[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]





       MARKUP OF: BUDGET VIEWS AND ESTIMATES FOR FISCAL YEAR 2017

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

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             MARCH 1, 2017

                               __________




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            Small Business Committee Document Number 115-005
              Available via the GPO Website: www.fdsys.gov
              
              
              
              
              
              
              
              
              
              
              
              
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        TRENT KELLY, Mississippi
                             ROD BLUM, Iowa
                         JAMES COMER, Kentucky
                 JENNIFFER GONZALEZ-COLON, Puerto Rico
                          DON BACON, Nebraska
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                                 VACANT
               NYDIA VELAZQUEZ, New York, Ranking Member
                       DWIGHT EVANS, Pennsylvania
                       STEPHANIE MURPHY, Florida
                        AL LAWSON, JR., Florida
                         YVETTE CLARK, New York
                          JUDY CHU, California
                       ALMA ADAMS, North Carolina
                      ADRIANO ESPAILLAT, New York
                        BRAD SCHNEIDER, Illinois
                                 VACANT

               Kevin Fitzpatrick, Majority Staff Director
      Jan Oliver, Majority Deputy Staff Director and Chief Counsel
                     Adam Minehardt, Staff Director
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Steve Chabot................................................     1
Hon. Nydia Velazquez.............................................     1

                                APPENDIX

Additional Material for the Record:
    SBC Majority Views and Estimates.............................     5
    SBC Minority Views and Estimates.............................    18

 
       MARKUP OF: BUDGET VIEWS AND ESTIMATES FOR FISCAL YEAR 2017

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                        WEDNESDAY, MARCH 1, 2017

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 11:00 a.m., in Room 
2360, Rayburn House Office Building. Hon. Steve Chabot 
[chairman of the Committee] presiding.
    Present: Representatives Chabot, Luetkemeyer, Brat, 
Radewagen, Knight, Kelly, Blum, Comer, Bacon, Fitzpatrick, 
Marshall, Velazquez, Evans, Murphy, Lawson, and Adams.
    Chairman CHABOT. Good morning. Right on time. The Small 
Business Committee will come to order.
    And before we get on to any of our important business, we 
want to congratulate the gentleman from Mississippi. It happens 
to be his birthday today. He is 26, I think, if I am not 
mistaken. Something like that. All right. So let's hear it for 
him.
    Ms. VELAZQUEZ. Where is the cake?
    Chairman CHABOT. Yeah, where is the cake? That is right.
    So we wish him a great day here today. We wish all of you a 
great day.
    So I will call the Committee on Small Business Budget Views 
and Estimates meeting to order.
    Today's order of business is to consider the Views and 
Estimates on the priorities of the Committee on Small Business 
for fiscal year 2018. And I believe we should be able to get 
through this relatively quickly, too.
    Since its founding, the United States has relied on small 
businesses. We are a nation of creators and inventors and risk 
takers. Our economy was structured to be driven by 
entrepreneurs and, in fact, most net job growth has been from 
small firms. In the past few years, the growing number in 
complexity of federal regulations, the healthcare law, and the 
tax code have made it increasingly difficult for small 
companies to compete and thrive globally, and to keep people 
employed locally.
    Although the economy is improving, small businesses still 
face rough waters. As a result, more small businesses are 
dependent on the programs of the SBA, the Small Business 
Administration, and it is essential that these programs be 
tailored to yield the most efficient and effective results.
    The Small Business Administration, or SBA, has a vital role 
to play in helping small business owners to expand our economy. 
SBA's core functions make capital available, provide training, 
and increase the use of small businesses as Federal Government 
contractors. However, multiple investigations by the Government 
Accountability Office, or GAO, and the SBA Inspector General, 
the IG, have revealed an agency that has misplaced priorities 
and management deficiencies.
    SBA's first responsibility is to complete the task mandated 
by Congress before it expends funds on its own untested 
initiatives or entrepreneurial training that duplicates 
longstanding and proven programs operated by the SBA and its 
partners, such as the Small Business Development Centers and 
SCORE. SBA's information technology has long been outdated, and 
was found by GAO and the SBA IG to be a critical vulnerability.
    The Views and Estimates recommend increasing the number of 
personnel assisting small government contractors to compete in 
the nearly $500 billion federal procurement marketplace. They 
recommend establishing a more transparent regulatory process 
for SBA's lending partners, strengthening enforcement so only 
eligible small businesses participate in SBA programs, 
reallocating funds from SBA's own initiatives to the 
modernization of SBA's loan management system, and reducing 
agency information technology vulnerabilities. The end result 
would be a better SBA, one that delivers results for America's 
small businesses and for taxpayers.
    At this point I will yield to the Ranking Member, Ms. 
Velazquez, for any comments she may have on the Committee's 
Views and Estimates.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    Consideration of this year's Views and Estimates comes 
before we have a proposed budget to examine. While submission 
of this document to the Budget Committee is an important aspect 
of the Committee's work, doing so without an actual budget to 
inform us is a questionable exercise. In the absence of a 
budget, we are making up a broad document that focuses on 
improving program functions at the Small Business 
Administration. This is consistent with the Committee's 
previous work.
    As a result, we agree with the chairman on a number of 
issues. For example, recommending SBA takes steps to better 
manage its capital access, procurement, and entrepreneurial 
development programs is prudent governance. Doing so advances 
SBA's mission to assist small businesses and better protect 
taxpayers. But I just want to make clear, we have to provide 
the resources that will enable the Small Business 
Administration to do its work. We just cannot come here and 
criticize the Small Business Administration for not doing their 
job while cutting their budget. We cannot do more with less.
    We also agree with the chairman that SBA has repeatedly 
failed to properly evaluate its pilot programs. Both the GAO 
and this Committee have found that many of these are largely 
ineffective and divert resources from proven programs. The 
agency's funding of these initiatives, without a specific 
authorization, is not in the best interest of taxpayers or 
small businesses.
    Additionally, we again concur with the chairman that SBA 
should strengthen oversight of its lending programs. The agency 
is guaranteeing record levels of investment in our small 
business community while also reducing loan defaults, but it is 
important that loans in the 7(a) and other programs are 
targeted to businesses who need it the most, particularly those 
that have been unable to secure capital through private 
channels. To this point, we must ensure that those businesses 
that receive loans truly cannot receive ``credit elsewhere'' as 
required under law.
    Despite my agreement in so many areas, there is one issue 
where the chairman and I do not see eye to eye, and this is in 
the area of the Regulatory Flexibility Act which we share 
jurisdiction of with the Judiciary Committee. Yes, I am open to 
investigating ways to better tailor regulations for the small 
business community and reducing compliance costs. However, I 
cannot support efforts that will halt broad health, safety, and 
environment protections. That said, I look forward to finding 
common ground with the chairman in the area of regulatory 
policy, as we have done with so many other policy issues.
    The success of the American economy depends on small 
businesses leading the way, and the SBA is a vital part of this 
formula. I thank the chairman for holding this markup and look 
forward to continuing our work together to make the SBA an even 
better resource for America's small businesses.
    With that, I yield back the balance of my time, and I thank 
you.
    Chairman CHABOT. The gentlelady yields back, and I thank 
her for her remarks.
    Are there any other members who wish to be recognized for a 
statement on the Views and Estimates on the priorities of the 
Committee for fiscal year 2018?
    Okay. Seeing no members, the Committee now moves to 
consideration of the Views and Estimates. The clerk will read 
the title of the document.
    The CLERK. Views and Estimates of the Committee on Small 
Business.
    Chairman CHABOT. I ask unanimous consent that the Views and 
Estimates be considered as read and open for amendment in its 
entirety.
    Does any member seek recognition for the purpose of 
offering an amendment?
    Seeing no amendments, we will move on. And the question is 
on adopting the Views and Estimates on the priorities of the 
Committee for fiscal year 2018.
    All those in favor, say aye.
    Those opposed, no.
    In the opinion of the chair, the ayes have it. The ayes 
have it and the Views and Estimates are agreed to.
    I will now recognize the ranking member for the purpose of 
making a motion.
    Ms. VELAZQUEZ. Mr. Chairman, pursuant to House rules, I 
would like to give notice that the Committee Democrats will be 
submitting additional views to the Committee on the budget.
    Chairman CHABOT. Thank you.
    Without objection, so ordered.
    And the Committee is authorized to make technical and 
grammatical corrections to the Views and Estimates.
    And I believe that concludes the business before the 
Committee today. So if there is no other business other than to 
wish everybody a very, very merry Trent Kelly birthday today, 
we hope you have a great day.
    And if there is no further business to come before the 
Committee, we are adjourned. Thank you.
    [Whereupon, at 11:10 a.m., the Committee was
    
    
    
    
    
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