HOUSE SPONSORS of the Small Business Innovation Act are pressing the Rules Committee to bring the bill to the House floor promptly. Despite the measure's surface appeal -- who can be against "small business" or "innovation"? -- the Rules Committee would do both the House and the nation a favor by letting the bill languish.
After whirlwind passage by a 90-to-0 vote in the Senate, and swift approval of a still more generous version by the House Small Business Committee, the innovation act has run up against increasing resistance. This is because the rationale for the bill -- which would require all major federal agencies to earmark an additional 3 percent of research and development money for relatively small businesses -- doesn't bear up under closer scrutiny.
The notion that small, high-technology businesses are starving for capital is simply no longer so. Since the capital gains tax was reduced in 1978, venture capital in general, and small business investment in particular, have soared. The additional investment incentives provided by last year's tax cuts should further stimulate this investment.
Nor does it appear that government discriminates against small business in its R&D decisions. Small businesses employ only 5.5 percent of private-sector scientists and engineers engaged in R&D -- most small businesses, after all, are not in the research business -- but they already receive 6.8 percent of federal research contract money.
Apart from being unneeded, the proposed set aside program is likely to be ineffective. The small-scale experiment run by the National Science Foundation -- upon which the legislation was based -- could not be efficiently reproduced on the huge scale envisioned by either the Senate or House bills. A more likely outcome is that research money would be squandered on contracts with firms that could not otherwise compete for federal money.
The House committees in charge of defense, intelligence, science and technology, and energy and commerce have objected that the bill would disrupt essential research in their jurisdictions and eat into the dwindling amount of funds available for basic research. More recently, four congressmen changed their minds about cosponsoring the bill and urged other sponsors to follow their lead.
Small business is an important part of American life -- and it has a strong hold on the average congressman's heart. But this is no time for sentimentality where the federal budget is concerned. To avoid embarrassment all around, the Rules Committee should consign the Small Business Innovation Act to a well-cobwebbed pigeonhole.