In the weeks ahead, Congress will consider President Bush's nomination of Steven C. Preston as the new head of the Small Business Administration. As the reins get passed, it's a good time to take stock. The scope of the SBA's work is broad. The agency provides start-up loans to businesses, ensures that small businesses get a fair share of federal contracts, and provides management and marketing guidance to small-business owners. In addition, it steps in behind the Federal Emergency Management Agency after a disaster like Hurricane Katrina to make loans available to small businesses and homeowners.
Unlike President Clinton, who elevated the SBA and FEMA to Cabinet-level status, this administration downgraded both agencies. And, in other ways, they are radically different agencies than they were during the Clinton years. The SBA, for example, has raised fees on small-business loans and favored big business in government contracting, thereby rendering the agency's mission effectively meaningless.
Furthermore, it has been well documented that the pace of disaster loan approval by the SBA post-Katrina was nowhere near the level required. While there have been recent efforts to disperse loans for residents and business owners more quickly, bureaucratic impediments still seem to prevent the agency from moving with the sense of urgency called for after a disaster of this scale.
During the confirmation hearings for Mr. Preston, the Senate should focus on the core mission of the agency and how it has drifted. Its budget has been cut by nearly 40 percent, more than the budget of any other agency in the federal government, and a recent survey of employee morale at 30 federal agencies ranked the SBA last.
This presents the administration and the incoming SBA administrator with a challenge. They can reverse these trends and put the SBA back in a more central role in U.S. economic policy or continue to let it move away from its essential role.
Two immediate actions must be taken to help get the SBA back to serving its intended purpose. First, the SBA's loan programs must be fully funded. The focus in terms of economic policy that the administration has placed on big businesses at the expense of small ones has produced decidedly mixed results. Big business continues to shed jobs as it struggles with the rapidly rising cost of employee benefits. Neutering small business in this environment curtails economic growth, and denies many hardworking and entrepreneurial citizens the opportunity to build and expand businesses of their own.
During confirmation hearings, the Senate should focus on the core mission of the SBA and how it has drifted.
Second, the SBA must assert itself more aggressively in the area of procurement to ensure that small businesses are receiving a greater share of federal contracts. The rebuilding of the Gulf Coast region is a good place to start.
Lastly, spiraling health care costs are a burden on all American businesses but especially on small businesses, which lack the leverage to negotiate better rates. It's time for the President and Congress to find a way to address this issue for the good of the entire business community and the nation.
We have seen in past administrations what the SBA and FEMA can do when they are fully funded and empowered. It's time to restore these agencies' funding, resources, and stature, so that they can do the job that Americans deserve.
Fred P. Hochberg is the dean of Milano the New School for Management and Urban Policy, in New York City. He served as deputy and then acting administrator of the SBA from 1998 to 2001.