Memorandum of Disapproval of Amendments to the Small Business Act and the Small Business Investment Act

I am withholding my approval of H.R. 11445, omnibus amendments to the Small Business Act and the Small Business Investment Act. Because I recognize very personally the needs of the small business community and the dedication of Congressman Neal Smith and Senator Gaylord Nelson, Chairmen of the respective House and Senate small business committees, in developing this legislation, it is with great regret that I must take this action.

Having spent most of my adult life as a small businessman, I share with the Congress a strong commitment to the small business people of our country and I recognize the need for greater attention to small business needs by the Federal Government. Since I took office we have reduced the burden of Federal regulations on small business, proposed significant tax reductions and increased lending under the guaranteed loan program by 40%. In May of this year I signed an Executive Order calling for a White House Conference on Small Business to be held in January, 1980. This conference will involve over 25,000 small business people throughout the country helping us to develop a small business policy for this country. I intend to work with the Congress and particularly with Chairmen Smith and Nelson to develop and implement such a policy.

This legislation does have beneficial features. However, it is precisely because of my commitment to small business and an effective Small Business Administration, that I must withhold my approval from H.R. 11445. This bill, in its present form, is not the best we can do for small business in the United States and is inconsistent with the tight budget situation we will face in the next few years. Disapproval of the bill would not interrupt any existing SBA programs since SBA programs are already authorized for fiscal year 1979, nor would it interfere with Administration plans regarding the White House Conference on Small Business, since $4,000,000 has already been appropriated for the Conference in fiscal year 1979. This Conference is an important priority of mine and of my Administration.

The bill authorizes over $2 billion in expenditures in excess of our budget projections through 1982. It continues a duplicative program of farm disaster lending by the SBA with excessively deep interest subsidies and terms which we believe to be wasteful. This has led to an unwarranted amount of farm disaster lending which should be done by the Farmers Home Administration. This Administration has proposed that farm lending be consolidated in the Department of Agriculture which has the farm credit expertise and extensive field network necessary to operate the program effectively and efficiently. The Congress has failed to act on this recommendation.

Even more important is the effect this bill would have on the operations of the Small Business Administration. The bill virtually mandates significant staff increases. It would also interfere with the ability of the Administrator of the SBA, my primary small business advisor and representative, to effectively run that agency. The legislation imposes specific titles and responsibilities upon agency officials and specifies funding and personnel levels for activities throughout SBA down to the smallest detail. These legislative strictures run counter to my efforts to better manage the Federal Government.

The bill also distorts the role of SBA's Chief Counsel for Advocacy. I supported the establishment of this office as a means to insure that the views of small business were adequately reflected in the policymaking processes of the Government. But the legislation tends to move' the Chief Counsel for Advocacy into policy and administrative areas more properly those of the Administrator of the SBA. This bill also might begin to isolate the Chief Counsel for Advocacy from the executive policy-making process by calling for an annual report to Congress which could not be reviewed or coordinated with any other agency of the Executive Branch. Current statutes provide the Chief Counsel with sufficient authorities to evaluate small business issues and serve as an ombudsman to small business interests.

I am also concerned by the loan pooling provision in this bill that would authorize private dealers to issue a new class of 100 percent federally guaranteed securities which would compete directly with the Treasury and other federally-backed securities in the bond markets.

I look forward to working with the Congress and the small business community who worked on this bill to develop a program to meet the needs of small business. It is my great hope that early in the next Congress an approach will be fashioned to meet the needs of the small business community, with the full involvement of my Administration.

JIMMY CARTER