Floor Statements

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 923) to amend the Small Business Investment Act of 1958 to allow certain premier certified lenders to elect to maintain an alternative loss reserve, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on this legislation.

Mr. Speaker, I yield myself such time as I may consume.

The SBA's 504 Certified Development Company program provides small businesses with long-term, fixed-rate financing for the purchase of fixed assets such as land, buildings and equipment for business expansion purposes. The loans are made by CDCs, usually nonprofit corporations organized to contribute to the economic development of a particular community or region. The entire 504 program runs totally on user fees charged to small business borrowers. It does not receive an annual appropriation.

SBA has a Premier Certified Lender program that gives discretion to certain qualified CDCs to approve 504 loans subject to the borrower being eligible and the available loan authority. In return for this lower regulatory oversight, these premier CDCs must set aside more money in order to cover potentially bad loans than regular CDCs. Some premier CDCs believe that this amount of reserve is well beyond what is prudently required.

My good friend and colleague, the gentleman from California (Mr. Doolittle), introduced H.R. 923 for the purpose of allowing premier CDCs to take a cue from the private sector by using a risk-based management approach to calculate the loan loss reserve requirements. I agree with this approach subject to certain conditions to protect the taxpayer and to ensure that no unintended consequences result from this change in policy such as higher loan fees. Our staffs have met to develop an acceptable compromise which unanimously passed the committee last month. I am pleased to present it to my colleagues before the full House today.

This bipartisan compromise creates a 2-year pilot program that permits qualified premier CDCs to use a risk-based approach to calculate their loan loss reserve requirements. In order to ensure that premier CDCs' loan loss reserves are sufficient to protect the taxpayer, the compromise establishes a Bureau of PCLP oversight within the Office of Lender Oversight at SBA. For those premier CDCs not in the new pilot program, they can withdraw from their loss such amounts that are in excess of 1 percent of their total outstanding loan balances. Finally, this compromise provides for a study to evaluate alternative loan loss reserve approaches.

H.R. 923 is about providing more liquidity and capital into the hands of small businesses without any additional cost to the taxpayer. I urge my colleagues to support H.R. 923.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 5 minutes to the gentleman from California (Mr. Doolittle), my good friend and colleague, the author of the bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Chairman, I offer an amendment.

My understanding is that the gentleman was going to reserve a point of order so I could get my point across.

Mr. Chairman, the American economy is in the midst of a manufacturing crisis. Over the past 3 years, we have lost 2.6 million manufacturing jobs. In the past 12 months, 53,000 manufacturing jobs each month have been lost in this country. These are good-paying jobs. Small business manufacturers pay on average 20 percent more to their employees than other small businesses and provide a vast majority of the basic products such as tools, dies and molds that are essential to our national security and essential to our defense industrial base.

In 1981, Rockford, Illinois, my district's largest city, had an unemployment rate of 24.9 percent, the highest in the Nation. Today it is around 11 percent. I do not want to see a recurrence of what happened in 1981. But we are losing our industrial base in this country. Unlike the past when factories were closed during an economic downturn but reopened when times improved, today a too-frequent outcome is the permanent closure of the factory. The jobs leave forever. Young people entering the workforce do not have a manufacturing career choice left open to them as they did in the past.

Since 1933, the Buy American Act has safeguarded the interests of American manufacturers by requiring the Federal Government to purchase domestically produced products. But that only means 50.001 percent has to be American goods. The Department of Labor's May employment report showed again the 34th consecutive month of loss of manufacturing jobs.

Let me tell my colleagues what happened in Rockford, Illinois. After 112 years in business, Ingersoll Milling ceased operations. The Rockford machine tool maker was one of only two companies to make machines to shape radar absorbent composites into the skin of stealthy warplanes. In bankruptcy, a Chinese state-owned enterprise is trying to buy Ingersoll. The only plant that is left in the United States is in Kentucky and that is Cincinnati Machine. They have just downsized from 750 people to 350 people. We are losing the ability to have manufacturing facilities to defend the United States. The purpose of this amendment is to build that manufacturing core to say, wake up, Washington, wake up, America, the manufacturing jobs are gone, the security of our Nation is being imperiled.

This amendment simply increases the Buy American content from 50 percent to 65 percent. It is so simple. The money that is being used to protect America, we are only asking 65 cents of that be used to buy American products. This is a very simple amendment. We would ask that this body take its part in restoring American manufacturing in this country. I would urge my colleagues, urge them, beg them, beseech them, to adopt this amendment to help the restoration of our manufacturing base.

Offered By: Mr. Manzullo

Amendment No. 1: At the end of the bill (before the short

title), insert the following:

Mr. Speaker, as the chairman of the Committee on Small Business, our Nation's small businessmen and -women tell me over and over that accessible and affordable health care is their number one priority. I have heard from thousands of small employers in America who have been pleading for options to help them manage their surging health care costs. In fact, so many letters came in, we put them into a binder called ``Health Care Horror Stories from America's Small Employers.'' The NFIB assisted us in putting this together for us.

The small business owners tell us regularly how they struggle to provide their workers with health insurance but, each year, they face double-digit increases. Small business owners tell me they do not know how much longer they can continue to provide health care for their employees. Mom and pop businesses tell me they want to provide health care for their employees, but they cannot because of the expense of the policy. My own brother who runs a family restaurant is drowning in the surging costs and the exorbitant costs of health care insurance. This is a family business. We know personally what it costs when you are little, when you have a very small pool. People like my brother Frank are horrified at the thought of not being able to have insurance.

As one of my small business constituents wrote, ``I have always wanted to take care of my employees and provide them with competitive benefits and wages, but each year it gets more and more difficult. Our health insurance costs were raised 43 percent last year and 34 percent this year.''

Another constituent: ``Health care costs and insurance are draining us. Last year we had a 14 percent increase, and now the costs are going up 21 percent again. I have nowhere else to go.''

So they go out of business because they cannot afford insurance.

Today we bring forward a great option, association health plans, to help control these outrageous costs. Of the 41 million Americans with no health insurance, 60 percent of these are small entrepreneurs, their families and their employees.

Why should the small businesses of this country not have the same right to band together as local labor unions do to purchase their insurance in large pools? That is all this is. It is just that simple. The more people you have in the pool, the cheaper the rates are for the insurance. It is a matter of equity. The little guys out there, the people that are struggling, why can they not have the same right, the same legal right to get together as labor unions? Why does there have to be a double standard, to allow labor unions to get together and do the smart thing, which they have been doing for 60 or 70 years, and using the union as the center post around which to buy their insurance, and allow associations as a center post around which to buy insurance for the small business people?

It is simply a matter of equity, it is a matter of fairness, and the biggest argument that we have here is this: the larger the pool, the lower the rate. There is not anybody here on the floor today or in this country that can dispute that fact. My brother is a pool of two, him and his wife, at the restaurant.

As the Chairman of the Small Business Committee, our nation's small business men and women tell me over and over that accessible and affordable health care is their number one priority.

I have heard from thousands of small employers in America who have been pleading for options to help them manage their surging health care costs.

Small business owners tell me regularly how they struggle to provide their workers health insurance, but each year they face double digit increases.

Small business owners tell me they don't know how much longer they can continue to provide health care for their employees because each year the premiums rise, their coverage decreases and out of pocket expenses soar.

``Mom and Pop'' businesses tell me how they want to provide healthcare for their employees, but they cannot because of the expense for a policy that covers less then ten people.

My own brother, who runs the family restaurant, is staggering at the exorbitant cost of health care insurance.

They are horrified at the thought of leaving their workers high and dry without health insurance.

As one of my small business constituents wrote, ``I've always wanted to take care of my employees and provide them with competitive benefits and wages, but each year it is getting more and more difficult. Our health insurance costs were raised 43 percent last year and 34 percent this year and there is nothing we can do about it.``

Another constituent writes, ``Health care costs and insurance are draining us. Last year, we had a 14 percent increase. Now, the costs are going up 21 percent again. I have nowhere to go.''

They are hopeless. Our entrepreneurs, whose ingenuity and hard work ethic have driven the American economy, have run out of options to battle this crisis. They need our help.

And today, we bring forward a great option--Association Health Plans--to help them control these outrageous costs and continue offering vital health insurance to their employees and their families.

Of the 41 million Americans with no health insurance, 60 percent are small entrepreneurs, their families and their employees.

One of the reasons small businesses cannot afford health coverage for their employees is that they are unable to achieve the economies of scale and purchasing power of larger corporations and unions.

Small businesses suffer from unequal treatment--what they want most is a level playing field when it comes to health care.

Large corporations and labor unions use the purchasing power of thousands of employees to offer affordable health insurance to their workers.

Small business owners have to find their insurance on an individual basis, making it very difficult and expensive to find affordable health coverage.

The premiums that small businesses pay for health insurance are typically 20-30 percent higher than those of large companies or unions which can self-insure.

Additionally, the administrative costs incurred by small businesses are likewise higher than those of large businesses; 25-27 percent versus 5-11 percent for large businesses.

Association Health Plans can provide hope to those who lack health care by expanding the pool of people and bringing down costs by 15 to 30 percent.

For small businesses, that savings can mean the difference between providing health care or not.

That savings can be the difference between profitability or losing money.

In March, I held a Small Business Committee hearing on this very topic.

The Washington State Farm Bureau testified to the success they have enjoyed operating an AHP for the last 3\1/2\ years.

Traditionally, farmers have had great difficulty buying health insurance because their business is usually made up entirely of their family.

Of those who have taken advantage of the Washington State Farm Bureau's AHP, 25 percent did not have health insurance prior to enrolling.

Additionally, the Washington State Farm Bureau AHP has operated with a 99 percent retention rate.

The proof is irrefutable. AHPs work.

I urge all of my colleagues to support H.R. 660.

I yield to the gentleman from Wisconsin.

Mr. Speaker, reclaiming my time, that is a government- run pool with a government-run subsidy, and that will end up like every other government-run program: it will bankrupt the country, and the small businessperson will be at the end of it.

Try this. See if this works. This is so simple. If it works for the labor unions, why can it not work for Frank and Mary Ann Manzullo?

I yield to the gentleman from Wisconsin.

Mr. Speaker, enclosed are Committee on Small Business Rules for the 108th Congress for submission to the Congressional Record in accordance with clause 2(a)(2) of rule XI.

Rules and Procedures of the Committee on Small Business

U.S. House of Representatives, 108th Congress

1. general provisions

The Rules of the House of Representatives, and in

particular the committee rules enumerated in rule XI, are the

rules of the Committee on Small Business to the extent

applicable and by this reference are incorporated. Each

subcommittee on the Committee on Small Business (hereinafter

referred to as the ``committee'') is a part of the committee

and is subject to the authority and direction of the

committee, and to its rules to the extent applicable.

2. referral of bills by chairman

Unless retained for consideration by the full committee,

all legislation and other matters referred to the committee

shall be referred by the Chairman to the subcommittee of

appropriate jurisdiction within 2 weeks. Where the subject

matter of the referral involves the jurisdiction of more than

one subcommittee or does not fall within any previously

assigned jurisdictions, the Chairman shall refer the matter,

as he may deem advisable.

3. Date of Meeting

The regular meeting date of the committee shall be the

second Thursday of every month when the House is in session.

A regular meeting of the committee may be dispensed with if,

in the judgment of the Chairman, there is no need for the

meeting. Additional meetings may be called by the Chairman as

he may deem necessary or at the request of a majority of the

members of the committee in accordance with clause 2(c) of

rule XI of the House.

At least 3 days notice of such an additional meeting shall

be given unless the Chairman determines that there is good

cause to call the meeting on less notice.

The determination of the business to be considered at each

meeting shall be made by the Chairman subject to clause 2(c)

of rule XI of the House.

A regularly scheduled meeting need not be held if there is

no business to be considered or, upon at least 3 days notice,

it may be set for a different date.

4. announcement of Hearings

Unless the Chairman, with the concurrence of the ranking

minority member, or the committee by majority vote,

determines that there is good cause to begin a hearing at an

earlier date, public announcement shall be made of the date,

place and subject matter of any hearing to be conducted by

the committee at least 1 week before the commencement of that

hearing.

After announcement of a hearing, the committee shall make

available as soon as practicable to all Members of the

Committee a tentative witness list and to the extent

practicable a memorandum explaining the subject matter of the

hearing (including relevant legislative reports and other

necessary material). In addition, the Chairman shall make

available as soon as practicable to the Members of the

Committee any official reports from departments and agencies

on the subject matter as they are received.

Meetings and Hearings Open to the Public

(A) Meetings

Each meeting of the committee or its subcommittees for the

transaction of business, including the markup of legislation,

shall be open to the public, including to radio, television

and still photography coverage, except as provided by clause

4 of rule XI of the House, except when the committee or

subcommittee, in open session and with a majority present,

determines by record vote that all or part of the remainder

of the meeting on that day shall be closed to the public

because disclosure of matters to be considered would endanger

national security, would compromise sensitive law enforcement

information, or would tend to defame, degrade or incriminate

any person or otherwise would violate any law or rule of the

House: Provided, however, that no person other than members

of the committee, and such congressional staff and such

executive branch representatives as they may authorize, shall

be present in any business meeting or markup session which

has been closed to the public.

(B) Hearings

Each hearing conducted by the committee or its

subcommittees shall be open to the

public, including radio, television and still photography

coverage, except when the committee or subcommittee, in open

session and with a majority present, determines by record

vote that all or part of the remainder of the hearing on that

day shall be closed to the public because disclosure of

testimony, evidence or other matters to be considered would

endanger the national security, would compromise sensitive

law enforcement information, or would violate any law or rule

of the House; Provided, however, that the committee or

subcommittee may be the same procedure vote to close one

subsequent day of hearings. Notwithstanding the requirements

of the preceding sentence, a majority of those present, there

being in attendance the requisite number required under the

rules of the committee to be present for the purpose of

taking testimony, (i) may vote to close the hearing for the

sole purpose of discussing whether testimony or evidence to

be received would endanger the national security, would

compromise sensitive law enforcement information, or violate

clause 2(k)(5) of rule XI of the House; or (ii) may vote to

close the hearing, as provided in clause 2(k)(5) of rule XI

of the House.

No member of the House may be excluded from non-

participatory attendance at any hearing of the committee or

any subcommittee, unless the House of Representatives shall

by majority vote authorize the committee or subcommittee, for

purposes of a particular series of hearings on a particular

article of legislation or on a particular subject of

investigation, to close its hearing to members by the same

procedures designated for closing hearings to the public.

6. witnesses

(A) Statement of Witnesses

Each witness who is to appear before the committee or

subcommittee shall file with the committee at least two

business days before the day of his or her appearance, 100

copies of his or her written statement of proposed testimony.

At least one copy of the statement of each witness shall be

furnished directly to the ranking minority member. In

addition, all witnesses shall be required to submit with

their testimony a resume or other statement describing their

education, employment, professional affiliations and other

background information pertinent to their testimony unless

waived by the Chairman.

Each witness shall also submit to the committee a copy of

his or her final prepared statement in an electronic format

no later than the day of the hearing unless waived by the

Chairman.

The committee will provide public access to its printed

materials, including the proposed testimony of witnesses, in

electronic form.

(B) Interrogation of Witnesses

Whenever any hearing is conducted by the committee or any

subcommittee upon any measure or matter, the minority party

members on the committee shall be entitled, upon request to

the Chairman by a majority of those minority members, to call

one witness selected by the minority to testify with respect

to that measure or matter. The witness requested by the

minority shall furnish at least one copy of his or her

statement and any supplementary materials directly to the

Chairman within two business days before the day of his or

her appearance unless waived by the Chairman.

Except when the committee adopts a motion pursuant to

subdivisions (B) and (C) of clause 2(j)(2) of rule XI of the

rules of the House, committee members may question witnesses

only when they have been recognized by the Chairman for that

purpose, and only for a 5-minute period until all members

present have had an opportunity to question a witness. The 5-

minute period for questioning a witness by any one member can

be extended only with the unanimous consent of all members

present. The Chairman, followed by the ranking minority

member and all other members alternating between the majority

and minority, shall initiate the questioning of witnesses in

both the full and subcommittee hearings.

In recognizing members to question witnesses, the Chairman

may take into consideration the ratio of majority and

minority members present in such a manner as not to

disadvantage the Members of either party. The Chairman, in

consultation with the ranking minority member, may decrease

the 5-minute time period in order to accommodate the needs of

all the Members present and the schedule of the witnesses.

7. subpoenas

A subpoena may be authorized and issued by the Chairman of

the committee in the conduct of any investigation or series

of investigations or activities to require the attendance and

testimony of such witness and the production of such books,

records, correspondence, memoranda, papers and documents, as

he deems necessary. The ranking minority member shall be

promptly notified of the issuance of such a subpoena.

Such a subpoena may be authorized and issued by the

chairman of a subcommittee with the approval of a majority of

the members of the subcommittee and the approval of the

Chairman of the committee.

8. quorum

No measure or recommendation shall be reported unless a

majority of the committee was actually present. For purposes

of taking testimony or receiving evidence, two members shall

constitute a quorum. For all other purposes, one-third of the

members (or 12 Members) shall constitute a quorum.

9. amendments during mark-up

Any amendment offered to any pending legislation before the

committee must be made available in written form when

requested by any member of the committee. If such amendment

is not available in written form when requested, the Chairman

shall allow an appropriate period for the provision thereof.

10. proxies

No vote by any member of the committee or any of its

subcommittees with respect to any measure or matter may be

cast by proxy.

11. postponement of proceedings

The Chairman in consultation with the Ranking Minority

Member may postpone further proceedings when a record vote is

ordered on the question of approving any measure or matter or

adopting an amendment. The Chairman may resume proceedings on

a postponed request at any time. In exercising postponement

authority, the Chairman shall take all reasonable steps

necessary to notify members on the resumption of proceedings

on any postponed recorded vote. When proceedings resume on a

postponed question, notwithstanding any intervening order for

the previous question, an underlying proposition shall remain

subject to further debate or amendment to the same extent as

when the question was postponed.

12. number and jurisdiction of subcommittees

There will be four subcommittees as follows:

Workforce, Empowerment and Government Programs (seven

Republicans and six Democrats)

Regulatory Reform and Oversight (seven Republicans and six

Democrats)

Rural Enterprises, Agriculture and Technology (six

Republicans and five Democrats)

Tax, Finance and Exports (eight Republicans and seven

Democrats)

During the 108th Congress, the Chairman and ranking

minority members shall be ex officio members of all

subcommittees, without vote, and the full committee shall

have the authority to conduct oversight of all areas of the

committee's jurisdiction.

In addition to conducting oversight in the area of their

respective jurisdiction, each subcommittee shall have the

following jurisdiction:

workforce, empowerment and government programs

Oversight and investigative authority over problems faced

by small businesses in attracting and retaining a high

quality workforce, including but not limited to wages and

benefits such as health care.

Promotion of business growth and opportunities in

economically depressed areas.

Oversight and investigative authority over regulations and

other government policies that impact small businesses

located in high risk communities.

Opportunities for minority, women, veteran and disabled-

owned small businesses, including the SBA's 8(a) program.

General oversight of programs targeted toward urban relief.

Small Business Act, Small Business Investment Act, and

related legislation.

Federal Government programs that are designed to assist

small business generally.

Participation of small business in Federal procurement and

Government contracts.

regulatory reform and oversight

Oversight and investigative authority over the regulatory

and paperwork policies of all Federal departments and

agencies.

Regulatory Flexibility Act.

Paperwork Reduction Act.

Competition policy generally.

Oversight and investigative authority generally, including

novel issues of special concern to small business.

rural enterprises, agriculture and technology

Promotion of business growth and opportunities in rural

areas.

Oversight and investigative authority over agricultural

issues that impact small businesses.

General oversight of programs targeted toward farm relief.

Oversight and investigative authority for small business

technology issues.

tax, finance and exports

Tax policy and its impact on small business.

Access to capital and finance issues generally.

Export opportunities and oversight over Federal trade

policy and promotion programs.

13. committee staff

(a) Majority Staff

The employees of the committee, except those assigned to

the minority as provided below, shall be appointed and

assigned, and may be removed by the Chairman. The Chairman

shall fix their remuneration, and they shall be under the

general supervision and direction of the Chairman.

(B) Minority Staff

The employees of the committee assigned to the minority

shall be appointed and assigned, and their remuneration

determined, as the ranking minority member of the committee

shall determine.

(C) Subcommittee Staff

The Chairman and ranking minority member of the full

committee shall endeavor to

ensure that sufficient staff is made available to each

subcommittee to carry out its responsibilities under the

rules of the committee.

14. powers and duties of subcommittees

Each subcommittee is authorized to meet, hold hearings,

receive evidence, and report to the full committee on all

matters referred to it. Subcommittee chairman shall set

meeting and hearing dates after consultation with the

Chairman of the full committee. Meetings and hearings of

subcommittees shall not be scheduled to occur simultaneously

with meetings or hearings of the full committee.

15. subcommittee reports

(A) Investigative Hearings

The report of any subcommittee on a matter which was the

topic of a study or investigation shall include a statement

concerning the subject of the study or investigation, the

findings and conclusions, and recommendations for corrective

action, if any, together with such other material as the

subcommittee deems appropriate.

Such proposed reports shall first be approved by a majority

of the subcommittee members. After such approval has been

secured, the proposed report shall be sent to each member of

the full committee for his or her supplemental, minority, or

additional views.

Any such views shall be in writing and signed by the member

and filed with the clerk of the full committee within 5

calendar days (excluding Saturdays, Sundays, and legal

holidays) from the date of the transmittal of the proposed

report to the members. Transmittal of the proposed report to

members shall be by hand delivery to the members' offices.

After the expiration of such 5 calendar days, the report

may be filed as a House report.

(B) End of Congress

Each subcommittee shall submit to the full committee, not

later than November 15 of each even-numbered year, a report

on the activities of the subcommittee during the Congress.

16. RECORDS

The committee shall keep a complete record of all actions,

which shall include a record of the votes on any question on

which a record vote is demanded. The result of each

subcommittee record vote, together with a description of the

matter voted upon, shall promptly be made available to the

full committee. A record of such votes shall be made

available for inspection by the public at reasonable times in

the offices of the committee.

The committee shall keep a complete record of all committee

and subcommittee activity which, in the case of any meeting

or hearing transcript, shall include a substantially verbatim

account of remarks actually made during the proceedings,

subject only to technical, grammatical, and typographical

corrections authorized by the person making the remarks

involved.

The records of the committee at the National archives and

Records Administration shall be made available in accordance

with rule VII of the Rules of the House. The Chairman of the

full committee shall notify the ranking minority member of

the full committee of any decision, pursuant to clause

3(b)(3) or clause 4(b) of rule VII of the House, to withhold

a record otherwise available, and the matter shall be

presented to the committee for a determination of the written

request of any member of the committee.

17. ACCESS TO CLASSIFIED OR SENSITIVE INFORMATION

Access to classified or sensitive information supplied to

the committee and attendance at closed sessions of the

committee or its subcommittees shall be limited to members

and necessary committee staff and stenographic reporters who

have appropriate security clearance when the Chairman

determines that such access or attendance is essential to the

functioning of the committee.

The procedures to be followed in granting access to those

hearings, records, data, charts, and files of the committee

which involve classified information or information deemed to

be sensitive shall be as follows:

(a) Only Members of the House of Representatives and

specifically designated committee staff of the Committee on

Small Business may have access to such information.

(b) Members who desire to read materials that are in the

possession of the committee should notify the clerk of the

committee.

(c) The clerk will maintain an accurate access log, which

identifies the circumstances surrounding access to the

information, without revealing the material examined.

(d) If the material desired to be reviewed is material

which the committee or subcommittee deems to be sensitive

enough to require special handling, before receiving access

to such information, individuals will be required to sign an

access information sheet acknowledging such access and that

the individual has read and understands the procedures under

which access is being granted.

(e) Material provided for review under this rule shall not

be removed from a specified room within the committee

offices.

(f) Individuals reviewing materials under this rule shall

make certain that the materials are returned to the proper

custodian.

(g) No reproductions or recordings may be made of any

portion of such materials.

(h) The contents of such information shall not be divulged

to any person in any way, form, shape, or manner, and shall

not be discussed with any person who has not received the

information in an authorized manner.

(i) When not being examined in the manner described herein,

such information will be kept in secure safes or locked file

cabinets in the committee offices.

(j) These procedures only address access to information the

committee or a subcommittee deems to be sensitive enough to

require special treatment.

(k) If a member of the House of Representatives believes

that certain sensitive information should not be restricted

as to dissemination or use, the member may petition the

committee or subcommittee to so rule. With respect to

information and materials provided to the committee by the

executive branch, the classification of information and

materials as determined by the executive branch shall prevail

unless affirmatively changed by the committee or the

subcommittee involved, after consultation with the

appropriate executive agencies.

(1) Other materials in the possession of the committee are

to be handled in accordance with the normal practices and

traditions of the committee.

18. OTHER PROCEDURES

The Chairman of the full committee may establish such other

procedures and take such actions as may be necessary to carry

out the foregoing rules or to facilitate the effective

operation of the committee.

The committee may not be committed to any expense whatever

without the prior approval of the Chairman of the full

committee.

19. AMENDMENTS TO COMMITTEE RULES

The rules of the committee may be modified, amended or

repealed by a majority of the members, at a meeting

specifically called for such purpose, but only if written

notice of the proposed change has been provided to each such

member at least 3 days before the time of the meeting.

Mr. Speaker, the death tax falls most heavily on small businesses because they are asset rich but cash poor. This bill allows small businesses to be passed from one generation to the next without having to sell assets to pay the punitive tax. This bill is not about Bill Gates. It is not about Warren Buffett. If they have problems with repealing the death tax, let them write a check to the government.

This bill is about the Beuth family of Winnebago, Illinois, and the Hall family of Ogle County, Illinois, who live in my congressional district. Richard and Judy Beuth of Seward almost lost the family farm several years ago when Richard's father died and the IRS hit them with a $185,000 death tax bill. Factual, not philosophical, factual. Not Warren Buffett, not Bill Gates, but Richard and Judy Beuth of Seward, Illinois. Gary Hall and his four sisters of Lindenwood had to sell equipment, had to sell part of their land, and take out huge loans to pay a $2.7 million death tax bill they received shortly after their father died in 1996. Real live people, real live farmers, my constituents, forced to go out of business because of the capital- intensive farming operations that they have to make their living.

This tax is immoral. It has devastated too many family farms and mom and pop businesses. These families worked hard all their lives to put food on the dinner tables, and this is about giving that family farm, that family business on to succeeding generations. Of all of the small businesses in this country, fewer than 30 percent are passed on to succeeding generations and fewer than 13 percent make it to the third generation. I urge that this bill to repeal the death tax be made permanent.

Mr. Speaker, will the gentleman yield?

No, because the estates would have been more than that.

It was probably worth more than the $3 million.

Mr. Chairman, I offer an amendment.

Mr. Chairman, I yield myself such time as I may consume. The American economy is in the midst of a manufacturing crisis. Over the past 3 years, we have lost 2.6 million jobs. The latest Bureau of Labor Statistics reports show that for 34 straight months, we have had a coring out of our manufacturing base, losing 53,000 manufacturing jobs each month. These jobs are necessary, many of them, to help out with our defense industrial base. They include such basic products as tools, dies and molds.

In 1981, Rockford, Illinois, the largest city in the congressional district I represent, led the Nation with unemployment at 24.9 percent. Today it is around 11 percent. I do not want to see a recurrence of 1981. We are in danger of seeing our industrial base irreparably harmed. Unlike the past when factories were closed during an economic downturn but reopened when times improved, today a too frequent outcome is the permanent closure of a factory. The jobs leave forever. The young people entering the workforce do not have a manufacturing career

choice left open to them. My own constituents have been impacted by the bankruptcy of several manufacturers since this downturn began.

Mr. Chairman, the bleeding continues. Since 1933, the Buy American Act has safeguarded the interests of American manufacturers by requiring the Federal Government to purchase domestically manufactured products for government usage. To qualify as a domestic product, the content cost of the components must be ``substantially all'' produced in America. Most people would say that term ``substantially all'' means 80 to 90 percent or even 99 percent. However, the regulators at the Federal Government say ``substantially all'' means only 50 percent. I am glad to say that at the Federal Aviation Administration, ``substantially all'' is defined as 60 percent for the acquisition of steel or manufactured goods according to the 1995 acquisition regulations which the FAA authorized back then.

I am disturbed, however, at the instance of waivers allowed by the FAA. Civil aircraft and aircraft components purchased by the FAA are not subject to the Buy American Act due to the provisions of the Agreement of Trade on Civil Aircraft negotiated by the U.S. Trade Representative. Currently the FAA is advertising on its Web site a requirement for an airborne research and development multi-engine jet aircraft at $14.9 million that could be bought with U.S. taxpayers' dollars from foreign countries at a time when tens of thousands of air and space workers in this country are unemployed.

It has been 8 years since the Secretary of Transportation was last required to report to Congress on procurements that were not domestic products. This amendment will require a report that will bring us current information on this subject. We do not even know how many aircraft or other products the FAA is procuring each year from foreign countries because of waivers to the Buy American Act. We are asking that this Congress, that this House of Representatives adopt this amendment to help stop the hemorrhaging of the loss of the American base in this country.

I urge my colleagues to support this commonsense amendment.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I yield myself such time as I may consume.

Mr. Chairman, this amendment provides simply for a study of what has taken place in the past. It changes no law.

Mr. Chairman, I yield 1 minute to the gentleman from Florida (Chairman Mica).

Mr. Chairman, I yield back the balance of my time.

Mr. Chairman, I demand a recorded vote.

Mr. Speaker, I rise today in support of the Walter Craig American Legion Auxiliary Post 60 located in Rockford, Illinois. This auxiliary post is dedicated to supporting the veterans and their families in my congressional district, and I would like to acknowledge the many accomplishments of the Walter Craig American Legion Auxiliary Post 60: Americanism Patriotic Conference; and Youth Conference, Spirit of Youth Fund Scholarships for Jr. Girls Nation and Youth Conference; Auxiliary Emergency Fund for Displaced Homemakers; American Legion Child Welfare Foundation; Dept. Children and Youth Christmas Gifts for Institutional Children; Children and Youth Scholarships for teaching field of handicapped children; Children's Heartlink Heart surgery for needy children; Children's Miracle Network hospital care for children in need; Special Olympics; Spinoza Buddy Bear Project; Department Scholarship Fund for All Dept. Scholarship Funds; Funding for Special Field Services 7 VA Hospitals; Dept. National Security Fund ROTC Awards 7 Patriotic Conference; Nurses Scholarship Fund; Six Point Program extras for hospitalized veterans; North Chicago Medical Center; Crime Stoppers; World War II Nurses; Rescue Mission.

Mr. Speaker, the Walter Craig American Legion Auxiliary Post 60 is an exemplary post, and its members take great pride in helping their local veterans. This post is to be commended for its many accomplishments and steadfast support of the veterans in the 16th Congressional District of Illinois.

Mr. Speaker, I recently had the honor of attending the memorial service for a heroic young man from Roscoe, Illinois, who selfishly gave his life to protect our families and our freedoms in the United States and to give the Iraqi people a future without terror and oppression.

Brandon Jacob Rowe would have turned 21 years old on April 14, 2003. But on March 31, the Army Specialist from the 101st Airborne Division was killed in an ambush near Najaf, Iraq. Brandon, who earned a waiver and was promoted to Specialist early, was one of two machine gunners in his infantry rifle platoon. According to Major Gen. Robert T. Clark, who presented Brandon's mother with her son's Purple Heart at the memorial service, machine gunners are the most important soldiers in a rifle platoon because they provide the firepower that protects the rest of the men. As Brandon's older brother, Brent, so aptly put it, ``He was my short little brother, but he was one hell of a man.''

I never met Brandon Rowe. But I learned of his character and his love for his country after meeting his courageous family. Brandon's mother, his father, his brothers, his sister, and his aunts, uncles and cousins are obviously in tremendous pain right now after losing him. Even amid that anguish, their pride for Brandon and their support of his mission shines through. Brandon made a tremendous impression on his family and all who knew him. I wish I had known him, Mr. Speaker.

I have enclosed a tribute to Brandon written by his Aunt Cecile shortly after his death. Brandon's sister, Leah, read the tribute at his memorial service on April 12 at Hononegah High School in Rockton, Illinois:

Unnamed Soldier, Roscoe, Illinois

Now we can tell his name. His name is Brandon Jacob Rowe.

He had other names--our son, our stepson, our grandson, our

brother and brother-in-law, our nephew, our cousin, our

boyfriend, our dear friend, our co-worker, our comrade-in-

arms, our buddy, our neighbor and more. For what seemed to us

a long, long while, though it was only a few days, he was

known through media reports only as the first combat casualty

from the 101st Airborne in Operation Iraqi Freedom.

His name is Brandon Jacob Rowe and he died in Iraq because

he was committed to a cause. His death is not senseless, but

full of purpose and meaning. He appreciated his freedom, and

felt that everyone deserved to be free. He was proud of the

job he was doing to serve his country.

He died trying to make life better for others, trying to do

his part to rid the world of those who oppress the innocent.

Brandon put his life, his heart, on the line so others he

didn't even know wouldn't have to continue to live in terror.

He had great admiration for his grandfather, who fought for

our country's freedom and earned a Purple Heart as an Army

paratrooper during the Second World War. Brandon wanted to do

something with his life that had real value and merit.

Brandon's life certainly had both.

Brandon was known for his sense of humor and fun, but he

had a quiet, deep spirituality that others did not always

see. They did know he was strong, and kind, and always

looking out for others' welfare before his own. He sensed

when others were lacking, or hurting, or needing a friend; he

became that friend. Brandon always put others before himself,

concerned about the welfare of his buddies, his teammates,

his family and friends.

From his first smile to his last, the kindness and

sweetness in his face shone out of him. His goodness drew

people to him for all of his nearly 21 years. One could not

see his smile without feeling happier, without feeling glad

to know him.

We in his family love and honor Brandon, and thank all

those who have shown love and support at this difficult time.

We are grateful to his hometown friends and the members of

the 101st Airborne he was so proud to be associated with, and

with whom he served his country. He offered up the ultimate

sacrifice. It was not in vain, Brandon, and we will not ever

forget.

Mr. Speaker, today we are considering H.R. 2, the Jobs and Growth Tax Act of 2003. The bill will provide tax cuts for American taxpayers of $550 billion over the next 10 years. This reduction in taxes is an appropriate measure to kick-start a lackluster economy and will permit the economy to grow at a faster rate for many years to come.

As Chairman of the House Small Business Committee, I am particularly pleased that the bill before us includes a number of significant provisions to assist America's small business owners. By quadrupling small business expensing from $25,000 to $100,000, many small business owners will be able to increase capital investment in their businesses. The increase in the overall investment limit to $400,000 and the fact these figures will be indexed for inflation are also tremendously helpful.

The acceleration of the tax rate cuts, originally enacted in 2001, will also greatly assist small business owners. More than 85 percent of all small businesses pay individual, instead of corporate, income taxes. Accelerating the scheduled reduction in the individual income tax rates will immediately put money back into the hands of small business owners, allowing those owners to infuse their businesses with much needed capital.

Also, according to the Joint Economic Committee, small business owners receive 80 percent of the tax relief from reducing the top marginal rate to 35 percent. Marginal rate cuts increase the likelihood that a small business owner will hire additional employees and will lead to higher wages and/or benefits for those workers.

Lastly, the reduction in the taxation of capital gains also will benefit small business owners who sell their businesses at retirement or at other times. In addition, small business owners will benefit from the general improvement in the economy that will result from the lower taxation of capital gains and dividends generally.

I urge my colleagues to join with me in support of America's small businesses. Join with me in voting for the bill on final passage.

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 205) to amend the Small Business Act to direct the Administrator of the Small Business Administration to establish a program to provide regulatory compliance assistance to small business concerns, and for other purposes

Madam Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on this legislation.

Madam Speaker, H.R. 205 is identical to legislation this House passed unanimously on October 2, 2001. Unfortunately, this bill did not pass the Senate last year. We are here today to try again.

H.R. 205 was so strongly supported by the Committee on Small Business that

both the ranking member and I decided to skip the markup process and bring this bill straight to the House floor. It contains all the compromises within our committee and with the Senate. For those interested in the legislative history of the bill, I would encourage them to examine the committee's report from the 107th Congress on H.R. 205.

This bill is designed to help small businesses cope with the maze of Federal, State and local regulations that have created such a heavy burden on Main Street America. Every day we all receive complaints from our constituents about their inability to understand regulations that are written in legalese rather than in plain English and about arbitrary actions taken by some regulatory agencies.

Instead of creating a new program, H.R. 205 uses the existing Small Business Development Center network to provide regulatory compliance assistance to small businesses. The SBDC network has a good track record with small businesses. Because many small business owners fear going to regulatory agencies for compliance advice, SBDCs can serve as a buffer so that small business can receive the hands-on assistance it needs without retribution.

Already this fiscal year, the Small Business Administration received an additional $1 million appropriation for SBDCs to provide regulatory compliance assistance to small businesses. H.R. 205 simply builds upon this initial first step. In addition, the legislation includes enhanced privacy protections for small business clients of SBDCs.

I urge my colleagues to support H.R. 205.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, I yield myself such time as I may consume.

Sometime ago, the gentleman from New York (Mr. Sweeney) came to me and said, Chairman, I have got a very interesting piece of legislation; and I took a look at it, and this is the type of legislation that really helps out small business people.

The gentleman from New York (Mr. Sweeney) is the former labor commissioner for the State of New York, undoubtedly proud of Syracuse, and even though I am a graduate of Marquette, I am still here supporting the bill.

He explained how difficult it is, and I agree with him, for small business people to understand the web of regulations. He has experience in the private/public sector.

Madam Speaker, I yield as much time as he may consume to the gentleman from the Empire State (Mr. Sweeney), whose idea fostered this legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I continue to reserve the balance of my time.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I am delighted that we were able to expeditiously move this legislation on the floor today. This bill is identical to legislation this House unanimously approved on December 5, 2001. It is unfortunate that the Senate was unable to take this legislation up on the Senate floor last year but we are here today to try again.

The purpose of H.R. 1106 is to create jobs, to spur entrepreneurship, and to stimulate the economies and foster economic development on Indian lands. Further, the purpose of the Act is to help in the creation of new small businesses owned and managed by Indian tribe members, Native Alaskans, and Native Hawaiians and to help expand such small businesses that already exist. The Act will provide much needed management, technical, and research assistance to small businesses owned by Indian tribe members, Native Alaskans, and Native Hawaiians. The Act will help insure that Indian tribe members, Native Alaskans, and Native Hawaiians have full access to existing counseling and technical assistance provided through the Small Business Development Center (SBDC) program. In providing entrepreneurial assistance, a State receiving a grant under the provisions of the Act is required to seek the advice of local Tribal Councils on where small business development assistance is needed.

Approximately 60 percent of Indian tribe members and Native Alaskans live on or in the immediate vicinity of Indian lands and suffer from an average unemployment rate of 45 percent. Currently, Indian tribe members and Native Alaskans own more than 197,000 business enterprises and generate revenues in excess of $34 billion.

The service industry, the largest sector, accounts for 17 percent of the businesses, and 15.7 percent of the total revenues. The second largest sector is construction, which accounts for 13.9 percent of the businesses and 15.7 percent of the total revenues. The third largest sector, the retail trades, accounts for 7.5 percent of the businesses and 13.4 percent of the total revenues.

The number of businesses owned by Indian tribe members and Native Alaskans grew by 84 percent during the period from 1992 to 1997, while businesses, generally, grew by only seven percent. During the same period, the gross receipts for Indian tribe members and Native Alaskan business owners increased by 179 percent, in comparison with the business community, as a whole, where the gross receipts for the same period grew only by 40 percent.

In the past, the SBDC program with more than 1,100 offices throughout the United States has provided cost-effective business counseling and technical assistance to small businesses. For example, clients receiving long-term counseling under the program in 1998 generated additional tax revenues of $468 million, which was approximately six times the cost of the program to the Federal government.

By using the existing infrastructure of the SBDC program, it is anticipated that small businesses owned by Indian tribe members, Native Alaskans, and Native Hawaiians, who receive services under the Act, will have a higher survival rate than the average small businesses not receiving such services. Further, increased assistance through SBDC counseling has in the past been able to reduce defaults under Small Business Administration (SBA) lending programs.

The business counseling and technical assistance, provided for under this Act, is critical on Indian land where, without such assistance, similar services are scarce and expensive. Past and current efforts by SBDCs to assist Native American populations located on or along reservation lands have proven difficult. In addition, the lack of resources makes it difficult to raise an equal amount of matching funds to specifically assist Native Americans.

H.R. 1166 will establish a three-year pilot project providing grants to SBDCs for assisting Indian tribe members, Native Alaskans, and Native Hawaiian populations with their entrepreneurial needs. The purpose is to stimulate

the economies on reservation lands through the creation and expansion of small businesses by ensuring the target population has full access to important business counseling and technical assistance through the SBDC program.

Any SBDC in a State, whose Indian tribe members, Native Alaskan, and Native Hawaiian populations are one percent of the State's total population, can apply for a grant from the SBA. Such grants must be used to provide SBDC program assistance to Native Americans. Grants under the Act are limited to $300,000 and the amount authorized to be appropriated annually, in each of the fiscal years 2004, 2005, and 2006, is $7 million. No matching funds are required from the States.

Services by SBDCs are to be provided to benefit the target population on tribal lands and reservations, but an individual center need not be located on each tribal land location or reservation. If the target population is in more than one location or reservation within a State, the center should be situated in a location that optimizes access by all those serviced by the center. H.R. 1166 does not limit in any way, the number of centers or subcenters a state program may implement. I expect the SBA Administrator to balance the need for multiple sites with the quality of assistance and counseling when awarding grants. Consultation with the local Tribal Council is required in determining those locations in most need and where the best access may be attained.

SBA is responsible for designing the grant application, which should provide essential information, but should not be burdensome to applicants. At a minimum, the application should contain information concerning the applicant's (1) goals and objectives, (2) prior experience in providing entrepreneurial and technical assistance to small businesses, (3) the ability to provide training and services to Indian tribe members, Native Alaskans, and Native Hawaiians, and (4) the extent of consultation with local Tribal Councils. In addition, the applicant should identify the location of a proposed center, and the amount of funding required.

Within 180 days after the enactment of H.R. 1166, the SBA Administrator is required to issue final regulations, after a notice and comment period, that implement the requirements of the Act. Such regulations shall include standards for the educational, technical, and support services to be provided and for a work plan for providing assistance to the targeted community.

The Act's predecessor, H.R. 2538, was subject to a hearing and a committee mark-up in the 107th Congress. The Congressional Budget Office (CBO) estimated that implementing the bill would cost $20 million over the next four years and contains no intergovernmental or private sector mandates. H.R. 2538 also unanimously passed the House on December 5, 2001 but unfortunately saw no action on the Senate floor, even though a companion bill was discussed and marked-up in the Senate Small Business and Entrepreneurship Committee. That's why I am pleased to join again with my good friend from New Mexico, in cosponsoring H.R. 1166 in this Congress and seeing it pass the House yet once again. Hopefully, the other body will look more kindly upon the legislation this year.

Mr. Chairman, I rise today in support of H.R. 534, the Human Cloning Prohibition Act of 2003. Human cloning is accomplished by a technique called ``somatic cell nuclear transfer.'' One takes the nucleus from a body (somatic) cell and transfers it into a female egg which has its nuclear material removed. Using an electric current or chemical stimulus, the cloned embryo beings to divide as does a fertilized embryo. Thus, the product of human cloning would be a human embryo, regardless of how the embryo will be used.

Mr. Chairman, I am opposed to human cloning for a variety of reasons. When animals are cloned, 95-98 percent of the attempts end in failure, and those that are successful have genetic abnormalities. Most scientists will agree that human cloning poses a serious risk of producing children who are stillborn, unhealthy, severely malformed or disabled. Many opponents of this bill think the cloned embryos will produce stem cells that can be used to cure a variety of ailments. However, there are no models in animal cloning in which scientists derived stem cells to cure the animals. The prospect of creating clinical treatments from stem cells derived from cloned embryos is completely speculative.

The attempt to perfect human cloning despite the high risks of injury would constitute a violation of the fundamental principle of all human research: DO NO HARM. To proceed on the basis that the eventual benefits may outweigh the probable harms to woman and child is akin to the Nazi experiments at Nuremberg. Efforts to create human beings by cloning shift human reproduction into a manufacturing process in which children are made in laboratories to preordained specifications and in multiple copies.

Human cloning also poses a significant risk to women's health. In order to create human embryos, great quantities of women's eggs will be needed. To obtain eggs, women will be injected with supervulatory drugs and then will undergo an invasive procedure. The risks of this procedure are just starting to be documented. The side effects from these injections are known to be abdominal pain and nausea, in three to five percent of cases of hyperstimulation of the ovaries occurs, causing severe abdominal pain, and on rare occasions surgery is required which may leave the woman infertile.

Women of lower economic means are particular targets for exploitation. Women may be paid to donate their eggs for failed human cloning experiments. But it will not just be a few women who will be needed. In order to generate enough cloned embryos to carry out research on the scale that is envisioned, thousands of eggs will need to be solicited from numerous women. Just to treat 16 million Parkinson's patients, it is estimated that a minimum of 800 million human eggs would be needed from a minimum of 80 million of childbearing age.

I strongly support the development of cell and tissue-based therapies based on research involving the tissue based on research involving the cloning techniques to produce molecules, DNA, cells other than human embryos, tissues, organs, plants, or animals other than humans. Already, these scientific methods have enabled researchers to develop innovative drugs to treat diseases such as breast cancer, and aid in treatment techniques for injuries, such as cloning skin cells for skin grafts. The bill I support restricts the use of cloning technology only on human embryos.

Mr. Chairman, I believe that human life at every stage of biological development is deserving of respect and protection, regardless of the circumstances under which that human life was created. That is why I am supporting H.R. 534 and will oppose Mr. Greenwood's substitute amendment.

Mr. Speaker, I yield myself such time as I may consume, and I want to thank again the chairman of the committee, the gentleman from Iowa (Mr. Nussle), for his leadership. And I also want to thank, in particular, the gentlewoman from New York (Ms. Velazquez) for the tremendous work that she has put into this. If there is any name to be placed on this bill, her name should have a prominent place on it.

Mr. Speaker, small businesses are having a tough time obtaining credit around the nation. The Small Business Administration's 7(a) and 504 loan guaranty programs are a vital source for nearly $13.5 billion of new capital to small businesses every year. Over 48,000 small businesses are served each year by these programs. In fact, the 7(a) program alone provides 40 to 50 percent of all the long-term financing that goes to small businesses, which have led to the creation of thousands of small firms, contributing to job creation and economic growth.

However, last October, the SBA cut back both the amount of loans made and the maximum loan size under the 7(a) Loan Guaranty Program. This hurts companies like Ryden Heavy Hauling of Woodstock, Illinois, which is caught in a credit limbo while we try to fix this problem.

Initially, Ryden sought an SBA guaranteed loan of $1 million to generate eight new full-time and part-time jobs and sustain the jobs of the 16 employees already working at Ryden. However, Ryden has been caught in a credit squeeze, and it could only apply for a loan of $500,000, creating serious ramifications that impact their future growth. We need to pass S.141 as one step in the process to lift the SBA-imposed loan caps.

Mr. Speaker, I submit for the Record a letter I received from Ryden Heavy Hauling in this regard.

Ryden Heavy Hauling Inc.

Woodstock, IL, February 7, 2003.

Congressman Don Manzullo,

181 North Virginia Ave.

Crystal Lake, IL.

Congressman Manzullo: Ryden Heavy Hauling provides

transportation services for persons or companion looking to

haul heavy equipment. Major customer segments include the

Construction, Utility and Manufacturing industry.

The mission of Ryden Heavy Hauling, Inc. is to be the most

reliable heavy hauling company servicing the midwest. Ryden

Heavy Hauling prides itself in hiring the best drivers,

competitive pricing and updating and maintaining equipment to

insure the highest level of safety for our customer's

equipment.

We strive to support the economy by expanding and creating

additional jobs to stimulate the business community.

We presently are applying for an SBA backed loan in the

amount of $500,000.00 dollars. Originally we asked for $1

Million but the cap for the SBA guarantee was dropped to

$500,000.00 dollars. This decision has created serious

ramifications that impact our future growth.

Our projected program will generate 8 new full-time and

part-time positions as well as retain the existing 16 jobs in

our work force.

Therefore it is in the interest of the business community

to reinstate the original limit of $2,000,000.00 so companies

like Ryden Heavy Hauling can survive.

Respectfully,

Leonard R. Ryden,

President.

Mr. Speaker, how did we get in this situation in the first place? In December 2001, the President signed into law a provision to reduce fees charged to borrowers in the 7(a) program, starting on October 1, 2002. The 7(a) program has netted the government handsome profits every year, taxing small businesses more than $1.4 billion over the last 10 years beyond the cost of operating the program.

This is all because of an overly conservative credit subsidy calculation model used by SBA and the Office of Management and Budget that requires charging more fees than is necessary to cover potential bad loans. This model simply averages the annual default rate going back to 1986, even though Congress dramatically changed the 7(a) Loan Guaranty Program in the 1990s that made the program more safe and secure for the taxpayer. Yet current small business borrowers are now penalized, in their ability to access one of the few remaining sources of credit, for old mistakes in a program that have been changed.

This is the worst possible time for these actions. Small businesses create over three-quarters of the new jobs in the U.S. S.141 begins to correct the problem. The bill simply authorizes OMB to adopt a new economic model for calculating the 7(a) program subsidy rate to take effect this fiscal year, beginning October 1 of 2002. The General Accounting Office has long advocated this approach. SBA has already developed and OMB has approved an econometric model for the 7(a) program in the 2004 budget cycle. OMB pledged to use this model for 2003.

Mr. Speaker, I submit for the Record, a letter dated November 14,

2002 from OMB Director Daniels and addressed to me regarding this subject matter.

executive Office of the President, Office of Management

and Budget,

Washington, DC, November 14, 2002.

Hon. Donald A. Manzullo,

Chairman, Committee on Small Business, U.S. House of

Representatives, Washington, DC.

Dear Mr. Chairman: Thank you for your letter of November

12, regarding the subsidy rate for small business loans.

As you know, the Administration is committed to improving

the Small Business Administration's (SBA) ability to more

accurately estimate the cost of subsidizing small business

loans. This will enable the agency to allocate its resources

more effectively, determine program risk more precisely, and

increase its ability to target loan programs to the most

deserving recipients.

In accordance with the commitment that the Administration

one year ago, the Office of Management and Budget has just

approved SBA's 7(a) econometric subsidy model to calculate

its fiscal year 2004 resource requirements. Further, in light

of the fact that this improved subsidy calculation procedure

is now available, the Administration would support

legislation that allows us to implement the econometric model

for fiscal year 2003 as well. Applying the econometric model

would produce a subsidy rate of 1.04 percent rather than 1.76

percent submitted in the FY 2003 budget.

Please let us know if you need any more information.

Sincerely,

Mitchell E. Daniels, Jr.,

Director.

The subsidy rate using an econometric model in 2003 dramatically drops from 1.76 percent to 1.04 percent, a 41 percent reduction.

S. 141 allows SBA to guarantee $3.4 billion in new lending to the small businesses. Congress must now act to increase access for small business lending. To its credit, the administration was the first to recognize the problem and begin to work on solutions within a few months of taking office. Their willingness to retroactively use the econometric model for 2003 in the 7(a) program is another example of their openness to finally correct this festering problem.

However, OMB cannot change the assumption in the President's 2003 budget request on their own after its proposal has already been sent to Congress. That is why we are here today for a legislative remedy.

The same cooperation should also extend to the 504 program. The subsidy rate calculation error in the 504 is proportionately a bigger problem than the 7(a). There is some question as to whether or not S. 141 would cover the Supplemental Terrorist Activity Relief loan program, known as STAR. STAR loans have always been viewed by the SBA as a subset within the 7(a) program.

Mr. Speaker, I include for the Record two SBA procedural notices and a copy of the statutory language creating the STAR loan program.

SBA Procedural Notice

To: To All Employees.

Subject: Guidelines for Implementation of the Fee Reduction

on Loans to Small Business Adversely Affected by the

Terrorist Activities of September 11, 2001.

SBA Procedural Notice 5000-775 provided information

regarding the 7(a) program fee reduction authorized in the

Defense Appropriations Act of 2002 which was signed into law

on January 11, 2002. The purpose of this notice is to provide

more detailed guidance on the implementation of that fee

reduction. In order to distinguish loans made under the

Defense Appropriations Act from other 7(a) loans made during

the same period, loans with the fee reduction will be known

as ``Supplemental Terrorist Activity Relief'' (``STAR'')

loans.

1. background information on SBA's Annual Fee

Section 7(a)(23) of the Small Business Act authorizes SBA

to collect an annual fee on each outstanding SBA guaranteed

loan equal to 0.5 percent (50 basis points) of the guaranteed

share of the outstanding balance of the loan. The Defense

Appropriations Act authorized a reduction in that fee from

0.5 percent to 0.25 percent (25 basis points) for loans made

to small businesses adversely affected by the September 11th

attacks. This reduced fee will apply for the life of the

loan. Both the original and temporarily reduced fees are

subject to the provisions of Section 7(a)(23)(B) which states

that this fee is ``. . . payable by participating lender and

shall not be charged to the borrower.''

2. period of applicability

The reduction in the annual fee is effective for eligible

loans approved (funded) by SBA between January 11, 2002, and

January 10, 2003, or until the approximate $4.5 billion

program level provided for this initiative has been used up,

whichever occurs first.

Any 7(a) loan approved before January 11, 2002, will

continue to be subject to the 50 basis points fee, subject to

the following exception. If the lender finds that a borrower

that had its 7(a) loan approved prior to January 11, 2002,

was adversely affected by the terrorist actions, AND, if the

loan is fully undisbursed; the lender may cancel the approved

loan and submit a new application which will then meet the

criterion of having been approved after January 10, 2002. If

SBA approves the new loan, a new loan number must be issued.

3. definition of ``adversely affected'' small business

As indicated in the previous notice, for purposes of the

STAR program, the term ``adversely affected small business''

means a small business that suffered economic harm or

disruption of its business operations as a direct or indirect

result of the terrorist attacks perpetrated against the

United States on September 11, 2001. Some examples of

economic harm are: difficulty making loan payments on

existing debt; difficulty in paying employees or vendors;

difficulty in purchasing materials, supplies, or inventory;

difficulty in paying rents, mortgages, or other operating

expenses; and, difficulty in securing financing. As

previously noted, SBA does not intend that this list be

considered all-inclusive. The Agency anticipates that

there will be other circumstances that are appropriate for

use to illustrate that a business has suffered economic

harm or a disruption of its business operations. Agency

guidance should not be construed as limiting eligibility

to any particular geographic area or to any specific

type(s) of business. A loan to a start-up business may

qualify for the STAR program if, for example, the business

planned to commence operations earlier, but its ability to

do so was hampered by the terrorist actions and their

aftermath.

SBA believes that a high percentage of businesses finding

it necessary to seek SBA-guaranteed financing may be found to

have been adversely affected by the terrorist actions. In

order to qualify for the reduced fee, however, the lender

must: (1) find that the loan applicant was adversely affected

by the terrorist events of September 11, 2001; and, (2)

prepare and maintain in its loan file a write up summarizing

its analysis and its conclusion that the loan is eligible for

the STAR program. A lender will not be found to have met its

responsibility for determining that a borrower was adversely

affected if the lender statement merely states that

conclusion, but does not provide a narrative justification

demonstrating the basis for the conclusion.

4. Steps Required for Lender to Submit a STAR program Application

In order for a loan to qualify as a loan under STAR, the

SBA lender must:

(a) Determine that the applicant business was ``adversely

affected'' by the terrorist activity of September 11, 2001,

and must document the basis for this conclusion in its loan

file. This documentation must be available for review by SBA,

but need not be submitted to SBA.

(b) Indicate that the loan is being submitted under the

STAR program by writing ``STAR Loan'' at the top of the SBA

Form 4-I, ``Lender's Application for Guaranty or

Participation,'' or 4-L, ``Application for LowDoc Loan,'' as

applicable.

(c) Amend the loan authorization provision-regarding the

on-going fee to be paid to SBA on the loan to indicate that

the fee will be 0.25 percent per annum.

5. Collection of the Reduced Fee

Lenders will submit to Colson Services, Inc. (Colson), the

0.25 percent fee using the same SBA Form 1502 process as it

uses for other SBA loans. SBA will provide Colson with a list

of loans that are subject to the lower fee. As with all other

fee collections, Colson will work with a lender to make any

necessary corrections to the fee and reporting submissions.

6. PLP/SBAExpress/Community Express

The PLP center will provide additional direction to PLP

lenders regarding STAR program requirements.

7. Processing STAR Loan Requests

The SBA Loan Accounting Tracking System (LATS) has been

modified to provide a STAR program indicator to track STAR

loans. Data must be entered into this indicator field as

follows: (1) An ``S'' must be entered for any loan submitted

by the lender under the STAR program; and, (2) An ``N'' (for

``no'') must be entered for any non-STAR loan. This data

must be completed for each loan (including a 504 loan)

even if the loan is not STAR eligible.

When the STAR Indicator is filled in with an ``S'', it will

mean that:

(a) The lender has informed SBA that the loan is eligible

for the STAR program;

(b) The lender will be charged the reduced 0.25% annual

fee;

(c) The loan will be subject to the STAR program subsidy

rate; and

(d) The loan will be funded out of the separates STAR loan

fund.

There are four sets of circumstances that may occur in

connection with a loan that is potentially eligible for the

STAR program. The attachments to this Notice (described

below) provide instructions for SBA's data input under each

of these circumstances.

a. new loan application submitted by a lender after the effective date

of this notice

The Star program Indicator field shown on LAS001 must be

completed as part of the

data input for all new loan applications. For any loan

designated by a lender as a STAR loan, the ``S'' designation

must be entered. For any non-STAR loan the ``N'' designation

must be entered. [Attachment A provides instructions for

processing a STAR-qualified loan submitted to SBA by a lender

after the effective date of this notice.]

b. re-classification of a Loan after Submission, but prior to sba

approval

If a loan was originally input as a non-STAR loan, but

prior to SBA's approval, the lender provides a written

request to SBA to reclassify the loan as a STAR loan, the SBA

processing office must use the LSA005 Screen to input an

``S'' in the STAR program indicator field. [Attachment B

provides instructions for re-classifying a loan as a STAR-

qualified loan after SBA's initial data input, but prior to

SBA approval.]

c. re-classifying a loan as a star loan after approval but before

disbursement

For any loan approved by SBA on or after January 11, 2002,

that was not initially classified as a STAR loan; if,

subsequent to SBA approval and prior to any disbursement, the

lander provides a written request to SBA to reclassify the

loan as a STAR loan, the SBA field office servicing the loan

must:

1. Verify that the loan is fully undisbursed;

2. Prepare a SBA Form 327 action to support cancellation of

the regular 7(a) funded loan and re-instatement of the loan

as a STAR loan;

3. Cancel the existing loan, thus returning the regular

7(a) funds to the regular 7(a) program account; and,

4. Wait at least one business day after completing step 3

and reinstate the loan and enter an ``S'' in the STAR

Indicator on LAB00 screen.

[Attachment C provides instructions for re-classifying a

fully undisbursed loan as STAR-qualified after approval by

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

In closing, let me say that we are going to miss the gentlewoman from Ohio (Mrs. Jones) on the committee, and request a waiver from the Democratic leadership that she be on the Committee on Ways and Means and the Committee on Small Business at the same time.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, yesterday the House Small Business Committee held a roundtable with sixteen small business owners and representatives on the President's Economic Growth Package. The small business groups were unanimous in their support for the small business provisions of the President's proposal.

Specifically, the small business groups cited the acceleration of the tax rate reductions enacted as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 and the expansion of the small business expensing provisions for new investment as vital. According to the participants, the President's proposal would enable them to purchase more equipment immediately. In addition, the capital freed up by the acceleration of the tax rate reductions would permit the vast majority of small businesses to reinvest that money into their businesses.

At the roundtable, we were honored to have the Honorable Hector V. Barreto, Administrator of the U.S. Small Business Administration, present the President's Economic Growth Package. In my opinion, Administrator Barreto's statement was an exemplary testament on the state of small business in our economy today and a compelling account of why small businesses need economic growth assistance. Small business creates jobs. The President's proposal will ensure short-term and long- term growth for small business and ensure sustained growth for our economy.

The Administrator's statement was so compelling that I wish to share it with my colleagues.

Statement of Hector V. Barreto, Administrator U.S. Small Business

Administration

Good Morning, Chairman Manzullo and distinguished Members

of the Committee. I am pleased to be here this morning to

participate with all of you in this roundtable discussion on

the small business provisions of the President''s economic

growth package. It's good to be among so many friends who

share the President's views on these important changes.

Small businesses are the backbone of our economy--they

employ more than half the private work force, generate about

50% of the nation's gross domestic product, and create two-

thirds to three-fourths of the net new jobs. And research

shows that the vast majority of these new jobs are

established in the first two years of the business. Small

business entrepreneurs are key to our economic vitality, and

the President's plan offers specific relief and the

opportunity for them to grow and create more jobs for

American workers.

This roundtable is a perfect way to talk about the

President's plan and narrow in on making sure government

policy helps small business. This format is one that the

President personally believes in. I have been with the

President quite a few times over the past year at roundtables

where the President solicits feedback and support from the

small employer community. From the economic summit in Waco,

TX, to Louisville, KY, to St. Louis, MO, to Alexandria, VA--

the President's purpose is clear--to hear from the employer

community about what will work best for this country.

The President has called on Congress to act swiftly to pass

his economic growth package. Your voice will be critical to

this effort and we thank you for your commitment and active

participation in these deliberations.

Through a combination of income tax rate reductions, an

increase in allowable deductions for expenses and the

permanent repeal of the estate tax, American small business

owners and their families will get to keep more of what they

earn. The President has pointed out that under his plan, ``a

family of four with an income of $40,000 will receive a 96

percent reduction in federal income taxes.''

That's nearly a complete elimination of that family's

federal income tax burden and translates to more disposable

income to be invested, saved or spent.

For small business owners, many of whom are subject to

personal income tax rates on their business, the reduction in

rates will mean an increase in capital to expand their

business, hire new workers and provide new or improved

products. As proposed, the reduction in the top marginal rate

scheduled to take effect in 2006 (to 35 percent) would take

place retroactively in 2003, resulting in tax cuts averaging

$2,042 for some 23 million small business owners. These

hardworking entrepreneurs would receive 79 percent (about

$10.4 billion) of the $13.3 billion in tax relief from

accelerating the reduction in the top tax bracket. Since

small business owners are so closely tied to the personal tax

rates, lowering individual marginal rates will have a

positive affect on the ability of many entrepreneurs to

expand. As Princeton University Economist Harvey Rosen stated

in a May 2001 report to the SBA, ``Taxes matter. As tax rates

go up, entrepreneurial enterprises grow at a slower rate,

they buy less capital, and they are less likely to hire

workers.''

Additionally, a proposed 200% increase in year one

expensing deduction for new investments--``Section 179

expensing''--would encourage small business owners to

purchase the technology, machinery and--other capital

equipment they need to expand. The amount of investments that

may be immediately deducted--beginning in 2003--by small

businesses would increase from $25,000 to $75,000. This new

amount is permanent and indexed to inflation.

Expanding the eligible write-offs for small business

investments has strong support in the small business

community. All White House Conferences on Small Business have

recommended increases in direct expensing. Moreover, SBA's

Office of Advocacy has long supported proposals to increase

such write-offs and testified in support of this change

before the Senate Finance Committee in March of 2001.

From an economic development perspective, this is more than

a simple tax code change. There have been several studies

that have found links between taxation and investment. A 1998

Bureau of Economic Research paper concluded that marginal tax

rate changes significantly change investment spending

patterns. The study suggested that tax rate changes would

alter the cost of capital for new investment decisions, and

that the lower tax rates would make more projects viable. And

by making this change permanent and predictable for small

businesses, it will yield greater results as capital spending

patterns rise from year to year.

According to SBA's Office of Advocacy, there are over 22

million small businesses in the United States. [Note that of

these about 16 million have no employees.]

If, with the President's plan, on average, they increased

their equipment purchases by only $10,000, almost $230

billion would be pumped into the economy annually, creating

jobs and expanding the tax base. As the President stated in

his recent visit with me to a flag manufacturing company in

Alexandria, VA, ``this is a plan that says if you're willing

to take risk and invest more, that there's a benefit for

doing so. It's an incentive for small business to increase.''

The President has also proposed the permanent repeal of the

estate tax so small business owners will no longer be faced

with the prospect of leaving their family an insurmountable

tax bill along with the family business--and the difficult

decision of whether or not to sell the business to pay the

tax. Instead of forcing their heirs to sell the business to

pay the government, the repeal will provide certainty for

family-owned small businesses that want to transfer the

business to the next generation of entrepreneurs.

And finally, the President's plan to abolish the double tax

on dividends will help businesses to grow and create jobs by

reducing the cost of capital. Most dividends received by

shareholders will be tax free. Small businesses that retain

corporate earnings will not face capital gains taxes on the

increase in the value of the firm from retained earnings that

could have been distributed as dividends. This will benefit

the owners of 2 million ``C'' corporations, including many

small corporations.

Our President and Administration are strongly committed to

helping small business by removing or reducing barriers that

stand in the way of faster economic growth. Besides the

significant changes outlined in the plan, let me take this

opportunity to mention a couple of other items the President

talks about in his agenda for small business--streamlining

small business regulations and the need for tort reform to

curtail frivolous lawsuits.

We know that small businesses are hardest hit by

regulations. Firms employing fewer than 20 employees face an

annual regulatory burden of $6,975 per worker--60 percent

more than a firm employing 500 or more people. And tax

compliance costs are twice as burdensome on small businesses

compared with their larger counterparts. The Federal

government has a new web site--www.regulations.gov that makes

it easier to participate in Federal rulemaking. Small

businesses can review and submit comments on proposed

regulations that are published in the Federal Register.

Americans spend nearly a trillion dollars a year complying

with state and federal regulations, so having this website

provides an opportunity to hear from those unfairly burdened.

Tomorrow, I will be testifying before the Senate Committee

on Small Business and Entrepreneurship on another

Administration priority--the need for Congress to pass

Association Health Plan (AHP) legislation to help small

business have access to affordable health care for their

employees. Another issue that the community has been very

pro-active in pursuing.

Taken together, these changes send a strong signal that

this Administration understands that our economy can thrive

only if our small businesses thrive. As the economy continues

to trend upward, America's small businesses can be counted on

to continue to provide strength, resilience and optimism.

Thanks to the President's aggressive agenda, small business

owners can count on an environment in which their efforts

will be encouraged and their success will be sustained.

Thank you again for including me in today's discussion, and

I look forward to working with you in the months ahead to

achieve passage of the President's economic growth plan.