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Congressional Budget for the United States Government for Fiscal Year 2007--Continued

Location: Washington, DC



Mr. KERRY. Mr. President, I am deeply disappointed that this budget resolution assumes deep cuts and unprecedented fees for the Small Business Administration, the SBA. The administration's request of $624 million is insufficient to meet the needs of small businesses in this country that need access to capital, counseling, and Federal contracts. By the SBA's own calculation, the request is $18 million less than what was available to the Agency last year when congressional initiatives and disaster supplementals are excluded. If this budget is adopted, the Agency will have been cut more than 37 percent since 2001. In context, that means it will have suffered the largest cuts of all 24 Federal agencies.

To address this shortfall, I introduced S.A. 3072 to increase SBA's fiscal year 2007 budget of $624 million by $151 million, for a total of $775 million. The amendment would have paid for this increased spending by closing abusive corporate tax loopholes and would, among other things, have prevented the administration from increasing the cost of disaster loans, from imposing a new fee on SBA's largest loan and venture capital programs, from eliminating the SBA's microloan programs, and from weakening business assistance to women, minorities, veterans, Native Americans, and those trying to cut through redtape to contract with the Federal Government.

This budget resolution comes after 5 years of drastic budget cuts which have eroded SBA's core programs and left the Agency with one of the worst morale problems in the Federal Government. SBA's largest lending program, the 7(a) program, is now more expensive than ever for small business borrowers and lenders, and the administration is proposing to add new ``administrative fees'' for larger 7(a) loans, 504 loans, and SBIC or venture capital deals. These fees are the first time the SBA has attempted to pass along administrative costs to lenders and small business borrowers, but the administration is pushing for them because they will generate $7 million in savings. We are told that some 7(a) borrowers will pay $625 more per loan, some 504 borrowers will pay $1,625 per loan, and the majority of companies that get an SBIC investment will pay $45,000 more. This is in addition to the excessive fees these small business borrowers already pay to cover the loan subsidy cost. This would set a bad precedent. To prevent the administration from imposing a new fee on small business borrowers, my amendment provided $7 million to the SBA's budget for next year to offset this proposal.

Deep budget cuts for SBA have also meant less transparency and accountability when it comes to the oversight of small business contracting. After pressure from our Committee on Small Business and Entrepreneurship, the SBA hired additional procurement center representatives, PCRs--the Government officials responsible for monitoring the bundling of large contracts and for helping small businesses cut through redtape to compete for Federal contracts--now bringing the number of PCRs nationwide up to 58. But many of these are not full-time PCRs. To avoid further reports of contracting abuses, large businesses receiving small business contracts, and Federal agencies missing their small business goals, my amendment provided $10 million for 100 additional PCRs to ensure robust contracting oversight throughout the Nation.

For the fifth year in a row, this budget continues on the path of providing unrealistic funding by cutting critical programs, such as the Small Business Development Centers or SBDCs, Women's Business Centers and SCORE, forcing SBA's counseling partners to spend fewer hours with clients because the Federal matching grant isn't keeping pace with inflation or demand. Despite the budget's failure to account for inflation costs, these programs continue to play an integral role in helping entrepreneurs from underrepresented communities. These cuts, when combined with 5 years of budget cuts for the SBA as a whole, would leave the SBA ill-prepared to meet the demands of the growing entrepreneurial sector. I strongly oppose flat funding these resources for small businesses and so proposed an additional $23 million in my amendment to bring Small Business Development Centers from the outdated $87.1 funding level to $110 million, proposed $4.95 million to bring SCORE funding to $7 million, and $4.7 million to bring the Women's Business Centers to a level of $16.5 million.

All of this pales in comparison to the mismanagement of the response to recovery of the gulf coast region. The SBA's disaster loan program, essential to the recovery of business owners, homeowners, and renters after a disaster, almost ran out of money twice in February. Instead of getting their fiscal house in order like every American family must do, the President now proposes to raise the cost of disaster loans and no longer guarantee our most vulnerable borrowers fixed interest rates. Although they could still have up to 30 years to pay off a loan, if they don't pay it off in 5 years, the interest rate will go up. Instead of telling us how this will help disaster victims, we are told this will save the SBA an estimated $41 million. We should not be saving money on the backs of disaster victims. Instead, we should help them to rebuild their homes and businesses. To prevent raising disaster loan interest rates, my amendment provided $41 million to the SBA's budget for next year.

The $151 million in my amendment would have provided real money to our appropriators and to small business programs in desperate need of funding. Unfortunately, this amendment did not garner bipartisan support. While I am disappointed with this outcome, I am pleased that we were able to work out a bipartisan compromise with Senator Snowe, the chair of the Small Business Committee. Our compromise, S.A. 3134, would increase the SBA fiscal year 2007 budget by $130 million, and although it would not add any additional funds to the budget resolution, it is a bipartisan effort to address many of the issues that my amendment 3072 attempted to address. There is bipartisan support for the 7(j) technical assistance program and the HUBZONE Program, which Senator Bond from Missouri worked hard to put in place and I joined with him in cosponsoring it when he was chairman for SBDCs and SCORE and Women's Business Centers; for the Microloan Program and microloan technical assistance, both of which the President has tried to eliminate for several years now. We all support U.S. Export Assistance Centers and Veterans Business Development, Small Business Innovation Research, and Small Business Technology Transfer Program. While I would have liked to have seen higher funding levels for the PRIME and New Markets Venture Capital Program, I am glad that our amendment reflects continued funding for these vital programs. We made a strong bipartisan statement that minority lending numbers must be increased, with about $1 million more toward Native-American outreach. And we agreed to reject the proposals to raise the cost of disaster loans and to impose a new fee on the lending and venture capital programs. Overall, amendment 3134 is sending an important signal to all that there is broad bipartisan support to increase funding for these vital small business programs.

Mr. President, I thank my colleagues, Senators Landrieu, Lieberman, Levin, Nelson of Florida, Vitter, and Coleman for joining us to cosponsor this amendment, the entire Senate for agreeing to the amendment, and Senators Conrad and Gregg for their help in putting together a more realistic budget for small businesses.


Mr. KERRY. Mr. President, I am grateful to both of the managers and appreciate the courtesy.


Mr. President, I have an amendment which I send to the desk and ask for its appropriate consideration in the line of votes, as we decide on that later.

The PRESIDING OFFICER. The clerk will report the amendment.

The legislative clerk read as follows:

The Senator from Massachusetts [Mr. Kerry] proposes an amendment numbered 3143.

Mr. KERRY. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

The PRESIDING OFFICER. Without objection, it is so ordered.

The amendment is as follows:
(Purpose: To eliminate increased fees and co-payments for retired military healthcare)


Mr. KERRY. Mr. President, the President's budget proposal includes a concept to increase TRICARE--this is the DOD, Department of Defense, health care program--fees and copayments for military retirees under the age of 65 and for their dependents.

All of us recognize there is this spiraling cost to health care. I understand that. And it affects everything we are doing in the country. The Department of Defense is, needless to say, no different. It has those increases. But the answer is not found in tripling the fees for retired officers, doubling them for senior enlisted retirees, and demanding more from every military retiree under the age of 65 who uses the health care system, when you look at the other costs that are already going up for all of those folks.

Most importantly, there are a series of better ways that have been recommended to bring down the cost of health care for those retirees. So you do not have to go immediately to fees and copayments in order to solve the problem of the increase in costs.

In successive budget requests, the Bush administration has asked for increased fees and copayments for veterans health care, which is increasingly shifting the burden of that care from some veterans on to others, and it is driving some veterans out of the system altogether, which is, obviously, not fair.

My amendment will restore the funding for TRICARE so that military retirees are not saddled with these increased costs and fees. We pay for it by closing a number of tax loopholes. I think by doing so, we keep faith with people who have served our country for 20 years or more.

They did not ask to change the terms of their commitment to the military when things got tough, and I do not think we should be ignoring and changing our commitment to them now.

Mr. President, I yield back such time as may remain.


Mr. KERRY. Mr. President, the Bush budget triples the fees for officers who are retired under the age of 65 who put in their 20 years of service, and doubles the fees and copays for senior enlisted folks, again, after their 20 years of service to the country.

There are several other ways to cover the costs of increased health care under TRICARE. We could stimulate the use of lower cost mail-order pharmacies. We could negotiate with drug manufacturers who secure discounts under TRICARE, which we don't do. You don't have to take it out of the hide of the retirees themselves.

We pay for this. It is paid for by closing a number of tax loopholes and it is fully paid for so we do not have to raise copays on retirees who put in 20 years of service in uniform.

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