[Congressional Record Volume 158, Number 60 (Wednesday, April 25, 2012)]
[Senate]
[Pages S2732-S2734]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Ms. SNOWE (for herself, Ms. Landrieu, and Mrs. Shaheen):
S. 2364. A bill to extend the availability of low-interest
refinancing under the local development business loan program of the
Small Business Administration; to the Committee on Small Business and
Entrepreneurship.
Ms. SNOWE. Mr. President, I rise today to urge my colleagues to
support a one-year extension of the Small Business Administration, SBA,
504 loan refinancing program that was originally authorized in the
Small Business Jobs Act of 2010. This bill would allow small business
owners to use 504 loans to refinance up to 90 percent of existing
commercial mortgages.
The 504 loan program provides approved small businesses with long-
term, fixed-rate financing used to acquire fixed assets for expansion
or modernization. According to the SBA, as of February 15, 2012, the
$50 billion in 504 loans has created over 2 million jobs. The
refinancing option in the Small Business Jobs Act authorized $7.5
billion in refinancing until September 27, 2012. Unfortunately, because
of a delay in promulgating regulations to enable refinancing, the
program did not become operational until a few months ago,
significantly shortening the period of time that business could
refinance existing 504 loans. The 504 loan program also comes at no
cost to taxpayers, has created jobs and will provide much needed relief
to businesses for one additional year.
America's small business owners face a daunting business life cycle
that is volatile at best: according to the SBA, while seven out of 10
new employer firms survive for at least 2 years, only \1/3\ of these
firms exist after 10 years. These failure rates are quite constant for
different industries. Yet one factor that is a bell-weather for success
is access to capital. The SBA identifies the
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major factors in a firm's survivability as including: an ample supply
of capital, being large enough to have employees, the owner's education
level, and the owner's reason for starting the firm.
Clearly, the drive of an entrepreneur is a major factor in start-ups
where statistics from the 2008 ``Report to the President on the Small
Business Economy'' delivered by SBA's Office of Advocacy, show that in
2005, more than 12 million individuals were involved in starting 7
million ventures. After six years, only one third of entrepreneurs have
a working business despite the fact that they put in 9.9 billion hours
of uncompensated time in 2005 launching their businesses. These
uncompensated hours represented 2.7 percent of total paid work in the
United States that year and almost one half of the hours for all
American self-employed workers. That is an incredible effort of time
and talent and a show of great risk taking.
A number of small businesses utilize 504 loans as long-term, fixed-
rate financing used to acquire fixed assets for expansion or
modernization. These 504 loans are made available through Certified
Development Companies, CDCs, SBA's community based partners for
providing 504 loans. The 504 loan program offers small businesses both
immediate and long-term benefits, so business owners can focus on
growing their business. These benefits include 90 percent financing,
longer loan amortizations, no balloon payments, fixed-rate interest
rates, and savings that result in improved cash flow for small
businesses.
Generally, a business must create or retain one job for every $65,000
guaranteed by the SBA under this program. Small manufacturers must
create or retain a ratio of one job for every $100,000 guaranteed. In
addition, the 504 program serves to revitalize a business district,
expand exports, promote small businesses owned and controlled by women,
minorities and veterans, especially service-disabled veterans, aid
rural development, and increase productivity and competitiveness.
As I mentioned at the outset of my remarks, the 504 program is a job
creator that does not receive any appropriated funds. The 1-year
extension of the refinancing for the 504 loan program will allow
businesses to retain employees and it also comes at zero cost to
taxpayers. These are solid measures that will help small businesses at
a time when many small enterprises are struggling to keep their
employees and run basic operations. I ask my colleagues to support this
legislation as swiftly as possible, as our Nation's capital-starved
small businesses deserve no less.
______
By Mr. ALEXANDER (for himself, Mr. McConnell, Mr. Enzi, Mr. Kyl,
Mr. Cornyn, Mr. Wicker, Mr. Inhofe, Mr. Barrasso, Mrs.
Hutchison Mr. Blunt, Mr. Hoeven, Mr. Johanns, Mr. Coats, and
Mr. Isakson):
S. 2366. A bill to extend student loan interest rates for
undergraduate Federal Direct Stafford Loans; placed on the calendar.
Mr. ALEXANDER. Mr. President, I would like to talk a little bit more
specifically this morning about the issue of interest rates on student
loans. President Obama is busy this week traveling to campuses across
America to talk about student loans. It is a noble goal to talk about
making it easier for students to afford college. It is a goal we all
share.
But I am afraid the President is not telling the whole story. Because
if he were to tell the whole story, what he would have to tell the
students is that the principal reason for the rise in tuition at public
colleges and universities and community colleges across America and the
principal reason for the increase in student loans is President Obama
himself and his own health care policies.
To be fair, he did not start many of these policies. They have been
going on for a good while. But he has made them worse over the last
several years. When the new health care law goes into effect in 2014,
with its new mandates on States, we will find an exaggeration of what
has already been happening, which is that Federal health care mandates
on States are soaking up the money States otherwise would spend on the
University of Oklahoma, and Tennessee, and the State University of New
York.
When States do not support their public colleges and universities,
which is where approximately three-quarters of our college students
attend, then their only choice is either to become more efficient, to
decrease their quality or to raise tuition. Most of them are trying to
do all three.
So Federal health care policies are the main reason tuition is up,
and the reason tuition is up is the main reason debt is up.
Specifically, what we are talking about, and what the President has
been talking about, is a 3.4-percent interest rate for some student
loans.
Here are some facts about that. The President has proposed that for 1
year, for new Stafford subsidized loans, rates would remain at 3.4
percent. Governor Romney agrees with him. I agree with him. So there is
substantial support from both the President and his probable Republican
opponent in the Presidential race for this next year. New loans, after
July 1, which are now at 3.4 percent, would stay at 3.4 percent. The
benefit to students who get the advantage of that lower rate--most
other loans are at 6.8 percent by law--is about $7 a month, according
to the Congressional Research Service.
All this talk is about offering students the benefit of about $7 a
month for new loans. It is important to notice that no student who has
a 3.4-percent loan today will see his or her interest rate go up. I
will say that again. If you have a loan and you are going to the
University of North Carolina and are paying 3.4 percent today, your
rate will not go up on July 1. The law only affects new loans, and it
doesn't affect 60 percent of loans. For 60 percent of those getting new
loans after July 1, they will continue to pay the 6.8 percent set by
Congress a long time ago.
I am glad the President is bringing this issue up, because the real
driver of higher tuition and higher interest rates is the President's
own policies--in two ways: The government and congressional Democrats
who passed the health care law are actually overcharging students--all
students--on student loans and using some of the money to pay for the
health care law. These aren't just my figures. The CBO said when the
new health care law passed, Congress took $61 billion of so-called
savings--I call them profits on student loans--and it spent $10 billion
to reduce the debt, $8.7 billion on the health care law, and the rest
on Pell grants.
How does that work? How could Congress be overcharging students?
Well, under the health care law, the government borrows money at 2.8
percent. The government then loans to students at 6.8 percent. That
produces a profit. The Congressional Budget Office has said that the
Congress could have lowered the interest rate from 6.8 to 5.3 percent
and save all students $2,200 over the life of their average 10-year
loan. I am introducing legislation today on my behalf and on behalf of
others called the Student Interest Rate Reduction Act. This law
proposes to keep the interest rate at 3.4 percent for subsidized
Stafford loans beginning July 1 of this year, just as the President and
Governor Romney proposed. We will pay for that by taking back the money
that the Congress overcharged students on their student loans under the
health care law.
This 1-year solution, as I said, will save students about $7 a month
on interest payments on their new loans, or about $83 a year. It will
cost the taxpayers about $6 billion, which will be paid for by
reductions in savings from the new health care law.
Let's talk a moment about the real cost of tuition and student debt
going up--that is, Federal health care policies. When I was Governor of
Tennessee in the 1980s, the same thing would happen every year as I
made up my State budget, and it is happening today in every State
capital in America. I would work through all the things we had to fund
with State tax dollars--the roads, the schools, the prisons, and the
various State agencies. Then I would get down to the end of the
budgeting process and have some money left. The choice would always be
between Medicaid and higher education--our public colleges and
universities. I spent my whole 8 years as Governor trying to keep the
amount we gave to Medicaid down so that I could increase the
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amount for colleges and universities, because I thought that was the
future of our State.
In fact, we had a formula then that said if you went to a public
college or university, the taxpayer would pay for 70 percent of it and
the student would pay for 30 percent. If we raised your tuition, we
would raise the State's share. We kept that 70/30. That is now turned
completely around in Tennessee, where it is closer to 30/70 now; the
student pays 30 percent and the taxpayers pay nearly 70 percent. This
shift is because Medicaid mandates from Washington on every State have
forced Governors and legislatures to take the money they would
otherwise spend for public colleges and universities and spend it
instead for Medicaid. As a result, State colleges and universities have
less money, and to get more money, they must raise tuition.
When tuition goes up at the University of California, and you see
students protesting, the reason is because of Washington. As I said,
President Obama didn't invent this problem--this is a 30-year old
problem--but he has made it worse. He made it worse with laws that say
when States have less money, they have to spend more on Medicaid. If
they are told from Washington to spend more on Medicaid, even though
they have less revenues, they are going to spend less on something
else. So they spend less on the University of California, or the State
University of New York, or the University of Tennessee.
Last year in Tennessee, State funding for Medicaid went up 16 percent
in actual dollars; as a result, State funding for community colleges
and the University of Tennessee went down 15 percent in real cuts. That
was not a cut in growth. That was a real cut. What did the state
colleges and universities do? They raised tuition 8 percent. What did
students do? They borrowed more money.
I have been trying to get this point across ever since I became a
Senator. I said during the health care debate that everybody who voted
for it ought to be sentenced to serve as Governor for 8 years in his or
her State so they would understand this problem.
We cannot continue to order the States to spend more for Medicaid and
expect our great colleges and universities to be affordable and
continue to be the best in the world. That is the real reason why
tuition is going up and loans are going up.
Here are the facts. There are still good options for students. I
mentioned earlier that the average cost of tuition at a 4-year public
university in America is about $8,200. For a community college, it is
around $3,000. There are many scholarships to help them go there. It is
true that loans are going up to very high levels. It is true that there
are some abuses here and there--within the for-profit and other parts
of the higher education system. But it is also true that in the United
States we not only have some of the best colleges and universities in
the world, we have almost all of them. Many of them are public colleges
and universities. They are at risk today. Why? Because of Federal
health care policies that are hamstringing States and soaking up the
money that States should be using to fund the universities of this
country and the community colleges of this country.
Mr. President, again, I am introducing today the Student Loan
Interest Rate Reduction Act. It addresses exactly the subject President
Obama is talking about on the campaign trail these days. How do we keep
the interest rate on subsidized Stafford loans, the new loans that
began July 1--how do we keep that at 3.4 percent for 1 year? Governor
Romney supports that. President Obama supports that. I support that.
The only difference is how we pay for it. It will cost $6 billion.
Our friends on the Democratic side have come up with their usual
methods of paying for it: They are going to raise taxes on small
business and people who create jobs.
We have a little better idea on this side, which is, let's take the
$8.7 billion back that the Federal Government overcharges students on
student loans today to help pay for the health care law and give it
back to the students, and let's extend this for 1 year. That will leave
nearly $3 billion extra, which we can use to shore up the Pell grant
funding gap that is expected over the next couple of years.
Respectfully, I say to President Obama, when you visit the next
college campus, tell the whole story. It is hard to attend and pay for
college. There are many good options. Debt is up. But in fairness, the
principal reason tuition is rising, and therefore debt is rising, is
because of President Obama's own health care policy. He didn't start
it, but he made it worse. What he has done is put into place a set of
policies that are soaking up the money States would use to fund public
colleges and universities and community colleges across this country,
forcing them to use that money for Medicaid. As a result, the
universities and community colleges have less money, they raise
tuition, and that is the principal reason why we have higher tuition
and higher interest rates.
The way to stop that would be to either repeal the health care law or
repeal the Medicaid mandates. That would improve the quality of
American public higher education, and it would improve access to higher
education. It would slow down the rising of tuition and slow down the
rising of student debt.
______
By Mr. CONRAD (for himself and Mr. Crapo):
S. 2367. A bill to strike the word ``lunatic'' from Federal law, and
for other purposes; to the Committee on Banking, Housing, and Urban
Affairs.
Mr. CONRAD. Mr. President, today I am pleased to be joined by Senator
Crapo in introducing the 21st Century Language Act of 2012. This
bipartisan legislation updates federal law by eliminating references
that contribute to the stigmatization of mental health conditions.
Specifically, this legislation removes the word ``lunatic'' from
several sections of the United States Code to reflect our nation's
modern understanding of mental health conditions.
Recently, a North Dakota constituent contacted my office to express
support for legislative efforts to remove this outdated and
inappropriate language from federal law. Senator Crapo and I agree that
federal law should reflect the 21st century understanding of mental
illness and disease, and that the continued use of this pejorative term
has no place in the U.S. Code.
Senator Crapo and I have worked with the Senate Banking Committee to
confirm that ``lunatic'' is an unnecessary term and that its removal
will have no impact on the broader federal law. This legislation enjoys
strong support from a number of mental health advocates across the
nation, including the National Alliance on Mental Illness, Mental
Health America, National Council on Community Behavioral Healthcare,
and the Clinical Social Work Association. I hope my colleagues will
join me in working to pass this overdue update to the U.S. Code.
____________________