Stockman Zeroes In on New Target: SBA : Claims It Gives Unfair Edge to Weak Businesses

Budget Director David Stockman took aim at yet another popular federal program today, saying the Small Business Administration should be dismantled because it unfairly helps weak businesses compete against strong ones.

“Is it fair for a business firm paying a 12% bank loan rate to have to compete with the new guy next door who got a 10% or 11% (loan from the SBA)?” Stockman asked.

“Why should somebody who’s got everything on the line--worked like a dog for his life’s savings--have to compete with the new guy on the block who’s got an SBA loan to set up a pizza parlor?”

Reagan Wants It Cut

President Reagan, in his fiscal 1986 budget, called for elimination of the SBA, which was budgeted for $726 million this year. Stockman said, however, that eliminating the government agency would save $5 billion over three years because the agency’s outstanding loans would be sold to private loan firms.

Stockman has earned the enmity of a number of special interest groups this year by singling out popular federal programs that he says the government must stop paying for if it is to make any headway in the battle to drive down the $200-billion federal deficit.

Stockman particularly raised the ire of farmers and veterans earlier in the month by questioning the value of crop subsidies and asking whether military pensions were exorbitant.

In an appearance before the Senate Small Business Committee, the budget director said the SBA merely helps weak businesses to “compete unfairly with the 99% of businesses” that have to go to the bank to get their loans.

Another Point of View

But Sen. Dale Bumpers (D-Ark.) said the SBA is a “generous, thoughtful and--quite frankly--economical program” set up to help people get started in businesses. “What have you got against car washes and beauty shops?” he asked Stockman.

“Nothing,” Stockman replied, but he said most of them have to go to banks for their loans, not the government.

Stockman presented figures showing that of the 4.7 million small businesses in the nation, 99.8% operate without SBA loans.

Sen. Lowell Weicker (R-Conn.) played a recording of a speech Reagan gave in September, 1983, to the National Assn. of Small Business Investment Companies in which the President praised the head of the SBA for his “good work” and the “public-private partnership” that the companies and the government provide for small businesses.

“We at the White House have come to enjoy watching old films of the President,” Stockman said. “This morning’s is not surprising.”

Weicker said, “I appreciate the amusement that old presidential films cause in the White House, but what about the rest of the country, what are they supposed to believe?”