[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




 
                     MARKUP ON VIEWS AND ESTIMATES
                   OF SBA BUDGET FOR FISCAL YEAR 2011

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

                                HEARING

                               before the


                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             March 4, 2010

                               __________

                               [GRAPHIC] [TIFF OMITTED] TONGRESS.#13
                               

            Small Business Committee Document Number 111-059
Available via the GPO Website: http://www.access.gpo.gov/congress/house



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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman

                          DENNIS MOORE, Kansas

                      HEATH SHULER, North Carolina

                     KATHY DAHLKEMPER, Pennsylvania

                         KURT SCHRADER, Oregon

                        ANN KIRKPATRICK, Arizona

                          GLENN NYE, Virginia

                         MICHAEL MICHAUD, Maine

                         MELISSA BEAN, Illinois

                         DAN LIPINSKI, Illinois

                      JASON ALTMIRE, Pennsylvania

                        YVETTE CLARKE, New York

                        BRAD ELLSWORTH, Indiana

                        JOE SESTAK, Pennsylvania

                         BOBBY BRIGHT, Alabama

                      DEBORAH HALVORSON, Illinois

                  SAM GRAVES, Missouri, Ranking Member

                      ROSCOE G. BARTLETT, Maryland

                         W. TODD AKIN, Missouri

                            STEVE KING, Iowa

                     LYNN A. WESTMORELAND, Georgia

                          LOUIE GOHMERT, Texas

                         MARY FALLIN, Oklahoma

                         VERN BUCHANAN, Florida

                      BLAINE LUETKEMEYER, Missouri

                         AARON SCHOCK, Illinois

                      GLENN THOMPSON, Pennsylvania

                         MIKE COFFMAN, Colorado

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

                  Karen Haas, Minority Staff Director

        .........................................................

                                  (ii)

  
?

                         STANDING SUBCOMMITTEES

                                 ______

               Subcommittee on Contracting and Technology

                     GLENN NYE, Virginia, Chairman


YVETTE CLARKE, New York              AARON SCHOCK, Illinois, Ranking
BRAD ELLSWORTH, Indiana              ROSCOE BARTLETT, Maryland
KURT SCHRADER, Oregon                W. TODD AKIN, Missouri
DEBORAH HALVORSON, Illinois          MARY FALLIN, Oklahoma
MELISSA BEAN, Illinois               GLENN THOMPSON, Pennsylvania
JOE SESTAK, Pennsylvania

                                 ______

                    Subcommittee on Finance and Tax

                    KURT SCHRADER, Oregon, Chairman


DENNIS MOORE, Kansas                 VERN BUCHANAN, Florida, Ranking
ANN KIRKPATRICK, Arizona             STEVE KING, Iowa
MELISSA BEAN, Illinois               W. TODD AKIN, Missouri
JOE SESTAK, Pennsylvania             BLAINE LUETKEMEYER, Missouri
DEBORAH HALVORSON, Illinois          MIKE COFFMAN, Colorado
GLENN NYE, Virginia
MICHAEL MICHAUD, Maine

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, Pennsylvania, Chairman


HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma, Ranking
BRAD ELLSWORTH, Indiana              LOUIE GOHMERT, Texas

                                 (iii)

  
?

               Subcommittee on Regulations and Healthcare

               KATHY DAHLKEMPER, Pennsylvania, Chairwoman


DAN LIPINSKI, Illinois               LYNN WESTMORELAND, Georgia, 
MELISSA BEAN, Illinois               Ranking
JASON ALTMIRE, Pennsylvania          STEVE KING, Iowa
JOE SESTAK, Pennsylvania             VERN BUCHANAN, Florida
BOBBY BRIGHT, Alabama                GLENN THOMPSON, Pennsylvania
                                     MIKE COFFMAN, Colorado

                                 ______

     Subcommittee on Rural Development, Entrepreneurship and Trade

                 HEATH SHULER, North Carolina, Chairman


MICHAEL MICHAUD, Maine               BLAINE LUETKEMEYER, Missouri, 
BOBBY BRIGHT, Alabama                Ranking
KATHY DAHLKEMPER, Pennsylvania       STEVE KING, Iowa
ANN KIRKPATRICK, Arizona             AARON SCHOCK, Illinois
YVETTE CLARKE, New York              GLENN THOMPSON, Pennsylvania

                                  (iv)

  
?

                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Velazquez, Hon. Nydia M..........................................     1
Graves, Hon. Sam.................................................     2


                                APPENDIX

Views and Estimates of SBA Budget for Fiscal Year 2011...........     5

                                  (v)

  


                   FULL COMMITTEE MARKUP ON VIEWS AND
              ESTIMATES OF SBA BUDGET FOR FISCAL YEAR 2011


                             ----------                              


                        Thursday, March 4, 2010

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
2360, Rayburn House Office Building, Hon. Nydia Velazquez 
[chairman of the Committee] presiding.
    Present: Representatives Velazquez, Moore, Schrader, 
Clarke, Bright, Halvorson, Graves, Westmoreland, Luetkemeyer 
and Thompson.
    Chairwoman Velazquez. I am pleased to call this morning's 
mark-up to order.
    Today the Committee meets to consider its views and 
estimates of the Small Business Administration's Fiscal Year 
2011 budget. This discussion comes at a time when the economy 
is beginning to turn a corner. Most Americans, including the 
President, are looking to entrepreneurs to maintain that 
momentum. By providing robust funding for small business 
programs, we can further that progress and keep our recovery 
strong.
    Needless to say, I was pleased to see President Obama boost 
funding for the SBA. However, I have concerns about how that 
money will be spent. As of now, 89 percent of SBA's new 
resources will go to unauthorized programs and agency overhead. 
This leaves a mere 2.6 percent increase for core programs.
    It is my hope that through the adoption of these views, we 
can change that trend and redirect funds to the programs that 
entrepreneurs have always relied on.
    Just as the downturn has forced small firms to make smart 
choices, SBA should do the same. That means spending widely and 
investing strategically. This is why we need to support 
programs like the new markets venture capital, which is making 
the government money. Even amidst the worst investment climate 
in decades, that initiative which receives no funding in this 
budget has managed to generate revenue for the Treasury, 
helping reduce deficits.
    But rather than providing any resources to NMBC, this 
proposal instead invests in riskier ventures, like SBA Express, 
which could cost taxpayers as much as $128 million FY 2011.
    More than anyone, small business owners understand the 
importance of fiscal restraint. The reviews before us take a 
page from those entrepreneurs and do more than simply increase 
spending. On the contrary, they offset new investment by 
cutting unnecessary costs and terminating six under performing 
programs.
    Entrepreneurial development programs have a track record of 
solid returns. In fact, every one dollar spent on these efforts 
puts another $2.87 back into the Treasury. Most of these 
programs, such as Small Business Development Centers are 
catalysts for job creation. Unfortunately, the FY 2011 budget 
will flat fund virtually all of them. It, instead, invests in 
proven efforts like the Emerging Leaders Program, which does 
essentially the same thing as SBDCs, only at twice the cost. 
The end result is spending $6,000 on each job created when we 
could do the same and spend only $3,000.
    Everyone agrees we need to get capital flowing to small 
businesses. In doing so, it is important for the lending 
process to be as accessible as possible. While it is never a 
good thing to increase costs on small business loans, this is 
particular true during an economic downturn. So the agency's 
proposed increase in lending fees is ill-timed, to say the 
least.
    In the last two years, we have seen considerable declines 
in private industry. The one sector that has grown is the 
federal marketplace. Between the years 2000 and 2008, it was 
than doubled in size. Historically, the SBA's contracting 
programs have helped business tap the expanding world of 
opportunity. However, following a recent wage of fraud, not all 
of these programs are running at full capacity.
    The Committee is well aware of this problem and is making 
fraud protection a top priority. However, the $2 million that 
this budget suggests for fraud control will not even put a dent 
in the $500 million in HUBZone and veteran disabled fraud the 
GA0 has uncovered, let alone waste that hasn't been identified.
    In these views, we provide the agency with a blueprint for 
fighting fraud. That plan will insure only honest 
entrepreneurs, not large corporations, receive small business 
contracts.
    After eight years of neglect, it is time to rebuild the 
SBA, and the overall funding level proposed in the President's 
budget is a welcome sign. But the agency needs to be judicious 
in its spending. These views give the SBA the direction and 
support it needs to make sound investments and promote its core 
mission, strengthening our nation's small businesses.
    I now will yield to Mr. Graves for any comments that he may 
have.
    Mr. Graves. Thank you, Madam Chair, and I want to thank you 
for holding this mark-up today on the Committee's views and 
estimates of the President's proposed SBAbudget for fiscal year 
2011.
    The President has repeatedly stated that small businesses 
will lead our economic recovery. Yet the Committee continues to 
hear reports that small businesses are unable to access 
capital, have difficulty obtaining federal government contracts 
and are hamstrung by ever increasing regulatory burdens. Small 
Businesses simply cannot thrive under these conditions. The 
soaring federal deficits are piling up as a result of 
Washington's spending addiction further impeding economic 
growth in America.
    Unsustainable deficits can result in higher interest rates 
that hit small businesses especially hard. As a result, the 
businesses must devote more of their cash flow to larger 
interest payments, making it less likely that they will have 
the resources to hire employees or expand their operations.
    Additionally the continued uncertainty about the future of 
far reaching legislation, such as health care reform and the 
proposed national energy taxes, all but have frozen business 
expansion and job creation nationwide. Until entrepreneurs can 
get an accurate idea of the new government regulations that lay 
ahead, they are unlikely to invest in expanding their 
enterprises.
    In an effort to incentivize small business lending, the 
administration has proposed reallocating $30 billion in return 
TARP funds to establish a new small business lending fund. 
Given our responsibility and legislative mandate under House 
rules, the House Small Business Committee has an obligation to 
hear directly from Treasury Secretary Geithner about this 
proposal as he is the primary proponent and likely overseer of 
this new small business lending facility. Secretary Geithner 
must share with us the plans for the execution and the expected 
results of this fund before it is established.
    With respect to the SBA budget, I am particularly concerned 
about the lack of resources that will be devoted to increasing 
procurement opportunities for small businesses.
    I recently introduced the Helping Small Businesses Compete 
Act, a bill designed to improve the ability of small businesses 
to obtain federal government contracts. It is imperative that 
the SBA find ways within current resources to increase the 
number of trained personnel that can find and review federal 
procurement opportunities for small business owners. I 
certainly respect some of the Chairwoman's well founded 
criticisms of the budget, but I simply cannot concur with the 
proposed budget views and estimates, and I will be filing a 
separate set of views and estimates with the Budget committee.
    And with that I will yield back.
    Chairwoman Velazquez. Are there any other members who wish 
to be recognized on the views and estimates?
    [No response.]
    Chairwoman Velazquez. Well, the Committee now moves the 
consideration of the views and estimates of the Small Business 
Administration FY 2011 budget. The Clerk will report the title 
of the document.
    The Clerk. The views and estimates for the Small Business 
Administration's budget for Fiscal Year 2011.
    Chairwoman Velazquez. I ask unanimous consent that the 
views and estimates document in its entirety be open for 
amendments at this time. Does any member seek recognition for 
the purpose of offering an amendment?
    [No response.]
    Chairwoman Velazquez. Seeing none, the question is on 
agreeing to the views and estimates. A those in favor say aye.
    [Chorus of ayes.]
    Chairwoman Velazquez. All those opposed, no.
    [Chorus of nays.]
    Chairwoman Velazquez. The ayes have it, and the views and 
estimates are agreed to.
    At this point I would like to yield to Mr. Graves for an 
unanimous consent request.
    Mr. Graves. I would request unanimous consent to file my 
views on the budget estimate.
    Chairwoman Velazquez. Without objection, so ordered.
    I ask unanimous consent that the Committee be authorized to 
correct punctuation and to make other necessary technical 
corrections on the document considered today. Without 
objection, so ordered.
    This mark-up is now adjourned.
    [Whereupon, at 10:14 a.m., the Committee meeting was 
adjourned.]

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