News From Congresswoman
Nydia M. Velázquez
Representing New York's 12th Congressional District - Brooklyn, Manhattan, Queens
Ranking Democratic Member, House Small Business Committee

For Immediate Release
February 11, 2004

Contact: Wendy Belzer, Kate Davis (202) 225-2361

Velazquez: Bush Budget Paves Way
for SBA's Destruction
Gutting of agency's programs hurts small business and leaves our communities behind

WASHINGTON - Congresswoman Nydia M. Velázquez (D-N.Y.), Ranking Member of the House Small Business Committee, at today's Small Business Administration's (SBA) FY 2005 budget hearing called the Bush proposal representative of "the deconstruction of the only agency with the sole focus of assisting our economy's most important sector - small business."

"At a time when the economy continues to struggle and job creation lags, we should be investing in these programs, not turning our back on them," Congresswoman Velázquez said. "Not since the days of Reagan budget director David Stockman - when the elimination of the agency was proposed - have we seen such a destructive plan. At least in the early 1980s, the administration was honest about its intentions. But the current one, which is looking for the same outcome, is not being as forthcoming, instead hiding behind fake budget numbers and proposals that will never work."

President Bush has spent his time in office talking about small businesses and their inextricable link to job creation and a full economic recovery in the U.S. Yet in his FY 2005 budget request, the SBA was one of the agencies hardest hit by cuts.

"Even though President Bush spends a lot of time talking about the important role small businesses play in our economy, that's all it is - talk," Congresswoman Velázquez said. "Let me tell you, talk is cheap. If this administration really wanted to assist small businesses, it would have made the SBA budget whole."

The Bush administration's budget request for the SBA of $678.4 million is $119 million below last year's and about half of what was requested the last year President Clinton was in office. It fails to invest even $1 dollar in the SBA's loan programs, and completely eliminates the Microloan program. Making matters worse is the SBA's "fix" for the 7(a) loan program crisis announced yesterday that would lower the guarantee fee to 50 percent on loans of $250,000 and below, eventually extending that up to $1 million.

"This will harm the very small businesses the program was created to help by blocking avenues of credit and will also drive lenders out of the program altogether," Congresswoman Velázquez said. "This "fix" was either poorly thought out, or it is an intentional way to destroy the program - once and for all."

In addition, the budget fails to put the necessary resources into opening up the federal marketplace for small businesses. This initiative topped President Bush's 2002 small business agenda, but there is no funding for a women's procurement program that was made law four years ago, for enforcement to hold agencies accountable when they miss their small business goals, or to ensure small businesses get their fair share of federal contracting dollars.

"This budget has an unprecedented number of cuts to SBA's programs," Congresswoman Velázquez said. "The rationale behind these cuts is to channel remaining funds to the agency's "core" programs, discarding those that are deemed "duplicative." The problem is that the SBA's core programs have been flat funded for three years now. When you account for inflation, this amounts to a more than $10 million cut. It's one thing to expect an agency to do more with less - it's another thing to expect it to make something out of nothing."

Congresswoman Velázquez vowed to fight the budget cuts in Congress, joining with her Democratic colleagues to ensure the SBA's programs are adequately funded.

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