[Congressional Record Volume 140, Number 6 (Tuesday, February 1, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 1, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
 REPORT ON THE STATE OF SMALL BUSINESS--MESSAGE FROM THE PRESIDENT--PM 
                                   80

  The PRESIDING OFFICER laid before the Senate the following message 
from the President of the United States, together with an accompanying 
report; which was referred to the Committee on Small Business.

To the Congress of the United States:
  I am pleased to present my first annual report on the state of small 
business. This report covers data for fiscal year 1992, a period of 
slow economic recovery that occurred just before my Administration took 
office.
  Small businesses create many new jobs and are an important part of 
our Nation's economic growth. That is why, in my first address to the 
Joint Session of the Congress, I proposed some of the boldest targeted 
incentives for small business in history. These measures will benefit 
not only small businesses, but the American work force, our Nation's 
economy, and our international competitiveness.
  At the same time, we must undertake some major corrective efforts. As 
small business owners will testify, the best thing the government could 
do for small business and the economy is to reduce the deficit. The 
primary goal of the economic program is to set the economy on the 
proper course for the short- and long-term future. Deficit reduction 
and shifting consumption to investment are the ways to accomplish that 
goal.
  Reducing health care costs while ensuring that all Americans have 
access to health care is another national imperative. I have said it 
before: bringing health spending in line with inflation would do more 
for the private sector than almost any incentive or tax cut we could 
promote. At the same time, we must find a way to provide health care 
for everyone. Currently two-thirds of the Americans without health 
insurance are employed--many in small businesses. My health care task 
force has evaluated many proposals to ensure that health care is 
available to small business employees and affordable for small business 
owners. It will take time to change our health care system, but we are 
taking the important first steps.
  We will also need to keep looking for better ways to provide for 
workers upon retirement. As this report documents, pension plans, like 
health plans, are much less available and affordable in small 
businesses. And as the baby boom generation moves toward retirement, 
issues related to Social Security and pension plan availability take on 
new urgency.
  Beyond these long-range efforts, I have asked the Congress to join me 
in investing in small business and economic growth through specific tax 
incentives, capital formation initiatives, enterprise and empowerment 
zones, technology investments, and education and job training efforts.
  To encourage long-term investment in small business, I supported--and 
the Congress passed--a 50 percent tax exclusion on capital gains from 
investments in qualified small business stock held for at least 5 
years. This incentive, which will help small businesses raise 
critically needed capital, is projected to create 80,000 new jobs over 
the next 5 years. I also favored such an exclusion for investment in 
small business venture capital firms targeting investments to minority-
owned businesses. Another small business incentive I supported 
increases the ``Section 179'' expensing limitation from $10,000 to 
$17,500, which will enable a number of smaller firms to purchase 
equipment needed for modernization and growth.
  My Administration supports easing the regulatory burden on small 
firms so that more of the time spent filling out paperwork--especially 
complicated or duplicative paperwork--can be used for more productive 
activities. There are a number of measures we can take. We have already 
simplified the computation of certain taxes such as the alternative 
minimum tax and we have eased the safe harbor rules related to the 
individual estimated tax. And we can ensure that Federal agencies 
comply with the Regulatory Flexibility Act, which requires them to 
assess the effects of their proposed regulations on small firms.
  Recent low interest rates have made resources more available to 
consumers for purchasing the products and services of American business 
and have made loans somewhat less expensive for the business community. 
In addition, I have proposed a number of measures to make capital more 
available to small business. To ease the ``credit crunch'' faced by 
many small firms, new provisions are loosening restrictions on banks so 
they can more easily make ``character'' loans, easing appraisal 
requirements for real estate used as collateral for small business 
loans, eliminating overlapping Federal regulations on lending 
institutions, and establishing an appeals process for banks and 
consumers who believe they have been unfairly treated by regulators.
  Small and minority-owned businesses would also benefit from a 
strengthened system of community development banks. A proposed 
Community Development Banking and Financial Institutions Fund would 
support investment in community development financial institutions 
(CDFIs). These CDFIs would be a source for loans and technical 
assistance to individuals and businesses in communities underserved by 
traditional lending institutions.
  Another way we plan to support the growth of new small enterprises, 
especially in economically depressed areas, is through the 
establishment of empowerment zones, enterprise communities, and rural 
development investment areas. The zones and communities will be 
nominated by State and local governments and chosen on a competitive 
basis after certain criteria based on population, geographic area, and 
poverty level are met. Businesses in these designated communities can 
take advantage of expanded tax-exempt financing. Businesses in 
empowerment zones will be given additional employment credits and tax 
incentives.
  Only by fully developing our technological and human resources can we 
expect to be leaders in the international marketplace. That means 
investment in technology and worker skills.
  There are a number of actions we can take to remain technologically 
competitive. We can extend the research and experimentation tax credit 
to encourage more research activities by American small businesses. I 
would like to see an expansion of the Small Business Innovation 
Research program, which, as documented in this report, helps channel 
Federal research funding to innovative small firms. I support a strong 
Small Business Technology Transfer program in which small businesses 
work with Federal laboratories and universities to develop promising 
technology and introduce it into the marketplace. The manufacturing 
extension centers we have proposed would help small- and medium-sized 
businesses evaluate new manufacturing technology. And I'd like to see 
an expansion of the Commerce Department's Advanced Technology Program, 
which provides matching grants to companies working on generic 
technology. Finally, we need to speed up computer networks and 
coordinate Federal information and telecommunications policy.
  We are looking at innovative ways to employ, train, and provide for a 
work force second to none. To begin with, we have extended the targeted 
jobs tax credit, which is available to employers who hire economically 
disadvantaged youth and members of specific at-risk groups. But that is 
just a small part of a large picture: many State, local, and private 
groups are experimenting with innovative ways to develop and train a 
competitive work force for the 21st century.
  Clearly, our Nation faces many challenges. Fortunately, we face them 
with an almost limitless resource--the variety and ingenuity of the 
American people. If we can meet our national challenges with the energy 
and innovative spirit of America's small business owners, we will be 
doing very well. So I encourage the Members of Congress, together with 
young people and small business owners and all Americans to reach into 
your imaginations: dream boldly and begin something new.
                                                  William J. Clinton.  
  The White House, February 1, 1994.

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