[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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