May 25, 1995 CONGRESSIONAL RECORD— SENATE S7495 

Services (GATS). In order to provide effective leverage in these talks, legislation to reform Section 310(b) should explicitly provide 

for the Government to take on such an obligation. If the WTO basic telecommunications services negotiations are not successful, the U.S. will take a most-favored-nation exception for basic telecommunications 

services under the GATS. 

Third, the bill’s market-segment-for-market-segment approach should be dropped to 

allow market opening generally balanced 

among telecommunications services markets. 

Fourth and finally, the bill’s ‘‘snapback’’

provision is a unilateral provision to remove 

negotiated benefits which would be unacceptable to us if proposed by other nations 

for themselves. It is unnecessary insofar as 

the FCC can already condition authorizations and reopen them if the conditions later 

are not met, consistent with U.S. international obligations. 

f 

MESSAGES FROM THE PRESIDENT 

Messages from the President of the 

United States were communicated to 

the Senate by Mr. Thomas, one of his 

secretaries. 

f 

EXECUTIVE MESSAGES REFERRED 

As in executive session the PRESIDING OFFICER laid before the Senate messages from the President of the 

United States submitting sundry nominations which were referred to the appropriate committees. 

(The nominations received today are 

printed at the end of the Senate proceedings.) 

f 

REPORT ON THE STATE OF SMALL 

BUSINESS—MESSAGE FROM THE 

PRESIDENT—PM 53 

The PRESIDING OFFICER laid before the Senate the following messages 

from the President of the United 

States, together with an accompanying 

report; which was referred to the Committee on Small Business. 

To the Congress of the United States: 

I am pleased to forward my second 

annual report on the state of small 

business, and to report that small businesses are doing exceptionally well. 

Business starts and incorporations 

were up in 1993, the year covered in 

this report. Failures and bankruptcies 

were down. Six times as many jobs 

were created as in the previous year, 

primarily in industries historically 

dominated by small businesses. 

Small businesses are a critical part 

of our economy. They employ almost 60 

percent of the work force, contribute 54 

percent of sales, account for roughly 40 

percent of gross domestic product, and 

are responsible for 50 percent of private 

sector output. More than 600,000 new 

firms have been created annually over 

the past decade, and over much of this 

period, small firms generated many of 

the Nation’s new jobs. As this report 

documents, entrepreneurial small businesses are also strong innovators, producing twice as many significant innovations as their larger counterparts. 

In short, a great deal of our Nation’s 

economic activity comes from the 

record number of entrepreneurs living 

the American Dream. Our job in Government is to make sure that conditions are right for that dynamic activity to continue and to grow. 

And we are taking important steps. 

Maintaining a strong economy while 

continuing to lower the Federal budget 

deficit may be the most important step 

we in Government can take. A lower 

deficit means that more savings can go 

into new plant and equipment and that 

interest rates will be lower. It means 

that more small businesses can get the 

financing they need to get started. 

We are finally bringing the Federal 

deficit under control. In 1992 the deficit 

was $290 billion. By 1994, the deficit was 

$203 billion; we project that it will fall 

to $193 billion in 1995. 

Deficit reduction matters. We have 

been enjoying the lowest combined rate 

of unemployment and inflation in 25 

years. Gross domestic product has increased, as have housing starts. New 

business incorporations continue to 

climb. We want to continue bringing 

the deficit down in a way that protects 

our economic recovery, pays attention 

to the needs of people, and empowers 

small business men and women. 

CAPITAL FORMATION

One area on which we have focused 

attention is increasing the availability 

of capital to new and small enterprises, 

especially the dynamic firms that keep 

us competitive and contribute so much 

to economic growth. 

Bank regulatory policies are being 

revised to encourage lending to small 

firms. Included in the Credit Availability Program that we introduced in 

1993 are revised banking regulatory 

policies concerning some small business loans and permission for financial 

institutions to create ‘‘character 

loans.’’

New legislation supported by my Administration and enacted in September 

1994, the Reigle Community Development and Regulatory Improvement Act 

of 1994, establishes a Community Development Financial Institutions Fund 

for community development banks, 

amends banking and securities laws to 

encourage the creation of a secondary 

market for small business loans, and 

reduces the regulatory burden for financial institutions by changing or 

eliminating 50 banking regulations. 

Under the Small Business Administration Reauthorization and Amendments Act of 1994, the Small Business 

Administration (SBA) is authorized to 

increase the number of guaranteed 

small business loans for the next 3 

years. The budget proposed for the SBA 

will encourage private funds to be directed to the small businesses that 

most need access to capital. While continuing cost-cutting efforts, the plan 

proposes to fund new loan and venture 

capital authority for SBA’s credit and 

investment programs. Changes in the 

SBA’s 7(a) guaranteed loan program 

will increase the amount of private sector lending leveraged for every dollar 

of taxpayer funds invested in the program. 

Through the Small Business Investment Company (SBIC) program, a 

group of new venture capital firms are 

expected to make available several billion dollars in equity financing for 

startups and growing firms. The SBIC 

program will continue to grow as regulations promulgated in the past year 

facilitate financing with a newly created participating equity security instrument. 

And the Securities and Exchange 

Commission’s simplified filing and registration requirements for small firm 

securities have helped encourage new 

entries by small firms into capital 

markets. 

We are recommending other changes 

that will help make more capital available to small firms. In reauthorizing 

Superfund, my Administration seeks to 

limit lender liability for Superfund remediation costs, which have had an adverse effect on lending to small businesses. Interagency teams have been 

examining additional cost-effective 

ways to expand the availability of 

small business financing, such as new 

options for expanding equity investments in small firms and improvements to existing microlending efforts. 

We’ve also recognized that we can 

help small business people increase 

their available capital through tax reductions and incentives. We increased 

by 75 percent, from $10,000 to $17,500, 

the amount a small business can deduct as expenses for equipment purchases. Tax incentives in the 1993 

Budget Reconciliation Act are having 

their effect, encouraging long-term investment in small firms. And the empowerment zone program offers significant tax incentives—a 20 percent wage 

credit, $20,000 in expensing, and tax-exempt facility bonds—for firms within 

the zones. 

REGULATION AND PAPERWORK

But increasing the availability of 

capital to small firms is only part of 

the battle. We also have to make sure 

that Government doesn’t get in the 

way. And we’re making progress in our 

efforts to create a smaller, smarter, 

less costly and more effective Government that is closer to home—closer to 

the small businesses and citizens it 

serves. 

In the first round of our reinventing 

Government initiative—the National 

Performance Review—we asked Government professionals for their best 

ideas on how to create a better Government with less red tape. One recommendation was that Federal agency 

compliance with the Regulatory Flexibility Act—that requires agencies to 

examine proposed and existing regulations for their effects on small entities—be subject to judicial review. In 

other words, they said we need to put 

teeth in the legislation requiring Federal agencies to pay attention to small 

business concerns when they write regulations. That proposal has been under 

debate in the Congress. 

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