New York Times Business

Republicans on Capitol Hill have made no secret of their desire to cut deeply and broadly across discretionary spending by the federal government. But a letter sent in late January from leaders of the Senate Small Business Committee must have come as something of a surprise to its recipient, Karen Mills, the head of the Small Business Administration. The letter, drafted by Senators Mary Landrieu, Democrat of Louisiana, and Olympia Snowe, Republican of Maine, called on Ms. Mills to recommend “programs within the S.B.A. that you believe could be eliminated or substantially reduced without undermining the S.B.A.’s ability to serve the needs of small-business owners.”

Both Ms. Landrieu and Ms. Snowe have been strong supporters of the S.B.A., and have sought more funding for the agency in recent years — particularly after the recent Bush administration drastically cut the agency’s budget. In 2001, Congress appropriated $674 million to the S.B.A., excluding disaster aid and earmarks; by 2006, that had fallen to $440 million. The Democratic-controlled Congress, eventually in partnership with the Obama administration, restored much of those cuts. In 2010, the S.B.A.’s appropriation reached $687 million.

That is only slightly more than in 2001, though in the last two years the S.B.A. has received several hundred million in stimulus money, mostly to subsidize business loans. By contrast, total discretionary federal spending has grown 19 percent since 2001, according to an Office of Management and Budget spokeswoman, Meg Reilly. (Discretionary spending excludes funding for entitlements like Social Security and Medicare and other programs where spending is written into law.)

In their letter, which they also sent to the S.B.A.’s inspector general, Peggy Gustafson, the senators stressed the “possibility of eliminating duplicative, ineffective, or redundant programs” in an effort to simultaneously improve S.B.A. programs and trim spending. In a separate statement to The Agenda, Ms. Snowe cited “the fiscal imperative we are facing.” “It is incumbent upon the Small Business Committee to be a watchdog and do everything we can to examine the possibility of cost-cutting and find ways to make the S.B.A. more efficient and effective,” she said, through a spokeswoman. “Working hand-in-glove with the agency, we can make the S.B.A. more responsive to the entrepreneurs and businesses who stand to benefit from its valuable programs, while reducing the federal debt.”

Ms. Landrieu’s willingness to cut S.B.A. spending is somewhat more surprising, especially considering that Mr. Obama has said he is willing to spend more to encourage American innovation, particularly by small businesses. An aide to Ms. Landrieu, Richard Carbo, said the senator “is not looking to cut any program that’s working or that will harm the agency in any way.” Mr. Carbo did not know if the senator had begun making a list of programs to cut, but, he added, the letter “is just a very first step in a process that she wants to take a long hard look at.”

Separately, the new chairman of the House Small Business Committee, Representative Sam Graves of Missouri, has also declared his intention to find cuts in the S.B.A. budget. “Offices that primarily provide assistance or advice to headquarters staff that do not promote the interests of small businesses or protect the federal government as a guarantor of loans will be recommended for cuts or elimination,” Mr. Graves, a Republican, wrote in an oversight plan for the committee.

The oversight plan promises investigations into several specific administrative functions within the S.B.A. But it also targets S.B.A. programs, including two streamlined government-guaranteed loan programs, S.B.A Express and Patriot Express, for businesses owned by veterans.

Mr. Graves, reached by phone as he was feeding cattle on his farm in Tarkio, Mo., echoed the senators’ views. He insisted that he would not prejudge the S.B.A.’s efforts — the list of offices and programs in the oversight plan are “just examples of things that we’re going to be taking a look at.” (He too, he said, has asked Ms. Mills to recommend programs that might be scaled back, “and then maybe shift some of that focus over to some of the programs that are working.”) Nor would he commit himself to a specific percentage reduction in the agency’s budget. But he left little doubt that he would find places to cut. “There are programs within the S.B.A. that are not being used or are terribly inefficient,” he said.

“The fact of the matter is, there’s going to have to be some spending priority changes in Congress,” he continued. “You can’t keep spending money that you don’t have. That’s just all there is to it. And every business knows that, too. Everybody is under the microscope, and that includes the S.B.A.”

On Monday, Ms. Mills, the agency administrator, responded to the senators: “On February 14, the President will release his FY 2012 budget proposal, which will identify S.B.A. programs that can be further streamlined or — in some instances — eliminated altogether,” she wrote. The legislators, she said, would have to wait until then.