'Worst Yet' Federal Budget for Small Businesses

Nearly half of the 100 federal programs that assist small businesses would end and another 40 would be cut drastically, if President Bush's fiscal 2007 budget request is approved.


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“This year's [budget] request is truly the worst yet," said U.S. Rep. Nydia M. Velazquez (D-N.Y.), the ranking Democrat on the House Small Business Committee. "These cuts are hitting entrepreneurs across the nation – from rural to urban areas, from technology-based firms to small family farms – no small business sector has been spared in this budget request." Bush proposes a federal budget of nearly $3 trillion.

The Small Business Administration (SBA), the Department of Agriculture and Department of Labor are targeted for deep cuts. The House committee said in a report that three dollars are generated in tax revenue for every dollar invested in some of the small-business initiatives, CFO.com reported. Specifically, cuts are planned in 15 federal initiatives that encourage innovation and competitiveness, 14 that focus on disaster-relief and price-destabilization-relief programs, and five that promote energy efficiency, the committee said. The budget would eliminate, or cut, 27 programs in New York alone, Velazquez said.

The Dallas Morning News pointed out that the agency had a discretionary budget of $900 million in 2001,a figure that has shrunk to $624 million for 2007.

Velazquez and fellow Democrats in Congress are using Bush's proposed budget to draw attention to budget woes of the SBA, an agency they say is severely stretched. Some say the constantly shrinking budgets may mean Bush is aiming to eliminate the SBA altogether, a contention termed “ridiculous” by an SBA spokesman.

Steve Denson, an adjunct professor in the Cox School of Business at Southern Methodist University, told the Dallas newspaper that important training programs may suffer.

"SBA is a great training tool, a resource, for emerging entrepreneurs, especially minority entrepreneurs and female entrepreneurs," he said. "Some of their greatest success is in leveling the playing field for the entry of minorities and women."

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