[Congressional Record Volume 147, Number 171 (Tuesday, December 11, 2001)]
[Senate]
[Pages S12822-S12826]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         SMALL BUSINESS RELIEF

  Mr. KERRY. I ask unanimous consent that an article from the front 
page of yesterday's New York Times regarding the ripples of September 
11 widening in retailing and the extraordinary impact of September 11, 
not just at ground zero but broadly across the country on small 
businesses, be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                [From the New York Times, Dec. 10, 2001]

                 Ripples of Sept. 11 Widen in Retailing

                           (By Edward Wyatt)

       On West Eighth Street in Greenwich Village, shoe salesmen 
     stand forlornly on the sidewalk in front of 
     Leather&Shoes.com, smoking cigarettes and staring blankly 
     into the distance, wondering where all the customers have 
     gone.
       Down the block, Raja Chaani, the manager of India Imports, 
     and two of his employees sit on stools in a sprawling space 
     chock-full of leather jackets, silk scarves and Indian curios 
     but devoid of customers.
       Across the street, at Man Plus, Sonny Shahani and three 
     other salesmen spend their time rearranging sweaters and 
     calculating how much their commissions have fallen. And at 
     House of Nubian, no one but a few Internet shoppers is buying 
     Negro League jackets and hats, or buttons with pictures of 
     black leaders like Malcolm X and Haile Selassie.
       While it was expected that small businesses near the site 
     of the World Trade Center would suffer from the terrorist 
     attack on Sept. 11, which displaced 100,000 potential 
     customers from office buildings in the area and thousands 
     more from their homes, wider economic damage from the attack 
     is still rippling outward from ground zero.
       The national economy, of course, was already slowing before 
     Sept. 11. But the attack sent shudders through small 
     businesses, not only in New York City but also across the 
     nation. Some economic forecasters say they believe a wave of 
     business failures in New York and elsewhere could come soon 
     after the first of the year, as retailers and other 
     entrepreneurs succumb to the continuing lack of new business 
     in what is traditionally their busiest season.
       ``I've been on this street for 15 years, and it's never 
     been this bad,'' said Kawal Bhatia, whose family owns 
     Leather&Shoes.com, a shoe and leather goods store at 22 West 
     Eighth Street which, despite its name, does not have a Web 
     site. ``In past years, no matter how bad it was the rest of 
     the year, at least you knew you would cover all your losses 
     with the holiday shoppers.'' But on a recent Friday, he said, 
     ``I did $25 worth of business.''
       Last week, Mr. Bhatia put up a new sign: ``Store Closing.''
       Small businesses, including many retail establishments, 
     account for two of every five jobs in New York City and 
     roughly half of all jobs statewide, so the drought among 
     small-business owners presages economic pain that is likely 
     to spread far beyond Lower Manhattan. And while numerous 
     grant and loan programs have sprung up to help small 
     businesses recover from the disaster, business owners have 
     complained, in a growing chorus, that the grants are too 
     small to stem their losses and that loan agencies are not 
     approving loans.
       On Eighth Street between Fifth Avenue and Avenue of the 
     Americas, for example, roughly two miles north of ground 
     zero, businesses that depend on people who travel into the 
     city to shop have been devastated. The block, the professed 
     shoe district of Manhattan, has for decades served as a 
     crucible for small businesses, a place where shoe and leather 
     goods shops have mixed with funky clothing emporiums serving 
     an eclectic mix of college students, tourists and New Yorkers 
     in search of bargains. But tourists have stopped coming, and 
     retail sales not just in the Village but across the city have 
     been suffering.
       Economists say it is too early to tell just how many small 
     businesses are likely to end up closing or in Bankruptcy 
     Court, but they say that the signs are not good.
       ``I think there is a strong likelihood that come the first 
     quarter, small businesses that are holding on by the seat of 
     their pants may not be able to hold on anymore without some 
     outside assistance,'' said Ian E. Novos, senior director for 
     economic consulting service of KPMG.
       A report assessing the economic impact of Sept. 11 that was 
     prepared for the New York City Partnership, by KPMG and SRI 
     International, another consulting firm, predicted that for 
     the next two years, small businesses' sales would continue to 
     fall short of what was expected before the trade center 
     attack. Employment among small businesses will continue to 
     fall through the first quarter of next year, the report said.
       During the recession of the early 1990's, in a downturn 
     that was short-lived by historical standards, business 
     failures in New York State peaked at more than 6,000 
     companies per year, according to Dun & Bradstreet. The 
     failures involved less than 1 percent of the small businesses 
     operating in the state. In 1997, the most recent year for 
     which data is available, there were roughly 1.2 million small 
     businesses operating in New York State, according to state 
     statistics. (Federal data on small businesses, using 
     different measurement criteria, put the number at about half 
     that.)
       The 1990's recession lacked some of the ingredients of 
     today's problems--most important a cataclysmic event that 
     sent jobs streaming away from Lower Manhattan, immediately 
     closed off spigots of corporate spending and sent consumers 
     into a kind of anti-spending shock. Since the disaster, the 
     United States Small Business Administration has approved only 
     about one in three applications for disaster loans. Those 
     loans have provided $164 million to more than 2,000 
     businesses so far, but the approval rate is well below the 
     rates of 50 percent to 64 percent that have followed other 
     major disasters over the past decade.
       Hector V. Barreto, the administrator of the S.B.A., told 
     the House Committee on Small Business on Thursday that the 
     loan approval statistics were a result of what was a very 
     different disaster. But he also agreed to review all loan 
     applications that had been rejected in New York so far, to 
     see if the agency's loan standards, which often rely on cash 
     flow and the value of tangible property, had been applied too 
     rigidly.
       Unlike earthquakes, hurricanes and floods, which inflict 
     property damage mostly on homes and homeowners, the World 
     Trade Center attack did most of its property damage in a 
     small area around ground zero. Most of the loans requested 
     and made have been for economic injury to businesses in a far 
     wider geographic area, stretching over several counties near 
     New York City.
       Economic disaster loans to businesses account for three-
     quarters of the disaster loans approved so far, compared with 
     20 percent after events like the flooding of the Red River of 
     the North, in North Dakota in 1997, and Tropical Storm 
     Allison in Texas and Louisiana earlier this year. Economic 
     injury loans require more documentation of losses and of a 
     borrower's ability to repay them than property damage loans 
     do.
       A bill that would ease eligibility rules for disaster loans 
     as well as create a grant program to go with the loan program 
     was recently sent to the full House of Representatives by the 
     House Committee on Small Business.
       Representative Nydia M. Velazquez, whose district includes 
     parts of Brooklyn, Manhattan and Queens and who is the 
     ranking Democrat on that committee, said the current loan 
     program needed to be revised as the bill would require 
     because the existing loan program ``is not suitable for the 
     new reality of this disaster.''
       Some businesses that have been turned down for loans say 
     they cannot fathom whom the loan program is supposed to help, 
     if not them. Carla Behrle, who designs, manufactures and 
     sells custom-made leather clothing from a shop on Franklin 
     Street in TriBeCa, said she was told by S.B.A. officials 
     that her application would be rejected because her 
     business did not have enough cash flow to make the loan 
     payments of $143 a month.
       ``Some people spend more than that on cigarettes,'' said 
     Ms. Behrle (pronounced BURR-lee), who does not smoke. She 
     said the agency did not seem to take into account her plans 
     for the money, which included relocating her business, which 
     had revenues of about $125,000 last year, and shifting her 
     focus to wholesale sales, eliminating her retail store.
       ``I spent hours and hours filling out all this paperwork,'' 
     she said. ``If I had known what I know now, I would have put 
     my energies elsewhere.''
       Other entrepreneurs complain that the city and state 
     efforts to restore the economy are tailored to the needs of 
     large corporations rather than to small businesses. They note 
     that when Gov. George E. Pataki and Mayor Rudolph W. Giuliani 
     appointed members of the Lower Manhattan Redevelopment 
     Corporation last month, corporate and political interests 
     were well represented, but no representatives of small 
     business from downtown Manhattan were included.
       Asked what he would say to people who operate small 
     downtown businesses that are ailing, John C. Whitehead, the 
     newly appointed chairman of the group, said: ``I don't know 
     what we say to them, but we want to keep them and we don't 
     want them to be discouraged. I think there is assistance 
     available for them.''
       Carl Weisbrod, president of the Downtown Alliance, which 
     represents businesses in the financial district and around 
     the trade center site, said the redevelopment agency's 
     ``primary mission is going to be repairing the 
     infrastructure'' and creating a physical environment that 
     will draw customers back to small businesses downtown.
       Whether small businesses downtown can wait for those 
     improvements, which could easily take years, is uncertain. On 
     West Eighth Street, merchants up and down the block who are 
     not covering their expenses say their landlords have so far 
     refused to give them a break on their rents.
       At Mofa Shoes, Moses, the manager, who would not give his 
     last name, spoke woefully of the outlook. ``This used to be 
     the shoe capital of the world,'' he said. ``We'd get 
     customers who came to Eighth Street from Italy, Brazil, 
     Spain. Now, well, you see. The street is empty.''


[[Page S12823]]


  Mr. KERRY. Madam President, I heard the Senator from Arizona. I 
respect what he said in trying to characterize some discussions as 
negotiations. But I have been here for 18 years. Senator Bond has been 
here I think just about as long. He is the ranking member. He and I 
have worked together when he has been chairman and I, ranking member, 
and vice versa. The Small Business Committee is probably the least 
partisan committee of the Senate. We don't do anything if it isn't 
broadly by consensus. Eighteen members of our committee are cosponsors 
of this legislation. Sixty-two Senators are cosponsors of this effort 
to bring emergency assistance to small businesses of this country. We 
have now been waiting for 2 months while this bill has been held up by 
the great process of rolling holds and rolling theories of objection.
  While the Senator from Arizona politely characterizes it as a 
negotiation, there is nothing to negotiate based on what we have been 
offered. It is a basic gutting of the entire approach that is supposed 
to be in the form of a compromise. We are not to going to do that with 
62 cosponsors of a piece of legislation that provides emergency 
assistance to businesses that need it.
  Let me quote briefly from yesterday's New York Times. It said the 
following:

       While it was expected that small businesses near the site 
     of the World Trade Center would suffer from the terrorist 
     attack on Sept. 11, which displaced 100,000 potential 
     customers from office buildings in the area and thousands 
     more from their homes, wider economic damage from the attack 
     is still rippling outward from ground zero. . . . Some 
     economic forecasters say they believe a wave of business 
     failures in New York and elsewhere could come soon after the 
     first of the year, as retailers and other entrepreneurs 
     succumb to the continuing lack of new business in what is 
     traditionally their busiest season. . . . while numerous 
     grant and loan programs have sprung up to help small 
     businesses recover from the disaster, business owners have 
     complained, in a growing chorus, that the grants are too 
     small to stem their losses and that loan agencies are not 
     approving loans. Since the disaster, the United States Small 
     Business Administration has approved only about one in three 
     applications for disaster loans . . . [an] approval rate well 
     below the rates . . . [of] other major disasters over the 
     past decade.
       Carla Behrle, who designs, manufactures and sells custom-
     made leather clothing from a shop on Franklin Street in 
     TriBeCa, said she was told by SBA officials that her 
     application would be rejected because her business did not 
     have enough cash flow to make the loan payments of $143 a 
     month. ``Some people spend more than that on cigarettes,'' 
     said Ms. Behrle, who does not smoke. She said the agency did 
     not seem to take into account her plans for the money, which 
     included relocating her business, which had revenues of about 
     $125,000 last year, and shifting her focus to wholesale 
     sales, eliminating her retail store. ``I spent hours and 
     hours filling out all this paperwork,'' she said. ``If I had 
     known what I know now, I would have put my energies 
     elsewhere.''

  Clearly, the administration's approach is not working.
  We have seen documented over the past months by a number of different 
articles from the Bureau of National Affairs and the Washington Post 
that this bill is being held up by the administration and by two 
colleagues in the Senate who are suggesting there are a series of 
different reasons for doing so. The last time there was an objection, 
Senator Kyl said he would return to the floor and explain why later. He 
never returned, and he didn't explain why. But we have had a different 
set of explanations in the course of our conversations.
  I have heard people say it is not that they really have an objection 
to the bill but they are acting as an agent, holding it so it can be 
reviewed, that they don't really have a hold on the bill but they have 
an objection to the process. Then we heard that it is duplicative of 
the administration's approach and it helps medium-sized and large 
businesses. Then we heard that perhaps the defaults will be too high.
  My personal favorite excuse for the delay is that some people want to 
remove the hold but they can't get into the quarantined office in order 
to get the necessary paperwork to submit to remove the hold, and so on, 
and so on--anything to try to run out the clock.
  The clock is running out on a lot of small businesses in the country. 
I believe that every single excuse offered to date for not proceeding 
forward on this bill is subject to an analysis that completely 
dismisses that particular excuse.
  We need to pass S. 1499, the American Small Business Emergency Relief 
and Recovery Act of 2001. I emphasize that the key word is 
``emergency.'' Small businesses need help now. They have needed it 
since the terrorist attacks three months ago.
  However, as documented in several articles over the past months, from 
the Bureau of National Affairs to the Washington Post, the 
Administration and two of our colleagues in the Senate do not see the 
problems of small business as urgent. They have played games with the 
livelihoods of small business owners and their employees by putting 
``holds'' on S. 1499 and therefore blocking passage of legislation to 
help small businesses.

  On November 27, I moved to bring S. 1499 up for a vote. Senator Kyl 
objected and said that he would explain why later. He never returned to 
the floor. I hope that he will do so today.
  Addressing the concerns of those opposed to this bill as reported in 
the press or told to small businesses calling to urge passage of S. 
1499 is a moving target. One day it's too expensive. Next it's that 
they have no objection to the bill, but they are an ``agent,'' holding 
it so it can be reviewed, or, they don't have a ``hold'' on the bill, 
``they have an objection to the process.'' Next it's duplicative of the 
administration's approach, and it helps medium-sized and large 
businesses. Then it's that defaults will be too high. My personal 
favorite is that they want to remove the hold but they can't get into 
their quarantined office to get the necessary paperwork to submit to 
remove the hold. And so on, and so on, and so on, anything to run out 
the clock.
  Let me explain why these objections are not well-founded:
  No. 1, Senator Kyl and the administration contend that this bill 
costs too much. Senator Kyl was quoted as saying in the Congressional 
Quarterly on November 28: ``We have a debt situation in this country 
right now. This bill is a big deal. It costs too much.'' Let me just 
state the obvious--small business is not what caused our debt 
situation. Even leveraging money to provide loans and venture capital 
and counseling through the SBA is not what caused our debt situation. 
In fact, the SBA suffered disproportionately in budget reduction for 
FY2002 compared to other Departments. The President's fiscal year 2002 
budget cut funding for the SBA anywhere from 26 to 40 percent depending 
on how you look at it.
  Why the big difference? It is a 40-percent cut if you count the 
President's request to move the SBA disaster loan program out of SBA, 
SLASH the disaster loan part of the budget from $826 million to $300 
million, and RAISE the interest rates on disaster victims. That's 
right, if the Bush administration's fiscal year 2002 budget had been 
implemented, the very program that Senator Kyl and the administration 
are claiming is the answer to the problems of small businesses, would 
now be underfunded, and would be charging small business disaster 
victims 5.4 percent versus the current 4 percent. Luckily, Senator Bond 
and I were successful earlier this year in passing a budget amendment 
to restore that funding.
  Let me go back to the comment, ``This bill costs too much.'' This 
bill costs too much compared to what? Compared to the $15 billion that 
will be given to the airline industry? Compared to the estimated $4.75 
billion that Senator Kyl's S. 1500 would provide in tax credits for 
airplane tickets? Compared to the administration's approach of 
essentially declaring the entire Nation a disaster area and providing 
disaster loans nationwide?
  The Congressional Budget Office has informally scored S. 1499 as 
costing $860 million. Compared to the Kerry-Bond approach, Senator 
Kyl's bill costs 5.5 times more. Compared to the Kerry-Bond approach, 
the administration's approach through disaster loans costs almost 5 
times more--4.67 times, to be exact.
  The administration's approach through economic injury disaster loans 
has a subsidy rate--that's the net cost to the taxpayer of running the 
program--of anywhere from 14 percent to 17 percent, depending on whose 
estimate you use. The Kerry-Bond approach, which provides the majority 
of assistance through the 7(a) loans, has a

[[Page S12824]]

subsidy rate of 3 percent. The Kerry-Bond approach is more cost-
effective.
  In practical terms, if we fully funded this bill, for $860 million we 
could leverage more than $25 billion in loans and venture capital to 
fill the market's gap in lending. To provide an equal amount of access 
to capital through the disaster loan program would cost taxpayers about 
$3.5 billion. These charts illustrate on a State-by-State basis how 
many small business will be helped by S. 1499 through 7(a) and 504 
loans, and how much capital will become available in each state. For 
example, under this bill, more than 1,700 small business in Arizona 
could get loans to help recover from the terrorist attacks and the 
worsening economy. Under the administration's approach, only one small 
business has been helped in Arizona since September 11.
  No. 2, Senator Kyl contends this bill hasn't had sufficient review. 
According to the Washington Post, Senator Kyl says ``it is not a hold, 
but part of his role as chairman of the GOP steering committee to 
review bills that are being hustled through at the end of the session 
to make sure they have been properly `vetted.' `I'm just an agent,' '' 
Kyl said.

  Let me set the record straight on the process. This bill hasn't been 
``hustled through.'' It was drafted with the input of small business 
organizations, trade associations and SBA's lending and counseling 
partners through more than 30 meetings and conference calls--conference 
calls because we couldn't ask folks to fly in the immediate weeks after 
the attacks. It is cosponsored by 18 of the Small Business Committee's 
members. And overall 62 Senators, including 20 Republicans, have joined 
me in cosponsoring S. 1499.
  On October 15, S. 1499 was cleared by both cloakrooms. It would have 
passed by unanimous consent that night if OMB hadn't called at the last 
minute and asked the GOP leadership to put a hold on the bill so that 
SBA could introduce its own solution the next day. On October 16, the 
committee sat down with staff from the SBA and incorporated changes to 
S. 1499 to address their concerns. Nevertheless, when the GOP 
leadership lifted its hold, Senator Kyl put a hold on the bill for the 
Republican Steering Committee. They have now held this emergency 
legislation for almost 2 months.
  On the House side, the Committee on Small Business passed the 
companion to S. 1499 by unanimous consent. There's nothing hustled 
about this bill. It was moved quickly because it is emergency 
legislation. It is a good bill because it can do a lot of good for a 
lot of people. It is being held because of shameful politics. If 
Senator Kyl and other members of the Republican Steering Committee want 
to vote against the bill, then we should give them the opportunity. I 
say let's bring this bill up for a vote. Small businesses have a right 
to know exactly who is working against them and who is working for 
them. And the Republican Steering Committee should know that blocking 
this emergency small business bill because of politics, or because they 
oppose the process, doesn't hurt me or Senator Bond, it doesn't hurt 
our Committee or the Democrats; it hurts small businesses and puts in 
jeopardy the jobs of thousands of Americans.
  Has anyone looked at the unemployment rates? Over the past 2 months, 
the nation has lost 799,000 jobs. According to an article in the 
Christian Science Monitor yesterday, Monday, December 10, the jobless 
rate is now at 5.7 percent and economists expect it to peak out next 
year at between 6.5 and 7 percent.
  No matter how many tax credits we provide, if people don't think they 
will have a paycheck and are pessimistic about job prospects, they're 
not going to spend. The Consumer Confidence Index has declined for 4 
straight months. According to Lynn Franco, director of the Conference 
Board's Consumer Research Center: ``Widespread layoffs and rising 
unemployment do not signal a rebound in confidence anytime soon. With 
the holiday season quickly approaching, there is little positive 
stimuli on the horizon.''
  No. 3, Senator Kyl contends the defaults will be too high. If that 
were true, it would be reflected in the Congressional Budget Office's 
cost assessment of this bill. Subsidy rates for guarantee loan programs 
factor in not only fee income derived from the borrowers and lenders, 
but also the estimated defaults and recoveries. As I said earlier, the 
majority of loans to be made through this bill will be made through the 
SBA's 7(a) program. The subsidy rate for this program with incentives 
is estimated by CBO to be 3 percent. So, for every $100 loaned, it will 
cost $3. That does not indicate excessive default rates. And according 
to the administrator of SBA, the program is performing so well that in 
the President's fiscal year 2003 budget, OMB will reduce the subsidy 
rate for 7(a) loans by 50 percent.
  No. 4, Senator Kyl contends this bill is duplicative. It is not 
duplicative. The administration did adopt and implement a couple of 
provisions of the Kerry-Bond bill by expanding access to economic 
injury disaster loans through regulations. However, their approach is 
not comprehensive enough to help the range of small businesses with 
varying degrees of problems. As reported in the New York Times on 
October 31, ``more than half of the small businesses in New York City 
that have applied for Federal disaster loans since the World Trade 
Center attack have had their applications rejected, resulting in one of 
the lowest loan-approval rates in recent years among communities that 
have had to grapple with large-scale disasters.''
  While I am glad that the administration finally acted to help small 
businesses, their approach is not getting at the problem. Their 
approach doesn't defer payments or allow refinancing. Ours does. The 
administration didn't meet with small business groups when shaping 
their approach. We did. The administration didn't sit down with 
Senators Schumer and Clinton and ask how they could be of particular 
help to those businesses in ground zero. We did. Consequently, these 
are reasons why small business groups such as the U.S. Chamber of 
Commerce are pushing for passage of the Kerry-Bond bill.
  Let me give you insight into the damage suffered by just one group of 
affected small businesses: the chauffeured ground transportation 
industry. That industry used to employ about a 160,000 people. Since 
September 11, they have laid off approximately 80,000--half the jobs. 
Again, that's just one of many industries in trouble. If Senator Kyl's 
office, the members of the Republican Steering Committee and the 
administration listened to or read the letters from the United 
Motorcoach Association or the National Limousine Association, they 
would know that they need working capital to keep their businesses 
alive until they can restructure or until more normal business 
conditions return. And to have sufficient working capital, the ones in 
the New York and New Jersey that make their bread and butter from 
business from JFK Airport, La Guardia Airport, and Newark Airport need 
deferments. And they need to be able to refinance their debt. They 
aren't asking for hand-outs. They are asking for loans that they will 
pay back. The SBA is supposed to help small businesses. The 
administration's approach isn't working, so it is our responsibility to 
tailor SBA's programs so that together they can effectively address the 
needs of small businesses.
  Let me read this quote from an article in the Wall Street Journal 
published on Tuesday, November 6, 2001. They are the words of Mr. John 
Rutledge, chairman of Rutledge Capital in New Canaan, CT, and a former 
economic advisor to the Reagan administration:

       Interest rate reductions alone are not enough to jump-start 
     this economy. We need to make sure cheaper credit reaches the 
     companies that need it . . . The Fed is cutting interest 
     rates--but the money isn't reaching capital-starved small 
     businesses because Treasury regulators are cracking down on 
     bank loans. Credit rationing, not interest rates, is the real 
     problem with the economy. . . . This problem didn't start on 
     September 11. For more than a year U.S. banks have been 
     closed for business lending. Unless the current Bush 
     administration takes steps to restore bank lending to small 
     businesses and heal the asset markets now, the economy will 
     stay weak.

  No. 5, Senator Kyl contends this bill helps medium-sized and large 
businesses. This bill does not help medium-sized and large businesses. 
For 1 year only, S. 1499 allows businesses for certain industries in 
limited areas--the areas hardest hit--New York, Virginia and the 
contiguous areas designated as

[[Page S12825]]

disasters--to be considered small for purposes of accessing disaster 
loan assistance. In addition, like the administration's own legislative 
request in the DoD appropriations bill now pending in conference, S. 
1499 gives discretion to the Administrator to raise any size standards 
not named in this bill to respond to the higher costs in New York City. 
These businesses are included in those eligible for assistance in order 
to compensate for the unique magnitude of their damage and the 
expensive markets they are in. The ones named in this bill were created 
in cooperation with the New York City Economic Development Corporation 
through the offices of Senators Schumer and Clinton. For example, S. 
1499 raises the size standards for restaurants from $5 million to $8 
million. Annual revenues of $5 million for a restaurant in States like 
Arizona or Massachusetts or Florida might seem like a medium-sized or 
large business, but according to Mayor Giuliani's staff, it could be 
merely a fancy coffee shop in Manhattan. In order to really help small 
businesses in New York City, the city recommended raising the size 
standard to $8 million. These are loans, not grants, and it makes sense 
to take advice from those experts who know the markets of their small 
businesses.
  Travel agencies have been hard hit in all of our States. Raising the 
size standard from $1 million to $2 million is not excessive. In fact, 
the travel agents want to know why we can help the airlines but not 
them.
  Size standards need to keep pace with inflation. The current 
standards are inadequate under normal market conditions, much less a 
disaster of this gravity and so unique in nature.
  No. 6, the administration contends that the Kerry-Bond approach 
displaces the private sector. Weighing in on this bill for the first 
time in writing almost 2 months after S. 1499 was introduced, here's 
what the Administrator said to me in a letter dated November 30: ``SBA 
is also concerned with Section 5 and Section 6 of S. 1499. . . . 
[because it] could make government guaranteed small business loans more 
attractive than conventional loans, potentially displacing private 
sector options.''
  I think the administration has our proposals confused. It is the 
Kerry-Bond approach that uses 5,000 plus private-sector lenders who are 
experienced at making SBA loans to help deliver this assistance to 
small businesses. It is the administration's approach that makes loans 
directly from the SBA, which cuts out the private sector.
  This bill does not cost too much. This bill is not duplicative of 
what the administration has already put into place. This bill does not 
encourage defaults. This bill does not help big businesses. This bill 
does not cut out the private sector. This bill has not been rushed 
through the Senate. On the contrary, this emergency legislation has 
been blocked from being considered for 2 months.
  I want to emphasize that this obstruction should not be blamed on all 
Republicans. My colleague Senator Bond has worked in earnest to pass 
this bill, and the bill has 20 Republican cosponsors. I greatly 
appreciate their cooperation, and I know small businesses, their 
employees and the groups that represent small business appreciate their 
support. If they really want to prove their support, before we adjourn 
for the holiday, they will vote in favor of invoking cloture, and they 
will vote in favor of the bill when it comes up for a final vote.
  It ought to be the subject of a debate in the Senate. We ought to 
have a vote. Let the Senate do its work. We could dispense with this 
bill in 3, 4 hours or less. If someone wants to bring an amendment, let 
them bring an amendment. We have an opportunity to be able to do that.
  The Senator from Arizona was quoted in the Congressional Quarterly on 
November 28 saying:

       We have a debt situation in the country right now. This 
     bill is a big deal. It costs too much.

  Let me state the obvious. Small business is not what caused the debt 
in this country. Even leveraging money to provide loans and venture 
capital and counseling through the SBA is not what caused our debt 
situation. In fact, the SBA suffered disproportionately in budget 
reductions for fiscal year 2002 compared to other departments. The 
President's budget cut the funding for SBA anywhere from 26 to 40 
percent, depending on how you make the analysis.
  Senator Bond and I came in with an amendment. I am pleased to say we 
were able to try to prevent that cut. But let me go back to the comment 
of the Senator from Arizona that it costs too much.
  Mr. KYL. Might I ask the Senator from Massachusetts a question; will 
he yield for a question?
  Mr. KERRY. I will yield for a question.
  Mr. KYL. Since the Senator has invoked my name on several occasions 
and not made it clear when he was connecting various criticisms to my 
name, I would like the opportunity to respond. The problem is, as the 
Senator knows, we have a 10:30 briefing on a very important subject. I 
would like the opportunity prior to that time to be able to respond to 
the comments. Could the Senator advise if he thinks that might be 
possible before 10:30?
  Mr. BOND addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts has the floor.
  Mr. KERRY. Madam President, I want my colleagues to take part in 
this.
  My colleague introduced a bill himself that provides tax credits for 
airplane tickets that costs five times this bill; $4.75 billion the 
Senator's bill costs. What are we talking about when we talk about 
``costs too much?'' Let me ask the Senator from Arizona, could we bring 
this bill to the floor of the Senate within the next couple of days? I 
will curtail my comments, if we could get an agreement to bring this 
bill to the floor.
  Mr. KYL. Madam President, I say to the Senator from Massachusetts 
that he knows very well the administration has significant objections 
to the bill as written, that the President announced almost immediately 
after September 11 emergency programs for small business loans, that 
the White House believes that is sufficient under the circumstances 
today, and that the bill is too expensive for the needs of the people 
about whom the Senator has talked.
  Therefore, until there is more willingness than the Senator has 
expressed--and the Senator has made it clear there is no willingness to 
compromise--then the answer to the question is no.
  I would also be pleased to talk about the other subject, the travel 
and tourism tax credit, as part of the stimulus package, if the Senator 
wished to further yield on that.
  Mr. KERRY. Let me say to the Senator from Arizona, all of the 
analysts, all of the small business entities, the Chamber of Commerce 
of the United States and others, do not find what the administration is 
doing adequate. And the President did not, as you say, announce almost 
immediately after September 11 emergency programs for small business 
loans. The administration waited more than 1 month to act, and they did 
so after OMB put a hold on S. 1499. The consensus of the community is 
that the administration's response is simply not adequate.

  They didn't sit down and talk with the same groups we did in putting 
this bill together. They didn't reach out to the Senators from New York 
to find out what the needs of the city were in doing this the way we 
did. We have done that, and we have even incorporated provisions into 
the bill to address concerns by the administration. The Senate deserves 
to have an appropriate debate notwithstanding. There are plenty of 
things we debate on that the President does not agree with, the White 
House does not agree with.
  I ask my colleague from Missouri whether or not in his judgment he 
thinks what the administration is doing is adequate. Without losing my 
right to the floor, I ask him if he might respond to that.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BOND. Madam President, I concur wholeheartedly with my colleague 
from Massachusetts. The needs of small business are great. Not only the 
small businesses directly impacted in New York and in Virginia by the 
tragic terrorist actions, but many other small businesses throughout 
this country are suffering. I think every Member of this body can tell 
you about general aviation companies in their States who

[[Page S12826]]

were shut down, put out of business for up to a month, some even longer 
because of the FAA restrictions. The bill we have sponsored is very 
modest, $851 million. We are talking about the need.
  We just passed $40 billion in relief. We passed another $20 billion 
on Friday night, an allocation of $20 billion for antiterrorism. We are 
talking about a stimulus that could be anywhere from $40 to $80 
billion.
  The beauty of 1499 is that it only spends money if the small 
businesses that have been crippled as a result of this terrorist action 
will borrow the money and put it to work hiring people, buying goods, 
getting the economy moving again. It is absolutely critical. I ask my 
colleagues to let us debate the bill. Let us bring out the problems on 
the floor.
  If the administration were ultimately to decide we have not made the 
case, then they still have the right to veto it. We cannot get into the 
details of this legislation. My last count was we had 64 Members--at 
least we have over 60 Members supporting the bill. It is something we 
need to do this month because small businesses may be out of business, 
if they are not already, by the time we get back next year. I urge my 
colleagues to let us debate the bill.
  I also join with my colleague from Arizona in saying that it is 
absolutely unconscionable that we not act on the nomination of Eugene 
Scalia, ultimately qualified to be the lawyer for the Secretary of 
Labor. If people have objections to him, let them bring them to the 
floor. I don't think they will withstand the scrutiny of the light of 
day. We have just a few days remaining. It is very important that we 
act on the Secretary of Labor nomination, the lawyer the President 
selected, who is adequately qualified and deeply committed to this 
cause.
  It is absolutely essential that we act now to provide small business 
the stimulus it needs by making it easier to get over the hurdles that 
have been caused by the terrorist acts of September 11 to borrow money 
to get back in business to expand their business. I hope we can vote on 
both of these measures.

  I strongly support my colleague from Massachusetts on the need to 
move to 1499 and my colleague from Arizona on the need to move to the 
appointment of Eugene Scalia. I hope we can get on with both of them.
  Mr. KERRY. I say to my colleague from Arizona, the administration's 
approach proceeds through the economic injury disaster loans. It has a 
subsidy rate--That is a net cost to the taxpayer of running the 
program--of anywhere from 14 to 17 percent, depending on whose estimate 
you use. The base is 14 percent.
  The Kerry-Bond approach, which provides the majority of assistance 
through the 7(a) program loans, has a subsidy rate of 3 percent. So the 
administration's approach is a 14- to 17-percent cost to the taxpayer. 
Our approach is 3 percent to the taxpayer.
  In practical terms, if you fully funded this bill, you could leverage 
more than $25 billion in loans and in venture capital to address the 
market gap in lending.
  Let me say to the Senator from Arizona, under our bill, Arizona could 
make 1,700 small business loans right now. Under the administration's 
program, only one business in Arizona has had any help since September 
11. That is the difference between the bills. The cost to the taxpayer 
is less and the coverage is greater. And the leverage is higher. It is 
a more effective and cost-effective piece of legislation.
  While I am glad the administration finally acted on this program, 
their approach does not allow refinancing. The administration approach 
does not allow deferral of payments. I remember in 1991, when we had 
the RTC and the savings bank problem, we had a lot of programs that 
were falling.
  I am sorry to see the Senator leave. I would love to see if we could 
get agreement to proceed forward.
  Well, Madam President, I hope the record is clear that small 
businesses in this country could be significantly helped if we were to 
proceed forward with this legislation. We now understand that the 
administration and some in the Republican caucus--I regret to say it--
are unwilling to proceed forward to help small businesses with a 
program that would be more effective than what is happening now.
  Let me give an insight into some of the damage suffered. You can look 
at the ground transportation industry, at travel, and at others, all of 
which have viable industries, but they need help to be able to tide 
them over in order to proceed forward. It seems to me that providing 
them with working capital is an essential ingredient.
  Let me quote from the Wall Street Journal of November 6. These are 
the words of John Rutledge, chairman of Rutledge Capital in New Canaan, 
CT, and a former economic adviser to President Reagan:

       Interest rate reductions alone are not enough to jump-start 
     this economy. We need to make sure that cheaper credit 
     reaches the companies that need it. . . . The Fed is cutting 
     interest rates--but the money isn't reaching capital-starved 
     small businesses because Treasury regulators are cracking 
     down on bank loans. Credit rationing, not interest rates, is 
     the real problem with the economy. . . .

  That is exactly the same problem we faced in 1989, 1990, and 1991 
when we had failures in the savings and loan and the banking industry, 
and we had an entity called Recall Management come in to try to process 
some of the small loan portfolios. What happened is a whole lot of 
viable businesses got lumped into the bad loans so that the viable 
businesses were, in effect, put into a category where they could not 
get the credit they needed simply to tide them over. We lost thousands 
of jobs. Viable business was liquidated because of bad judgment. That 
is precisely the situation in which we are now putting people. People 
who have a viable business, who simply need to ride out this momentary 
downturn, which all of us know was exacerbated by the events of 
September 11, need small amounts of working capital in order to be able 
to tide over their workers, to be able to pay the various legal 
obligations they have to stay in business.
  If you don't want to create a cycle of self-fulfilling prophecy, 
where you drag your economy down as a consequence of not helping all of 
these small businesses to be able to sustain those jobs, this is the 
way to do it. If you provide emergency small business lending in a way 
that is in keeping with the emergency efforts in the past, the 
standards of the SBA will still be met. These are not throw-away loans. 
These are loans that can leverage some $25 billion of economic activity 
in the country. That is why this legislation has 62 cosponsors in the 
Senate.
  Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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