Republicans Find More to Cut From the S.B.A. Budget
By Robb Mandelbaum 
March 18, 2011

In April, House Republicans plan to lay out the broad outlines of their budget to fund the federal government for 2012, but this week the chairman of the House Small Business Committee revealed his spending priorities for the Small Business Administration. And while President Obama proposed to save $28 million in his budget by cutting or eliminating a handful of programs, Sam Graves, the committee’s chairman, declared the gesture did not go far enough. He recommended cutting an additional $100 million.

“The Small Business Committee believes that the Small Business Administration budget needs to eliminate funds from duplicative and ineffective programs and reallocate some of those funds to programs that will be more helpful to America’s entrepreneurs,” said Mr. Graves in a statement Tuesday. “There isn’t a federal agency that should be immune from cutbacks and fiscal discipline and the Small Business Administration is no different.”

The committee’s Republicans by and large leave alone the funding the administration has proposed for the S.B.A.’s financing programs. Instead, in a report (pdf) known as the committee’s “views and estimates” on the 2012 budget, they go after practically everything else. Many of the blows are directed at budget items the committee finds vague, or programs that it concludes are redundant or unproven.

First, the House Republicans take aim at provisions in last year’s small-business jobs act meant to foster small-company exports — provisions that, ironically, were written by a fellow Republican, Maine Senator Olympia Snowe, the top Republican on the Senate Small Business Committee. The House Republicans would rescind $30 million in grants to states for export promotion, and cut all of the new hires in the S.B.A.’s Office of International Trade. (Mr. Graves’s committee also takes aim at another initiative in the jobs act, the Intermediary lending pilot program, which would allow the S.B.A. to make direct loans that fill the gap between microloans and guaranteed business loans.)

Among counseling, or entrepreneurial development, programs, the Republicans do not play favorites between Score and the network of small business development centers — they would leave Score’s $7 million intact, and add back $5 million to the $10 million the administration wants to cut from the development centers. But they would pay for that by eliminating, or cutting drastically, every other entrepreneurial development program: funding for business centers for women and veterans, for counseling aimed at disadvantaged businesses, for the HubZone program, and outreach to Native Americans would all disappear, saving about $35 million. Even microloan technical assistance, which the administration wants to cut by $9 million, would see a further $2.5 million shaved because, according to the committee report, “a majority of training provided by microloan intermediaries is not to borrowers but to prospective borrowers, many of whom do not become borrowers.”

Finally, the Republicans also propose big cuts in the S.B.A. bureaucracy, sparing only the district offices that deal directly with small business owners. The ten regional offices that supervise district offices and are in turn supervised by the headquarters would be eliminated entirely. And Republicans find that the headquarters staff is bloated (more than a quarter of agency staff works in Washington). Among the cuts: 10 percent off the office of administrator.

It’s not all trimming and whacking, though. In addition to restoring money to the small business development centers, the Republicans propose using $2 million of the savings to bolster S.B.A. staff that helps small businesses win federal contracts, $2 million for the Inspector General’s office, and more to speed up the review of size standards and hire additional staff for the Office of Advocacy.

The “Views and Estimates” on the budget that each Congressional committee prepares are supposed to guide the Budget Committees in setting broad categories of spending. However, the final funding is determined by the Appropriations Committee in each chamber, and then, of course, those competing appropriations bills must be reconciled. In other words, the House Small Business Republicans’ “views and estimates” are not the last word on how much the S.B.A. will have to spend next year.

Read the report online HERE