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33–614 PDF 2008

FULL COMMITTEE MARKUP OF

VIEWS AND ESTIMATES ON THE

SMALL BUSINESS ADMINISTRATION’S

PROPOSED BUDGET FOR FY 2008

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

FEBRUARY 28, 2007

Serial Number 110-2.1

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

JUANITA MILLENDER-McDONALD, 

California 

WILLIAM JEFFERSON, Louisiana 

HEATH SHULER, North Carolina 

CHARLIE GONZA ́ LEZ, Texas 

RICK LARSEN, Washington 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

HENRY CUELLAR, Texas 

DAN LIPINSKI, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

BRUCE BRALEY, Iowa 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

STEVE CHABOT, Ohio, Ranking Member 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

STEVE KING, Iowa 

JEFF FORTENBERRY, Nebraska 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio 

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KEVIN FITZPATRICK, Minority Staff Director

STANDING SUBCOMMITTEES 

MELISSA BEAN, Illinois, Chairwoman 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

DEAN HELLER, Nevada, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

Subcommittee on Contracting and Technology

BRUCE BRALEY, IOWA, Chairman 

WILLIAM JEFFERSON, Louisiana 

HENRY CUELLAR, Texas 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

JOE SESTAK, Pennsylvania 

DAVID DAVIS, Tennessee, Ranking 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

MARY FALLIN, Oklahoma

(II) 

Subcommittee on Regulations, Health Care and Trade

CHARLES GONZA ́ LEZ, Texas, Chairman 

WILLIAM JEFFERSON, Louisiana 

RICK LARSEN, Washington 

DAN LIPINSKI, Illinois 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

LYNN WESTMORELAND, Georgia, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

MARILYN MUSGRAVE, Colorado 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

JIM JORDAN, Ohio

Subcommittee on Urban and Rural Entrepreneurship

HEATH SHULER, North Carolina, Chairman 

RICK LARSEN, Washington 

MICHAEL MICHAUD, Maine 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JEFF FORTENBERRY, Nebraska, Ranking 

ROSCOE BARTLETT, Maryland 

MARILYN MUSGRAVE, Colorado 

DEAN HELLER, Nevada 

DAVID DAVIS, Tennessee

Subcommittee on Investigations and Oversight

JASON ALTMIRE, PENNSYLVANIA, Chairman 

JUANITA MILLENDER-McDONALD, 

California 

CHARLIE GONZA ́ LEZ, Texas 

RAUL GRIJALVA, Arizona 

LOUIE GOHMERT, Texas, Ranking 

LYNN WESTMORELAND, Georgia

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page

Vela ́zquez, Hon. Nydia M. ....................................................................................... 1

Chabot, Hon. Steve .................................................................................................. 2

Moore, Hon. Gwen ................................................................................................... 3

APPENDIX 

Prepared Statements: 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 7

Chabot, Hon. Steve .................................................................................................. 9

(V) 

(1)

FULL COMMITTEE MARKUP OF THE 

VIEWS AND ESTIMATES ON THE 

SMALL BUSINESS ADMINISTRATION’S 

PROPOSED BUDGET FOR FY 2008

Wednesday, February 28, 2007

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:00 a.m., in Room 

2360, Rayburn House Office Building, Hon. Nydia Vela ́zquez 

[chairman of the Committee] presiding. 

Present: Representatives Vela ́zquez, Jefferson, Shuler, Gonza ́lez, 

Larsen, Grijalva, Lipinski, Moore, Altmire, Ellsworth, Johnson, 

Sestak, Chabot, Bartlett, Akin, Westmoreland, Heller, Fallin, Buchanan and Jordan. 

OPENING STATEMENT OF CHAIRWOMAN VELA ́ ZQUEZ 

Chairwoman VELA ́ ZQUEZ. The Committee is called to order. 

Today, the Committee fulfills its responsibility under the Budget 

Act with our consideration of the views and estimates for the SBA 

fiscal year 2008 budget. The views before us today make it clear 

that the administration’s request is simply not the right priorities 

for the future of our small businesses. 

The budget simply does not do enough to help our businesses 

face the challenges of the 21st century. The proposed funding continues the six-year decline in federal small business programs. SBA 

expenditures have now been cut nearly in half in those six years. 

As such, this represents the lowest percentage of federal discretionary spending on small business programs in decades. 

We have heard over and over again that you cannot measure the 

agency’s success purely by its funding, yet it is not coincidence that 

these cuts have occurred at the same time that we have seen a 

number of mishaps at the SBA. Loans intended to ease the 9/11 

tragedy have gone to the wrong businesses. Small business contracts are being awarded to some of the world’s largest corporations. Allegations of fraud in the agency’s lending programs, and 

the debacle that was Katrina, still continues. 

At a time when entrepreneurs are facing historically high health 

care and energy costs, and unprecedented competition from overseas, it would seem appropriate to invest in programs designed to 

assist small businesses. However, 17 out of 26 core programs in the 

SBA are being cut, flat funded, or terminated by the President’s 

budget. No one program receives any significant increase. 

2

Small business development centers, women’s business centers, 

and SCORE are all flat funded, while being directed to provide additional services. Under this budget, the women’s business center 

program will have seven centers eliminated, though it served the 

fastest-growing sector in our economy. 

The administration also proposes elimination of the funding for 

the microloan initiative and its technical assistance programs, 

which provides small loans to low-income communities. These attacks on the program are despite the fact that the microloan program has had only two defaults in 10 years, yet the cuts could cost 

a small borrower $4,000 over the life of the loan and reduce demand. 

The budget provides nothing to reduce the cost of the 7(a) loan 

guarantee program for small business borrowers. This comes at a 

time when the number of participating lenders is declining, and the 

average loan size has fallen by about 40 percent in four years. It 

also fails to provide funds to reopen the agency’s venture capital 

program. This will leave many entrepreneurs without the resources 

to grow and expand their businesses. 

I believe that Administrator Preston wants to run a helpful agency and to be candid and straightforward in working with Congress. 

I know each one of us aims to help SBA do better, but rebuilding 

takes more than good intentions and hard work. It also takes faith 

and some investment in the future of our small businesses. 

We can start that process today by adopting these views and estimates and recommending a budget that charts a course towards accountability and recovery for our small business program. 

I look forward to working with my colleagues on the Committee 

and the administration to see to it that the SBA has the resources 

it needs to assist our future entrepreneurs. 

And now I will recognize the Ranking Minority, Mr. Chabot, for 

his opening statement. 

OPENING STATEMENT OF MR. CHABOT 

Mr. CHABOT. Thank you, Madam Chair. Thank you. I’d like to 

thank Chairwoman Vela ́zquez for holding this markup today on the 

Committee’s views and estimates of the President’s proposed budget for the Small Business Administration. 

While I am in agreement with the Chairwoman on aspects of the 

majority’s views and estimates document, I will be filing separate 

views in the next day or so. One of the most important things we 

can do as a Committee is to ensure that the SBA has the tools it 

needs to fulfill its mission to help small businesses—the backbone 

of our nation’s economic prosperity and recovery. 

I believe the President’s budget request proposes realistic funding levels and would strengthen budget authority levels for most 

SBA programs. The budget request proposes to cut fees, hire more 

procurement center representatives to help more small businesses 

obtain federal contracts, and increases services to veterans. 

However, as I said at our budget hearing, not everything in the 

SBA’s budget request is perfect. For example, I believe that many 

of the entrepreneurial development programs at the SBA should 

have received at least an inflationary increase. If the SBA can receive more than an inflationary increase to pay for higher staff salVerDate 0ct 09 2002 09:04 Mar 04, 2008 Jkt 033615 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 G:\CLERK SB\HEARINGS\TRANSCRIPTS\02-28-07 BUDGET MARK-UP.TXT LEANN
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ary costs and rent, I believe that small business development centers and women’s business development centers deserve similar increases, because they face identical pressures. Furthermore, I support additional increases in the number of personnel allocated to 

the function of procurement center representative. 

Beginning with tomorrow’s hearing on increasing access to capital for our nation’s small businesses, this Committee will begin 

taking the first steps towards reauthorizing the SBA and its programs—a process that hasn’t been completed since 2002. It is important that the SBA and its programs be thoroughly reviewed and 

evaluated to improve what is working and to fix what isn’t. 

I look forward to beginning the reauthorization process and yield 

back the balance of my time. 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Chabot. 

Does any other member wish to be recognized on the views and 

estimates? Ms. Moore is recognized for five minutes. 

OPENING STATEMENT OF MS. MOORE 

Ms. MOORE. Thank you so much, Madam Chair and the Ranking 

Member, for your very sage comments. I was very pleased—very 

pleased to associate myself with the response of you, Madam Chairwoman, to the Budget Committee. I think that this document really lays out with a great deal of clarity some of the problems with 

the SBA loan programs. 

I think it is probably a very worthy goal of SBA to try the zero 

subsidy program and have the programs pay for themselves. But 

what we have seen is that our economic engine in this country—

everybody agrees that 90 percent plus of our businesses—our small 

businesses—they simply cannot thrive without—even as the Ranking Member has said, without an inflationary increase at a minimum. 

Our biggest program—the 7(a) loan program—we have seen the 

fees passed on to both borrowers and lenders, substantially increasing, as you’ve pointed out, the cost of these programs to borrowers. 

And, of course, lenders don’t have any incentive to work in these 

programs. 

Some of our other programs that are very popular with non-profit, and so forth, again, with the zero-based subsidy there is a huge 

disincentive for intermediaries to get involved with these loan products. And the consolidation into the S&E lines of some of the programs that serve many minority programs is very troubling as 

well. 

I think that we can’t have it both ways. My Mom would say you 

can’t talk out of both sides of your mouth. You can’t say on one 

hand that you want to help small businesses, and then basically 

cut all of the resources that you would have. 

I think that there are many programs in the United States, in 

the Federal Government, that we can fund, but this is an investment in SBA. It is an investment that will—that with the multiplier effect will be seen by the growth in job development that we 

create. 

Thank you. I yield back. 

Chairwoman VELA ́ ZQUEZ. Thank you. Does any other member 

wish to be recognized on the views and estimates? 

4

[No response.] 

Seeing no other members wishing to be recognized, we will now 

move that the Committee adopt the views and estimates. All those 

in favor say aye. 

All those, say no. 

In the opinion of the chair, the ayes have it. 

Mr. CHABOT. Madam Chair? 

Chairwoman VELA ́ ZQUEZ. Yes. 

Mr. CHABOT. I ask for a recorded vote. 

Chairwoman VELA ́ ZQUEZ. A recorded vote is requested. The Clerk 

shall call the roll. 

The. CLERK. Ms. Vela ́zquez. 

Chairwoman VELA ́ ZQUEZ. Aye. 

The. CLERK. Ms. Vela ́zquez votes aye. 

Mrs. Millender-McDonald. 

[No response.] 

Mr. Jefferson. 

[No response.] 

Mr. Shuler. 

Mr. SHULER. Aye. 

The. CLERK. Mr. Gonza ́lez. 

Mr. GONZA ́LEZ. Aye. 

The. CLERK. Mr. Larsen. 

[No response.] 

Mr. Grijalva. 

Mr. GRIJALVA. Aye. 

The. CLERK. Mr. Michaud. 

[No response.] 

Ms. Bean. 

[No response.] 

Mr. Cuellar. 

[No response.] 

Mr. Lipinski. 

[No response.] 

Ms. Moore. 

Ms. MOORE. Yes. 

The. CLERK. Mr. Altmire. 

Mr. ALTMIRE. Aye. 

The. CLERK. Mr. Braley. 

[No response.] 

Ms. Clarke. 

[No response.] 

Mr. Ellsworth. 

Mr. ELLSWORTH. Yes. 

The. CLERK. Mr. Johnson. 

[No response.] 

And Mr. Sestak. 

Mr. SESTAK. Yes. 

The. CLERK. Mr. Chabot. 

Mr. CHABOT. No. 

The. CLERK. Mr. Bartlett. 

[No response.] 

Mr. Graves. 

[No response.] 

5

Mr. Akin. 

[No response.] 

Mr. Shuster. 

[No response.] 

Ms. Musgrave. 

[No response.] 

Mr. King. 

[No response.] 

Mr. Fortenberry. 

[No response.] 

Mr. Westmoreland. 

[No response.] 

Mr. Gohmert. 

[No response.] 

Mr. Heller. 

[No response.] 

Mr. Davis. 

[No response.] 

Ms. Fallin. 

Ms. FALLIN. No. 

The. CLERK. Mr. Buchanan. 

[No response.] 

Mr. Jordan. 

Mr. JORDAN. No. 

Chairwoman VELA ́ ZQUEZ. Any other member who wishes to cast 

their vote or change their vote? 

Mr. AKIN. How am I recorded? 

The. CLERK. Mr. Akin, your vote? 

Mr. AKIN. Is no. 

Mr. ORBAN. Mr. Westmoreland is here now, too. 

The. CLERK. Mr. Akin votes no. 

Mr. Westmoreland. 

Mr. WESTMORELAND. No. 

Mr. ORBAN. Roscoe Bartlett is also here. 

The. CLERK. Mr. Bartlett. 

Mr. BARTLETT. No. 

The. CLERK. Mr. Bartlett votes no. 

Mr. ORBAN. Mr. Heller is also here. 

The. CLERK. Mr. Lipinski. 

Mr. LIPINSKI. Aye. 

The. CLERK. Mr. Johnson. 

Mr. JOHNSON. Aye. 

The. CLERK. Mr. Johnson votes aye. 

Mr. ORBAN. Mr. Heller. 

Mr. HELLER. No. 

The. CLERK. Mr. Heller votes no. 

Chairwoman VELA ́ ZQUEZ. Any other members who wish to cast 

their vote or change their vote? 

[No response.] 

If not, the Clerk will report. 

The. CLERK. Madam Chair, the total ayes are 10, with total—or 

12, with total 6—

Mr. ORBAN. Madam Chair, could I ask how Mr. Buchanan is recorded? 

6

The. CLERK. Mr. Buchanan had not voted. Mr. Buchanan. 

Mr. BUCHANAN. No. 

The. CLERK. Mr. Buchanan votes no. 

Mr. Larsen. 

Mr. LARSEN. Yes. 

The. CLERK. Mr. Larsen votes yes. 

Chairwoman VELA ́ ZQUEZ. Any other members wish to be recorded 

or change their vote? 

[No response.] 

If not, please, the Clerk will report. 

The. CLERK. Madam Chair, the ayes 13, the nays 7. 

Chairwoman VELA ́ ZQUEZ. Well, the Committee agrees to the 

views, and should be submitted to the budget. I recognize Mr. 

Chabot for the purpose of a motion. 

Mr. CHABOT. Thank you, Madam Chair. We will be offering a 

separate view in the next day or so. 

Chairwoman VELA ́ ZQUEZ. Thank you. Well, let the record reflect 

that this meeting is now adjourned. Thank you. 

[Whereupon, at 10:19 a.m., the Committee was adjourned.]

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