[Congressional Record Volume 150, Number 67 (Thursday, May 13, 2004)]
[Senate]
[Pages S5385-S5386]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             SPURRING AN ECONOMIC RECOVERY IN RURAL AMERICA

  Mr. DASCHLE. Mr. President, last month the Department of Commerce 
reported that my home State of South Dakota had the Nation's second-
highest rate of growth in per-capita personal income during 2003.
  This surely comes as welcome news to many South Dakotans who have 
struggled to make ends meet during our Nation's recent economic 
downturn.
  But now is not the time for us to congratulate ourselves. Too many 
Americans still can't find work. Too many Americans still don't have 
health insurance. And of those lucky enough to have health insurance, 
too many Americans can barely afford it.
  Last Thursday, Alan Greenspan warned that rising deficits threaten 
the long-term stability of our economy and he is right.
  We need sound fiscal policies that preserve and protect the health of 
our economy. We must do everything we can to ensure that the economic 
recovery finally takes hold, and that the benefits of the recovery 
extend to all Americans, not just to a privileged few.
  Unfortunately, even after last year's encouraging growth in personal 
income, South Dakotans still tend to earn far less than the national 
average, and the same is true for many other rural States in our 
region.
  Even worse, average income figures conceal wide disparities in wealth 
between those at the top and those at the bottom even within our 
States. Sadly, rates of poverty in many parts of rural America are 
worse than we find in countries we often consider to be ``developing.'' 
This is a quiet national crisis that we must address.
  To reduce the prosperity gap between rural States and the rest of the 
Nation, Congress has created a variety of Federal programs designed 
specifically to promote rural economic development.
  Unfortunately, the administration proposes to cut many of these 
programs, despite the positive results they have achieved. Instead of 
pulling the rug out from under those who need our help the most, we 
should be supporting programs that provide a helping hand to farmers, 
ranchers, and small businesspeople in rural areas.
  With our help, they can bring the benefits of economic recovery to 
more Americans than ever before.
  Small businesses are the backbone of this economy. According to the 
Small Business Administration, or SBA, businesses with 500 or fewer 
employees are responsible for roughly three-quarters of net job 
creation in this country. In my State, and in many other rural States, 
this figure is even higher.
  According to the FDIC the 7(a) program is one of the single largest 
sources of long-term capital to small businesses in this country. By 
providing lenders a guarantee against default by small borrowers, it 
provides capital to those borrowers on more favorable terms than they 
could get anywhere else.
  This is not a big-government handout, as some might be tempted to 
claim. It is a helping hand from the government to the invisible hand 
of the market.
  So I was disappointed in January when the SBA was forced to 
temporarily suspend its most successful small business loan program, 
the 7(a) Loan Guarantee Program, because the Bush administration failed 
to support sufficient operating funds.
  Unfortunately, this is the most recent manifestation of the 
administration's history of underfunding successful small business 
programs. According to the FDIC, the 7(a) program is one of the single 
largest sources of long-term capital to small businesses in the 
country.
  By providing lenders a guarantee against default by small borrowers, 
it provides capital to those borrowers on more favorable terms than 
they get anywhere else. This is not a big government handout as some 
might be tempted to claim. It is a helping hand from the government to 
the invisible hand of the market. With the funds acquired through the 
7(a) program, small businesspeople are free to expand their operations 
as they see fit, and their positive record of job creation shows 
plainly that they know how to do so effectively.
  For all of its rhetoric about supporting small business, how much did 
the Bush administration devote to this key program in the proposed 
budget for the upcoming year?
  Not one dollar. The administration actually proposes to eliminate the 
funding for the 7(a) program--in effect, doing away with the single 
most helpful nudge the Government can provide to these businesses. In 
my view, this is not the way to boost job creation.
  The abandonment of the 7(a) program is not an isolated case. It is 
part of a larger pattern of cuts to programs that always have assisted 
small business especially.
  Consider the SBA's Microloan Program. Under this program, the SBA 
provides funds to qualified nonprofit organizations which then make up 
loans of up to $35,000 to new and existing small business. According to 
the SBA, the average loan is around $10,500. The nonprofit lenders that 
participate in the program also provide management and technical 
assistance to borrowers to ensure that they have the skills necessary 
to succeed. Since the Microloan Program was established in 1992, it has 
facilitated more than 12,500 loans with $102 billion. Despite the fact 
that the borrowers who benefit from this program tend to have 
relatively low credit ratings which makes them unattractive to 
commercial lenders, the program has had only one loss to date. Few 
government programs can match that record of success. And few provide 
as much value to able entrepreneurs. Regrettably, the administration 
has proposed eliminating this program, as well.
  Another critical area that has been shortchanged is the small 
business outreach in Indian country. Native Americans continue to 
suffer from rates of unemployment far greater than those that existed 
in America even during the Great Depression. Part of this problem stems 
from the lack of an active small business community in much of Indian 
country and a lack of resources to help stimulate the creation of such 
a community.
  Years of experience with efforts to reduce poverty in Indian country 
have taught us that market-based, business-oriented approaches hold the 
greatest promise for success. But the market will not eliminate poverty 
on its own in Indian country. The neglect by the Federal Government has 
gone on far too long. The poverty is too extreme, too deep rooted.

[[Page S5386]]

  We need special outreach efforts dedicated to bringing new business 
skills and financial resources to Native-American communities. But 
these efforts have fallen victim to the administration's budget 
priorities. For the second year in a row, the administration has 
proposed to eliminate all funding for Native-American business 
outreach.
  The list of small business programs on the chopping block is too long 
to mention here. Cumulatively, the SBA has already seen its resources 
reduced by this administration by 25 percent, giving it the unfortunate 
distinction of being the most cut of all 26 Federal agencies. This, to 
me, does not demonstrate a commitment to economic development in job 
creation. We need to restore adequate funding to the SBA.

  While the SBA's budget has suffered the deepest cuts under the 
administration, it is not the only agency that has seen its small 
business and rural development programs cut. The Treasury Department 
oversees a fund that provides capital to community development 
financial institutions, or CDFIs. These are specialized private sector 
institutions that provide financial products and services to people and 
communities underserved by traditional financial markets.
  The Treasury Department estimates that every dollar it invests in a 
CDFI leverages 12 non-Federal or private sector dollars.
  There are 13 CDFIs in South Dakota, and they do enormous good. The 
Lakota Fund is one that operates on the Pine Ridge Indian Reservation. 
The two counties that make up the reservation are the twenty-sixth and 
second poorest counties in America. Few areas need economic development 
as badly as Pine Ridge.
  When the Lakota Fund began lending in 1986, there were 40 businesses 
on the reservation, and most of them were owned by nontribal members. 
Today, thanks in large measure to the financial and technical 
assistance delivered by the Lakota Fund, Pine Ridge has nearly 100 
businesses, and many of them are owned by members of the Oglala Sioux 
Tribe.
  If the more than 800 CDFIs around the United States had more funds to 
lend, there is no telling how much good they could achieve. But instead 
of helping CDFIs meet the growing demand for their services, the 
administration has underfunded them dramatically. This year, like last 
year, it requested only three-fifths of what the CDFIs received in 
2002.
  The President's proposed budget cuts also provide cuts in the 2002 
Farm Bill. Democrats worked alongside Republicans to establish new 
initiatives under the Department of Agriculture to bring new jobs and 
opportunities to rural communities. When the President signed the Farm 
Bill into law, many people believed those programs would become a 
reality. I believed the President when he expressed his support for 
those programs with the stroke of his pen. But since then, many of 
these programs have languished due to inaction or even opposition by 
the White House.
  From my State and several neighboring States, including Iowa, 
Minnesota, Nebraska, and North Dakota, the establishment of a Northern 
Great Plains Regional Authority was one of the most exciting features 
of the Farm Bill. This authority was modeled on the successful 
Appalachian Regional Commission, which demonstrated the power of a 
regional approach to economic development.
  Unfortunately, nearly 3 years after its creation, the Northern Great 
Plains Regional Authority has yet to fulfill even a fraction of its 
promise, in large part because the administration has not fulfilled the 
responsibilities to the Authority. The administration failed to appoint 
Federal and tribal cochairs to lead the Authority, and it has failed to 
support any funding for the Authority's activities.
  Other programs in the Farm Bill are also neglected. The Rural 
Business Investment Program, which is supposed to provide millions of 
dollars to private companies willing to invest and leverage that money 
in rural areas, has not been implemented even though the Farm Bill was 
enacted over 2 years ago.
  The same goes for the Rural Strategic Investment Program which was 
designed to help rural areas develop plans to attract new investment.
  And the list of underfunded programs goes on and on. They include 
cuts to firefighter assistance grants, coupled with proposed changes in 
the eligibility criteria to favor urban areas; cuts in assistance for 
rural hospitals, where costs are rising fast--many rural hospitals are 
already in danger of having to close their doors; cuts to USDA 
community facility loans, which help finance construction of fire 
halls, clinics, daycare centers, senior centers, and critical community 
facilities; cuts to rural housing loans; cuts to rural electric 
contribution and telecommunication programs.

  It is hard to understand how we can slash and eliminate programs that 
are designed specifically to strengthen the economy of rural America 
and then claim to be champions of rural communities and small business.
  Unfortunately, the President's two-word solution to the economic 
struggles of rural America is the same two-word answer he offers on 
virtually every other problem: tax cuts. In the face of exploding 
deficits and rising health care costs that threaten the long-term 
sustainability of our economy, the President continues to insist on the 
wrong kinds of tax cuts.
  Many of us support tax cuts if they are smart, if they are targeted, 
if they are fair, if they are affordable. The right kinds of tax cuts 
can help stimulate the economy during times of economic distress.
  That is why some of us introduced S. 2245 to create a small business 
health tax credit that would reduce the burden of health costs on small 
business and enable them to retain and hire more workers. That is also 
why we worked to reach a compromise on the estate tax that would exempt 
all but the very richest Americans and fully exempt farms, ranches, and 
small businesses that parents pass on to their children.
  But tax cuts cannot be our only weapon in the battle against rural 
poverty. Independent analysis shows the vast majority of small 
businesses receive little or no benefit from the President's tax cuts.
  And let us not forget that these cuts have a cost, or as Chairman 
Greenspan put it, ``The free lunch has still to be invented.''
  In order to help finance his tax cuts, the President has proposed 
cutting or eliminating program after program designed to help small 
business and residents of rural America.
  If the choice is between ruinously expensive tax cuts that 
overwhelmingly benefit the wealthiest Americans and proven, cost-
effective, and desperately needed economic development programs for 
rural America, I think the answer should be clear. We should stick with 
what works. We should invest in the targeted, proven solutions we know 
will bring new prosperity to Main Street, not just to Wall Street.
  We need to continue to support programs designed to improve the 
quality of life in rural America, and we need to uphold our common 
commitment to ensuring that those programs succeed.
  Mr. President, I yield the floor.

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