STATEMENT
of the
Honorable Nydia M. Velázquez, Ranking Democratic
Member
House Committee on Small Business
Small Business Index - 3rd Quarter of FY 2005
Wednesday, November 16, 2005
Good morning and thank you all for being
here today. Our nation's economy has endured some tough
times over the past few months. Not only have we been
faced with ongoing conflict in Iraq and Afghanistan
that has no end in sight, but we are now also enduring
a massive recovery effort right here in the Gulf Coast
region. These are all occurrences that are taking their
toll on the U.S. economy.
The reality is that for the past few years,
our economy has been in a constant state of flux taking
one step forward to only fall two steps back. That shaky
footing is reflected in the 3rd quarter Small Business
Index that we are releasing today. The numbers speak
for themselves. Today's index stands at an eight year
low of 69.99 - down nearly 2 points from June.
There are a number of reasons for the
constant decline in the economic environment. Among
the most significant are the rising energy and healthcare
costs. In fact, recent surveys have shown that energy
and health care have now replaced taxes as the number
one concern for small businesses - showing the growing
effect these factors are having on our nation's entrepreneurs
today.
These two indicators - combined with rising
interest rates - have put a major dent in the ability
of entrepreneurs to invest back in their businesses,
or to even start a new one.
Sadly, these less than favorable conditions have only
been worsened by the recent hurricanes. While Hurricane
Katrina clearly had a regional impact on the Gulf Coast
economy - the SBI data shows that it had a nationwide
impact as well.
While the impact on the oil and gas industry has been
well documented, a number of our country's major ports
are located in the Gulf Coast, and the devastation brought
on by the hurricanes has already resulted in a major
decline in exports. In addition, the agriculture industry
in the Gulf Coast region has taken a hit -the Department
of Agriculture reported that agriculture losses have
now topped $1.1 billion. This will undoubtedly continue
to have a ripple effect on the nation's economy.
Given the impact, it is amazing to me
and my Democratic colleagues that the administration
has yet to put a plan in place that will aide in the
recovery process of the Gulf Coast region, or mitigate
the impact nationwide.
While our nation's small businesses come
to terms with the impact of Hurricane Katrina, the truth
is that the hurricanes are just one factor in a slew
of many that have created a negative economic environment
for small businesses.
With the convergence of all of these negative conditions
today, entrepreneurs simply don't have the confidence
they need to take the risks that will provide them with
the rewards of business ownership.
If we want to see entrepreneurs truly
stimulate economic growth - then policies need to be
put in place that help small businesses. An energy policy
needs to be implemented that does more than just help
the energy companies, tax breaks need to reach small
business owners, and a health care plan needs to be
put in place so entrepreneurs can afford to cover themselves
and their employees.
In the end, the underlying entrepreneurial
spirit of this country will remain pessimistic if changes
are not made - and the trend for small businesses will
continue on its downward slope. Thank you.
