Kerry to receive Distinguished American Award

Madam Chairman, I'd like to submit letters and my full testimony for the record as well as some testimony from other folks.

SNOWE: Without objection, so ordered.

KERRY: Thank you very much. It's sort of hard to know where exactly to begin. I know that the administrator is put in the position of carrying out the will of the administration, and there are budget chiefs and the president himself and others who dictate what will happen.

So I'm going to try to recognize that as I direct comments at you, Mr. Administrator, and at the administration. I don't want to slay the messenger, so to speak, but I have to say that this budget is just really disturbing. I mean if you just look at the fundamentals that the chairwoman has put up there.

I've spent 22 years here now, and I spent a lot of those years on this committee, and our job is to try to help small business, our job is to try to create jobs in America. This is not a partisan committee. This is probably one of the least -- this and the Intelligence Committee are the two least partisan committees in the Senate, and we exist for the purpose of helping 98 percent of the businesses in America be able to create jobs and to grow America. And there are some time-honored proven ways in which we do that.

The success stories of lending programs by the SBA, those companies that have been successful have themselves repaid the nation in taxes and salaries paid many times more than the budget of the SBA. There's no debit here that has to be made up somehow, and yet you're cutting, you're undoing and destroying programs that work -- I mean destroying them. Morale at the agency is low. You may assert otherwise, but we know otherwise. And the fact is in the small business community people are really struggling to be able to make things work, and the administration in four years and a bit now has yet to create one new net job in America -- one new net job. And it's small business who create those jobs. I would think you guys would be trying to find ways to grab whatever you can or go out there and excite innovation and incubation and small business.

I know you come in here and you're going to say to us, as you did in the House and elsewhere, that you've got this rosy scenario, you're doing more with less, you're saving taxpayer money, zero funding for loans and so forth, but the fact is you've shifted costs to borrowers and lenders through higher fees, and those higher fees put loans out of reach to the neediest small business borrowers in America.

And a lot of us in this room understand that the SBA takes credit for things that Congress did that rescued the SBA, like the 7(a) ran out of money and sort of bringing people together, and there's sort of a long story here of biting off your nose despite your face.

The SBA's plan to save money by zero funding its largest loan programs you've admitted two key facts about the plan. Number one, it only works because you've shifted costs to the borrowers and lenders through the higher fees. And, second, that ask any -- and we're going to have people who testify and you can talk to small business people, they'll tell you how much harder it is to get that kind of lending, which is what this is for.

I don't believe the proposed program levels are adequate to meet the likely demands for these loans. And that demand, in my judgment, is essential to responding to America's need to create jobs here in this country and to incubate.

In addition, I disagree with the proposals to eliminate the MicroLoan Program and the SBA Participating Securities Program. Each of them serve a financing gap in the marketplace, I mean that's why we're here. I know there are some who ideological resist the notion that the government ought to do anything with respect to marketplace, but history has proven over 220 plus years that that intervention is often necessary.

We have a Fed Reserve, we have various lending programs, we have a commerce clause, we have certain rules that we have to play by, and there are certain regulations and interventions that are necessary to leverage behavior. Those particular financing mechanisms provide for a gap in the marketplace, which is why this committee in bipartisan, non-ideological fashion helped put them there in the first place.

And we all know that traditional lending institutions and venture capitalists often look for the fastest return on investment or the safest return on investment or a combination of the two, and that doesn't always work for some kinds of options.

KERRY: When I was lieutenant governor I sat on the board of something called the Massachusetts Technology Development Corporation, and we actually funded the companies that fell through the gaps. And the minute they began to take off and be successful we got the heck out of it because we didn't want the government involved in it. But we put big companies on the big board in New York that otherwise wouldn't have gotten there. Jobs were created and people became successful and it more than paid for itself.

Why we sort of turn away from these obvious success stories is absolutely beyond me, and I think the administration's budget is shortsighted with respect to the economy of our country.

In the MicroLoan Program, in all the years since its inception in 1992, there have been only one or two defaults. It creates jobs at a bargain rate, at less than $4,000 a job versus the $33,000 at the SBA's other programs. And it meets the SBA's goal of more start-ups. Why aren't we growing it instead of reducing it?

The 7(a) Community Express Program, while a good program for more established small businesses is not a substitute for the MicroLoan Program, and your budget for this year, just like last year, continues your assault on entrepreneurial development programs that help low- income, minority, home-based, rural and women entrepreneurs. Now, I oppose the cuts to these programs.

I'm particularly concerned about what you're doing to the women's business centers Prime Programs. The Prime Program has no substitute. You've praised it, Mr. Administrator. You've talked about how important it is. I could quote you here. And it has no substitute, and it helps a sector of our economy that needs it the most.

And with regard to the Women's Business Center Program, you've repeatedly said that you're not going to support sustainability grants which allow the most experienced and productive centers to continue receiving funding. That program has enjoyed strong bipartisan and bicameral support, including Chairwoman Snowe, Senator Talent when he chaired the House Business Committee and most of the members of this committee, but you're going in the opposite direction.

Repeated repress from the women's business community and strong support from many of us in Congress have kept this program going. But last year's extension, which passed as part of the appropriations bill, only funded the program through fiscal year 2005, and without a new authorization about 60 percent of the women's business centers are going to be forced to close. Is that a good idea? Madam Chairwoman, I'm deeply concerned with the administration's ongoing strategy that limits transparency and reduces the oversight authority of this committee by removing program funding from line items in the budget and incorporating them into the operating budgets of managing offices, which given the experience we've been through is a way of saying we're in for trouble down the road.

I'm especially concerned with the elimination of the line item for advocacy research and the lack of independence that would result with such transfer of budget authority.

So I thank you, Madam Chairwoman, for having this hearing. I might add on the association business -- the health plans, here we come again. No bigger issue did I run into across the country than health care. That's America's crisis, not social security. Social security is a problem. It's a problem we can deal with, and we will deal with it just as we have in the past.

The crisis is health care, and the president and the Small Business Administration ought to be leading on it. Of all the people in the world to be leading on something, small business. It's small business people who can't provide their health care. They're the ones being crushed under the costs of the health care.

And the Congressional Budget Office has said that the association health plans will raise the cost of doing business for four out of five of the premiums that are paid. Now, that's the CBO. It's non- partisan, it's just an assessment of what's going to happen. Four out of five small business workers' and their families' premiums are likely to go up under that plan.

Now, we have a plan where premiums could go down. With a reinsurance plan you could actually stop gap costs for all businesses in America. You could lower the premiums for everyone in America and begin to get a breathing spell and reduce costs in the country. But you've got to make a different set of choices than this administration is willing to make.

So I'm disappointed by the budget. I know that's not going to come as a surprise to you, but it's not a partisan disappointment. It is not prompted by anything to do with ideology. It's practical, it's based on sound experience of this committee, it's based on what we know works, it's based on good business practices, and most importantly it's based on the pleas and needs of small business people all across this country, whether they're Republicans, independents or Democrats. And I think your budget is out of touch with them and with the needs of the country, and I regret that.

So I look forward to the hearing, and we'll see what we can to try to cobble something together that makes sense.