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65–518 2011

MARKUP OF THE SMALL BUSINESS 

ADMINISTRATION FISCAL YEAR 2012 BUDGET 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MARKUP HELD 

MARCH 15, 2011 

Small Business Committee Document Number 112–005 

Available via the GPO Website: http://www.fdsys.gov 


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HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

ROSCOE BARTLETT, Maryland 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

CHUCK FLEISCHMANN, Tennessee 

JEFF LANDRY, Louisiana 

JAIME HERRERA BEUTLER, Washington 

ALLEN WEST, Florida 

RENEE ELLMERS, North Carolina 

JOE WALSH, Illinois 

LOU BARLETTA, Pennsylvania 

RICHARD HANNA, New York 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

MARK CRITZ, Pennsylvania 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

JUDY CHU, California 

DAVID CICILLINE, Rhode Island 

CEDRIC RICHMOND, Louisiana 

GARY PETERS, Michigan 

BILL OWENS, New York 

BILL KEATING, Massachusetts 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, General Counsel 

MICHAEL DAY, Minority Staff Director 


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C O N T E N T S 

Opening Statements: 

Graves, Hon. Sam ............................................................................................. 1 

Vela ́zquez, Hon. Nydia M ................................................................................ 2 

APPENDIX 

Views and Estimates of the Committee on Small Business on Matters to 

be set forth in the Concurrent Resolution on the Budget for Fiscal Year 

2012 ....................................................................................................................... 4 

Statements for the Record: 

Cicilline, Hon. David N .................................................................................... 23 

Clarke, Hon. Yvette D ...................................................................................... 26 

Chu, Hon. Judy ................................................................................................. 28 


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MARKUP OF THE SMALL BUSINESS 

ADMINISTRATION FISCAL YEAR 2012 BUDGET 

TUESDAY, MARCH 15, 2011 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 1:34 p.m., in Room 

2360, Rayburn House Office Building, Hon. Sam Graves [chairman 

of the Committee] presiding. 

Present: Representatives Graves, Coffman, Mulvaney, Tipton, 

Fleischmann, West, Ellmers, Walsh, Barletta, Hanna, Vela ́zquez, 

Schrader, Altmire, Clarke, Cicilline, Owens, and Keating. 

Chairman GRAVES. We will go ahead and call this markup to 

order. 

Two weeks ago, the Committee heard from Administrator Mills 

about the Small Business Administration’s budget for 2012. The 

Committee now has the opportunity to provide its opinion on the 

budget for the SBA. The Views and Estimates considered today will 

be transmitted to Chairman Ryan for incorporation into the Congressional budget resolution. 

The past few years have been very difficult for small businesses. 

They have had their credit lines cut, they have lost customers, and 

they have laid off workers. And these businesses have had to reduce their expenses, including overhead. 

The federal government faces very similar constraints, and the 

chasm of the deficit requires tough choices to be made. There appears to be no effort put forth by the Administration to eliminate 

duplicative programs that are costing taxpayers millions of dollars. The Views and Estimates before us cut nearly $100 million from 

the SBA budget. Fourteen programs are defunded because they duplicate existing programs at the SBA or they are duplicated at 

other agencies. Other programs receive no recommendations of 

funds where there is an absence of any evidence that they are actually helping small businesses create new jobs. 

Despite these cuts, the core functions of the SBA—to make capital available, to provide advice, and to increase the utilization of 

small businesses as federal government contractors—is preserved. 

In fact, through some very judicious reallocation of funds, the services available to entrepreneurs will be improved over the SBA 

budget proposal that was given to us. 

The Committee recognizes the potential for fraud and abuse in 

various SBA programs. And, as a result, the Views and Estimates 

provide additional funds for modernizing the Loan Management 


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Accounting System and the Office of Inspector General to address 

those very concerns. 

And, finally, but for the need to fund SBA guaranteed lending 

programs, without which small businesses cannot obtain needed 

capital to create jobs, the Views and Estimates under consideration 

today represents a $155 million cut in the SBA budget request for 

fiscal year 2010. 

I now recognize the ranking member for opening remarks. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Today’s consideration of the Committee’s Views and Estimates on 

the SBA budget proposal could not be happening at a more critical 

time. In recent months, it has become clear that the economy is 

showing progress on many fronts; however, employment gains are 

lagging. And it is in this respect that the SBA can play an important role. 

Unfortunately, the SBA continues putting its own unauthorized 

programs ahead of other proven initiatives. This includes seven initiatives, at a cost of more than $50 million. Yet, no performance 

metrics accompany these sizeable requests. We all need to tighten 

our belt, and it begins with proposals like this. 

Just as the administration is creating its own programs outside 

of the legislative process, it is defunding initiatives that have been 

documented to have a pattern of success. The SBDC programs, for 

instance, which saw its core budget cut by $10 million, produces 

nearly $3 in Federal revenue for every $1 spent. It simply makes 

no sense to divert money from reputable programs and give it to 

the agency’s untested projects. 

The SBA also continues picking which programs to administer 

and which to overlook. It sees fit to implement the 504 refinancing 

and the intermediary pilot programs, even though they risk taxpayers’ dollars excessively and offer little in the way of meaningful 

job creation. And over the past 5 years, the SBA has dumped millions into an ineffective IT system, the Loan Management Accounting System. But when it comes to other initiatives, such as the Increased Veterans Participation Program, which was passed into 

law 3 years ago, the agency cannot find any money. 

Little attention is also paid to solving SBA’s most pressing problems, such as the ongoing fraud in its contracting and delegated 

authority in the lending programs. If we are going to spend additional money, it should go toward cleaning up waste and abuse so 

that the agency’s existing programs actually work and help small 

businesses. 

With regard to the majority’s Views and Estimates letter, I support several provisions. The letter recommends the elimination of 

several unauthorized pilot programs, as well as the questionable 

initiatives created in the Small Business Jobs Act of 2010. It is correct to terminate those programs if they have not demonstrated 

any value to the taxpayer. 

However, there are several areas of concern. By proposing to 

eliminate funding for the Veterans Business Outreach Center, it is 

limiting the ability of the 190,000 veterans from Iraq and Afghanistan to launch their own businesses. Veterans who have a high 

rate of entrepreneurship need more outreach, not less, regardless 

of the cost. As we seek to tighten the SBA’s belt, we should not be 


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doing so at the expense of those who have already sacrificed so 

much for our Nation. On this basis alone, Members should take 

pause in adopting these views. 

With regard to ending frivolous programs, we missed an opportunity to send a clear message on the administration’s proposed 

SBIC subprograms. The Views letter sent inconsistent signals by 

first stating that funds should not be made available for these initiatives; then, it seemingly contradicts itself by stating that, if a 

new program is created, the SBA should do so with a separate 

credit subsidy rate. This gives the agency at least tacit approval to 

go forward with this unauthorized project. As a result, the Views 

are permitting the exact sort of wasteful spending that we are concerned with stopping. 

I am concerned regarding all other wasteful unauthorized programs in any form, and we will make this clear in our Views. 

As we all know, it is not uncommon to disagree on budget priorities. While the chairman and I may not fully agree on our Views, 

I think it is clear that we are both disappointed in the agency’s priorities. The inconsistency in its funding request is indicative of an 

agency that needs to rethink its priorities. 

Just as the recent downturn required entrepreneurs to think 

more strategically, the SBA should be doing the same. What this 

Committee needs to see is a refocusing on initiatives that have 

positively impacted business owners while giving taxpayers a reasonable return on their investment. 

With that, I yield back. 

Chairman GRAVES. Thank you. 

Are there any other Members who wish to be recognized for a 

statement on the Views and Estimates? 

Mr. Cicilline. 

Mr. CICILLINE. Thank you, Mr. Chairman. I do have some remarks that I would like to, with unanimous consent, ask be included in the record. 

Chairman GRAVES. Thank you very much. No objection, we will 

include them in the record. 

Any other Members wish to be heard? 

The Committee now moves to the consideration of the Views and 

Estimates letter. 

The clerk will read the title of the document. 

The CLERK. Views and Estimates of the Committee on Small 

Business on matters to be set forth in the Concurrent Resolution 

on the Budget for Fiscal Year 2012. 


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Chairman GRAVES. I would ask unanimous consent that the 

Views and Estimates letter be considered as read and open for 

amendment in its entirety. 

Does any Member seek recognition for the purpose of offering an 

amendment? 

Seeing none, the question is on adopting the Views and Estimates letter. 

All those in favor, please say, ‘‘Aye.’’ 

All those opposed, say, ‘‘No.’’ 

The ayes appear to have it. It is the opinion of the chair that the 

ayes do have it. The Views and Estimates letter is agreed to. 

And I now recognize the ranking member for a motion. 

Ms. VELA ́ ZQUEZ. Yes, Mr. Chairman, I want to provide the Committee notice that Democrats will be filing separate Views with the 

Committee on the Budget. 

Chairman GRAVES. Without objection, so ordered. 

And I would ask unanimous consent that the Committee be authorized to correct punctuation and make any other necessary technical changes in the document considered today. 

And, without objection, that is so ordered. 

I do want to, real quick, before we finish, welcome Mr. Hanna 

from New York and Mr. Barletta from Pennsylvania to the Committee, our brand-new members. And I appreciate them being here 

today. 

And, with that, the hearing is adjourned. Thank you. 

[Whereupon, at 1:44 p.m., the committee was adjourned.] 


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