It has always been the quintessential American dream: Start a small business, hire some workers, work hard and watch it grow. For millions of Americans, and probably all our huge corporations, this has been their road to opportunity.
But in one of the most vicious attacks upon the free enterprise system in recent memory, the Reagan administration in its fiscal l986 budget has proposed eliminating many of the Small Business Administration programs that have enabled Americans to dream of starting their own business.
As a facilitator for business development, the SBA gives a burgeoning number of small businesses a variety of vehicles to address their needs, including direct lending to existing small companies that cannot attain funds through normal commercial channels, the benefits of counsel and risk capital through a private sector-government partnership, as well as investment risk capital to minority businesses and entrepreneurs. The SBA also serves as an independent "watchdog" agency, overseeing executive, legislative and regulatory proposals affecting small businesses, which provide about half of all new jobs in the country.
One of several SBA programs, the Small Business Investment Co. (SBIC), has provided financial assistance to more than 40,000 companies since its inception in l958. According to the House of Representatives' Committee on Small Business, the SBIC annually spends $4 million. In return, the agency generates $441 million in tax revenues -- a cost benefit ratio of l to l0.
Another important SBA program, the Minority Enterprise Small Business Investment Companies (MESBICs), is responsible for helping more than 7,000 minority businesses get started. As the primary source of capital for minority businesses, the MESBICs enable blacks, Hispanics, American Indians and Asians to finance business and pay back the capital, with interest. Seventy-five percent of the nation's minority communications and cable companies have been financed in this manner since l973.
Then why is the administration gutting this agency that is so essential to American business development? Budget Director David Stockman called the agency "a billion-dollar waste, a rathole."
James C. Sanders, head of the SBA, retorted sharply: "It's unthinkable that anyone in a responsible position would use that kind of excessive and abrasive language . . . that slanders the achievements of everyone in the agency . . . . I believe there are programs in which the federal government can come in and help small businesses succeed. And we have some -- no, many -- good people here to run them."
It's particularly ironic that an administration that has worn its free enterprise system on its sleeves would discard so important a free enterprise vehicle and leave future small entrepreneurs with no access to the system.
The administration's crippling of the SBA is particularly harmful to black entrepreneurs and businesses. As JoAnn Price, president of the American Association of MESBICs, says: "Not only do our investments contribute to stronger tax bases . . . but the jobs the companies in our portfolios create often go to men and women who would otherwise be forced onto unemployment compensation rolls or other forms of government assistance."
The administration's budget proposal has drawn criticism from citizens and politicians across the land.
The SBA has been a great help in assisting our companies to grow," said Idaho Gov. John V. Evans.
"The proposal to dismantle SBA is senseless and ill-advised," said Rep. Parren J. Mitchell, chairman of the House Committee on Small Business. "Abolition of the agency would be unconscionable."
Apparently conscience plays no role in the kinds of decisions the Reagan administration makes, nor does the welfare of the American people. While there may be some minor problems with the Small Business Administration, emasculating that agency in the name of reducing a nightmare federal deficit is not the answer.