[Congressional Record Volume 153, Number 185 (Wednesday, December 5, 2007)]
[Senate]
[Pages S14754-S14757]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 LEGISLATIVE AND APPROPRIATIONS PROCESS

  Mr. COBURN. Mr. President, let me, first of all, take a minute to 
talk about this bill for which unanimous consent was just requested. I 
think it is important in light of what the majority leader just said. 
Here we have a bill for which unanimous consent was requested. The 
American people need to understand what it means to get unanimous 
consent. It means all of us agree to it. It does not need to be further 
amended, it does not need to be changed, and it should be passed 
without ever having a vote on it.
  This bill has a section in it that so far has lost over $3.5 billion 
of your money doing venture capital investing by the Small Business 
Administration. The OMB analysis says there is absolutely no need for 
this venture capital investment, especially because of the fact it has 
lost such a great amount of money. And venture capital investing itself 
is a highly risky business that requires tremendously acute knowledge 
and people of great acumen in terms of investing, and they lose lots of 
money investing.
  The last thing we ought to be doing at the end of a session is 
passing a bill without vetting it, without debating it, without talking 
about the problems that are in the bill. This portion of the bill, the 
portion that is the Small Business Venture Capital Act, if anything, 
should come out of this bill. We should not reauthorize something that 
has lost already in excess of $3 billion, and something for which we do 
not get to look at the results until 10 years after it happens.
  The last thing we ought to be doing is investing the American 
people's money in venture capital when we cannot pay for the things we 
need to be paying for that the American people are dependent on. I look 
forward to working with Senator Kerry. I have had a good relationship 
with him. We will sit down and talk about this bill. But I think it 
highlights what we need to be doing and not spending time in quorum 
calls but spending time debating bills.
  I also want to spend a minute on this issue. I think the American 
people ought to be asking us about this. Here we sit, and we have one 
appropriations bill passed for the year that started October 1. I think 
I am correct. Other than the THUD bill, there has been no objection 
raised by the minority to proceeding to any of the appropriations 
bills. As a matter of fact, the choice was made not to bring up the 
appropriations bills in a timely manner and debate them because of the 
choice it was not a priority.
  I do recall the tremendous criticism we rightly received for what 
happened last year in the appropriations process. What is going to 
happen? I am happy to be here for Christmas to do the business we 
should have already done. But let me lay out what will happen, and then 
let me also give a warning. At the end of sessions, what happens is we 
get the request to pass all sorts of legislation--much like this bill 
to which I just objected. Committees do good work on legislation. But a 
bill that has passed committee has to be agreed to by a majority of the 
Senators to be able to become law.
  When we do unanimous consents, that means we are going to let it pass 
without looking at it, without amending it, and without voting on it. 
Well, at the end of the year, the time pressure comes. Everybody wants 
to get something passed. So what happens is we do a poor job of 
legislating because we do not look at it. We do not amend it. We do not 
have a debate so the American people can know about it. We just pass 
it.

  I sent a letter to all of my colleagues today outlining and 
reinforcing four statements I made at the first of this year. I will 
object to any bill coming forward by unanimous consent at the end of 
the session unless it meets the requirements I laid out. That means no 
new authorizations unless you deauthorize something else. We are not 
going to grow the Government any more when we cannot pay for the 
Government we have. No. 2, it has to be constitutional. It has to be a 
true duty of the Federal Government, not an obligation of the State 
governments that we are going to stand up for, when they have a $6 
billion to $7 billion surplus. Easily, when you look at any combination 
of any 10 States, they have an over $36 billion surplus totally, and we 
are running, in real numbers--non-Enron accounting but real numbers--a 
$250 billion surplus.
  I am not going to allow--unless we want to put it on the Senate 
floor, unless we want to debate it--I am not going to allow us to pass 
bills at the end of the session by unanimous consent. So if you have a 
bill that you want to try to pass by unanimous consent, I would suggest 
we sit down and talk about it now, not 2 weeks from tomorrow but now. 
If they come in the last week, we will not have the time to look at 
them. So not agreeing to unanimously consider the bill as passed will 
be the standard fare.
  Now, let's talk about the appropriations process. What we have is $23 
billion more than what we agreed we are going to pass in total for the 
appropriations bills, not counting the emergency things we have already 
done that we have charged to our grandchildren. As the game is played 
in Washington, what will come is the pressure of chicken. We are going 
to play chicken because we chose not to do the appropriations bills at 
the appropriate time, and lots of Members have lots of earmarks in 
bills.
  So they do not want us to continue to fund where we are. They want us 
to have an omnibus bill where we can have all these earmarks, about $26 
billion worth of earmarks, so we can look good at home--not 
competitively bid, not based on priorities but based on our political 
priorities individually as Senators. We are going to spend about $23 
billion more than what we said we are going to spend. That $23 billion 
is almost $300 billion over the next 10 years. And we are fighting 
about $80 billion on an AMT fix for 1 year. But we are not 
concentrating on the fact we are going to institute $300 billion worth 
of more spending.
  I will remind my colleagues again, we do not have to raise taxes. We 
can eliminate the AMT. What we do not want to do, and what we fail to 
do, is get rid of the waste, fraud, abuse, and duplication that numbers 
in excess of $250 billion every year--every year--because we will not 
do the hard work of oversight.
  So we are going to line up, and we are going to get a package from 
the House, and we are going to get a chance to vote on it, and the 
President has already said he is going to veto it if it has this excess 
number and all these earmarks in it. I would think this would be better 
than playing chicken: Why don't we live within our means like every 
family has to? That $250 billion comes to 20 percent of everything we 
spend in the discretionary budget. If you ask homeowners and families 
who are having a lot of pressure now, would they dare waste 20 percent 
of their budget, would they dare not look and reconsider how they are 
spending their money when it comes to their family budget, they would 
not. Yet we continuously refuse to do the hard work of oversight. We do 
not want to offend anybody. In the process we are offending the next 
two generations. My hope is we don't end up here at Christmas, but I 
was dead serious when I took my oath. I am going to defend the 
Constitution and I am going to work to make sure bills that are outside 
of that Constitution don't pass this body. I am going to defend my 
obligation to the next two generations and the heritage this country 
was built on--one generation sacrificing for the next--so future 
opportunity is there. I am going to do everything in my power to not 
let $23 billion of extra spending go through this Senate at the end of 
the year. Now, I may not be successful in that, but at the end of the 
day, I am going to sleep real well knowing I am fulfilling my oath, 
knowing that I know what the Constitution says. When we get outside the 
bounds of the Constitution, in terms of Federal responsibility, what we 
do is we say in name we are helping somebody and we are charging it to 
our grandchildren and undermining the very opportunity we all 
experience.

[[Page S14755]]

  My hope is we can come together during this season and say: Let's get 
it right. Let's not spend a bunch of extra money. Let's put it back. We 
could be facing some pretty severe economic times in this country in 
terms of how things look, especially people who were sold homes and 
mortgages they didn't qualify for and now are struggling. How are we 
going to address that? How are we going to help them through that? How 
are we going to accomplish that which empowers people, not Government? 
We need to be working on those things. We do not need to be spending 
the extra money now that we may, in fact, need to spend later. We may, 
in fact, need to borrow money later. So we should be doing the job 
right the first time, staying within our means, doing what is 
necessary, even though it offends people who might not get something 
from the Federal Government through an earmark.
  I believe the people of the Senate are great people. I believe, 
ultimately, they want what is great for this country. I know all of 
those who have children and grandchildren wish and hope for the very 
best for their lives and to experience the kind of opportunities we 
have had. But I wish to tell my colleagues it is at risk. It is not a 
small risk, it is a great risk. Mr. President, 2012 is coming fast; 
2012, that day when the baby boomers are taking both Social Security 
and Medicare, when we start down this road of $79 trillion worth of 
unfunded mandates. How can we be trusted to fix those problems when we 
can't even live within our own budget?
  I said before, about a year and a half ago on this floor, that there 
is a rumble in America and it is real. The American people are sick and 
tired of the partisan games we play. They don't want to see Republicans 
pointing their fingers at Democrats. They don't want to see Democrats 
pointing their fingers at Republicans. What they want us to do is the 
job of governing within our means.
  Our problem is we have difficulty identifying what is most important: 
Our political careers or the future of the country. What gets in front 
of us too often is how do we look good at home rather than how do we 
look good in the future so we secure the promise America stands for. My 
hope is we will work together.
  One final comment on the farm bill. We need a farm bill, but we don't 
need a farm bill that continues to have programs that wealthy people 
who aren't real farmers take advantage of--people who aren't farmers, 
yet suck the money out of the farm program. Twenty percent of our 
farmers produce 80 percent of our goods, but a large portion of the 
farm program goes to gentlemen farmers--doctors, lawyers, who happen to 
own a small acreage and then suck the programs dry for their own 
benefit for things they could very well afford to pay for. So the farm 
bill isn't going to go forward until we have an open amendment process.
  I agree with the majority leader. We shouldn't have all of these 
votes that aren't necessarily related to the farm bill, but we should 
certainly fix the crop insurance program. We should certainly mandate 
that if you are getting a government benefit as a farmer, you ought to 
be a farmer. You shouldn't be an investor who is investing in making 
money off the hard-earned tax dollars of middle-class America. That is 
what too much of the farm program is. We shouldn't be setting about 
saying that if we are going to incentivize to get greater production, 
and then all of a sudden if somebody is successful at it, then you 
can't do it anymore. If an incentive is put in place to work, then 
let's make it work. We haven't done that with ethanol. We haven't said 
you can only produce so much ethanol. So if an incentive works, we 
ought to use it. But we ought to make sure the people getting those 
incentives are real farmers.
  Again, I thank the Chair for his indulgence and I yield back the 
remainder of my time.
  Mr. KERRY. Mr. President, today the Senate tried to call up and pass 
an amended version of S. 1662, the Small Business Venture Capital Act 
of 2007. There was objection to the bill based on a concern that it 
reauthorized the SBA's Small Business Investment Company Participating 
Securities program, a program which the Office of Management and Budget 
has predicted will have losses of about $3 billion.
  The amendment pending before the full Senate does not reauthorize the 
SBIC Participating Securities program. That provision was taken out of 
the bill in October when the committee first circulated the proposed 
amendment to colleagues and the parties notified their members that the 
committee would like to pass the bill by unanimous consent.
  Equity financing like the SBIC Participating Securities program is 
important to the continuum of small business financing, and testimony 
before our committee this summer emphasized the need for a reformed 
program to fill the void left by the private sector. However, as the 
report to S. 1662 clarifies, Congress could not find common ground with 
the administration on reforming the program and so the committee 
included a token reauthorization amount to signal to the business 
community that it understood the need for small equity investments and 
that there was support for the Small Business Investment Company 
program in general.
  The bill reauthorizes through 2010 the Small Business Investment 
Company Debenture program, and the New Markets Venture Capital program. 
Venture capital is a critical driver of our economy and job creation. 
Since the creation of the SBIC program almost 50 years ago, the country 
has benefited from hundreds of thousands of jobs. Some examples of 
success stories include businesses that are now household names--
Calaway Golf, Intel, Jenny Craig, Outback Steakhouse, and Federal 
Express. Through the SBA's New Markets Venture Capital program, which 
has only been making investments for a couple of years, businesses in 
areas with the highest national employment, such as in the Appalachia 
region of Kentucky, have gotten access to more than $48 million in 
patient investment capital and created hundreds of jobs with 
sustainable wages and health care benefits. Senator Snowe and I worked 
with the SBA in drafting S. 1662, and the committee of jurisdiction 
adopted it unanimously--by a vote of 19 to 0.
  Further, we understand concerns about moving legislation last minute 
and we try to avoid that. In this case, our committee voted out this 
bill in June, giving colleagues with concerns more than 5 months to 
review the legislation. And in anticipation of moving this bill by 
unanimous consent committee staff reached out to other offices in 
October. We have tried for 6 weeks to discuss the bill and identify any 
possible concerns. We gave those offices copies of the bill, the 
report, the CBO cost estimate, explained what was in the amendment to 
be hotlined, and provided a copy of the revised CBO cost estimate that 
reflected striking the section that reauthorized the SBIC participating 
securities program and the section that triggered direct spending. The 
bill has a very modest cost, reduces the historic authorization levels, 
and has the potential to have a very positive impact on the economy, 
through investment and job creation. We would be happy to work with our 
colleagues to try and clarify any other misunderstandings and to work 
through any substantive concerns. I ask unanimous consent that a copy 
of the amendment be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Small Business Venture 
     Capital Act of 2007''.

     SEC. 2. DEFINITIONS.

       In this Act--
       (1) the terms ``Administration'' and ``Administrator'' mean 
     the Small Business Administration and the Administrator 
     thereof, respectively;
       (2) the term ``low-income geographic area'' has the meaning 
     given that term in section 351 of the Small Business 
     Investment Act of 1958 (15 U.S.C. 689), as amended by this 
     Act;
       (3) the term ``New Markets Venture Capital company'' has 
     the meaning given that term in section 351 of the Small 
     Business Investment Act of 1958 (15 U.S.C. 689); and
       (4) the term ``New Markets Venture Capital Program'' means 
     the program under part B of title III of the Small Business 
     Investment Act of 1958 (15 U.S.C. 689 et seq.).

     SEC. 3. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Definitions.
Sec. 3. Table of contents.

[[Page S14756]]

           TITLE I--SMALL BUSINESS INVESTMENT COMPANY PROGRAM

Sec. 101. Reauthorization.
Sec. 102. Leverage.
Sec. 103. Investments in smaller enterprises.
Sec. 104. Maximum investment in a company.

             TITLE II--NEW MARKETS VENTURE CAPITAL PROGRAM

Sec. 201. Diversification of New Markets Venture Capital Program.
Sec. 202. Establishment of Office of New Markets Venture Capital.
Sec. 203. Low-income geographic areas.
Sec. 204. Applications for New Markets Venture Capital Program.
Sec. 205. Operational assistance grants.
Sec. 206. Authorization.

           TITLE I--SMALL BUSINESS INVESTMENT COMPANY PROGRAM

     SEC. 101. REAUTHORIZATION.

       Section 20 of the Small Business Act (15 U.S.C. 631 note) 
     is amended by inserting after subsection (e) the following:
       ``(f) Small Business Venture Capital.--For the programs 
     authorized under part A of title III of the Small Business 
     Investment Act of 1958 (15 U.S.C. 681 et seq.), the 
     Administrator is authorized to make--
       ``(1) $2,000,000,000 in guarantees of debentures for fiscal 
     year 2007;
       ``(2) $2,250,000,000 in guarantees of debentures for fiscal 
     year 2008;
       ``(3) $2,500,000,000 in guarantees of debentures for fiscal 
     year 2009; and
       ``(4) $2,750,000,000 in guarantees of debentures for fiscal 
     year 2010.''.

     SEC. 102. LEVERAGE.

       (a) In General.--Section 303(b)(2) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 683(b)(2)) is amended to 
     read as follows:
       ``(2) Maximum leverage.--
       ``(A) In general.--The maximum amount of outstanding 
     leverage made available to any 1 company licensed under 
     section 301(c) may not exceed the lesser of--
       ``(i) 300 percent of private capital; or
       ``(ii) $150,000,000.
       ``(B) Multiple licenses under common control.--The maximum 
     amount of outstanding leverage made available to 2 or more 
     companies licensed under section 301(c) that are commonly 
     controlled (as determined by the Administrator) may not 
     exceed $225,000,000.
       ``(C) Investments in women-owned and minority-owned 
     businesses and in low-income geographic areas.--
       ``(i) In general.--The maximum amount of outstanding 
     leverage made available to--

       ``(I) any 1 company described in clause (ii) may not exceed 
     the lesser of--

       ``(aa) 300 percent of private capital; or
       ``(bb) $175,000,000; and

       ``(II) 2 or more companies described in clause (ii) that 
     are commonly controlled (as determined by the Administrator) 
     may not exceed $250,000,000.

       ``(ii) Applicability.--A company described in this clause 
     is a company licensed under section 301(c) that certifies in 
     writing that not less than 50 percent of the dollar amount of 
     investments of that company shall be made in companies that, 
     prior to that investment, are owned by women or minorities 
     (as determined by the Administrator) or are located in a low-
     income geographic area (as that term is defined in section 
     351).
       ``(D) Exception.--The Administrator may, on a case-by-case 
     basis, impose such additional terms and conditions relating 
     to the maximum amount of outstanding leverage made available 
     as the Administrator determines to be appropriate to minimize 
     the risk of loss to the Administration in the event of a 
     default.''.
       (b) Technical and Conforming Amendments.--Section 303(b) of 
     the Small Business Investment Act of 1958 (15 U.S.C. 683(b)) 
     is amended by striking paragraph (4).

     SEC. 103. INVESTMENTS IN SMALLER ENTERPRISES.

       Section 303(d) of the Small Business Investment Act of 1958 
     (15 U.S.C. 683(d)) is amended to read as follows:
       ``(d) Investments in Smaller Enterprises.--The 
     Administrator shall require each licensee, as a condition of 
     an application for leverage, to certify in writing that not 
     less than 25 percent of the aggregate dollar amount of 
     financings of that licensee shall be provided to smaller 
     enterprises.''.

     SEC. 104. MAXIMUM INVESTMENT IN A COMPANY.

       Section 306(a) of the Small Business Investment Act of 1958 
     (15 U.S.C. 686(a)) is amended by striking ``20 per centum'' 
     and inserting ``30 percent''.

             TITLE II--NEW MARKETS VENTURE CAPITAL PROGRAM

     SEC. 201. DIVERSIFICATION OF NEW MARKETS VENTURE CAPITAL 
                   PROGRAM.

       (a) Selection of Companies in Each Geographic Region.--
     Section 354 of the Small Business Investment Act of 1958 (15 
     U.S.C. 689c) is amended by adding at the end the following:
       ``(f) Geographic Goal.--In selecting companies to 
     participate as New Markets Venture Capital companies in the 
     program established under this part, the Administrator shall 
     have as a goal to select, from among companies submitting 
     applications under subsection (b), at least 1 company from 
     each geographic region of the Administration.''.
       (b) Participation in New Markets Venture Capital Program.--
       (1) Administration participation required.--Section 353 of 
     the Small Business Investment Act of 1958 (15 U.S.C. 689b) is 
     amended in the matter preceding paragraph (1), by striking 
     ``under which the Administrator may'' and inserting ``under 
     which the Administrator shall''.
       (2) Small manufacturer participation.--Section 353(1) of 
     the Small Business Investment Act of 1958 (15 U.S.C. 689b(1)) 
     is amended by inserting after ``section 352'' the following: 
     ``(with a goal of at least 1 such agreement to be with a 
     company engaged primarily in the development of and 
     investment in small manufacturers, to the extent 
     practicable)''.

     SEC. 202. ESTABLISHMENT OF OFFICE OF NEW MARKETS VENTURE 
                   CAPITAL.

       Title II of the Small Business Investment Act of 1958 (15 
     U.S.C. 671) is amended by adding at the end the following:

     ``SEC. 202. OFFICE OF NEW MARKETS VENTURE CAPITAL.

       ``(a) Establishment.--There is established in the 
     Investment Division of the Administration, the Office of New 
     Markets Venture Capital.
       ``(b) Director.--The head of the Office of New Markets 
     Venture Capital shall be an individual appointed in the 
     competitive service or excepted service.
       ``(c) Responsibilities of Director.--The responsibilities 
     of the head of the Office of New Markets Venture Capital 
     include--
       ``(1) to administer the New Markets Venture Capital Program 
     under part B of title III;
       ``(2) to assess, not less frequently than once every 2 
     years, the nature and scope of the New Markets Venture 
     Capital Program and to advise the Administrator on 
     recommended changes to the program, based on such assessment;
       ``(3) to work to expand the number of small business 
     concerns participating in the New Markets Venture Capital 
     Program; and
       ``(4) to encourage investment in small manufacturing.''.

     SEC. 203. LOW-INCOME GEOGRAPHIC AREAS.

       (a) In General.--Section 351 of the Small Business 
     Investment Act of 1958 (15 U.S.C. 689) is amended--
       (1) by striking paragraph (2);
       (2) by redesignating paragraphs (3) through (8) as 
     paragraphs (2) through (7), respectively; and
       (3) in paragraph (2), as so redesignated--
       (A) in the matter preceding subparagraph (A)--
       (i) by striking ``the term'' and inserting ``The term''; 
     and
       (ii) by striking ``means'';
       (B) by striking subparagraph (A) and inserting the 
     following:
       ``(A) means a `low-income community' within the meaning of 
     section 45D(e) of the Internal Revenue Code of 1986 (relating 
     to the new markets tax credit); and''; and
       (C) in subparagraph (B), in the matter preceding clause 
     (i), by inserting ``includes'' before ``any area''.
       (b) Application of Amended Definition to Capital 
     Requirement.--The definition of a low-income geographic area 
     in section 351 of the Small Business Investment Act of 1958, 
     as amended by subsection (a), shall apply to capital raised 
     by a New Markets Venture Capital company before, on, or after 
     the date of enactment of this Act.

     SEC. 204. APPLICATIONS FOR NEW MARKETS VENTURE CAPITAL 
                   PROGRAM.

       Not later than 1 year after the date of enactment of this 
     Act, the Administrator shall prescribe standard documents for 
     an application for final approval by a New Markets Venture 
     Capital company under section 354(e) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 689c(e)). The Administrator 
     shall ensure that such documents are designed to 
     substantially reduce the cost burden of the application 
     process on a company making such an application.

     SEC. 205. OPERATIONAL ASSISTANCE GRANTS.

       (a) In General.--Section 358(a)(4)(A) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 689g(a)(4)(A)) is amended 
     to read as follows:
       ``(A) New markets venture capital companies.--
     Notwithstanding section 354(d)(2), the amount of a grant made 
     under this subsection to a New Markets Venture Capital 
     company shall be equal to the lesser of--
       ``(i) 10 percent of the private capital raised by the 
     company; or
       ``(ii) $1,000,000.''.
       (b) Conforming Amendment and Limitation on Time for Final 
     Approval of Companies.--Section 354(d) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 689c(d)) is amended to read 
     as follows:
       ``(d) Requirements to Be Met for Final Approval.--The 
     Administrator shall grant each conditionally approved company 
     2 years to raise not less than $5,000,000 of private capital 
     or binding capital commitments from one or more investors 
     (other than agencies or departments of the Federal 
     Government) who met criteria established by the 
     Administrator.''.

     SEC. 206. AUTHORIZATION.

       Section 368(a) of the Small Business Investment Act of 1958 
     (15 U.S.C. 689q(a)) is amended--
       (1) in the matter preceding paragraph (1), by striking 
     ``fiscal years 2001 through 2006'' and inserting ``fiscal 
     years 2007 through 2010''; and
       (2) in paragraph (2), by striking ``$30,000,000'' and 
     inserting ``$20,000,000''.

  Mr. KERRY. 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.

[[Page S14757]]

  Mr. SPECTER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________