign it. So respond to that, would you?
    Mr. McCracken. You make a good point in terms of the 
political timing of when you can do this kind of thing. But my 
deeper concern is we are just now starting this debate. As you 
know, we got July and a little bit of September and that is it. 
I would be surprised if we could reach a high degree of 
consensus between the House and the Senate and getting this 
whole thing done this year in time. And I would hate to see the 
Congress miss the opportunity to at least do the improved 
independence through the appropriations process while waiting 
for that kind of consensus to develop.
    Chairman Talent. I am just disinclined to have something 
which continues in name but not in substance, unless you have 
an extraordinarily strong person as Chief Counsel, in which 
case you don't need the line item either, do you? All the 
arguments against the commission, the only grounds that you can 
do it collegially, and you have a strong-person thing, it is 
all arguments against the line item. If you got a strong enough 
person, they will go and fight for fun as Jere has done.
    The line item, on the other hand, to the extent that you 
have a problem getting visibility and the rest, it was, you 
know, I don't know that it changes anything. And I don't know 
that I want to be a party to something that, you know, you will 
go out and brag about what enhances the independence of the 
Chief Counsel when it really doesn't.
    Jere, did you want to respond to what Dan said? You can if 
you want.
    Mr. Glover. Just to be factually correct, we have taken a 
number of positions on estate taxes beginning in 1995 when we 
supported the estate tax provisions in the Contract with 
America. We sent letters to the Ways and Means, House Small 
Business Committee, Senate Small Business Committee. We 
supported NFIB's proposal in previouse years on the estate 
taxes. We have taken three different positions on estate taxes, 
always in support of estate tax reform. By and large, we 
respond when Congress asks us to, and every time that we have 
been asked on the estate tax, we have been very supportive of 
reform.
    Chairman Talent. I will recognize the gentlelady and thank 
her for her patience.
    Ms. Velazquez. Thank you, Mr. Chairman. I think that we 
might be able to get the Senate to act on this legislation 
before they act on the reauthorization bill. Mr. Glover, we 
currently have a process whereby the SBA has procurement goals 
with other agencies. I am a little concerned that an agency 
such as the Department of Energy has a small business goal of 5 
percent for Fiscal Year 2000, while the U.S. Department of 
Agriculture has a small business goal of 43 percent. I think 
the way it is structured with a mid-level career SBA employee 
going to these big agencies makes it unclear whether the SBA is 
dictating the terms to an agency, or whether an agency is 
dictating the terms to SBA. And more often than not, it appears 
that the agency is dictating the terms to SBA. It seems to me 
that if we create an independent Office of Advocacy, many of 
the tools that you already use to get agencies to comply with 
SBREFA could be applied to get agencies to comply with Federal 
small business procurement requirements. Could you please 
comment on that?
    Mr. Glover. As most of this committee knows, the 
procurement battle is one I think I have lost every step of the 
way from opposing some of the reform legislation that went 
through, to trying to get originally goals for women and other 
things through. We won some things, but we have lost a lot more 
than we have won. The goal process, I only recently fully 
understood it and how it works, and it is certainly not 
functioning. Whether it is in the Office of Advocacy or whether 
it is someplace else in the SBA, it needs to be at a much 
higher level and needs to have much more senior commitment to 
it.
    These goals should drive significant dollars to small 
business, and I am surprised that it is being decided as low 
down as it is. It clearly has to be at a very high level, the 
Administrator has fought for the top goal, raising it to 23 
percent, for example. But when you drop below that, it needs to 
be raised up to a much, much higher level somewhere, whether it 
is Advocacy or within the SBA.
    Ms. Velazquez. Would you feel comfortable with the Office 
of Advocacy becoming an independent agency office to do the job 
that SBA is not doing?
    Mr. Glover. I have always believed that I will do the best 
I can with whatever task, and whatever resources that are 
provided to me. If I am tasked to increase government 
procurement, I will fight for it very hard. When we lost the 
fight, we created PRO-Net and we had a whole plan to force 
agencies to use PRO-Net that weren't meeting their goals. There 
are things that need to be done in the procurement area. But I 
think that is up to you folks and the administration to decide 
where it is housed.
    Ms. Velazquez. Mr. Glover, the SBA has never won a 
department appeal on contract bundling. Do you think the 
Independent Office of Advocacy with jurisdiction over this 
issue will be able to change this?
    Mr. Glover. I don't know. The laws have changed. Bundling 
is one of the worst problems that we have seen. We have tried 
to document it. We know how bad it is. Technically, can we win 
a fight? I don't know. But there is no question that the 
hearings that this committee has held, your involvement and 
your commitment, have been important to raise that issue. It 
needs to be raised. And it needs to be addressed, whether 
through litigation or through regulation. It needs to be very 
clear that what they are doing is not working for small 
business.
    Ms. Velazquez. Under the commission concept as proposed, 
how do you see that impact being the traditional role Advocacy 
has played in such areas as the White House Conference on Small 
Business?
    Mr. Glover. That is an interesting question, because a 
national commission, the commission is more of an--as I see it 
structured, is more of an adjudicative adversary regulatory 
body doing more in that regard than a lot of the other things 
we can do, such as more long-range research, more long-range 
working with the groups. I think it could work. I think it 
could work. I would have to think through it a little bit 
better.
    Ms. Velazquez. Mr. Morrison, would you like to comment on 
that?
    Mr. Morrison. Putting the Advocacy in charge of the White 
House think it is a little awkward. Obviously, something that 
is billed as a White House conference is intended to be an 
Executive branch activity, but I think you could solve it. 
Certainly, you could just arrange it in the law.
    Ms. Velazquez. Today----
    Mr. McCracken. Seeing is--the quadrennial conference is--it 
is not necessarily a White House conference. It strikes me as 
being entirely appropriate if there is a commission to have 
them staff it rather than going through this whole process of 
hiring all these temporary people and letting them all go every 
few years.
    Ms. Velazquez. Mr. Mastromarco.
    Mr. Mastromarco. I think a commission----
    Ms. Velazquez. I have a question for you. Sorry.
    Mr. Mastromarco. Thank you.
    Ms. Velazquez. It is my understanding that you are here to 
testify on your experiences atAdvocacy, correct?
    Mr. Mastromarco. Yes.
    Ms. Velazquez. In your current position, do you represent 
any small business concerns?
    Mr. Mastromarco. Oh, sure, many.
    Ms. Velazquez. Can you please list some.
    Mr. Mastromarco. Our firm has represented a host of small 
business organizations, for example, I am Executive Director of 
a group called the Travel Council for Fair Competition which is 
travel industry group consisting of the United American 
Motorcoach Association, American Bus Association, American 
National Park Hospitality Association, National Tour 
Association, and the list goes on from there. So yes.
    Ms. Velazquez. During your work at Advocacy, you seem to 
allude that the Chief Counsel lacked independence. You stated 
that. Was this lack of independence because of the structure of 
the Office or because of the stream of acting Chief Counsels?
    Mr. Mastromarco. Well, I think the first point is that no 
matter what Chief Counsel is in that position, even if they are 
an extremely independent person by heart and by nature, we need 
to create an environment in which they can exercise the 
independence expected of them. The personalities don't matter 
all that much. During the Bush administration, they were 
clearly not independent. No question about it. In fact, the 
Office was almost run at times by the Director of 
Congresssional Affairs for the agency who knew nothing about 
small business. But Frank Swain was a very independent Chief 
Counsel and did a fine job. The moral is: We shouldn't depend 
strictly on the personality of the occupant, we should create 
the environment.
    Ms. Velazquez. That plays an important role?
    Mr. Mastromarco. Yes.
    Ms. Velazquez. We have been here listening to Jere Glover's 
accomplishments, and some of them have been not in--it has been 
in contradiction with the White House and the administration. 
And it happened because of the strong personality and 
independence of Mr. Jere Glover. So that brings a--it plays an 
important role there having an effective advocate.
    Mr. Mastromarco. I think that role is served by the Senate. 
They are to be reminded yearly during the confirmation process 
that is the type of person they want. But here, what we are 
talking about, is creating the environment, creating the 
organic legislation that would ensure that result. That is what 
I am most concerned about. And also, it is not necessarily the 
positions as I mentioned that the advocate takes. I mean, in 
every public position, they have got to disagree, otherwise, it 
doesn't make that chart over there. But it is also what 
positions they choose to take versus not choose to take.
    And thirdly, it is the issue of what research they fund, 
whether they fund innocuous academic research in the true sense 
of the term, or whether they really fund research, for example, 
that shows how many family firms are destroyed by the death tax 
or by how the ergonomics rule affects small business, or about 
the many other issues affecting small business, including 
fundamental tax reform.
    Ms. Velazquez. Mr. Morrison, do you think that agencies 
will view the Office of Advocacy any differently if it were an 
independent office or a commission?
    Mr. Morrison. Absolutely. I think that is the purpose of 
the legislation. The relationship does change. And there are 
advantages and disadvantages. As we have heard here at some 
great degree today, if the objective is to create this 
environment that really, from the get-go, communicates strong 
independence, it will do that, but I think that there is also a 
loss in terms of an informality in the relationship, which I 
think will probably disappear.
    Ms. Velazquez. Mr. Cole, you are here today to testify 
before the committee based on your expertise as a former Senate 
staff, correct?
    Mr. Cole. And as an attorney representing small business 
clients in agency rulemakings, yes.
    Ms. Velazquez. So you represent some small businesses 
organization. Thank you.
    Mr. Cole, the essence of a commission like FCC, SEC or FTC 
is to administer a very complex set of government regulations. 
If we were to set up Advocacy as a commission, its role would 
be very different. How would that fit with the traditional 
investigatory role that most commissions play?
    Mr. Cole. It is a different role. We don't have a perfect 
model. In some respects, the Office of Advocacy should act like 
an Inspector General's office. In some respects, it should act 
like counsel for small businesses in various rulemakings. So I 
don't think that there is a perfect parallel anywhere in 
government that we can look to.
    The question is, what type of structures could we create 
that would enhance the effectiveness of the organization. I 
agree that the real measure is the effectiveness of the office 
with respect to small business, not some artificial measure of 
independence. But the roles of agencies like the FCC are not 
wholly dissimilar. The commission would be doing a more 
aggressive job of writing regulations on how agencies should 
comply with the Regulatory Flexibility Act, which is actually a 
fairly complex process. I would envision that regulatory 
program to be a series of guidances on how the agencies 
operate, and that is going to have to be pretty complex. There 
isn't one easily-written piece of guidance that can apply the 
Reg Flex act to all agencies.
    So actually you are going to have a fairly complex, but 
differentiated series of guidances for different Federal 
agencies. And so in that sense, the commission is going to be 
overseeing a regime of guidance or regulation very similar to, 
although not on the scale of the FCC but not be that 
dissimiliar from the FEC. I think the parallels to the 
adjudicative functions of the agencies is one that we can draw 
on, but we shouldn't make too much of it. The commission does 
not have to interact with other Federal agencies purely in an 
adjudicative role. I don't see the informal discussions ending 
simply because we move to a commission. There is nothing to 
stop those discussions from continuing. That is going to be up 
to the people who inhabit the agency.
    In my testimony, I focused on getting the right people, and 
part of that is getting people who will continue the best 
traditions of the Office of Advocacy. Overall, I see this as 
adding new tools to the tools available to Jere today.
    Ms. Velazquez. Mr. Morrison, would you please comment on 
this.
    Mr. Morrison. Well, in terms of whether the informal 
relationship would continue, I would hope they would. But I 
think I would respectfully disagree with Mr. Mastromarco on 
that. I am not nearly as optimistic, no matter who you put in 
there, because I think the structure is intended to be 
essentially adversarial. It is intended to create an essential 
clash between the commission and other Federal agencies. But he 
might be right. This is, you know, new ground that we are 
plowing here. I am not sure, just my take on it would be a 
little different.
    Ms. Velazquez. Thank you.
    Ms. Kerrigan, the Small Business Survival Committee has 
consistently been a voice that speaks out against additional 
Federal spending. So I think your input on how this committee 
advocates critical funding is important. Could you comment on 
the cost of the commission, which could be as high as some 
estimates of $20 million? Would your members be comfortable in 
supporting such a price tag for expanding the program?
    Ms. Kerrigan. You are correct. One of the biggest concerns 
and priorities of the SmallBusiness Survival Committee is to 
limit both the size and scope of government. And we have been very 
vocal and aggressive, and what are some of the other words we are using 
here today, ``acrimonious,'' that is right, relative to those issues. 
What many of our leaders in our organization are currently grappling 
with is if you have this money--it is hard for them to believe that if 
you are spending this money in Washington, will it go down a black hole 
or can it be used for something good? On the other hand, there have 
been many of our leaders who have said we do need this type of 
structure in Washington, and it will work simply because of the size of 
the regulatory state. That is why we are looking at doing something 
like this.
    The question in our mind is, and what some of the members 
are looking at is gee, if we spend money on a commission, is 
this really going to be a net benefit for small business? Does 
this mean that if we spend 20 million a year, does that mean 
50-, or a 100 billion less in terms of what we have to spend 
for regulatory costs? And so, you know, you are right. It is a 
tough thing to address from our perspective because----
    Ms. Velazquez. What is it that you are telling me? You are 
not sure if you are going to be----
    Ms. Kerrigan. No, hopefully this is just the beginning of 
the debate. There are some issues pretty cut and dry for SBSC. 
We are opposed to the expanse of the size and scope of 
government. We are against it if it expands government, we are 
for it if it doesn't. The current environment makes that 
assessment much different because of the 4,538 new regulations 
that are in the pipeline. I mean, we do need some type of 
entity, an independent body that is going to be a watchdog and 
do all the types of things that the commission intends to do.
    So we want to give more feedback to the committee and the 
Chairman on this, because we do have mixed reviews right now.
    Chairman Talent. I thank the gentlelady. Mr. Bartlett has 
been very patient. I am pleased to recognize my friend, the 
gentleman from Maryland.
    Mr. Bartlett. Thank you. Mr. Glover, I really would like to 
echo the position of the Chairman. I think that the 
accomplishments of your office have been in spite of the way it 
is structured, not because of it--I think it is because you are 
there and we are lucky to have you there, but you won't always 
be there, so it is very appropriate that we are looking at a 
way to structure the office so that it will be effective in the 
future. I would like to see the Office of Advocacy at least as 
strong as the agencies that you are overseeing, the EPA and 
OSHA, and hopefully we are going to add IRS to that list.
    I would like to see your office so strong that when they 
were coming out with a rule that you felt was going to hurt 
small business, that you could say you can't do that because 
that is going to hurt small business. In fact, you could have a 
veto. You could stop them. Now all you can do is to hopefully 
shame them into doing the right thing by pointing out how 
stupid their new regulations are. That sometimes works and 
sometimes it doesn't work. Now, if your agency, if your office 
is to have that kind of power, one could make the argument that 
you would then, in effect, be writing the regulations, because 
the regulations that would get through were those that you 
approved.
    So in effect, you would be writing the regulations. That 
might be seen as giving your Office of Advocacy too much power. 
I would certainly like to see you have a veto that at least 
required a review. Now, if we could structure your Office of 
Advocacy that way, how would a difference of opinion between 
you and the IRS be adjudicated? Obviously, we need some 
regulations, a whole lot less than we are getting, a whole lot 
less than we have but we may need some. We wouldn't want an 
obstreperous advocate just stopping all regulations. Can you 
envision a mechanism whereby this could be adjudicated?
    Chairman Talent. The gentleman, if I could just interrupt 
the gentleman, has just happened on the perfect, what we have 
been searching for, ``obstreperousness.'' That's what we want.
    Mr. Glover. Let me share with you something that has been 
working recently that I don't think anybody expected. And 
again, it is the regulatory review process in the White House. 
We have had a number of panels in which we brought small 
business people in. They have raised the concerns under the 
SBREFA law. They have raised concerns, they have raised 
questions about data and information. We continue that fight on 
through the regulatory process and go into the Office of 
Information and Regulatory Affairs at the White House where the 
person heading that office up happens to be the former general 
counsel of the Small Business Administration who was involved 
in regulations. We carry the fight there and we carry the 
discussions there. Amazingly, we have won a number of 
regulatory fights with that office and had some regulations 
that have actually been killed. I can certainly provide some of 
those examples to you.
    Now, that is not the perfect solution because that office 
is under--if we question Jere's independence, and the Office of 
Advocacy's independence--that office is directly in the White 
House, but they are able, in a regulatory situation, to make 
some changes.
    So the process, the mechanism that you have identified, 
does have some merit. And there are examples of where it has 
worked quite well. In a more formal--that is an interesting 
question of where it would be. The Office of OIRA has had a 
likewise checkered past as to how effective it has been in 
terms of solving regulatory problems. It doesn't seem to make 
much difference who the President is. But the process that you 
are identifying exists now but in an imperfect world. And I 
think that you raise an interesting question. And I think that 
some version of what we are doing know with OIRA may strain 
that process, because it would have to be somebody in the 
executive branch that would make that review.
    Mr. Bartlett. Would it have to be somebody in the executive 
branch? It is really affecting not the executive branch, 
regulations are going to affect the small business community. I 
think that the adjudication should come, perhaps, from an ad 
hoc group. If you had that kind of power, you would have to, 
very seldom, come to the point, you would have to adjudicate, 
because they would be reasonable in formulating the 
regulations, because they would know if they weren't 
reasonable, you were going to shut them down and it would go to 
adjudication. I think the challenge is to find a mechanism of 
adjudication that everybody could buy into, a binding-
arbitration kind of thing that everybody could buy into. I am 
not sure what that could be. I can think of several possible 
mechanisms.
    Mr. Glover. Obviously, the courts, in having judicial 
review authority under the Regulatory Flexibility Act, I think 
some of the suggestions Mr. Morrison made about strengthening 
that, the ultimate hammer is going into court, is having your 
reg thrown out. I think that the courts have done some of that. 
I think that if we use the example of the Environmental 
Protection Act, which was passed back in the 1970's, the courts 
threw regulations out for many years that did not comply with 
environmental impact analysis. You know that long history. 
Well, that kind of challenge in the courts for small business 
has been something we have talked about for a long time. We got 
some of that now with judicial review, but there are a couple, 
I think, technicalities that Mr. Morrison identified that I 
think keep us from making it as effective as we would like for 
it to be.
    But ultimately, the threat of going to court, the threat of 
us filing an amicus brief all are the reason that we are seeing 
agencies coming to us now early in the process asking for our 
help,asking how do we avoid this. And quite frankly, in many 
cases, we are seeing agencies write their regulations just to exempt 
small business entirely, because they don't want to even touch this 
whole process. They don't want us involved, they don't want to have to 
do a reg flex analysis; they would rather exempt all small businesses 
from it. So it is working, but it could work better.
    Mr. Bartlett. It is working because you are there. Our 
concern is that we need to set up a mechanism that is going to 
work with less effective people in the office. If we just took 
your present office and gave it an independent status and gave 
you veto authority that would be adjudicated in some 
appropriate way, would that be more preferable to you than the 
commission?
    Mr. Glover. Sure. Sure. That is a lot more power than 
anything in the commission proposal.
    Mr. Bartlett. This is what I would opt for, is real 
autonomy with a veto power, and I think very seldom, you would 
have to use that, because now, all you have got is some charm 
and haranguing and still you are being very effective. If you 
could add to that a veto power, just think how conciliatory 
they would be and how seldom you would have to use that veto 
power.
    Mr. Glover. I appreciate those kind comments. I will tell 
you, most agencies don't find me charming. I will tell you that 
I know of no agency official that would use that 
characterization of me, and quite frankly, of any of my office. 
But we do have some interesting things. I don't want to 
discount the things that Congress gave us in 1996. Clearer 
judicial review authority, clear amicus authority, and the 
panel process, all of these things are really making a dramatic 
and significant difference.
    So when you change the law, when you tune and tweak it, you 
are getting good results. Those results would happen whether it 
is Jere Glover as Chief Counsel or anybody else, because the 
agencies are afraid they are going to lose in court. The panel 
process we have made that work better than I think the law 
intended to work, and perhaps we have done some things there, 
but once having done that, I think it will continue on. And the 
panel is working better than I think any of us envisioned it 
ever would.
    Mr. Bartlett. To the rest of the members of the panel, is 
there some evil thing that would happen if we were to give the 
Office of Advocacy veto power that could then be adjudicated in 
some way if they wouldn't reach agreement? Right now it is 
generally charm and cajoling and threats, you know, from an 
office that really doesn't have many teeth because of the way 
we have structured it. What evil thing would happen if Jere had 
veto power that would then force an adjudication and----
    Mr. Cole. Congressman, my fear is that if you propose 
giving veto power to the Advocate, whether it is Jere's current 
office or an independent commission, you are not going to get 
any legislation passed during the very critical window that the 
Chairman has mentioned.
    You asked two questions about providing a firm independent 
basis for the Office, and the second was about the issue of 
veto power. I believe that the current statutory authorities 
for the Office to file amicus briefs, if an agency refuses to 
go along with the Office of Advocacy, coupled with what is in 
this draft will provide a firm statutory basis for the 
independence of the Advocacy function. A third important 
feature is the ability of the Commission to issue regulations 
to implement the Regulatory Flexibility Act. Those three pieces 
will form a very powerful tool for the commission to use.
    I really see it more as an amicus brief, the tool as the 
amicus brief. The courts are going to give much more deference 
to the views of the commission based on the language in this 
draft and the fact that the agency, the commission would be 
issuing guidance, and would be the agency of expertise in 
implementing the Reg Flex Act. That is tough of a hammer. And I 
think you could get that through this year. I just fear if you 
write into legislation that says that we are going to set up an 
independent commission that can veto any regulation by any 
agency of the executive, we are going to end up with nothing, 
and that is the perfect being the enemy of the good.
    Mr. Bartlett. What I am talking about, a veto that just 
stops the process. What you are saying is that under the 
current proposal, that the court would be the final arbiter 
that you could file the brief that then would have to be 
adjudicated in court, is that what you are saying?
    Mr. Cole. Yes. Under the current proposal, the mechanism is 
filing an amicus brief in litigation that one of us private 
lawyers brings against an agency for ignoring the Reg Flex Act, 
in other words, and the court would, under this act, give much 
more deference to the advice of Advocacy to make that amicus 
brief a very powerful document. The court would be the final 
arbiter.
    Mr. Bartlett. But can an action make the point that they 
have thought about the effect on small business? And they have 
considered that and they don't consider that effect to be 
severe enough to limit them in making this rule? As I 
understand SBREFA, it simply requires them to take a look at 
how badly they would hurt small business. My understanding is 
that they could, in effect, kill small business if they have 
considered the effect on small business. It is okay for them to 
go ahead and enact the rule.
    And Jere is shaking his head yes that that is true. What we 
need is an advocate with more teeth than that. Maybe we can't 
get it through, but goodness knows we need to try. And you 
know, we need to try to do the right thing. Here we have 
agencies out there who have been harassing small businesses 
almost to the point of extinction, and we certainly ought to 
have somebody there who is their advocate with at least enough 
authority to bring this to some adjudication.
    Mr. Cole. What you are really asking for is a slight change 
in the Regulatory Flexibility Act. Right now it says the 
agency, as you correctly pointed out, has to consider the 
impacts of the regulation on small business. It also has to 
consider various options to change that. What you could do is 
amend the Reg Flex Act to say that the agency must come up with 
an approach that achieves its regulatory ends with the least 
impact on small business possible. So you could strengthen the 
Reg Flex Act to add a substantive dimension that is currently 
lacking. However, the issue of what requirements an agency must 
comply with under the Reg Flex Act is, I think, separate from 
the strengthing the Office of Advocacy to be independent and to 
advocate its views as obstreperously as it wishes to in every 
single agency rulemaking.
    Mr. Bartlett. Thank you, Mr. Chairman. I think that before 
we come up with final legislation, that we need to explore 
various options for not only making the Office of Advocacy 
independent, but giving it the kind of teeth it needs to do its 
job. Right now, the pendulum has almost got through the side of 
the clock on the other side. We need to bring it back somewhere 
near the center. What I am proposing would hopefully do that. 
Thank you very much.
    Chairman Talent. I thank the gentleman for his questions. I 
am pleased now to recognize the gentleman from Illinois, Mr. 
Manzullo.
    Mr. Manzullo. Thank you, Mr. Chairman. One of the bright 
lights of this very complicated area of unreturned phone calls, 
incompetent administrators, and rules and regulations that are 
hard to understand, is the Office of Advocacy. I can cite, I 
don't know how many instances where, because Jere was the head 
of the office, we were able to help small business. Let me give 
an example. We have a hospital called Dixon KSB Hospital just 
outside our district, but serves a lot of my constituents. They 
are one of eight hospitals nationwide thatwere subjected to 
some very unusual rules. I asked Jere to come into the office and meet 
with our constituents, and this was one of those problems that could 
have cost the hospital attorneys fees that it could not have afforded.
    I think even before my constituents got back to Illinois, 
Jere had cut through the web and was able to get immediate 
relief to the hospital. What impressed me about this office is 
I think that the Office of Advocacy of the Small Business 
Administration should be very close to the heart of the Small 
Business Administration and to the Small Business Committee. If 
it is autonomous and independent of these two bodies then it 
might not be close to small business. We serve on this 
committee, not because it is glamorous and we have very little 
jurisdiction, but because we have a heart for the small 
businesses throughout the Nation that are being essentially 
hammered by the Federal Government.
    And the relationship that I have enjoyed with Jere all 
these years is the fact that he is tucked into the Small 
Business Administration. Quite frankly, I don't see how that 
has ever hindered the zeal, with which he represents small 
businesses.
    It is interesting that more times than not, he has gone up 
against the very president who appointed him. Now, I think that 
is good because of whether it is ergonomics, whether it is EPA, 
whether it is HCFA. HCFA is the worst Federal organization and 
is not subject to any judicial review. They have an inordinate 
number of incompetent people running the organizations, and 
they have books of regulations that no one understands. You 
will note however, that Office of Advocacy has been in there.
    I have a couple of suggestions. I would suggest that the 
Office of Advocacy be beefed up to allow that office to bring a 
class action in court representing businesses obviously 
impacted by legislation or proposed regulation without having 
to certify as a class. That is pretty simple. To be able to go 
in there and to fight a rule, some of the most stupid rules 
that we have seen. My brother owns a small family restaurant. 
And some guy came along and said where is your sign? This is 13 
tables in this restaurant! The bar holds 10 people. My dad and 
brother built the bar themselves because they couldn't afford 
$10,000 to build it. And this guy just started screaming at my 
brother on a Friday night when the restaurant was full of 
people coming down for fish. And my brother turned to him and 
said who in the hell are you? And he said, well, I am such and 
such, a Federal inspector, you don't have a sign over the bar 
there warning pregnant women about the dangers of alcohol, and 
I am going to write you up.
    My brother, who has been known to have my temper, could 
have picked him up and thrown him out, but the man was probably 
protected in the same manner as a Federal chicken inspector 
under the Crime Act of 1993. If you lay your hand on a Federal 
employee, you are going to be subject to a felony. And 
fortunately, he just let this guy rant and rave and finally 
left. The guy didn't even order a fish dinner. I guess what I 
would like to see here is to give more powers to the office of 
Advocacy to act at the suggestion of people within the SBA and 
the Small Business Committee. I would like to see the members 
of the Small Business Committee continue to be able to sit down 
with the Office of Advocacy and say there is a real problem 
there. And these small businesses that are affected need 
somebody to actually lead the charge in court to be able to go 
into court, because they are getting killed and they can't 
afford to hire an attorney.
    But I do have a couple of questions here. I don't like the 
word ``commission'' because with all deference to the Chairman 
who drew it up, ``commission'' to me means that there is nobody 
in charge. And to have three commissioners means that at any 
given time, one is on the golf course, one is out to lunch, and 
the other one is in Europe with nobody responsible. That has 
been my experience with these commissions.
    I'd rather have somebody who is in charge and truly 
accountable. We have been blessed with a Chief Counsel who 
answers phone calls, who shows up at the office immediately if 
there is a problem, who is there acting in a very appropriate 
manner. But Jere, would you suggest what legislative changes 
are still needed in the proposal to ensure that if the 
commission is set up, that it would not become too bureaucratic 
and slow in responding to regulatory proposals?
    Mr. Glover. One of the problems with commissions, and you 
have hit that point, it is one that gives me a great deal of 
concern. Since most of the times I have been asked to testify 
or asked to submit a position to Congress, than has been very 
quick turnaround, a day or two. Collegial bodies tend to not 
agree very often and once being appointed and sworn in, they 
begin to have their own ideas and viewpoints.
    The first thing they want is staff. They want to have their 
own special assistants who can tell them what the issues are. 
There is a real concern on how quickly you can make decisions, 
and most of the decisions affecting small business come to us 
either from the agencies or from the Congress very, very late 
in the process. We have to act very quickly.
    So have you to find a way to make sure those commissioners 
don't hold things up. I think that you are going to have 
problems with bipartisan commissions, one person feeling they 
have to write a dissenting opinion on everything that happens. 
I think that there are some ideas and suggestions that I think 
are very useful for the Office of Advocacy. There are a number 
of changes that are proposed in there that under the current 
structure, would make it a lot better for the Office of 
Advocacy.
    The one problem that I hear very clearly from everybody and 
which we had discussions with the Senate on is how do you deal 
with the fact when there are vacancies--when there is no Chief 
Counsel. One of the early Senate versions basically made the 
Chief Counsel serve like a judge until removed. I raised some 
concerns because I think you could get a bad Chief Counsel and 
you could be stuck with that person and never get them out. 
They tried a variety of different things and came up with one 
provision that requires notice before removal, to Congress to 
give the Office some more permanency.
    Other discussions are a fixed term, or even serve until 
replaced. There are a lot of things you can do to overcome the 
questions of what do you do when there is no Chief Counsel. The 
confirmation process is important. But I think that a collegial 
body, if we look at the history, Congress finally shut down a 
bunch of those collegial bodies that had been around for a long 
time. They tend to get bureaucratic, they tend to slow down, 
they tend to deliberate things. And I don't know how you change 
that-- I believe I run my office very entrepreneurial. I make 
decisions, the decision tree is very quick. I don't know how 
you do that in a commission.
    Mr. Manzullo. Do you have 43 people on the staff?
    Mr. Glover. 47.
    Mr. Manzullo. 47 people. What is different about your 
office is the quick turnaround in and the willingness to get 
involved in so many different issues. And I have to scratch my 
head and say you know, he really works for the Federal 
Government. And he is a friend of small business and he is in 
this position. So Mr. Chairman, I would be willing to work with 
Mr. Glover and whoever it is to beef up the powers of this 
office to clarify it. The thought of creating an independent 
commission, I am not sure about that. It is something that 
certainly we want to think about. But Mr. Chairman, if the 
advocate was independent, would he really be answerable to the 
Small Business Committee or the Small Business Administration? 
What if he would just be a bureaucrat that doesn't like small 
business and gets appointed and there is no oversight. What 
would you do in a case like that?
    Chairman Talent. I don't think our relationship would be 
affected any more than, for example Commerce exercises 
oversight over a number of independent agencies, because they 
still have to get their budget from them. I think that would 
remain virtually the same. In fact, if anything, it would 
probably be a little bit closer because they probably feel a 
greater dependence on the Congress relative to the--in other 
words, as the dependence on the executive branch lessened, the 
preponderance of control Congress exercised would probably loom 
larger. That is just my sense of it. I don't think that is a 
problem. I respect the concern about the commission being able 
to move quickly. I think maybe we can address that by doing 
something with the powers the Chairman would have to act 
unilaterally, for example, if the others were not available.
    Mr. Manzullo. The reason that I ask this question is that 
his office moves so quickly now. They do things the other 
Federal agencies don't do such as returning phone calls. You 
have had the same problem I have had with it in the Federal 
Government. But his organization is always there on the cutting 
edge and willing to take up a cause and do whatever is 
necessary.
    Chairman Talent. I should pause to see what my counsel here 
can finish his suggestion which he is writing on there. See 
what it says here. No, I think Jere is pretty independent. I am 
not going to say that. Often I just subside and play Charlie 
McCarthy to their Edgar Bergen, but sometimes the puppet comes 
to life here anyway.
    Thank you guys, anyway. I will just say what has always 
struck me about this debate, we always emphasize the importance 
of independence for the Chief Counsel. That is the reason we 
have the amicus power. That is the reason we have the review 
powers. That is the reason we have the special hiring. That is 
the reason we are proposing a special line item. Then when 
somebody talks about making them truly independent, then 
somebody comes up with all the problems with it.
    I just think we ought to consider, I have been terribly 
impressed over the last 4 years by the fact that when we get 
away from short-term issues, there is this really strong 
consensus on this committee, and I would say in the Congress as 
well, that what is good for small business people is good for 
the country. And if we could institutionally--the extent we can 
institutionalize that in the government, I think we are 
reflecting a tremendous consensus in the Congress, which is why 
this idea is attractive to me. Albeit, I understand the 
problems.
    I think it would probably decrease some of the flexibility 
or informality. Query whether that would be replaced by the 
fact that whether they liked it or not, they would want that 
commission on their side. I think I probably couldn't move as 
quickly. On the other hand, what is it that the Chief Counsel 
does that requires typically like a 24-hour turnaround? The 
decision to file an amicus brief, you normally have a couple 
weeks to make that decision. Same thing about, you know, 
opposing or comments against; usually you have a window period.
    So if you had a strong chairman, I wouldn't anticipate that 
would be a big problem. But I am happy to work with you on ways 
to try and deal with that. I am not positive that we should 
move forward with this. But I will tell you from my part in 
conceding all the points in opposition to it, this hearing has 
pushed me in the direction of continuing to push this. And I do 
think if we don't do this this year, it isn't going to happen. 
Because next year, whoever is sitting here and whoever is 
President, you are going to have one party, all of a sudden 
deciding that it doesn't like this idea. And that is going to 
be the party that miraculously is the party of the President. 
Because whoever is President isn't going to like this. And if I 
have the President's counsel, I would tell him to come up with 
all kinds of ways against it. So I think it is this year or not 
for at least four more years.
    Mr. Manzullo. I did have one question. I think I will ask 
it both to Mr. Glover and to the Chairman. Is it possible that 
this legislation could contain everything it has--I am talking 
about the enhanced powers--but not create an independent 
commission? In other words, that the emphasis would be based 
upon the enhanced powers but leaving the structure the way it 
is?
    Chairman Talent. Sure. We can adopt measures short of that. 
We could go with the Senate's view. It is going to be a 
question of what the Committee wants to do and whether we can 
come up with an agreement. The gentlelady and I have been 
talking about it. I am happy to work with you. There are 
halfway measures that we could do. I would like to urge 
everybody who cares about small business, I think, that is, 
everybody in this room, to think for a second what it would be 
like if we had faith that year after year, there was a 
commission that, yes, it began to adopt its own inertia, its 
own momentum, so no matter what issue it was and what 
administration was in control, there would be a baseline there, 
somebody in there representing small business. And I think that 
is what we were aiming at with the Chief Counsel. So why don't 
we just do it?
    Mr. Manzullo. The problem that I have----
    Chairman Talent. Then Jere, no matter who gets elected, I 
will recommend you for chairman. How is that?
    Mr. Manzullo. The difference between----
    Chairman Talent. If it is the Vice President, you won't 
need my recommendation, and it will probably be the kiss of 
death. If it is Governor Bush, we will see.
    Mr. Manzullo. But the difference between the Office of 
Advocacy and any other organization or commission or agency 
that you work with is he serves a unique function of being a 
highly skilled articulate attorney who can cut his way through 
the administrative nightmare that stymies each of us as Members 
of Congress. I don't know how many times I have called him, he 
serves in the role as a personal counselor to----
    Chairman Talent. Well, if the gentleman will yield a 
second. As long as we are talking about anecdotal things, I 
have said many times how much I respect----
    Mr. Manzullo. But that would be stopped if you had a 
commission, if they had to agree on whether or not they get 
involved in something.
    Chairman Talent. Let's just remember the opposite side of 
this. I have not called witnesses and tried to embarrass them. 
But if the gentleman will talk with people, I am sure you have 
someone who has been around this process for awhile, there have 
also been instances where Chief Counsels have been directed to 
hire people, for example, as regional advocates because of 
their personal connections with administrators. I mean, there 
is a whole lot of evidence in the record and not exclusively, 
or mostly I will say with this administration, which has been 
better at these things, I think, indicating that that 
independence is not there.
    And I think that would not happen with the commission, 
because you have people who have statutory independence and 
would take it seriously. I am not arguing that there aren't 
things on the other side. I will let the gentleman have the 
last word. If we mark this bill up, we can have the debate 
then. But let's not forget the facts that the existing 
structure at the end of the day allows a compromise of 
independence that the commission structure would not, whether 
that is enough to outweigh other things I think is the issue.
    Mr. Manzullo. But this bill eliminates these regional 
advocates.
    Chairman Talent. I think that is one of the major strengths 
of it. If we went through the background of the regional 
advocates over administration after administration, we would 
find that they are one of the biggest abusers of this process 
right now. And that is 10 more positions Icould give you right 
now for Jere, for research, or whatever. It is a good way to fund the 
bill too, Karen, would be to eliminate those positions.
    Maybe that would be appealing to your members. I thank the 
gentleman for his interest and advocacy.
    Gentlelady, have you any further questions?
    Ms. Velazquez. Last week the committee held a hearing, Mr. 
Glover, on the Ombudsman 2000 report, and the U.S. Chamber of 
Commerce made a recommendation about combining the Office of 
the Ombudsman with the Advocacy. What are your views on that?
    Mr. Glover. I think that is a decision for the Congress to 
make. I think that there was some discussion about where it 
should be when it was originally passed. And I think that there 
are some economies of scale and efficiencies. We have certainly 
been working more closely with the new ombudsman than we have 
in the past. We are facilitating some areas of cooperation. 
Again, we will deal with--we will work with whatever task and 
whatever resources we are provided.
    Ms. Velazquez. Thank you.
    Chairman Talent. Thank the witnesses for their patience. We 
will adjourn the hearing. Thank you, Jere.
    [Whereupon, at 12:35 p.m., the subcommittee was adjourned.]

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