News From the
Committee on Small Business
Nydia M. Velázquez, Ranking Democratic Member

For Immediate Release
March 2, 2006

CONTACT: Kate Davis, Allyson Ivins, (202) 225-4038

Report Shows 75 Percent of Small Business Programs Cut or Eliminated in President's FY 2007 Budget Request
Cuts government-wide for small firms in innovation, energy efficiency and disaster relief

WASHINGTON - Congresswoman Nydia M. Velazquez, Ranking Democrat on the House Small Business Committee, and her Democratic colleagues released their annual budget report today, which found that three-quarters of the 100 small business programs government wide had been slated for cuts or elimination in the President's FY 2007 request - a 200 percent increase in cuts for small business initiatives over the last four years. The analysis also found that despite the Bush administration's recent emphasis on innovation, energy reform and disaster relief - severe cuts were made to a number of small business programs that specialize in these areas.

"This nation's small businesses have been forced to bear the burden of the Bush administration's budget cuts for the past four years now - but this year's request is truly the worst yet," Congresswoman Velazquez said. "These cuts are hitting entrepreneurs across the nation - from rural to urban areas, from technology based firms to small family farms - no small business sector has been spared in this budget request. For an administration that has repeatedly touted its commitment to small businesses, they have been quick to turn around and pull vital funding right out of these critical entrepreneurial initiatives."

The report found that nearly 40 of the small business programs in this year's request were cut by over 80 percent, with nearly a half of the 100 small business programs slated for termination. Adding to the disturbing trend is that the agencies which administer the highest number of programs that provide assistance to small businesses - the U.S. Department of Agriculture (USDA), the Small Business Administration (SBA) and the Department of Labor (DOL) - all received significant cuts. While the Bush administration claims the cuts are necessary, the spending cuts to the small business programs make up a mere 1.5 percent of the total $423 billion U.S. budget deficit. For every dollar that is invested in a number of the small business initiatives, three dollars are generated in tax revenue, raising concern as to why small firms are increasingly targeted for these cuts.

Several of the areas evaluated in the report included small business programs that foster innovation, energy efficiency and disaster relief. Over the past few months the Bush administration has made a strong push on these issues with the release of the "America's Competitiveness Initiative" and continual calls to rebuild the Gulf Coast region through federal programs. Small businesses are responsible for 55 percent of all new innovations, play a major role in developing responses to overcome the country's energy crisis, and are largely responsible for rebuilding local communities following disasters. However, the majority of small business programs that foster growth in these areas were included in the cuts - 15 initiatives that foster innovation and competitiveness, 14 programs that focus on disaster and price destabilization relief programs for small businesses, and 5 initiatives that promote energy efficiency among small firms. These cuts will strongly impede the ability of entrepreneurs to access disaster relief, create solutions for energy efficiency and remain on the cutting edge of technological advancements world wide.

"The Bush administration's goals of advancing innovation, energy reform and rebuilding the Gulf Coast will not be accomplished unless they recognize the need to invest in this nation's 23 million small businesses," Congresswoman Velazquez said. "The FY 2007 budget request clearly shows the administration has not acknowledged this reality, but instead chooses to make draconian cuts to the vital small business initiatives year after year that foster economic development and job creation throughout our nation. This budget simply represents the wrong priorities for small businesses."

To receive a copy of the report, email Kate Davis at kate.davis@mail.house.gov or Allyson Ivins at allyson.ivins@mail.house.gov.

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