A Dayton, Ohio, businessman is leading an assault on the Office of Management and Budget for killing a widely praised Small Business Administration program that has helped more than 200 small firms finance pollution control equipment.
The businessman, Jack L. Schaefer, is president of Specialty Papers Co., which employs 295 persons and has been a mainstay of Dayton's inner city for 57 years. His comrades-in-arms are nearly 100 small businesses, ranging from cheese factories in Wisconsin to an electroplater in Arkansas, whose applications for nearly $180 million in pollution-control bond guarantees have been gathering dust in SBA's files for nearly a year.
SBA's Pollution Control Financing Guarantee Program, set up by Congress in 1976, was effectively closed down by an OMB directive in January. Under the program, SBA guarantees tax-exempt bond issues for pollution control equipment up to $5 million. OMB characterized the program as a form of "double-dipping" and told SBA it could guarantee bonds only when they would be taxed.
Advocates say that government-guaranteed tax-free bonds are the only practical way a small business can finance pollution control equipment, which typically is expensive, adds nothing to production and is of little value as loan collateral.
Large firms generally finance such equipment through tax-exempt bond issues. The smaller issues required by small firms, which lack the name recognition and financial resources of their big brothers, have limited appeal to investors. Taxable issues have almost none.
In a letter to the White House late last month, SBA administrator James C. Sanders reported that "taxable financings have not been utilized to any significant extent" in the year since SBA was limited to that option.
Supporters of the SBA bond-guarantee program call it a particularly odd target for Reagan because it turns a profit.
Schaefer's ad hoc group of businessmen, the Small Business Coalition on Pollution Control, has the discreet blessing of SBA officials, many of whom regard the program as one of the agency's most successful.
The group also has vocal bipartisan support on Capitol Hill, where members have watched with increasing alarm as the Reagan administration, budget knife flashing, has waded into the lifelines designed to help keep small businesses competitive with the industry behemoths.
Reagan's budget request for fiscal 1983 proposed to "zero out" business and industry loans under the Farmers Home Administration, small-business set-asides at the Energy Department, small-business grants at Interior, and direct loans and loan guarantees at the Economic Development Administration.
Reagan also would abolish SBA's direct loans, already cut to $225 million from the fiscal 1981 level of $308 million. The agency's guaranteed loans -- the linchpin in federal aid to small business -- would be cut to $2.4 billion, nearly a billion dollars under the 1981 level.
"I can't believe the American people want to do this to small business," said Rep. Berkley W. Bedell (D-Iowa), who took up the banner of Schaefer's group in a series of congressional hearings over the past year. Rep. Silvio O. Conte (R-Mass.), a member of Bedell's subcommittee, introduced legislation to restore the bond guarantees; it has passed the House without a peep of protest.
Similar legislation also has been approved by the Senate Small Business Committee with equal ease. Backers hope to package the provision in an "omnibus" bill that will also include benefits for minority-owned businesses, making it a pro-small business, pro-environment and pro-minority bill that supporters figure will be difficult to veto even in a non-election year.
In a last-ditch effort last week to solve the problem the way it started -- administratively -- a group of congressmen made a direct appeal to OMB Director David A. Stockman, who reportedly promised he would "think about it." But an agency spokesman said two days after the meeting that OMB remains firmly opposed.
"When you start authorizing on macroeconomic theory, the programs have a tendency to get lost," said a congressional aide.
A Washington lobbyist was even more direct: "This administration thinks small business and housing are a pain in the tookies," he said. "It's got to be the most anti-small business administration in 60 years."