Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I am pleased to begin consideration of H.R. 2862, making appropriations for fiscal year 2006 for Science, the Departments of…
Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I am pleased to begin consideration of H.R. 2862, making appropriations for fiscal year 2006 for Science, the Departments of State, Justice, Commerce, and related agencies. This bill provides funding for programs whose impact ranges from the safety of people in their homes and communities to the conduct of diplomacy around the world, to the farthest reaches of space exploration.
The bill before the House today reflects a delicate balance of needs and requirements. We have drafted what I consider a responsible bill for fiscal year 2006 spending levels for the departments and agencies under the subcommittee's jurisdiction. We have had to carefully prioritize funding in the bill and make hard choices about how to spend scarce resources.
I want to thank the gentleman from California (Chairman Lewis) for supporting us with a fair allocation and helping us to move the bill forward. I also would like to thank the ranking member, the gentleman from West Virginia (Mr. Mollohan), who has been very effective and a valued partner and colleague on this bill. I appreciate his principled commitment and understanding of the programs in the bill.
Also I wanted to thank all members of the subcommittee for their help and assistance: the gentleman from North Carolina (Mr. Taylor), the gentleman from Illinois (Mr. Kirk), the gentleman from Illinois (Mr. LaHood), the gentleman from Florida (Mr. Weldon), the gentleman from Texas (Mr. Culberson), the gentleman from Louisiana (Mr. Alexander), the gentleman from New York (Mr. Serrano), who used to be the ranking member on the committee, the gentleman from Alabama (Mr. Cramer), the gentleman from Rhode Island (Mr. Kennedy), and the gentleman from Pennsylvania (Mr. Fattah), and also the gentleman from Wisconsin (Mr. Obey), the ranking member of the full committee.
Mr. Chairman, I also want at the outset to thank the members of the staff who have worked incredibly hard, as I am sure all subcommittee staff on this committee do on appropriations, but particularly want to thank them publicly. Mike Ringler, the clerk of the subcommittee, who has led the subcommittee through the House appropriations process. Also I want to thank Christine Kojac, John Martens, Anne Marie Goldsmith, Joel Kaplan and Celia Aloavado for their tireless efforts. Their work is very much appreciated. They have done an outstanding job.
In my personal office, I want to thank Dan Scandling, Janet Shaffron, J.T. Griffin, Samantha Stockman and Courtney Schlieter for their efforts and work with the subcommittee.
From the minority staff, I want to thank David Pomerantz, Michelle Burkett, Rob Nabors, Sally Moorhead and Julie Aaronson for their insight and input on the bill.
It has been a good bipartisan effort. Sometimes those things are said, but sometimes there is not a lot of reality to them. But this has been a good bipartisan effort. As in past years, we
have worked in a bipartisan manner to draft this legislation, and I look forward to continuing forward in that spirit.
The bill contains $57.45 billion in discretionary spending. At a time of fiscal constraint, we have developed a bill that preserves critical domestic and international programs, while living within our allocation. Program increases are focused on the most critical areas, including counterterrorism, law enforcement, security of government employees overseas, as well as science and space programs.
As we know, the budget resolution upon which our allocation is based actually reduces nondefense discretionary funding from last year's level by 0.8 percent. As a result, we have had to make some difficult choices to focus limited resources on programs that are most critical to the Nation.
The bill continues the progress we have made in the fight against terrorism and crime. We have tried our best to establish strong funding levels for NASA and the National Service Foundation (NSF), the agencies that are new to our jurisdiction. At the same time, the bill also reflects our commitment to responsible stewardship of public funds.
For the Department of Justice, the bill includes $21.45 billion, $1.1 billion above the request, to restore needed funds for State and local crime-fighting to keep our streets safe. The bill also includes significant increases for Federal law enforcement for both terrorism prevention and traditional law enforcement and drug enforcement.
The bill focuses funding on fighting the growth of gangs and reducing gang violence. We have continued and enhanced FBI and ATF antigang programs and restored funding to the gang resistance training programs. In addition, we have created a new $60 million gang program that will allow each U.S. Attorney's office, working with local officials, to fund antigang strategies in cooperation with those in State and local government.
The bill also includes $5.76 billion for the FBI to provide enhanced training and information technology management, and to provide additional agents, analysts and translators to improve counterterrorism and counterintelligence capabilities, while continuing the fight on white-collar crime and gang violence.
We maintained the commitment to fighting illegal drug activities with $1.7 billion for the DEA, slightly above the request, to restore proposed reductions in assistance to State and local law enforcement, Mobile Enforcement Teams and Demand Reduction, and to fully fund the effort to combat heroin production in Afghanistan.
The bill also includes $2.59 billion for improving State and local law enforcement crime-fighting programs, restoring $1 billion above the request to the highest-priority programs. We have restored $1 billion.
I heard the gentleman from Indiana (Mr. Souder) talking earlier during debate on the rule, and I agree with what the gentleman from Indiana (Mr. Souder) said. Why would the administration have ever zeroed this out? But we have restored $1 billion above the request for the highest-priority programs, including SCAAP, Justice Assistance Grants and Juvenile Justice programs, all which the administration proposed to eliminate or drastically reduce.
For the Department of Commerce and related trade agencies, the bill includes $5.83 billion, a decrease of $831 million below 2005. We have not adopted the President's proposal for a new consolidated community development program, which explains why we are so far below the request for Commerce.
As we did last year, the overall funding levels for the trade agencies, USTR, ITA and ITC, is above the request; it is higher than the administration asked for.
I just cannot understand why this administration is not bringing an intellectual property case with regard to China. We gave them all of the resources last year and are giving them all of the resources this year. If they do not move this year, I do not know what we can do. Hopefully, with Rob Portman down there, they will move.
This will empower them to negotiate, verify and enforce trade agreements that are free and fair, and ensure an even playing field for American businesses.
For NIST, we have provided $19 million above the current year level for the core science programs, focusing on national security standards and nanomanufacturing.
To further bolster our manufacturing sector, the bill includes $106 million for the Manufacturing Extension Partnership Program, an increase of $59 million. Members from both sides of the aisle spoke to us on numerous occasions about that.
The bill makes some cuts for the NOAA budget, eliminating lower- priority programs and projects. The critical function of the National Weather Service and NOAA's satellite programs are funded above the request, and funding is continued for critical ocean and fisheries programs.
The bill includes $1.7 billion, a 10 percent increase, for the PTO, and equal to the amount they expect to collect in fees. A strong patent and trademark system is essential to protect our intellectual property and maintain innovation in the economy.
Finally under Commerce, we provide an increase of $87 million to support the ramp-up to the 2010 decennial census, including full funding for the American Community Survey.
For NASA, the bill ensures that the President's vision for space exploration is adequately funded at $3.1 billion, while at the same time restoring the aeronautics research program to the enacted level of $906 million, and providing $40 million over the request to partially restore NASA's science programs.
The space shuttle program is funded at the request to ensure that all shuttle safety issues are being fully funded. In coordination with the Committee on Science and the gentleman from New York (Chairman Boehlert), new legislative language is included in the bill directing the President to develop a national aeronautics policy to be submitted with the fiscal year 2007 budget.
Boeing is dropped in production and share of the market. Ten years ago they had 65 percent of the market, now they are down to 48 to 49. Frankly, without an aeronautical policy, that will continue to drop. That language, working with the gentleman from New York (Mr. Boehlert), is in here.
For the NSF, we are providing an increase of $171 million over last year, $38 million above the request. People say we are falling behind in math, science, physics, chemistry and biology, and we are trying to do everything we can to reverse that. Also I have sent a letter to the administration asking that they triple the funding next year, taking from other areas, but triple the funding on R&D so this country does not lose its competitive edge.
This includes a 3.7 percent increase for basic research funding, $44 million above the request. And for science education we have included $807 million, which is $70 million above the request. Science is the engine of our competitiveness, and I have encouraged the President to substantially increase our investment in basic research and science education in the 2007 budget.
For the State Department and Broadcasting Board of Governors, the bill includes $9.53 billion, a decrease of $1.1 billion below 2005, and $273 million below the request.
Within this total we are providing $1.5 billion, the full request, for worldwide security improvements and replacement of vulnerable facilities and funding to support 55 new positions to support security readiness.
Look at the security that this Capitol Building has. Look at the security that many other Federal buildings have. To say that we are going to send Federal employees abroad and not protect them, we remember the bombing in Tanzania and the bombing in Kenya, so we fully make sure that is funded.
We are providing 100 new positions for high-priority diplomatic requirements, including in the areas of fighting terrorist financing, nonproliferation of WMD and for new critical language needs related to the Global War on Terror.
We continue to strongly support public diplomacy improvements, including significant increases for information programs, international broadcasting and international exchange programs, particularly with the Arab and Muslim world.
We have included the requested funds for international peacekeeping to pay
the assessed costs for missions in Sudan. I think this administration has done a good job in Sudan. More should be done in Darfur, and Under Secretary Zoellick has been to Darfur now twice. But this money for peacekeeping in Sudan will have a major impact on what is taking place in Darfur; also, in Haiti, Liberia and elsewhere.
We have attached to this funding new language requiring notification to the committee that prevention and prosecution measures are in place to ensure zero tolerance of sexual abuse in peacekeeping missions. If you read the report on the peacekeeping abuses, sexual abuse by U.N. peacekeepers in the Congo, it will make you sick. So this language deals with notification to the committee, and prevention and prosecution measures are in place for the zero, zero tolerance of sexual abuse in peacekeeping missions.
We also include new language supporting the maintenance of a flat U.N. budget. We also require the State Department to keep the committee informed of any changes in the U.N. budget.
There is a lot of interest, Mr. Chairman, in the U.N. and, as many of my colleagues know, last year in our bill, we created a United Nations Task Force to make recommendations for U.S. Government action to reform the U.N. and ensure the U.N. fulfills its charter purposes. The task force is cochaired by Senator Mitchell and Speaker Gingrich. Their recommendations are coming to the committee later this week, and we will look closely at their recommendations and do everything we can to advance them, and we would urge the administration and everyone in Congress to do everything that they can to advance their recommendations made by Speaker Gingrich and Majority Leader Mitchell.
The bill again fully funds the Federal Trade Commission Do-Not-Call program, and fully funds the request for the SEC to protect American investors.
For the SBA, the bill provides full requested funding for Small Business Development Centers. We restored $11 million for the Microloan program, which the President proposed to terminate. For business loan programs, the bill allows for $16.5 billion in general business loans, an unprecedented program level, while requiring no appropriation.
In closing, this is a summary of the bill. It provides increases where needed to maintain and strengthen the operations of critical law enforcement and other agencies. It gives no ground in the fight against terrorism, crime, and drugs, and restores desperately needed resources for State and local law enforcement personnel.
It represents our best take on matching needs with scarce resources. We have tried very hard to produce the best bill we could within the resources that we had to work with, and I urge all Members to support the bill.
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Mr. Chairman, I reserve the balance of my time.
Mr. Chairman, I yield 2 minutes to the gentleman from Texas (Mr. DeLay), the majority whip.
Mr. Chairman, I yield 5 minutes to the gentleman from Florida (Mr. Weldon).
Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from Texas (Mr. Poe).
Mr. Chairman, I yield such time as she may consume to the gentlewoman from Florida (Ms. Ginny Brown-Waite) for the purpose of a colloquy.
Mr. Chairman, will the gentlewoman yield?
Mr. Chairman, I would be happy to do so for the gentlewoman.
I share her concerns about waste, fraud and abuse, and have also expressed my concerns to the SBA about this issue. In fact, the gentlewoman from Texas (Ms. Granger) had expressed the same concern, too.
I understand that the SBA is now collecting the information on, and essentially tracking, loan agents. Any potential fraud cases are immediately referred to the Inspector General, and perhaps we ought to put some language in saying they should be referred to the FBI for prosecution.
I will assure the gentlewoman I will work with the SBA Administrator and the Inspector General, and also, if the gentlewoman would agree, the FBI, to assure that no fraud occurs in the small business loan program.
Mr. Chairman, I yield 2 minutes to the gentleman from California (Mr. Calvert).
Mr. Chairman, will the gentleman yield?
Mr. Chairman, I would, definitely.
Mr. Chairman, I yield such time as he may consume to the gentleman from Michigan (Mr. Ehlers) for purposes of a colloquy.
Mr. Chairman, I want to thank both the gentleman from Michigan (Mr. Ehlers) and the gentleman from New York (Mr. Boehlert) for their comments. Frankly, I have learned a lot from them on this issue, and a lot of what they have been pushing for, I now see, if you will. So I want to thank them.
I understand their concerns, and I will be pleased to work with them to explore what might be done to address these concerns in conference. I support the MSP program at the NSF and look forward to working with the gentleman from Michigan and also the gentleman from New York to see if we can address the legitimate concerns they raise.
Furthermore, I am committed to ensuring that our investment in future innovation does not waiver; and I look forward to working with both my colleagues and, hopefully, the President of the United States with additional resources as the budget comes up next year on improving the allocation for science in future budgets.
Mr. Chairman, I agree with the gentleman from New York that the State Department's American Corners Program is important for several reasons. It encourages the opening flow of ideas, which we desperately need at this time. It teaches people about America, which we also desperately need. And it increases global literacy.
The fundamental function of the American Corners Program is to make information about our country available to foreign publics at large. Access to the American Corners collection is free and open to all interested citizens of the host country, and I think it is particularly important to countries that are closed.
I am happy to work with the gentleman from New York to ensure strong support for this program going forward.
Yes, I do agree with the gentleman that this funding for ongoing research and capital improvements to these laboratories is important. To date, no new funding has been requested by the administration, and plans for such a fence have not been finalized. The committee understands this project may be considered for future budget requests to the Congress.
Also, I tell the gentleman that I would be glad to set up a meeting with the new director of NIST and others to kind of meet in our offices and see how we can resolve this to the gentleman's satisfaction.
Mr. Chairman, we will be glad to work with the gentleman from Texas and Ranking Member Mollohan to see what we can do to help. That sounds like a horrible situation: 31 Americans kidnapped. So if we can help, we will do whatever we can to help you.
I thank the gentleman for bringing this issue to our attention, Mr. Chairman. As the gentleman said, the budget is very tight this year and difficult decisions had to be made. While I believe that all the programs in the bill are worthy of funding, we had to keep the bill within the subcommittee 302(b) allocation.
I agree with the gentleman that the functions of NOAA are very important and will work to see that the conference funding levels are adequate.
Mr. Chairman, I move to strike the last word.
I yield to the gentleman from Nebraska.
Mr. Chairman, reclaiming my time, I agree with the gentleman from Nebraska (Mr. Osborne) and will work with the gentleman to address this issue. If the gentleman can come up with something creative, working with the authorizers, working with the gentleman from Wisconsin (Mr. Sensenbrenner) and the gentleman from Indiana (Mr. Souder), maybe there is something we could put in our bill at the end, assuming the authorizers agree, that does something special and more direct with regard to the meth issue. I am wide open. I know how meth has impacted the gentleman's State, and he has been a leader with the gentleman from Nebraska (Mr. Terry) on this issue. I suggest you talk with the gentleman from Indiana (Mr. Souder) and the gentleman from Wisconsin (Mr. Sensenbrenner), and maybe we could do something dramatic to deal with this issue.
Mr. Chairman, I reserve a point of order on the Obey amendment.
I do, Mr. Chairman.
Mr. Chairman, I make a point of order against the amendment because it proposes to change existing law and constitutes legislation in an appropriation bill and therefore violates clause 2 of rule XXI.
Mr. Chairman, I ask unanimous consent that debate on this amendment and any amendments thereto be limited to 20 minutes to be equally divided and controlled by the proponent and myself, the opponent.
Mr. Chairman, I yield myself 2 minutes.
Mr. Chairman, I rise in opposition to the amendment. The amendment would reduce funding for one of the President's top priorities, science and space. This represents more than a 6-percent reduction in the President's new Vision for Space Exploration and would significantly jeopardize NASA's ability to implement its new mission.
I would like to read a letter from the Administrator, Michael Griffin.
``Dear Mr. Chairman:
``It has come to my attention that, during House consideration of H.R. 2862, an amendment will be offered by Mr. Obey that proposes to reduce NASA Exploration Systems funding by $200 million, and redirect the NASA funds to State and local law enforcement assistance activities.
``I must respectfully oppose this amendment. I support full funding of the President's fiscal year 2006 request for NASA. Any reduction in NASA's fiscal year 2006 Exploration Systems funding would threaten the ability of this Nation to ensure U.S. human access to space, our efforts to accelerate the availability of the crew exploration vehicle to minimize the gap between the retirement of the space shuttle and the first operational flight of the CEV, and our efforts to maintain a robust civil service workforce at NASA's field centers in support of these efforts.''
Mr. Chairman, I reserve the balance of my time.
Mr. Chairman, I yield 3 minutes to the gentleman from Texas (Mr. Hall).
Mr. Chairman, I yield 1 minute to the gentleman from New York (Mr. Boehlert).
Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from Florida (Mr. Weldon).
Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from Florida (Mr. Feeney).
Mr. Chairman, I yield the balance of my time to the gentleman from Texas (Mr. Culberson).
Mr. Chairman, I ask unanimous consent that debate on this amendment, and any amendments thereto, conclude by 15 minutes, and that the time be equally divided and controlled by the proponent and myself, the opponent.
Mr. Chairman, I yield myself 2 minutes.
This amendment takes the worst possible approach to finding offsets with an across-the-board cut. It is a blunt instrument and does tremendous damage. Indiscriminate cuts in this amendment would be irresponsible. Hundreds of people, perhaps thousands, would lose their jobs, and many other negative consequences would occur in virtually every agency in the bill.
For every Federal law enforcement agency in the bill this is a cut. The FBI, working around the clock to protect the country from the next terrorist attack is cut by $26 million. If adopted, a reduction of 161 FBI agents, gone; 45 DEA agents gone, 35 deputy U.S. marshals gone; 22 ATF agents gone; 65 U.S. attorneys gone. In addition, the Bureau of Prisons, $22 million out; State and local law enforcement programs are reduced including a $2 million reduction in COPS and $1.5 million from Juvenile Justice.
This amendment, not that the gentleman meant it to be that way, even cuts education benefits for the survivors of public safety officers killed in the line of duty, as well as disability benefits for officers while injured on duty.
Lastly, NASA is cut by $70 million. Science goes down the tubes and is cut with regard to that. Embassy security, $6.8 million, and remember Americans killed in Tanzania, Americans killed in Nairobi. A $4 million is cut from SEC. Remember Enron, and we would take money from the SEC. Nineteen million dollars cut from the National Science Foundation. At the very time we are falling behind and everyone here is saying put more money into NSF, this takes money out of NSF, as we are falling down behind in engineers and math and science and physics and chemistry, and we just had the colloquy with the gentleman from New York (Mr. Boehlert) and the gentleman from Michigan (Mr. Ehlers).
Lastly, there have been a number of groups opposed to this: the National Taxpayers Union, Citizens Against Government Waste, American Conservative Union, Americans for Tax Reform. If Members find something, if they need something, look at a bill and go through it. To have it equally across the board is the wrong way to go.
Mr. Chairman, I yield 1 minute to the gentleman from West Virginia (Mr. Mollohan).
Mr. Chairman, I yield 1 minute the gentleman from New York (Mr. Boehlert).
Mr. Chairman, I yield 1 minute to the gentleman from Florida (Mr. Feeney).
Mr. Chairman, I yield 1 minute to the gentleman from Texas (Mr. Culberson).
Mr. Chairman, I yield myself the balance of my time.
Mr. Chairman, my father was a policeman for 20 years, so I am not going to take any back seat to anybody else.
If you really want to do something, stand up to the drug industry, which this Congress will not do, and do what the State of Oklahoma did: pass the law that makes you go up to the counter and ask for it. If you really want to do something, do that and stand up to the drug industry and deal with it.
This amendment cuts COPS $2 million; U.S. Attorneys, $7 million; Marshals Service, $4 million; the Do Not Call, FEC, $4 million; Small Business Administration, $3 million; NSF, $19 million; NASA, $72 million; DEA, $7 million; public safety officer benefits. Why? If we were looking to have an amendment, we would sort of exempt that out.
That is why these across-the-boards are a bad thing. We would exempt that out. Oceans. We just had a colloquy with the gentleman from Maryland (Mr. Gilchrest) on oceans. We go down on oceans.
I understand. Meth is coming to my area. We do not want to take away from embassy security so Federal employees get blown up, or reduce the FBI that is fighting that, or DEA. There are other ways to deal with this.
I care about the meth issue as much as anybody else. This is not the way to do it. You cannot go out and explain why we make all these cuts. There must be some focus. If you think this is so important, find out that area, offer an amendment to cut it, and put it back in this. But across the board, this is a bad amendment.
I urge Members to vote ``no.''
Mr. Chairman, I think it is a good amendment, and I have no objection. I think it should pass.
Mr. Chairman, I reserve a point of order on the gentleman's amendment.
Mr. Chairman, this is subject to a point of order, and it is unfortunate that it is. I would pledge to the gentleman that we will do everything we can to deal with this problem.
Several weeks ago several of us were down in El Salvador where they made the very case of the people who were involved in violent gangs had gone to coyotes who would take them up. I think the gentleman is right on target, so we will work with him, and I appreciate him bringing this to our attention, so that we can see what we can do.
Mr. Chairman, I appreciate the gentleman raising this issue. This is really an important issue. Before I came to Congress, I was involved in a reentry program at Lorton Reformatory, so I think what the gentleman is trying to do is a good idea.
Reentry programs are critical to rehabilitating prisoners. I support the programs and will continue to work with the gentleman. The bill includes a $6 million increase in the Bureau of Prisons and $10 million in OJP for reentry programs. You really cannot put a man or a woman in jail for 15 years and then, at the end, just open up the cell and let them out without having any reentry programs. So what the gentleman is trying to do is exactly right. But that is the status of funding, a $6 million increase within the Bureau of Prisons and $10 million in OJP for reentry programs.
Mr. Chairman, I ask unanimous consent that the debate on this amendment and any amendments thereto, conclude by 15 minutes, and that the time be equally divided and controlled by the proponent and myself, the opponent.
Mr. Chairman, I withdraw that and would insert 20 rather than 15.
Mr. Chairman, I rise in opposition to this amendment. If we were to pass this amendment, then you can never write to your constituents and say you really care about the deficit. And I know the gentleman from Illinois (Mr. Manzullo) is going to speak about this. We dealt with this program last year. We are now at a record level of loans. So if you vote for this, you will never be able to write and say that I am concerned about the deficit.
The 7(a) program has been operating at record levels without subsidy appropriations since the beginning of fiscal year 2005 when the fees on lenders and borrowers reverted to the pre-2003 level. The SBA administrator continues to assure us the program is running strong, does not require a subsidy. Since lending levels are no longer tied to appropriation, the program has been able to meet the demand.
The program is on track, Mr. Chairman, to far exceed the previous lending levels and in fact may come close to the $16 billion authorized level.
Media reports all over the country have touted the recent success of the 7(a) lending. To highlight this, I have articles which we will put in the Record, if it is appropriate at this time, from the Chicago Tribune, Cincinnati Press Courier. Here are some of the headlines: ``SBA programs looks
sound.'' ``Stable funding turns banks on to SBA lending.'' In fact, lending to every segment of the population, including women and minorities is up from last year's level.
[From the Chicago Tribune, Dec. 27, 2004]
SBA Program Looks Sound
(By Rob Kaiser)
Holiday magic isn't the likely reason the U.S. Small
Business Administration and its numerous critics appear in
harmony for the first time in years.
A more likely explanation is the $16 billion stocking
stuffer for the SBA's flagship 7(a) loan program, which will
likely keep it from suffering short-falls in 2005 that drew
the ire of banks and small-business owners this year.
``The risk of a cap or a shutdown is basically nil,'' said
Tony Wilkinson, president of the National Association of
Government Guaranteed Lenders and a frequent SBA critic.
Such an outlook is a vast improvement from recent years,
when frequent loan limits and speculation about shutdowns
sent bankers scurrying to submit loan applications and left
many business owners in limbo--often with unpaid bills--when
expected loans suddenly evaporated.
To achieve the peace, bankers grudgingly accepted a return
to paying higher fees as the Bush administration got its wish
to wipe away a nearly $80 million subsidy that had been
supporting the 7(a) program. In return, the bankers expect to
inherit a more stable program.
Such stability would have saved Julie Valenza a lot of time
and money.
Valenza was close to purchasing her second Jimmy John's
sandwich franchise in January when the $250,000 loan she
expected to secure through the 7(a) program was suddenly
stalled when SBA stopped accepting new applications due to a
funding short-fall.
To salvage the deal to purchase an existing store in
Westmont, Valenza recruited her sister as a investor.
``At least I didn't have to bring in a stranger off the
street,'' she said.
Still, the setback delayed the purchase by two months and
means Valenza now has to split the store's profits.
Paul Andreotti, an executive vice president at National
City Bank in Chicago, said SBA loans exist so such situations
are avoided.
Without 7(a) loans, many business owners would have to
finance growth on their credit cards or through other
expensive means.
``If the SBA wasn't guaranteeing loans, banks couldn't be
as aggressive and provide as much capital,'' said Andreotti,
whose bank is putting together a 7(a) loan so Valenza can
open a third Jimmy John's location in Oak Lawn.
While he's not happy to see the fees climbing, Andreotti
said, ``In the long run I think it will positively impact
small businesses.''
Fees for the 7(a) program are now 2 percent on loans up to
$150,000, up from 1 percent. Loans between $150,001 and
$700,000 carry a 3 percent fee, up from 2.5 percent. Loans
for more than $700,000 still carry a 3.5 percent fee.
The loan applicant usually pays these fees. Banks have to
pay another fee, which has also increased recently.
The SBA guarantees 85 percent of 7(a) loans up to $150,000
and 75 percent of loans for more than $150,000.
Previously, the highest loan guarantee was $1 million, but
under the new legislation that figure was raised to $1.5
million. This means the program will now guarantee 75 percent
of a $2 million loan, the largest 7(a) loan available.
Still, not everyone in the SBA universe is sold that the
recent compromise was the best solution.
``Clearly there were members of Congress that felt this
program was worthy of receiving an appropriation,'' said
James Ballentine, director of community and economic
development at the American Bankers Association.
Balentine said some business owners as well as leaders may
be dissuaded from taking part in the program because of the
fees.
Early indications, though, are that participation in the
7(a) program is at record levels.
From Oct. 1, the beginning of the fiscal year, through Dec.
10, the program has done more than 18,000 loans, worth nearly
$2.8 billion. During the same period last year, the program
did fewer than 15,000 loans, worth $2.4 billion.
In all of the last fiscal year, the 7(a) program did nearly
75,000 loans, worth $12.6 billion. The program has $16
billion in loans available for the current fiscal year.
``We think that should be sufficient,'' said Jodi Polonet,
senior vice president of Business Loan Express LLC in New
York. ``We are satisfied.''
The gentleman from Illinois (Mr. Manzullo), the chairman of the Small Business Committee who last year supported this amendment, is now supportive of the program continuing to operate without a subsidy appropriation. He has written a Dear Colleague letter, and I hope every Member has read that Dear Colleague letter in support of the status quo. This would really hit Justice Department programs and State Department programs.
So in summary, Mr. Chairman, it is not necessary to provide a subsidy appropriation for 7(a) loan programs. With the legislative and appropriation changes made last year, the program is running strong. The offsets are not a good idea.
I urge Members to oppose the amendment.
Mr. Chairman, I reserve the balance of my time.
Mr. Chairman, I yield to the gentleman from Illinois (Mr. Manzullo), the chairman of the SBA committee, such time as he may use.
Mr. Chairman, I yield 1 minute to the gentleman from Illinois (Mr. Manzullo).
Mr. Chairman, I would close when it is appropriate under the rules.
Mr. Chairman, how much time do I have?
Mr. Chairman, I yield myself such time as I may consume.
The numbers cited by the proponents of this amendment say that SBA's numbers are deceiving. I understand what the gentlewoman is trying to do.
I have information here on the gentlewoman's district, showing that 7(a) demand is up. Last year in the gentlewoman's district, for the entire year, there were 7,849 loans. This year, for the year to date, meaning there are still 3\1/2\ months left to the end of the fiscal year, the figure is 9,267 loans, if that trend continues, the number of loans will, almost double. It is one of the few times we have actually made a difference and rolled something back in this body.
I yield to the gentlewoman from New York.
Mr. Chairman, I thank the gentlewoman for her comments as well.
Hector Barreto, the SBA Administrator, in a letter dated June 3, 2005, that he sent in opposition to the amendment says: ``Through May 20, 2005, SBA guaranteed 60,266 small business loans, a 24 percent increase over the number of loans approved at the same time in 2004.''
That is dramatic, and the cost of this amendment will be upwards of $70-plus million.
I continue to read the letter, ``At this time last year, SBA had guaranteed more than $7 billion in 7(a) loans which was a record- setting figure.''
Mr. Chairman, reclaiming my time, I thank the gentlewoman.
He goes on to say: ``I am proud to report that as of May 20, 2005, SBA has shattered that record by guaranteeing more than $9.2 billion in loans to America's entrepreneurs.''
Then he goes on to say: ``If you go deeper into these statistics, you can see that 7(a) loan volume has increased for women and minority entrepreneurs in fiscal year 2005, up 52 percent to African Americans, up 49 percent to women, up 15 percent to Hispanics, and up 16 percent to Asian Americans.
``At this pace,'' Mr. Barreto goes on to say, ``SBA will likely surpass the fiscal year 2004 figures for both dollars guaranteed and the number of loans approved; especially if you consider that the fourth quarter of the fiscal year traditionally witnesses the highest volume of loans.''
He closes by saying, ``Mr. Chairman, I believe these number speak for themselves,'' and they do speak for themselves, ``and should serve to reassure supporters that the 7(a) program is running strong without need of a subsidy or a reduction in fees.''
I want to thank the gentleman from Illinois (Mr. Manzullo). He was on the other side last year. Not many people in this institution do that. I mean, he got up and said, yes, this is right, and I commend him for that. I think it is the right thing to do.
The thing that I worry about, if anyone is listening to this, is if we roll this
back in this tight budget, where do we find the money? I mean, if there was really a crisis with regard to small business, I would be for this amendment, but the loans are up, and if they are up, and to take all this, if I can just ask the staff how much would this amendment take, $79 million? We just had a debate on meth. If we are going to do anything, let us put $79 million in meth. If we are going to do anything, let us put $79 million in fighting the drug trade.
But we are going to take $79 million when we do not have a problem. Let us give it to the war on terrorism. Let us give it to the first responders, but not to a program that does not even need it, does not even want it, does not even ask for it.
I understand what they are saying, but if this amendment passes, I am going to go home very discouraged tonight. I think the passage of this amendment, in my own mind, if this amendment is passed, it will tell me, and it should be telling the American people, that we will never, ever be able to deal with the deficit again. There is no need for this, they are not asking for it, and the figures show that loans are up by 24 percent. The chairman for the committee who was for this amendment last year is now against it, and there is just no hope. It is a Katie- bar-the-door, we are going to spend whatever we need to spend.
Reclaiming my time, Mr. Chairman, I just do not think the American people could ever understand that by spending $79 million of additional money that we will help the deficit. I urge a ``no'' vote on the amendment.