User:DickGriffin07

The U.S. Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Federal Financial Management, Government Information and International Security met Thursday, April 6 and sort of  provided  a review of  “The Effectiveness of the Small Business Administration”.

Sort of a review, because had The Honorable Sue Kelly, Representative from New York, not been there to speak of the benefits she saw in her home district, no one else offered much in support of SBA. The Ranking Member, Senator Tom Carper did attend Mrs. Kelley’s portion of the meeting, and left immediately after she finished, leaving the rest of the event solely in the control of the Chairman.

Before one accepts this ‘review’ from the hand picked group of naysayers Dr/Senator/Chairman Tom Coburn (Chairman, R-OK) rolled out, let’s consider the questions that were not asked.

When the Chairman questioned SBA Administrator Hector V. Barreto following the Administrator’s prepared testimony, Barreto’s rhetoric was a drumbeat for how this administration’s goals for downsizing the department’s budget had achieved 30% reductions in operating dollars for the agency. One question not asked was, given that the same success chant was once delivered by former Deputy Secretary Brown for FEMA, is there a chance that those budget reductions may actually have a negative impact on the SBA’s ability to perform its functions and provide oversight of its programs?

What Mr. Barreto left unsaid includes the stories of 8(a) companies, Veteran Owned Businesses, Women Owned Business, and other Small Disadvantaged Businesses fostered and nourished by SBA programs and loans that now compete effectively and aggressively because of SBA initiatives that encourage agencies to do business with small businesses. Mr. Barreto did brag that overall the government had achieved its 23% set-aside goals for the past two fiscal years, but neglected to mention to that there are several watch groups inside and outside of government that challenge that claim.

Mr. Barreto also neglected to mention that even if his numbers are accurate, they indicate zero growth in the actual number of contracting dollars committed to Small Businesses, while the actual total number of contracting dollars has increased steadily and rapidly during that period. Given that few Small Business considerations were made in the awards of vast numbers of contracts and dollars related to war and catastrophic events, is it possible that several procurement areas have been exempted from including small business requirements? If this is the case, why were those areas exempted?

What Chairman Dr./Senator Coburn did focus on was what he considered ‘waste, fraud and abuse’ that are occurring in SBA monitored loan programs. Actually, the Chairman picked steadily away at a few high profile anecdotes, representing them as if they were the normal mode of doing business at the SBA, rather than the exceptions that demonstrate the need for more aggressive management by SBA officials. The Chair made a point of the claim that the 7(a) Loan program was actually in the budget for a $750 thousand line item to manage the program while it is claiming that it is a 0% budget line item. Technically, the Senator is accurate, but his observation failed to include a qualifier that in other areas of financial management (some under his purview), the $750K would be considered a ‘rounding error’, which in fact what this statement reflected. Not many responsible financial institutions managing a $7B plus portfolio can claim such a low cost for administration. Of course this issue is both a blessing (as in very low cost) and a curse, because in reality, (another question not asked) what level of oversight can we expect as citizens when we see such a small number of dollars committed to oversight?

The third panel that Dr./Senator Coburn selected included two college professors, both of whom have published books highly critical of the SBA. Each presented a litany of pointed, narrowly selected statistics that totally ignored analysis of the success of SBA Small Business assistance programs. For instance, both professors were positively gleeful that .05% describes the percentage of small businesses that actually get awarded 7(a) loans. (Several unasked question could have followed.) Could that mean that most small business people are conservative about their borrowing habits, or simply choose to access other funding sources? Another unasked question: of the .05% who did take advantage of the programs, what is the actual measure of benefit or default? Regardless of the fact that the 95.5% remainder of that statistic indicates that most folks in business don’t receive government help, do the programs actually help the people they were designed to help?

At one point, the Dr./Senator/Chairman directed some very antagonistically phrased comments and questions at the (scapegoat) banker. The Chairman chose the poor guy to aggressively explain why he felt the program shouldn’t be helpful to those folks who help small businesses. With Barreto bragging that the Bush administration is slashing discretionary spending budgets inside the agency, keeping funding for Small Business Development Centers flat, and reducing SBA staff across the agency who administer programs and procedures, who is it that the Chairman expects is going to help nurture small businesses?

The Chairmen’s enthusiasm for insinuating the banking industry’s abuse of the 7(a) guarantee loan program went over the top at one point, as he accusingly asked the banker if his industry organization was hording data rather than making it available to the public. When one of the Senator’s staffers pointed out problems with the question to the Senator, the Chairman (to his credit) then took the time to actually read the detailed question to the panel and the audience; after which the banker and his team immediately responded with assurances that the indicated information was, is, and always has been available to the committee, the Chairman, and the public through its organization. So the unasked question here is, Why is the government asking the banking sector for the information in the first place? Doesn’t SBA have its own records? Even if the Senator’s concern did have merit, is asking the banker’s organization for the information like asking the Fox for the keys to the Chicken coop?

Sadly, for the bulk of the hearing, the Chairman was the only Senator in the room, The Chairman’s staff had several corkboard posters ready to support the invited naysayers, and assured that their testimonies were available in hardcopy for distribution to the attending press. The general impression created by the testimony, the Chairman’s questions and the event is that the committee is being very critical of the need for SBA and its budget request for ’07. If the Chairman’s statement to Mr. Barreto, that he intends to “spend no money”, is taken seriously, then funding in SBA’s future is decidedly murky. Regards Dick Griffin, The Griffin Method Thegriffinmethod.com. 703 521 4838