On Friday, December 11, 2008, the Small Business Administration released a statement (“SBA Responds to CAPAF’s Analysis”) containing several refutations to the Center for American Progress article I authored, titled “Small Business Administration: Supporting America’s Engines of Growth.” Items topping their list: the budget cuts to SBA under President George W. Bush, staff reductions, and the Microloan Program. All of their refutations are not based on fact.
SBA budget under Bush
The SBA under President Bush did indeed undergo a budget reduction of over 40 percent. This is supported by the president’s own budget report, which discloses an almost 30-percentreduction (see OMB’s fiscal year 2009 mid-session review here). Furthermore, under the advisement of the Congressional Budget Office, when inflation is factored in, this amounts to a 40-percent reduction.
Staff reductions under Bush: 26 percent
An increase of 30 percent in “salaries and operations” expenditures, as noted by the SBA, does not tell the whole story. Along with a reduction of about 40 percent in budget dollars, there was a 26-percent reduction in staff. In particular, the offices of Lender Oversight and Contracting were shortchanged. They were not adequately staffed to provide proper oversight and enforcement.
Furthermore, under President Bush, the SBA fell from first place in 2001 to last place among 30 agencies surveyed in the biannual Government Accountability Office report measuring employee morale.
The elimination of the Microloan Program
The Bush administration since 2005 has in fact zeroed out the Microloan Program, which provides small loans to new start-up small businesses or newly established small businesses. It has only survived with the consistent support of Congress overriding the president’s budget. And while it is true that the Microloan Program may be more expensive than other lending programs, especially with regard to technical assistance, its successful outcomes have been widely substantiated. And “support” requires more than lip service. The Bush-run SBA cannot claim to support something in which they are unwilling to devote resources.
Fred P Hochberg, former deputy and acting administrator of the Small Business Administration and dean of the Milano School for Management and Urban Policy at the New School. He was also a co-lead of the Obama-Biden Transition Team as Agency Review for the Small Business Administration. To read his chapter on the SBA in Change for America please go to the Center for American Progress Action Fund website.