Small Business Committee Democratic Site

STATEMENT
of the
Honorable Nydia M. Velázquez
Ranking Member, House Small Business Committee
Small Business Index (SBI) Report Release
September 17, 2003

Good morning. Today, we are witnessing one of the longest economic downturns in our nation's history. The current climate is one marked by massive job losses, skyrocketing trade deficits and rising costs. It is an economic climate full of uncertainty.

The only certain thing right now is small business. Small businesses are the lifeblood of the American economy - they create three out of four new jobs, make up half of our GDP, are responsible for a majority of innovations and represent 99% of all employers.

And this week in Washington we gather to honor the contributions of entrepreneurs during National Small Business Week. Yet their prosperity is overshadowed by our current economic situation. You don't have to take my word for it - just look at the leading economic indicators for small businesses and you can see for yourself.

That's why we've developed the first-ever Small Business Index (SBI). The SBI reflects the current economic conditions facing small businesses. It also provides insights into the near-term performance of the small business sector.

The SBI is anchored in fact and reality, not in fiction and rhetoric. And it shows us that things aren't good. After reaching a five-year high in 2000, the current second quarter SBI represents a five-year low.

Down 33% in three years, the SBI shows that small businesses face a difficult economic environment, characterized by rising business costs, a decline in commercial lending, and increased competition from overseas.

The economy's continued weakness goes hand in hand with the lack of an environment conducive to small business start-up and expansion. Without the contributions of small businesses and the jobs they create, this nation's economic recovery will be out of reach.

It is in times of economic uncertainty when small businesses have an important role to play. Historically, during tough economic times, start-ups flourish and lead the way to recovery.

In the recession of the early 1990s, small companies created approximately 3.8 million jobs, far outpacing large firms. In fact, sixteen of the 30 companies on the Dow Jones industrial average actually trace their birth to recessions - from Microsoft to Disney.

But this time may prove different. Small businesses can't work their magic without help. The Bush administration promised to be the most small business friendly, but their flawed policies - OR lack of policies on certain issues - have actually hurt small enterprise. The SBI we unveil today reveals this.

First, the lack of a comprehensive energy policy has led to rising costs that small businesses are unable to absorb. The same proves true for health care. Without health care reforms to solve the uninsured crisis in this country - the majority who are small business owners, their employees and their families - our entrepreneurs will continue to suffer.

And the policies put forth by the administration - like the 2001 and 2003 tax cuts - did little to provide small businesses with the infusion of capital they so desperately needed. This was even evidenced in a recent member survey released by the National Federation of Independent Business (NFIB), which showed that small businesses are not increasing the amount of their capital purchases since the 2003 tax cut.

From tax and trade to health care and energy, the Bush administration policies are not so small business friendly. We even had a glimmer of hope in March of 2002 when President Bush released his Small Business Agenda. But to date, nothing has been done on this agenda, much to the disappointment of small business owners across the country.

And now is not the time to disappoint our small business owners. After all, they built our economy into the strongest in the world. During Small Business Week, the Bush camp can't just celebrate their contributions - they need to fix their realities. Until this happens, we can be certain that the next SBI - to be issued by this Committee on a quarterly basis - will continue to decline. And so will the American economy overall.

Thank you.