Snowe Looks to President-Elect Obama to Raise Small Business Administration to Cabinet-level Status
December 8, 2008
Washington, D.C. - To expand assistance and services offered to America’s 26 million small businesses, Ranking Member of the Senate Small Business and Entrepreneurship Committee U.S. Senator Olympia J. Snowe (R-Maine) today sent a letter to President-elect Barack Obama recommending that he elevate the Small Business Administration (SBA) to Cabinet-level status, as it was during the Clinton Administration. With the economy mired in a recession and the national unemployment rate at 6.7 percent, Senator Snowe stated that, with its status raised and budget restored, the SBA can help small businesses weather these difficult times and move toward economic recovery.
"During these challenging economic times, it is imperative that the SBA, the federal agency supporting the single-largest creator of jobs in this country, is part of every conversation President-elect Obama has about restoring confidence in the economy," said Senator Snowe. "As I told members of his transition team when they asked to meet with me last week, restoring the SBA’s place in the Cabinet is essential. Furthermore, we must work together to reverse the current Administration's eight-year pattern of shortchanging the SBA’s budget which has severely limited the services and capital available to growing enterprises."
Senator Snowe added, "As small businesses represent 99.7 percent of all employer firms, they are the key to economic growth in this country. But these engines of our economy are sputtering as a result of the global economic crisis and are struggling to access credit to expand operations, provide health insurance to employees, and even maintain payroll. With the proper assistance and funding, the Small Business Administration can expand its resources to help small businesses remain solvent and put America back on the road to economic growth."
Last week, Senator Snowe met with a key member of the Obama transition team to discuss the many challenges small businesses face in the current recession. Since its creation in 1953, the SBA’s programs have been providing small business financing, entrepreneurial development, and business counseling programs, while strengthening the Agency’s lender oversight authority. Yet despite these critical programs, our nation’s small businesses have endured eight consecutive years of inadequate budgets for the SBA, a 27 percent decrease since 2001, the largest decrease of any Federal Agency.
The text of the letter is below:
December 8, 2008
The Honorable Barack Obama
Office of the President-elect
Washington, D.C. 20270
Dear President-elect Obama,
Congratulations once again on your historic election victory. I look forward to working with you on a bipartisan basis, on behalf of our great nation.
As Ranking Member of the Senate Committee on Small Business and Entrepreneurship, I truly appreciate that you have made small business a cornerstone of your agenda. I wholeheartedly agree that small businesses play a central role in our economy and firmly believe that the federal government should foster a nurturing entrepreneurial environment that fully equips our small businesses, our true job generators, with the tools not just to mitigate and stem this economic crisis, but to be a catalyst for helping to address and ultimately solve it. Indeed, as you are well aware, small businesses are the engine that drives our nation’s economy, representing 99.7 percent of all firms, employing half of all private sector workers, and creating approximately three-quarters of net new jobs each year.
That is why I want to suggest you consider re-elevating the Administrator of the Small Business Administration (SBA) to Cabinet-level status. This designation will send a clear signal that small business will drive our nation out of this recession. The SBA is the primary agency within the federal government tasked with the responsibility of assisting small businesses, and it should have a seat at the table when it comes to revitalizing the economy, a top national priority.
As you may know, during the Clinton administration, the Administrator of the Small Business Administration (SBA) held the designation of Cabinet-level status – an influential position that promoted the well-being of our nation’s small businesses. Regrettably, however, it did not receive that status over the past eight years and, therefore the opportunities the SBA has to offer to our nation were not maximized. Frankly, in the past, the federal government has neglected to place enough emphasis on the resources and programs that could benefit America’s 26 million small businesses.
And in your administration, the incoming SBA Administrator will face an enormous agenda to ensure that small businesses are able to weather these challenging times, and must have access to secure swift quick approval of critical initiatives. First and foremost, the SBA must address the small business credit crunch. Banks are tightening their lending standards without a similar increase in the volume of SBA-guaranteed loans to small businesses, creating a domino effect on the job-creation ability of small businesses. According to the Federal Reserve, in the last quarter, 75 percent of banks reported that they have tightened their lending standards for small firms, and over the past year, lending in the SBA’s flagship 7(a) program has decreased by 55 percent. This is why I recently introduced the 10 Steps for a Main Street Economic Recovery Act, legislation that would help small firms get the necessary capital to finance business growth by reducing lending fees by over $500 million. It would also provide the Treasury Department with the authority to thaw frozen secondary markets, so that private banks will start lending to small businesses again.
In addition, I truly hope that your administration will reverse an alarming trend, over the past eight years, of shortchanging of the SBA’s budget. In fact, since Fiscal Year 2001, the SBA has seen its budget drastically cut by 27 percent, the largest decrease of any federal agency during that timeframe. When you consider that the SBA budget represents only about 2/100ths of a percent of the total federal budget – yet at the same time small businesses are creating about three-fourths of all new jobs – there is no question that adequately funding the Agency’s small business programs is an investment in America’s economic future. Also, in the 111th Congress, the SBA must work with Congress to reauthorize the SBA’s financing, entrepreneurial development, and business counseling programs, which are set to expire on March 9, 2009.
Finally, access to affordable health insurance continues to be the top issue facing small businesses and the self-employed. This is why I have reached across the partisan divide, to introduce, with Assistant Majority Leader Richard Durbin, the Small Business Health Options Program (SHOP) Act. This measure, which has attracted a broad array of support, would encourage the states to reform dysfunctional insurance markets; create affordable, nationwide health plans; and provide targeted tax credits to encourage our nation’s smallest employers to provide health insurance to their workers. You and I share a goal of universal coverage, and the policies in the SHOP Act fit neatly within the broader health reform debate.
Although the challenges before us are daunting, I plan on working closely with you and the SBA to ensure that small businesses continue to play a dominant role in the economy. Now, more than ever, small businesses will be the vehicle for sustainable economic change. Should you have any questions, please don’t hesitate to contact me, or have a member of your staff contact Wally Hsueh, Staff Director of the Senate Committee on Small Business and Entrepreneurship, at 202-224-7884. Thank you for your consideration of this request.
Sincerely,
________________________
OLYMPIA J. SNOWE
Ranking Member
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