[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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