Small Business, Homeowners, and Renters Disaster Relief Act of 2005

Mr. President, I rise today to bring to the attention of the Senate a bill, the Small Business Hurricane Relief and Reconstruction Act of 2005, which provides a comprehensive package for immediate emergency resources to help the victims of Hurricane Katrina rebuild their lives and their businesses.

As we are well aware, the entire gulf coast of the United States has been ravaged by the disaster of Hurricane Katrina. No natural disaster in this country in recent memory has carried with it the devastation and horror we have witnessed in the recent weeks. Many lives have been lost and damages are projected in the hundreds of billions of dollars. The President and Congress have already provided over $61 billion in emergency funds.

While we work to reestablish communities and provide some stability to the affected areas, we must consider the enormous economic impact this catastrophe has had on the region and on our entire Nation. This impact is particularly pronounced for the vital small business sector. With over 800,000 firms damaged in the hurricane-affected region, employment in the Louisiana, Mississippi and Alabama area may be reduced by over a million jobs! Moreover, our economy which has recently recovered from recession, thanks largely to our small businesses which have created three-quarters of all new jobs, could be dampened by as much as a full percentage point.

As chair of the Committee on Small Business and Entrepreneurship, I am committed to do everything in my power to provide immediate and necessary support to rebuild this region and to help sustain our economy. I want to ensure that every American affected by this hurricane has the resources to begin rebuilding their lives, their businesses, and their dreams.

I would like to thank my colleagues, Senator Kerry, Senator Vitter, Senator Landrieu, Senator Talent, Senator Kennedy, Senator Cornyn, and Senator Bayh, for cosponsoring this bill. This bill includes all of the provisions that were in prior hurricane relief legislation that I introduced with Senator Vitter and Senator Talent but also includes several additional provisions and improvements to preexisting provisions.

The provisions of this bill were contained in an amendment that I proposed, amendment No. 1717, to the Commerce, Justice, and Science Appropriations Act of 2005, H.R. 2862. I would like to thank my colleagues, Senator Kerry, Senator Vitter, Senator Landrieu, and Senator Talent, for cosponsoring that amendment. The amendment was approved in the Senate by a rollcall vote of 96 to 0 on September 15, 2006, and subsequently passed the Senate in the Commerce, Justice, and Science Appropriations Act on that same day.

Senator Vitter, Senator Talent, and I also introduced the provisions of S.A. 1717 as a stand-alone bill, S. 1724, on September 19, 2005. We took this step in order to begin the process of enacting these provisions into law more quickly than might occur through the Commerce, Justice, and Science Appropriations Act, which must still complete its Senate-House conference.

Today we are introducing an expanded package of provisions to increase the assistance provided to victims of the hurricane, who require immediate assistance. Because the Federal Disaster Loan program administered by the Small Business Administration issues disaster loans to businesses, homeowners, and renters, this

legislation would have a significant impact on many facets of the efforts to rebuild the areas damaged by Hurricane Katrina.

Because of the importance of this rebuilding challenge, I chaired a hearing in the Committee on Small Business and Entrepreneurship on September 22, 2005 to address the impact that Hurricane Katrina and Hurricane Rita have had on small businesses. At that hearing, the Committee heard testimony from the Administrator of the Small Business Administration, Hector Barreto, who explained the unprecedented scope of the SBA's response to these disasters. In addition, the director of the SBA's Disaster Assistance Program, Herb Mitchell, testified about the SBA's actions thus far, and its plans for the continuing recovery.

The committee also heard testimony from seven representatives of small businesses, and of small business development centers, in the gulf coast region. These witnesses, who traveled from Louisiana, Mississippi, and Alabama for the hearing, described to the committee the devastation that has occurred to their businesses and communities and various steps they believe would assist in the rebuilding process.

Many of their recommendations were contained in the legislation I had introduced last week, S. 1724, and the legislation I am introducing today includes other provisions stemming from the committee's hearing and their testimony.

The Small Business Administration is and must be at the forefront of this massive relief effort, playing a significant role in assisting impacted communities. This bill will strengthen the SBA's resources and will enable them to pave the pathway to recovery. I have faith that American small businesses will persevere through these difficult times and help lead the region's recovery. It is essential that we work together here in Congress, and put forth the best possible proposal to stimulate our economy and foster job growth.

I have spoken with SBA's Administrator Barreto concerning the various ways to respond to this disaster and assist with the recovery. He informed me that FEMA has referred over 500,000 cases for loan assistance to the SBA, and that the SBA is receiving up to 20,000 calls per day. This is a tremendous volume and a vital challenge that the SBA must satisfy. To date, the SBA has sent out almost 500,000 applications for loans to individuals and businesses, and has received 810 loan applications as of Monday morning, which demonstrates that much assistance is yet to be provided by the SBA. Therefore, it is critical that we act now.

I have included many provisions in my bill that would assist hurricane victims applying for SBA disaster loans. My legislation increases the maximum size of an SBA disaster loan from $1.5 million per loan to $10 million per loan and makes it possible for non-profit institutions damaged by Hurricane Katrina to be eligible for disaster loans.

I firmly believe this legislation is the best possible package to aid families, businesses, and communities through these challenging times. Small businesses must have a fighting chance to survive the economic disaster caused by Hurricane Katrina.

For instance, the bill increases the share of small businesses in Federal prime contracts and subcontracts for rebuilding the damaged areas through meaningful goals, set-asides, subcontracting plans, outreach programs, and HUBZone preferences.

The legislation also allows recipients of disaster loans to increase the size of their loan if the additional amounts would be spent on mitigation efforts, such as sea walls, storm shutters, or better drainage system to prepare for future disasters. This provision was suggested by the administration in its proposal to rebuild the gulf coast region.

The bill also allows the Small Business Administration to offer economic injury disaster loans to small businesses throughout the country if the businesses suffered direct adverse economic impacts from the two hurricanes. The SBA offered these loans nationwide after the terrorist attacks of September 11, 2001.

In addition, the bill protects future borrowers in the SBA's business loan programs from having to pay higher fees to compensate the Federal Government for any defaults that may occur because the businesses of some current borrower who had loans before the hurricane were destroyed in the hurricanes. SBA business loan programs utilize fees to pay for all or part of the programs' costs, and those businesses that default because of the hurricanes would not be included in the calculation of future program costs in the SBA's business loan programs.

The bill addresses concerns about fraud and lack of competition by abolishing the excessive increase in the ``micro-purchase'' threshold to $250,000. This increase, slipped into the second hurricane Supplemental Appropriations Act in September 2005, allowed Federal officials to ignore small businesses in awarding contracts up to $250,000. Micro-purchases are generally strictly limited to $2,500 and to $15,000 in case of nuclear attack or military contingency. These purchases allow for convenient credit card transactions by the Federal Government, but are vulnerable to fraud and favoritism.

I have also provided the SBA with the authority to grant victims of Hurricane Katrina up to 12 months to begin repaying their SBA disaster loans which would assist both small and large businesses, homeowners, and renters. This l2-month period could be extended to 24 months at the discretion of the SBA Administrator if he determines that Katrina victims would need additional time to begin repaying their loans. This would allow also homeowners and businesses additional time to get their lives and businesses restored before being required to begin repaying loans.

This legislation also proposes lowering fees for the 7(a) program to make borrowing more affordable for small businesses both within and outside the disaster areas, many of which have been impacted by the disaster and are struggling to cover higher costs in health care and energy and rising interest rates.

Recognizing the increased demand this disaster will place on all small business lending programs, the amendment proposes increasing the 7(a) lending program from a program level of $17 billion to $27 billion, and the 504 lending program from a program level of $7.5 billion to $12.5 billion. Both the 504 and 7(a) lending programs are funded entirely through fees, so the increases require no appropriation.

Moreover, this bill increases the program level for SBA disaster loans--physical and economic injury--by approximately $800 million, requiring an appropriation of approximately $86 million. The committee is concerned there will not be enough funding for disaster loans available to meet the scope of this disaster, given that the economic injury disaster loans alone for the September 11 attacks amounted to about $1 billion, and the physical damage for Katrina is considered much more extensive.

The bill also includes a provision requiring the SBA to treat these special provisions as separate from the regular programs, to avoid increasing future subsidy rates, and therefore, the costs for borrowers who rely on those programs. This same protection was provided for emergency 7(a) loans after the September 11 attacks, and for the special disaster loans made after those attacks.

Additionally, many small businesses in the disaster areas will require relief from making payments and interest on 504 loans they had before Katrina hit. Therefore, this amendment includes a provision that authorizes the SBA to cover the payments and interest on existing loans until the small business can resume payments.

Similar to the Supplementary Terrorist Activity Relief, STAR, loans enacted by Congress after September 11, this bill allows the SBA to provide similar loans with lower fees for small businesses located outside the disaster zones but are nonetheless indirectly impacted by Hurricane Katrina. The lowers fees also provides the lenders with an incentive to lend to these businesses.

Importantly, the bill includes protections to mitigate recent reports of past misdirection of loans to nondisaster victims. The protections include requiring lenders to inform borrowers that they are receiving Katrina relief loans, requiring lenders to document to

the SBA how the borrower was adversely affected by Hurricane Katrina, and for the SBA's inspector general to collect the explanations and report to the Senate Committee on Small Business and Entrepreneurship and House Committee on Small Business every 6 months, verifying loans are being used for the intended purposes. Finally, the bill would require the Government Accountability Office to review the implementation of the program, after its completion, and report its findings to Congress. These added protections will ensure that only applicants who really need these loans to recover from the horrific effects of Hurricane Katrina and Hurricane Rita will receive the loans.

Furthermore, the legislation authorizes $450 million to the affected State governments of Louisiana, Mississippi, Alabama, Texas, and Florida to provide emergency bridge loans or grants to small businesses in the disaster areas that have been adversely impacted by Hurricane Katrina and require immediate access to capital until they can secure other loans or financial assistance. The goal is to disburse the funds quickly, and this measure is based on a successful program that helped victims of the hurricanes in Florida in past years.

With the cost of Katrina relief and rebuilding estimated at over $100 billion, small businesses, particularly those located in the disaster area and that employ individuals in the affected areas, should receive their fair share of Federal contracting and subcontracting dollars. My bill also attempts to provide critical assistance to small businesses that have been operating in the areas devastated by the Hurricane Katrina by expanding access to Federal contract and subcontracts.

Government projects provide solid business opportunities and prompt, steady pay for small businessmen and businesswomen. In addition, Government procurement would open doors for many local small businesses to participate in the long-term reconstruction work in the gulf coast areas. Prior to the disaster, small construction companies in Alabama, Mississippi, and Louisiana brought home nearly $500 million in Federal contracts a year. Total small business contracts in the gulf coast region exceeded $3 billion a year. While many small businesses would benefit from other forms of disaster assistance, many of them are ready to get back to work and into business as soon as possible.

To that end, my bill designates the Hurricane Katrina disaster area as a HUBZone. A HUBZone designation would enable small businesses locating in the disaster area and employing people in that area to receive contracting preferences and price evaluation preferences to offset greater costs of doing business. The HUBZone program was created to direct federal contracting dollars to economically distressed areas. Extending the HUBZone designation to the gulf coast would bring needed businesses development tools to affected areas.

In addition Mr. President, my bill would increase the maximum size of SBA surety bonds for small businesses from $2 million to $5 million, and authorizes the SBA to increase the size of these bonds further to $10 million. Small contractors vying for work need an increase in bonds to handle greater projects for Hurricane Katrina relief. Local small businesses in the gulf coast can use higher bonds to compensate for the damage to their assets from the hurricane.

My bill would also direct the SBA, its resources partners, and the Federal offices of small and disadvantaged business utilization to create a contracting outreach program for small businesses located or willing to locate in the Katrina disaster area. Finally, my bill would establish small business contracting and subcontracting goals for all Katrina-related contracts and subcontracts to promote greater jobs creation and development, while providing reasonable flexibility to Federal agencies in meeting that goal in light of difficult circumstances on the ground.

Finally I would also like to comment on the funding levels provided for the SBA in this bill. I have authorized the appropriation of $24.25 million for grants to increase business counseling in the damaged areas for several SBA entrepreneurial development programs including: Small Business Development Center, SBDCs; SCORE; Womens Business Centers, WBCs; Veteran's Business Centers, and Microloan Technical Assistance.

Our Nation's 25 million small businesses prove time and again to breathe new life into our economy, by growing at twice the rate of all firms. And when a disaster strikes, the spirit, determination and will of America's small businesses help to create the firm economic foundation, propelling our Nation's economic growth. Therefore, we in turn must create an atmosphere favorable for small businesses and provide this emergency package to the SBA. We must allow our Nation's small businesses to do what they do best--create jobs.

Mr. President, I urge my colleagues to support this bill. Too much is at stake for small businesses, and the economy as a whole, to allow this critical legislation to languish. Congress must find essential agreement and fulfill its obligation to America's small businesses. Clearly, if we strive for anything less, we fail to support the backbone of our economy, our hope for new innovation, and the entrepreneurs reach for the American dream.

Thank you, Mr. President.

Mr. President, I rise today to bring to the attention of the Senate a bill which provides a comprehensive package for immediate emergency resources to help the victims of Hurricane Katrina rebuild their lives and their businesses.

As we are well aware, the entire Gulf Coast of the United States has been ravaged by the disaster of Hurricane Katrina. No natural disaster in this country in recent memory has carried with it the devastation and horror we have witnessed in the recent weeks. Many lives have been lost and damages are projected in the hundreds of billions of dollars. The President and Congress have already provided over $61 billion in emergency funds.

While we work to re-establish communities and provide some stability to the affected areas, we must consider the enormous economic impact this catastrophe has had on the region and on our entire Nation. This impact is particularly pronounced for the vital small business sector. With over 800,000 firms damaged in the Hurricane-affected region, employment in the Louisiana, Mississippi and Alabama area may be reduced by over a million jobs! Moreover, our economy which has recently recovered from recession, thanks largely to our small businesses which have created three-quarters of all new jobs, could be dampened by as much as a full percentage point.

As Chair of the Committee on Small Business and Entrepreneurship, I am committed to do everything in my power to provide immediate and necessary support to rebuild this region and to help sustain our economy. I want to ensure that every American affected by this Hurricane has the resources to begin rebuilding their lives, their businesses and their dreams.

The provisions of this bill were contained in an amendment that I proposed, Amendment #1717, to the Commerce, Justice, and Science Appropriations Act of 2005, H.R. 2862. I would like to thank my colleagues, Senator Vitter, Senator Talent, Senator Kerry, and Senator Landrieu, for co-sponsoring that amendment. The amendment was approved in the Senate by a rollcall vote of 96 to 0 on September 15, 2006, and subsequently passed the Senate in the Commerce, Justice, and Science Appropriations Act on that same day.

Because the Federal Disaster Loan program administered by the Small Business Administration issues Disaster Loans to businesses, homeowners, and renters, this legislation would have a significant impact on many facets of the efforts to rebuild the areas damaged by Hurricane Katrina.

I will also be holding a hearing in the Small Business Committee on September 22, 2005 to address the impact that Hurricane Katrina has had on small businesses.

The Small Business Administration is and must be at the forefront of this massive relief effort, playing a significant role in assisting impacted communities. This bill will strengthen the SBA's resources and will enable them to pave the pathway to recovery. I have faith that American small businesses will persevere through these difficult times and help lead the region's recovery. It is essential that we work together here in Congress, and put forth the best possible proposal to stimulate our economy and foster job growth.

I have spoken with SBA's Administrator Barreto concerning the various ways to respond to this disaster and assist with the recovery. He informed me that FEMA has referred over 500,000 cases for loan assistance to the SBA, and that the SBA is receiving up to

20,000 calls per day. This is a tremendous volume and a vital challenge that the SBA must satisfy. To date, the SBA has sent out almost 500,000 applications for loans to individuals and businesses, and has received 810 loan applications as of Monday morning, which demonstrates that much assistance is yet to be provided by the SBA. Therefore, it is critical that we act now!

I firmly believe this legislation is the best possible package to aid families, businesses and communities through these challenging times. Small businesses must have a fighting chance to survive the economic disaster caused by Hurricane Katrina.

I have included many provisions in my bill that would assist hurricane victims applying for SBA disaster loans. My legislation increases the maximum size of an SBA Disaster Loan from $1.5 million per loan to $10 million per loan and makes it possible for non-profit institutions damaged by Hurricane Katrina to be eligible for Disaster Loans.

I have also provided the SBA with the authority to grant victims of Hurricane Katrina up to 12 months to begin repaying their SBA disaster loans which would assist both small and large businesses, homeowners, and renters. This 12 month period could be extended to 24 months at the discretion of the SBA Administrator if he determines that Katrina victims would need additional time to begin repaying their loans. This would allow also homeowners and businesses additional time to get their lives and businesses restored before being required to begin repaying loans.

This legislation also proposes lowering fees for the 7(a) program to make borrowing more affordable for small businesses outside the disaster areas, many of which have been impacted by the disaster, and are struggling to cover higher costs in health care and energy, and rising interest rates.

Recognizing the increased demand this disaster will place on all small business lending programs, the amendment proposes increasing the 7(a) lending program from a program level of $17 billion to $20 billion, and the 504 lending program from a program level of $7.5 billion to $10 billion. Both the 504 and 7(a) lending programs are funded entirely through fees, so the increases require no appropriation.

Moreover, this bill increases the program level for SBA Disaster Loans--Physical and Economic Injury--by approximately $800 million, requiring an appropriation of approximately $117 million. The Committee is concerned there will not be enough funding for disaster loans available to meet the scope of this disaster, given that the economic injury disaster loans alone for 9-11 amounted to about $1 billion, and the physical damage for Katrina is considered much more extensive.

The bill also includes a provision requiring the SBA to treat these special provisions as separate from the regular programs, to avoid increasing future subsidy rates, and therefore, the costs for borrowers who rely on those programs. This same protection was provided for emergency 7(a) loans after 9-11 and for the special disaster loans for 9-11.

Additionally, many small businesses in the disaster areas will require relief from making payments and interest on 7(a) and 504 loans they had before Katrina hit. Therefore, this amendment includes a provision that directs the SBA to cover the payments and interest on existing loans for up to two years, or until the small business can resume payments.

Similar to the Supplementary Terrorist Activity Relief (STAR) loans enacted by Congress after 9-11, this bill allows the SBA to provide similar loans with lower fees for small businesses located outside the disaster zones but are nonetheless indirectly impacted by Hurricane Katrina. The lower fees also provide the lenders with an incentive to lend to these businesses.

Importantly, the bill includes protections to mitigate recent reports of past misdirection of loans to non-disaster victims. The protections include requiring lenders to inform borrowers that they are receiving Katrina relief loans, requiring lenders to document to the SBA how the borrower was adversely affected by Hurricane Katrina, and for the Government Accountability Office to collect the explanations and report to the Senate Committee on Small Business and Entrepreneurship and House Committee on Small Business every six months, verifying loans are being used for the intended purposes. These added protections will ensure that only applicants who really need these loans to recover from the horrific effects of Hurricane Katrina will receive the loans.

Furthermore, the legislation authorizes $400 million to the affected state governments of Louisiana, Mississippi, Alabama, Texas, and Florida to provide emergency bridge loans or grants to small businesses in the disaster areas that have been adversely impacted by Hurricane Katrina and require immediate access to capital until they can secure other loans or financial assistance. The goal is to disburse the funds within seven days, and this measure is based on a successful program that helped victims of the hurricanes in Florida.

With the cost of Katrina relief and rebuilding estimated at over $100 billion, small businesses, particularly those located in the disaster area and that employ individuals in the affected areas, should receive their fair share of federal contracting and subcontracting dollars. My bill also attempts to provide critical assistance to small businesses that have been operating in the areas devastated by the Hurricane Katrina by expanding access to Federal contract and subcontracts.

Government projects provide solid business opportunities and prompt, steady pay for small businessmen and businesswomen. In addition, government procurement would open doors for many local small businesses to participate in the long-term reconstruction work in the Gulf Coast areas. Prior to the disaster, small construction companies in Alabama, Mississippi, and Louisiana brought home nearly $500 million in Federal contracts a year. Total small business contracts in the Gulf Coast region exceeded $3 billion a year. While many small businesses would benefit from other forms of disaster assistance, many of them are ready to get back to work and into business as soon as possible.

To that end, my bill designates the Hurricane Katrina disaster area as a HUBZone. A HUBZone designation would enable small businesses locating in the disaster area and employing people in that area to receive contracting preferences and price evaluation preferences to offset greater costs of doing business. The HUBZone program was created to direct federal contacting dollars to economically distressed areas. Extending the HUBZone designation to the Gulf Coast would bring needed businesses development tools to affected areas.

In addition, my bill would increase the maximum size of surety bonds from $2 million to $5 million for Katrina-related contracts. Small contractors vying for work need an increase in bonds to handle greater projects for Hurricane Katrina relief. Local small businesses in the Gulf Coast can use higher bonds to compensate for the damage to their assets from the Hurricane.

My bill would also direct the SBA, its resources partners, and the Federal offices of small and disadvantaged business utilization to create a contracting outreach program for small businesses located or willing to locate in the Katrina disaster area. Finally, my bill would establish small business contracting and subcontracting goals for all Katrina-related contracts and subcontracts to promote greater jobs creation and development, while providing reasonable flexibility to Federal agencies in meeting that goal in light of difficult circumstances on the ground.

Finally I would also like to comment on the funding levels provided for the SBA in this bill. I have authorized the appropriation of $24.25 million for grants to increase business counseling in the damaged areas for several SBA entrepreneurial development programs including: Small Business Development Centers (SBDCs); SCORE; Womens Business Centers (WBCs); Veteran's Business Centers, and Microloan Technical Assistance.

Our Nation's 25 million small businesses prove time and again to breathe new life into our economy, by growing at twice the rate of all firms. And when a disaster strikes, the spirit, determination and will of America's small

businesses help to create the firm economic foundation, propelling our nation's economic growth. Therefore, we in turn must create an atmosphere favorable for small businesses and provide this emergency package to the SBA. We must allow Nation's small businesses to do what they do best--``create jobs.''

I urge my colleagues to support this bill. Too much is at stake for small businesses, and the economy as a whole, to allow this critical legislation to languish. Congress must find essential agreement and fulfill its obligation to America's small businesses. Clearly, if we strive for anything less, we fail to support the backbone of our economy, our hope for new innovation, and the entrepreneurs reach for the American dream.

Mr. President, I rise today to bring to the attention of the Senate a bill which provides a comprehensive package for immediate emergency resources to help the victims of Hurricane Katrina rebuild their lives and their businesses.

As we are well aware, the entire Gulf Coast of the United States has been ravaged by the disaster of Hurricane Katrina. No natural disaster in this country in recent memory has carried with it the devastation and horror we have witnessed in the recent weeks. Many lives have been lost and damages are projected in the hundreds of billions of dollars. The President and Congress have already provided over $61 billion in emergency funds.

While we work to re-establish communities and provide some stability to the affected areas, we must consider the enormous economic impact this catastrophe has had on the region and on our entire Nation. This impact is particularly pronounced for the vital small business sector. With over 800,000 firms damaged in the Hurricane-affected region, employment in the Louisiana, Mississippi and Alabama area may be reduced by over a million jobs! Moreover, our economy which has recently recovered from recession, thanks largely to our small businesses which have created three-quarters of all new jobs, could be dampened by as much as a full percentage point.

As Chair of the Committee on Small Business and Entrepreneurship, I am committed to do everything in my power to provide immediate and necessary support to rebuild this region and to help sustain our economy. I want to ensure that every American affected by this Hurricane has the resources to begin rebuilding their lives, their businesses and their dreams.

The provisions of this bill were contained in an amendment that I proposed, Amendment #1717, to the Commerce, Justice, and Science Appropriations Act of 2005, H.R. 2862. I would like to thank my colleagues, Senator Vitter, Senator Talent, Senator Kerry, and Senator Landrieu, for co-sponsoring that amendment. The amendment was approved in the Senate by a rollcall vote of 96 to 0 on September 15, 2006, and subsequently passed the Senate in the Commerce, Justice, and Science Appropriations Act on that same day.

Because the Federal Disaster Loan program administered by the Small Business Administration issues Disaster Loans to businesses, homeowners, and renters, this legislation would have a significant impact on many facets of the efforts to rebuild the areas damaged by Hurricane Katrina.

I will also be holding a hearing in the Small Business Committee on September 22, 2005 to address the impact that Hurricane Katrina has had on small businesses.

The Small Business Administration is and must be at the forefront of this massive relief effort, playing a significant role in assisting impacted communities. This bill will strengthen the SBA's resources and will enable them to pave the pathway to recovery. I have faith that American small businesses will persevere through these difficult times and help lead the region's recovery. It is essential that we work together here in Congress, and put forth the best possible proposal to stimulate our economy and foster job growth.

I have spoken with SBA's Administrator Barreto concerning the various ways to respond to this disaster and assist with the recovery. He informed me that FEMA has referred over 500,000 cases for loan assistance to the SBA, and that the SBA is receiving up to

20,000 calls per day. This is a tremendous volume and a vital challenge that the SBA must satisfy. To date, the SBA has sent out almost 500,000 applications for loans to individuals and businesses, and has received 810 loan applications as of Monday morning, which demonstrates that much assistance is yet to be provided by the SBA. Therefore, it is critical that we act now!

I firmly believe this legislation is the best possible package to aid families, businesses and communities through these challenging times. Small businesses must have a fighting chance to survive the economic disaster caused by Hurricane Katrina.

I have included many provisions in my bill that would assist hurricane victims applying for SBA disaster loans. My legislation increases the maximum size of an SBA Disaster Loan from $1.5 million per loan to $10 million per loan and makes it possible for non-profit institutions damaged by Hurricane Katrina to be eligible for Disaster Loans.

I have also provided the SBA with the authority to grant victims of Hurricane Katrina up to 12 months to begin repaying their SBA disaster loans which would assist both small and large businesses, homeowners, and renters. This 12 month period could be extended to 24 months at the discretion of the SBA Administrator if he determines that Katrina victims would need additional time to begin repaying their loans. This would allow also homeowners and businesses additional time to get their lives and businesses restored before being required to begin repaying loans.

This legislation also proposes lowering fees for the 7(a) program to make borrowing more affordable for small businesses outside the disaster areas, many of which have been impacted by the disaster, and are struggling to cover higher costs in health care and energy, and rising interest rates.

Recognizing the increased demand this disaster will place on all small business lending programs, the amendment proposes increasing the 7(a) lending program from a program level of $17 billion to $20 billion, and the 504 lending program from a program level of $7.5 billion to $10 billion. Both the 504 and 7(a) lending programs are funded entirely through fees, so the increases require no appropriation.

Moreover, this bill increases the program level for SBA Disaster Loans--Physical and Economic Injury--by approximately $800 million, requiring an appropriation of approximately $117 million. The Committee is concerned there will not be enough funding for disaster loans available to meet the scope of this disaster, given that the economic injury disaster loans alone for 9-11 amounted to about $1 billion, and the physical damage for Katrina is considered much more extensive.

The bill also includes a provision requiring the SBA to treat these special provisions as separate from the regular programs, to avoid increasing future subsidy rates, and therefore, the costs for borrowers who rely on those programs. This same protection was provided for emergency 7(a) loans after 9-11 and for the special disaster loans for 9-11.

Additionally, many small businesses in the disaster areas will require relief from making payments and interest on 7(a) and 504 loans they had before Katrina hit. Therefore, this amendment includes a provision that directs the SBA to cover the payments and interest on existing loans for up to two years, or until the small business can resume payments.

Similar to the Supplementary Terrorist Activity Relief (STAR) loans enacted by Congress after 9-11, this bill allows the SBA to provide similar loans with lower fees for small businesses located outside the disaster zones but are nonetheless indirectly impacted by Hurricane Katrina. The lower fees also provide the lenders with an incentive to lend to these businesses.

Importantly, the bill includes protections to mitigate recent reports of past misdirection of loans to non-disaster victims. The protections include requiring lenders to inform borrowers that they are receiving Katrina relief loans, requiring lenders to document to the SBA how the borrower was adversely affected by Hurricane Katrina, and for the Government Accountability Office to collect the explanations and report to the Senate Committee on Small Business and Entrepreneurship and House Committee on Small Business every six months, verifying loans are being used for the intended purposes. These added protections will ensure that only applicants who really need these loans to recover from the horrific effects of Hurricane Katrina will receive the loans.

Furthermore, the legislation authorizes $400 million to the affected state governments of Louisiana, Mississippi, Alabama, Texas, and Florida to provide emergency bridge loans or grants to small businesses in the disaster areas that have been adversely impacted by Hurricane Katrina and require immediate access to capital until they can secure other loans or financial assistance. The goal is to disburse the funds within seven days, and this measure is based on a successful program that helped victims of the hurricanes in Florida.

With the cost of Katrina relief and rebuilding estimated at over $100 billion, small businesses, particularly those located in the disaster area and that employ individuals in the affected areas, should receive their fair share of federal contracting and subcontracting dollars. My bill also attempts to provide critical assistance to small businesses that have been operating in the areas devastated by the Hurricane Katrina by expanding access to Federal contract and subcontracts.

Government projects provide solid business opportunities and prompt, steady pay for small businessmen and businesswomen. In addition, government procurement would open doors for many local small businesses to participate in the long-term reconstruction work in the Gulf Coast areas. Prior to the disaster, small construction companies in Alabama, Mississippi, and Louisiana brought home nearly $500 million in Federal contracts a year. Total small business contracts in the Gulf Coast region exceeded $3 billion a year. While many small businesses would benefit from other forms of disaster assistance, many of them are ready to get back to work and into business as soon as possible.

To that end, my bill designates the Hurricane Katrina disaster area as a HUBZone. A HUBZone designation would enable small businesses locating in the disaster area and employing people in that area to receive contracting preferences and price evaluation preferences to offset greater costs of doing business. The HUBZone program was created to direct federal contacting dollars to economically distressed areas. Extending the HUBZone designation to the Gulf Coast would bring needed businesses development tools to affected areas.

In addition, my bill would increase the maximum size of surety bonds from $2 million to $5 million for Katrina-related contracts. Small contractors vying for work need an increase in bonds to handle greater projects for Hurricane Katrina relief. Local small businesses in the Gulf Coast can use higher bonds to compensate for the damage to their assets from the Hurricane.

My bill would also direct the SBA, its resources partners, and the Federal offices of small and disadvantaged business utilization to create a contracting outreach program for small businesses located or willing to locate in the Katrina disaster area. Finally, my bill would establish small business contracting and subcontracting goals for all Katrina-related contracts and subcontracts to promote greater jobs creation and development, while providing reasonable flexibility to Federal agencies in meeting that goal in light of difficult circumstances on the ground.

Finally I would also like to comment on the funding levels provided for the SBA in this bill. I have authorized the appropriation of $24.25 million for grants to increase business counseling in the damaged areas for several SBA entrepreneurial development programs including: Small Business Development Centers (SBDCs); SCORE; Womens Business Centers (WBCs); Veteran's Business Centers, and Microloan Technical Assistance.

Our Nation's 25 million small businesses prove time and again to breathe new life into our economy, by growing at twice the rate of all firms. And when a disaster strikes, the spirit, determination and will of America's small

businesses help to create the firm economic foundation, propelling our nation's economic growth. Therefore, we in turn must create an atmosphere favorable for small businesses and provide this emergency package to the SBA. We must allow Nation's small businesses to do what they do best--``create jobs.''

I urge my colleagues to support this bill. Too much is at stake for small businesses, and the economy as a whole, to allow this critical legislation to languish. Congress must find essential agreement and fulfill its obligation to America's small businesses. Clearly, if we strive for anything less, we fail to support the backbone of our economy, our hope for new innovation, and the entrepreneurs reach for the American dream.

Mr. President, Senator Wyden and I are introducing legislation today to change a provision in law that was attendant to the emergency supplemental passed recently dealing with hurricane Katrina. That provision in law increased the amount of money that would be available to be spent on a Government credit card from $2,500 to $250,000. That is right--$250,000 for purchases on a Government credit card.

Here is what a Government credit card looks like. There are about 390,000--somewhere in that neighborhood--390,000 Government credit cards in the country. I have three GAO reports that describe substantial abuse and misuse of these Government credit cards.

The proposal that passed this Congress attendant to the hurricane emergency relief says that on these credit cards, the limit will go from $2,500 to $250,000. Let me describe for a moment what the GAO found in various investigations.

What has been charged to a Government credit card? Hiring prostitutes, gambling, breast-enlargement surgery--yes, it was for a girlfriend of somebody who had a Government credit card--cigars, mounting a deer head, jewelry, wine, and the list goes on.

Now the limit goes to $250,000. We aim to take it back to $2,500. It will still have the emergency capabilities that existed since 9/11 which will allow a $15,000 limit under emergencies.

We had a hearing at which a professor from GW Law School who is an expert in this area of Government procurement testified. Here is what he said about the $250,000 credit card limit:

The potential for abuse is staggering.

Everybody knows that: ``The potential for abuse is staggering.'' If you don't believe it, take a look at the GAO reports with respect to the abuse when the limit was $2,500. Now it is $250,000 for a credit card purchase? Who is going to stand up for the interest of the taxpayers?

This fellow, Mr. Safavian, was the top contracting officer for purchases of

the Federal Government. He just said several weeks ago about the $250,000:

This guidance--

That he and OMB would provide--

This guidance helps make sure that adequate management

controls are in place to ensure that taxpayers' dollars are

spent efficiently and responsibly in support of disaster

victims.

Meaning the new $250,000 on credit cards will be spent efficiently and responsibly. That is from David Safavian, Director of the Office of Procurement and Policy. The problem is, Mr. Safavian was arrested by the FBI on September 19 and charged with lying to an ethics officer and so on. He is the guy who gave us the assurance that taking the credit card from $2,500 to $250,000 will be just fine because there are all these limits in place and it will be spent wisely and efficiently. Yes, and the Moon is made of green cheese.

Who is going to believe this, especially when we have the GAO reports that show past abuses with even the $2,500 limit, which includes the hiring of prostitutes on Government credit cards? It includes breast- enlargement surgery on Government credit cards. When on Earth will people wake up and start thinking?

So Senator Wyden and myself are today introducing legislation to say, How about let's sober up and think through this the right way on behalf of the American taxpayers.

We want to help hurricane victims, no question about that. But I do not want people walking around with credit cards that have a $250,000 limit that say U.S. Government on them, in a way that the GAO says puts us at risk and in a way that Government procurement experts tell us is very dangerous for the American taxpayer.

I am pleased to do this with my colleague, Senator Wyden. For the past several years, Senator Wyden and I have taken a look at a whole range of wasteful issues. I might just say that Senator Wyden and I, a while back, found deep in the bowels of the Pentagon there was a plan to create what was called a futures market for terrorism. I think they were preparing to spend another $8 million on it. And, yes, they were going to actually have a futures market for terrorism so that people could make wagers buying futures contracts on things such as how many American soldiers will be killed in the next year, will the King of Jordan be assassinated within the next year. One could actually wager and make money by betting on those kinds of things.

Senator Wyden and I blew that wide open. The next day, both Secretary Rumsfeld and the President said they did not know it was going on. They shut it down and it is all over. In my judgment, that was unbelievably stupid as a public policy, whoever allowed that to happen. It is now shut down.

A lot of bad things happen in circumstances where no one is watching. In this case, with credit cards that have a $250,000 limit, there is something fundamentally wrong with that. I do not know who put that in the emergency supplemental. It should not have been there. But it was there. We aim to repeal it on behalf of the American taxpayer.

I would be happy to yield to my friend from Oregon.

Mr. President, in answer to the Senator's request, he is asking that of perhaps 390,000 credit cards that exist in the possession of Federal workers, do we know how many have this $250,000 limit? We do not have the foggiest idea.

The Senator indicated we want to help people who are dealing with the hurricane. Our interest is not in pulling the rug out from under people who are working and trying to respond to the devastation of these hurricanes, but I am not interested in paving the way for additional waste, fraud, and abuse with the misuse of Federal credit cards.

Yes, there are thousands of dedicated public servants who will use these responsibly, but increasing the limit from $2,500 to $250,000, in my judgment, is fundamentally irresponsible, and we aim to take it back with this amendment and aim to offer this amendment to the next supplemental that deals with this hurricane.

I will yield the floor so my colleague from Oregon can have the floor, and I would like to propound a question at some point later when he finishes his statement.

Mr. President, I conclude by pointing out that, yes, others have described their concern about the $250,000, and some have talked about a $50,000 limit and other approaches. Senator Wyden and I say that we ought to go back to the old limit, $2,500 per credit card per transaction. That is why we introduced this legislation and hope that our colleagues will agree.

Again, this is what the credit card looks like. There are nearly 400,000 that are possessed by Federal workers. We do not allege that these are not dedicated public servants. We do allege that at least in some instances, according to three GAO reports, there have been massive abuses. These are just a few.

I put up another chart about them: Liquor, gambling, mounting a deer head, cigars, ski clothes and diamond rings, not to mention hiring prostitutes and breast enlargements--all put on Government credit cards.

Does that make a person look and pay attention? Of course. Should that be happening? Of course not.

The $250,000 limit on the credit card, this is what Professor Yukins said, who is an expert in these areas:

[T]he Administration has announced various protective

measures. . . . It appears, however, that those additional

protections will not address the core problem with the new

procurement exceptions: Under the new law, agencies will be

able to spend billions of relief dollars without any of the

competition, transparency or other legal rules that normally

protect our procurement system.

I ask my colleagues how this got into the supplemental bill, taking it from a $2,500 to a $250,000 limit on a Federal Government credit card. How did that happen? When one looks at that they say: Wait a second, we are going to increase the limit on a credit card from $2,500 to $250,000? What on Earth are you thinking about?

Well, it came from the White House. The White House made the specific request, believing in the wake of Hurricane Katrina people were going to need emergency capabilities to do these kinds of purchases. So the White House said they wanted an increase to $250,000. The person they sent down to brief staff in the Senate of how this would work and why it is necessary was Mr. David Safavian. He was the head of all procurement policy at the Office of Management and Budget in the White House.

What did he tell us publicly and what did he tell the American people? ``This guidance''--guidance about procurement with the $250,000 limit on a credit card:

This guidance helps make sure that adequate management

controls are in place to ensure that taxpayers' dollars are

spent efficiently and responsibly in support of disaster

victims.

That was said 2 weeks before Mr. Safavian's arrest by the FBI for lying. This is the person who came to brief the Senate staff about why the $250,000 limit on credit cards was necessary.

It not only is not necessary, it is terribly unwise. In my judgment, unless changed, from this we will see a dramatic amount of waste, fraud, and abuse. There is a right way and a wrong way to do things. I guarantee this proposal to increase credit card limits for Federal employees to $250,000 is the wrong way.

Senator Wyden and I are going to do everything we can to see if we cannot in more sober moments persuade everyone here that we ought to go back to the previous limits and that we ought to enforce them the right way. The GAO's reports say that even with the $2,500 limits, there are serious problems with the use of these Federal credit cards.

That is our proposal. I want to thank my colleague from Oregon with whom I have worked on a number of occasions on many areas of Federal waste. Yes, this is a big old government, a big bureaucracy. There are wonderful people who work in it, and it does wonderful things. There are also areas of waste that make me furious. Senator Wyden and I have worked on that in a number of areas, in a number of ways, and I hope we can continue to do that. This is a preventive way to try to restore that $2,500 as a limit on Federal credit cards.

I yield the floor.

Mr. President, I rise today to introduce the ``Medicare Beneficiary Assistance Improvement Act.'' This legislation would improve what are referred to as the Medicare Savings Programs, which includes the Qualified Medicare Beneficiary, QMB, and Specified Low- income Medicare Beneficiary, SLMB, and Qualifying Individual-1 (QI-1) programs that provide cost-sharing assistance for low-income Medicare beneficiaries through the Medicaid program. It would also make permanent the QI-1 program, which expires today due to inaction by the House of Representatives to extend the program.

The QI-1 program was established as part of the Balanced Budget Act of 1997 and was authorized for 5 years. In 2002 and 2003, extensions of the program were included in various continuing resolutions. The program was further extended through passage of Public Law 108-448 in 2004, through today's expiration date.

There is no reason that the Congress must participate in this annual last minute scramble to try and extend the program for a few months or a year. It is a disservice to the States, who must watch the Congress closely to constantly prepare to send out disenrollment notices and layoff staff, even though they are relatively certain the program will be extended. But, more importantly, it is a disservice to those that need this important assistance, as many of those enrolled worry this benefit will be taken away and many of those never enrolled never are told of the benefit since States and advocates are spending their time trying to get the program extended rather than conducting outreach.

While I remain very hopeful that the Congress will pass an extension of the QI-1 program for an additional period in the coming week, I am introducing the ``Medicare Beneficiary Assistance Improvement Act'' today in the hope that Congress will end this process of temporary extensions and permanently authorize the program, as provided for in this legislation.

To reiterate, low-income senior citizens and disabled Americans nationwide should not be subjected to the constant risk of losing crucial health care benefits. Furthermore, the Centers for Medicare & Medicaid Services, CMS, the Social Security Administration, SSA, and the States should be spared the administrative burdens and cost associated with reauthorizing the program each year--sometimes more than once in a year.

Furthermore, the bill proposes several improvements to the Medicare Savings Programs and application processes that will make these low- income benefits both more efficient to administer and more accessible to the individuals who need them. It would also seek to simplify the process and make the Medicare Savings Programs more understandable to low-income senior citizens and people with disabilities, as well as State and Federal Government officials.

In New Mexico, over 1,500 low-income Medicare beneficiaries receive the QI-1 benefit, which saves them almost $1,000 in Medicare Part B premium out-of-pocket costs annually. Unfortunately, according to estimates made by the Medicare Rights Center using Census Bureau data, over 11,000 are likely to be eligible. Many are completely unaware of the assistance this program offers.

The same is true among those of us that created the three different Medicare Savings Programs. In fact, I am almost absolutely certain that few of my Senate colleagues could accurately explain how any of these programs work and that is precisely the problem with them. They are intended serve our Nation's most vulnerable, low-income citizens with their Medicare cost-sharing burdens, but do so in a very complicated manner that few can understand. It is no wonder that many of our Nation's elderly and people with disabilities that qualify for this assistance do not participate.

For example, the QI-1 program is Federal grant payment to States for the purpose of paying the Medicare Part B premium, which is $78.20 per month in 2005 and will increase to $88.50 per month or over $1000 per year in 2006, for individuals with income between 120 and 135 percent of the Federal Poverty Level. Through this Federal grant, States must pay the full amount of the Medicare Part B premium for qualifying individuals but may cap or otherwise limit enrollment if the State projects that further enrollment will result in exhaustion of their State allotment.

Six States had enrollment this year that would exceed their allotment so were forced to cap funding. The Centers for Medicare & Medicaid Services, CMS, responded to this problem with a rule on August 26, 2005, that reallocated unspent funding from some States to those that had exhausted their funds in order to eliminate the enrollment caps in the States of Oregon, Arizona, Mississippi, Louisiana, Alabama, and Connecticut.

Three days later Hurricane Katrina hit three of the six States and now their entire health care systems are in chaos, and Congress has failed to act to address their need. While that has gained a great deal of much needed attention and deserves even greater attention from the media and public, the House of Representatives yesterday failed to extend the QI-1 program and went out of session for the week even though it expires today. Senators Grassley and Baucus were working with the House of Representatives on a last minute extension through the introduction of S. 1718, but it failed to move in the waning hours of the fiscal year and the House of Representatives took no action whatsoever.

Even though CMS has apparently notified the Congress that it can continue to run the program for a few days, the failure of the Congress to take action in a timely manner to ensure that disenrollment notices are not sent out by the States to an estimated 185,000 low-income Medicare beneficiaries nationwide is absolutely unacceptable and also is deserving of attention and media scrutiny.

Furthermore, while the QI-1 program has always played an important role in helping low-income Medicare afford health care coverage, the QI-1 program would, in the future, play an important role in helping low-income Medicare beneficiaries access prescription drug coverage through Medicare's new drug benefit. Enrollment in the QI-1 program is supposed to automatically qualify a person for the Medicare Part D drug benefit's low-income subsidy beginning on January 1,2006.

To briefly describe the most critical aspects of the legislation, Section 2 of the bill simply provides for one unified name for the Federal programs that offer cost sharing and benefit assistance for low-income Medicare beneficiaries. Rather than separately referring to the QMB, SLMB, and QI-1 programs, the bill provides one common name for all of these programs, the ``Medicare Savings Programs.''

Low enrollment in these assistance programs is in large part due to the lack of knowledge and understanding of the programs or benefits offered. This simple change has been pilot tested with Medicare beneficiary groups and found to elicit a positive response and interest from Medicare beneficiaries.

Section 3 of the legislation would make permanent the QI-1 category by incorporating these individuals into the SLMB category at the State Children's Health Insurance Program enhanced matching rate. In addition to simplifying and making permanent the program, States would see a financial benefit from this change.

Section 4 eliminates some of the critical barriers to enrollment. As I noted earlier, just 1,500 of the estimated 11,000 low-income Medicare beneficiaries in New Mexico eligible for the QI-1 benefit are enrolled. This section provides for several important enrollment simplification procedures, such as allowing self-certification of income and continuous eligibility, and expanded outreach efforts.

Section 5 eliminates the limit on assets, which is set at $4,000 for an individual and $6,000 for a couple and disqualifies millions of Medicare beneficiaries with very low incomes from qualifying for assistance. Some States have waived or disallowed the counting of some assets for the purposes of eligibility determination and have seen much higher enrollment rates.

I urge the Congress to pass a temporary extension of the QI-1 program early next week, but then to immediately begin work to permanently authorize the QI-1 program and to simplify and streamline all the Medicare Savings Programs. Our Nation's low-income Medicare beneficiaries and the States deserve nothing less.

I ask unanimous consent to print a summary and text of this legislation in the Record.