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Will the SBA be Combined with the US Department of Commerce?
November 24, 2010
Recommendations by the National Commission on Fiscal Responsibility and Reform, launched by President Barack Obama, suggests that the Small Business Administration be combined with the US Department of Commerce. Chris Gunn with the American Small Business League joins Mike Siegel on the Boss Business Brief to discuss the likely falout of such an event.
Who is the Small Business League?
The American Small Business League was formed to promote and advocate policies that provide the greatest opportunity for small businesses – the 98% of U.S. companies with fewer than 100 employees.
ASBL monitors existing policies and proposed policy changes by the Small Business Administration and other federal agencies that affect its members, and helps to coordinate any response required to safeguard the interests of small businesses.
We achieve significant and measurable results for small businesses across America, seeking their mandated share of federal, state and local government contracts.
Transcript:
Siegel: Hi folks. Welcome in. Mike Siegel with you here at the BOSS Business Brief. Good to have you with us. We have great conversation, advocacy for small business. Big issue coming up with the SBA. Let's talk about that with Chris Gunn of the American Small Business League. That is, frankly, quite troubling. We had the business community, particularly the small business community, on November the 10th have a preliminary recommendation that the SBA be absorbed by the US Department of Commerce. This is something that is not widely known, but small business should know about this because it could be very damaging to the availability of funds for small business through the SBA. The recommendation is part of a plan that would out federal spending, or cut it, by 200 billion through 2015. They want to consolidate basically and, of course, that is going to put small business at risk. Chris Gunn is with us, as I said. Mr. Gunn, how are you? Nice to talk to you.
Gunn: Very well. I am doing well. Nice little fall day here.
Siegel: Well, I am glad to hear that – that it is pleasant for you. Absolutely. Let's talk about this. The SBA is the only federal agency that helps small business. Its job is to be there for 27 million small business across America. We know that the US Census Bureau says that small business is responsible for more than 90% of all net new jobs, 50.2% of the non-farm private sector work force, the total work force, so between big business and small business, it is pretty much an even split, but the new jobs are created by small business, and then 50% of the GDP, the gross domestic product, and 90% of exports and innovations are at the hand and behest of small business. Powerful group yet there is some danger that their interests, meaning small business in this country, could be damaged by what the administration is trying to do by consolidating the SBA into the commerce department. Tell us about that.
Gunn: So, what we have seen is a series of recommendations, and mind you they are preliminary recommendations but there is a very real possibility that these recommendations could end up in the final recommendations that are coming from a national commission on fiscal responsibility that was put together by the Obama administration. The commission itself is led by a couple of folks, Riscan Bowls and Alan Simpson. As part of their recommendation, they have recommended that (a) the SBA be combined with the US Department of Commerce and that (b) they combined budget for those two agencies is slashed by 10%, which they claim would save about 1 billion dollars in 2015. Now, we as an organization are very concerned about this. Very concerned about (a) the prospect of actually floating a recommendation like that and (b) the very real possibility that it could end up in the final recommendations coming from this national commission on fiscal responsibility and reform. The Small Business Administration is tremendously important as an organization despite the fact that we have had some disagreements about the way that certain issues have been handled by the SBA. For example, large corporations continuing to receive small business contracts and their handling of fraud and abuse. I think that everyone can agree, or most people rather, can agree that the SBA serves an essential function, which is (a) to administer small business programs and (b) to make sure that small businesses have access to the loans and credit that they need to run their businesses. Without the Small Business Administration, those things would be in jeopardy.
Siegel: I am going to use a high tech analogy, because I just like to make analogies. Now, it may make no sense to some people, but let me make the point. If you buy a stereo system, high end stereo system, and you buy what is called a receiver. It has the amp, the pre-amp and the tuner all built into one box. You can buy that, obviously, for less money than buying a separate amp, pre-amp and tuner. Three separate boxes. But the point would be, and audiophile would tell you, that when you have the separate boxes, each box functions for one thing only. The amplifier for the power, the pre-amp is for deciding which source it is going to go to, whether it is radio or CD or whatever it might be, and then you have the tuner which is the audio or the radio itself. Now, when they are separate they are specialized into what they do. Each one separately. If you have one box, it is not going to be of the same caliber or specifications. When you take an agency that singularly deals with s mall business in the same way and you fold it into something else much larger like the commerce department, it is going to get buried and the whole ability of small business to get access to funds is going to be layer upon layer, because now you have the commerce department overseeing it when at least now the SBA chief or executive can be held accountable for the policies there. It is no longer going to be that. There will be more layers and with the analogy with the audio system, greater problems and less quality, less efficiency.
Gunn: Absolutely. Absolutely, and we have actually seen it happen with one federal agency already. In the 80s actually, the minority business development agency was a standalone agency and it existed for the sole purpose of supporting minority-owner business enterprises. In 1983, it was combined with the commerce department and that agency is now a shadow of its former self. It still functions, but it functions in a manner that is diminished compared to the way it functioned prior to 1983. Our fear would be that that exact thing would happen, and in fact the Small Business Administration would cease to function as we know it today. I think you brought up a really great point there with that analogy in that if the SBA administrator is no longer the person who is accountable for the actions that the SBA has taken and/or if the SBA administrator is not the person who is essentially making those decisions as to whether or not to move forward with their specific policies or to move in specific directions when it comes to, say, handling fraud and abuse in small business contracting programs, suddenly we are faced with a very different prospect in the way that government addresses small business issues. I think that we are very concerned about the prospects of having essentially the secretary of commerce essentially handling those issues and having those take a back burner to other things that they are actually working on. Small businesses should be a priority. You mentioned that they are incredibly important, say for example, job creation, GDP, they are the backbone of our nation's economy. So, having them essentially a small part of a much larger agency doesn't make sense. We think it should be stand alone, that it should function efficiently on its own, that its budget should be increased quite frankly, and that it should be something that is a priority for not only this administration but for the government as a whole.
Siegel: And, by the way, the secretary of commerce is Gary Locke, the former governor of Washington State, who is not known for his great administrative skills. So, you could wind up with a complete _______________ because you might not get decisions made where as a separate agency the SBA can make decisions, and again you can hold them accountable. IN this case, it is going to be buried some place where the secretary of commerce would say, I want this, this or this, and then some place down the line other people get responsibility and you spend most of your time trying to work your way through the maze of the commerce department to figure out who actually is making the decision other than the SBA executive. But let's talk about this in terms of the alleged reason, which is efficiency. Now, we are talking with Chris Gunn of the American Small Business League. As I understand it, the commission chairs of the commission you just described, who deal with this report, they say that combining the SBA with the commerce department and then cutting the combined budget by 10% would save basically 1 billion dollars by 2015. Now, look, a billion dollars is a lot of money. I mean, as Emmett Dirkson, who was the republican senate minority leader once said when John Kennedy was president, a billion here and a billion there, pretty soon you have some money. Of course, now a days it is a trillion here and a trillion there. But be that as it may, if you put that in context with the fact that that billion between now and 2015 being saved compared to the 23 billion in Iraqi contracts that are now called lost, stolen or unaccounted for… and by the way, the BBC reported that in 2008. That is just lost money. And so, that is 23 billion. So, saving 1 billion by 2015 is a miniscule amount of money compared to the lost money in Iraqi, and what harm does it do to the middle class economy, to the small business owner? I would like you to answer that question for me.
Gunn: That is exactly the point that I think we are really hanging our hat on. We are talking about saving 1 billion dollars by 2015, but if you were to say, for example, that 23 billion was lost in Iraqi or if you were to even look at the budget that we have the pentagon in our defense budget, it is extremely large and we spend 1 billion dollars on things that have a much smaller impact fiscally and domestically than small businesses do. You know, America's 27 million small businesses have an agency that has a budget that is less than 1 billion dollars a year and it makes absolutely no sense to, you know, justify diminishing the effectiveness of that agency to save a paltry billion dollars over a five year period. I think there are much more prudent cuts that we could be making as opposed to cutting the SBA's budget.
Siegel: We only have 30 seconds. Bottom line question. Isn't this really about allowing big corporations to continue to get SBA money, so that it is buried in the commerce department.
Gunn: Yes. That is absolutely what we think is going on. You know, we think this is absolutely a move to wind down SBA programs designed to monitor the distribution of those funds.
Siegel: Mr. Gunn, always a pleasure to talk to you. American Small Business League does great work and for that we thank you. We thank you also, as always, for being on the program today.
Gunn: It was a pleasure as always. Thank you so much Mike.
Who is the Small Business League?
The American Small Business League was formed to promote and advocate policies that provide the greatest opportunity for small businesses – the 98% of U.S. companies with fewer than 100 employees.
ASBL monitors existing policies and proposed policy changes by the Small Business Administration and other federal agencies that affect its members, and helps to coordinate any response required to safeguard the interests of small businesses.
We achieve significant and measurable results for small businesses across America, seeking their mandated share of federal, state and local government contracts.
Transcript:
Siegel: Hi folks. Welcome in. Mike Siegel with you here at the BOSS Business Brief. Good to have you with us. We have great conversation, advocacy for small business. Big issue coming up with the SBA. Let's talk about that with Chris Gunn of the American Small Business League. That is, frankly, quite troubling. We had the business community, particularly the small business community, on November the 10th have a preliminary recommendation that the SBA be absorbed by the US Department of Commerce. This is something that is not widely known, but small business should know about this because it could be very damaging to the availability of funds for small business through the SBA. The recommendation is part of a plan that would out federal spending, or cut it, by 200 billion through 2015. They want to consolidate basically and, of course, that is going to put small business at risk. Chris Gunn is with us, as I said. Mr. Gunn, how are you? Nice to talk to you.
Gunn: Very well. I am doing well. Nice little fall day here.
Siegel: Well, I am glad to hear that – that it is pleasant for you. Absolutely. Let's talk about this. The SBA is the only federal agency that helps small business. Its job is to be there for 27 million small business across America. We know that the US Census Bureau says that small business is responsible for more than 90% of all net new jobs, 50.2% of the non-farm private sector work force, the total work force, so between big business and small business, it is pretty much an even split, but the new jobs are created by small business, and then 50% of the GDP, the gross domestic product, and 90% of exports and innovations are at the hand and behest of small business. Powerful group yet there is some danger that their interests, meaning small business in this country, could be damaged by what the administration is trying to do by consolidating the SBA into the commerce department. Tell us about that.
Gunn: So, what we have seen is a series of recommendations, and mind you they are preliminary recommendations but there is a very real possibility that these recommendations could end up in the final recommendations that are coming from a national commission on fiscal responsibility that was put together by the Obama administration. The commission itself is led by a couple of folks, Riscan Bowls and Alan Simpson. As part of their recommendation, they have recommended that (a) the SBA be combined with the US Department of Commerce and that (b) they combined budget for those two agencies is slashed by 10%, which they claim would save about 1 billion dollars in 2015. Now, we as an organization are very concerned about this. Very concerned about (a) the prospect of actually floating a recommendation like that and (b) the very real possibility that it could end up in the final recommendations coming from this national commission on fiscal responsibility and reform. The Small Business Administration is tremendously important as an organization despite the fact that we have had some disagreements about the way that certain issues have been handled by the SBA. For example, large corporations continuing to receive small business contracts and their handling of fraud and abuse. I think that everyone can agree, or most people rather, can agree that the SBA serves an essential function, which is (a) to administer small business programs and (b) to make sure that small businesses have access to the loans and credit that they need to run their businesses. Without the Small Business Administration, those things would be in jeopardy.
Siegel: I am going to use a high tech analogy, because I just like to make analogies. Now, it may make no sense to some people, but let me make the point. If you buy a stereo system, high end stereo system, and you buy what is called a receiver. It has the amp, the pre-amp and the tuner all built into one box. You can buy that, obviously, for less money than buying a separate amp, pre-amp and tuner. Three separate boxes. But the point would be, and audiophile would tell you, that when you have the separate boxes, each box functions for one thing only. The amplifier for the power, the pre-amp is for deciding which source it is going to go to, whether it is radio or CD or whatever it might be, and then you have the tuner which is the audio or the radio itself. Now, when they are separate they are specialized into what they do. Each one separately. If you have one box, it is not going to be of the same caliber or specifications. When you take an agency that singularly deals with s mall business in the same way and you fold it into something else much larger like the commerce department, it is going to get buried and the whole ability of small business to get access to funds is going to be layer upon layer, because now you have the commerce department overseeing it when at least now the SBA chief or executive can be held accountable for the policies there. It is no longer going to be that. There will be more layers and with the analogy with the audio system, greater problems and less quality, less efficiency.
Gunn: Absolutely. Absolutely, and we have actually seen it happen with one federal agency already. In the 80s actually, the minority business development agency was a standalone agency and it existed for the sole purpose of supporting minority-owner business enterprises. In 1983, it was combined with the commerce department and that agency is now a shadow of its former self. It still functions, but it functions in a manner that is diminished compared to the way it functioned prior to 1983. Our fear would be that that exact thing would happen, and in fact the Small Business Administration would cease to function as we know it today. I think you brought up a really great point there with that analogy in that if the SBA administrator is no longer the person who is accountable for the actions that the SBA has taken and/or if the SBA administrator is not the person who is essentially making those decisions as to whether or not to move forward with their specific policies or to move in specific directions when it comes to, say, handling fraud and abuse in small business contracting programs, suddenly we are faced with a very different prospect in the way that government addresses small business issues. I think that we are very concerned about the prospects of having essentially the secretary of commerce essentially handling those issues and having those take a back burner to other things that they are actually working on. Small businesses should be a priority. You mentioned that they are incredibly important, say for example, job creation, GDP, they are the backbone of our nation's economy. So, having them essentially a small part of a much larger agency doesn't make sense. We think it should be stand alone, that it should function efficiently on its own, that its budget should be increased quite frankly, and that it should be something that is a priority for not only this administration but for the government as a whole.
Siegel: And, by the way, the secretary of commerce is Gary Locke, the former governor of Washington State, who is not known for his great administrative skills. So, you could wind up with a complete _______________ because you might not get decisions made where as a separate agency the SBA can make decisions, and again you can hold them accountable. IN this case, it is going to be buried some place where the secretary of commerce would say, I want this, this or this, and then some place down the line other people get responsibility and you spend most of your time trying to work your way through the maze of the commerce department to figure out who actually is making the decision other than the SBA executive. But let's talk about this in terms of the alleged reason, which is efficiency. Now, we are talking with Chris Gunn of the American Small Business League. As I understand it, the commission chairs of the commission you just described, who deal with this report, they say that combining the SBA with the commerce department and then cutting the combined budget by 10% would save basically 1 billion dollars by 2015. Now, look, a billion dollars is a lot of money. I mean, as Emmett Dirkson, who was the republican senate minority leader once said when John Kennedy was president, a billion here and a billion there, pretty soon you have some money. Of course, now a days it is a trillion here and a trillion there. But be that as it may, if you put that in context with the fact that that billion between now and 2015 being saved compared to the 23 billion in Iraqi contracts that are now called lost, stolen or unaccounted for… and by the way, the BBC reported that in 2008. That is just lost money. And so, that is 23 billion. So, saving 1 billion by 2015 is a miniscule amount of money compared to the lost money in Iraqi, and what harm does it do to the middle class economy, to the small business owner? I would like you to answer that question for me.
Gunn: That is exactly the point that I think we are really hanging our hat on. We are talking about saving 1 billion dollars by 2015, but if you were to say, for example, that 23 billion was lost in Iraqi or if you were to even look at the budget that we have the pentagon in our defense budget, it is extremely large and we spend 1 billion dollars on things that have a much smaller impact fiscally and domestically than small businesses do. You know, America's 27 million small businesses have an agency that has a budget that is less than 1 billion dollars a year and it makes absolutely no sense to, you know, justify diminishing the effectiveness of that agency to save a paltry billion dollars over a five year period. I think there are much more prudent cuts that we could be making as opposed to cutting the SBA's budget.
Siegel: We only have 30 seconds. Bottom line question. Isn't this really about allowing big corporations to continue to get SBA money, so that it is buried in the commerce department.
Gunn: Yes. That is absolutely what we think is going on. You know, we think this is absolutely a move to wind down SBA programs designed to monitor the distribution of those funds.
Siegel: Mr. Gunn, always a pleasure to talk to you. American Small Business League does great work and for that we thank you. We thank you also, as always, for being on the program today.
Gunn: It was a pleasure as always. Thank you so much Mike.
