Donald Manzullo

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, I yield back the balance of my time.

Mr. MANZULLO. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, this amendment provides simply for a study of what has taken place in the past. It changes no law. Mr. Chairman, I yield 1 minute to the gentleman from Florida (Chairman Mica).

Mr. MANZULLO. Mr. Chairman, I yield myself such time as I may consume. The American economy is in the midst of a manufacturing crisis. Over the past 3 years, we have lost 2.6 million jobs. The latest Bureau of Labor Statistics reports show that for 34 straight months, we have had a coring out of our manufacturing base, losing 53,000 manufacturing jobs each month. These jobs are necessary, many of them, to help out with our defense industrial base. They include such basic products as tools, dies and molds. In 1981, Rockford, Illinois, the largest city in the congressional district I represent, led the Nation with unemployment at 24.9 percent. Today it is around 11 percent. I do not want to see a recurrence of 1981. We are in danger of seeing our industrial base irreparably harmed. Unlike the past when factories were closed during an economic downturn but reopened when times improved, today a too frequent outcome is the permanent closure of a factory. The jobs leave forever. The young people entering the workforce do not have a manufacturing career choice left open to them. My own constituents have been impacted by the bankruptcy of several manufacturers since this downturn began. Mr. Chairman, the bleeding continues. Since 1933, the Buy American Act has safeguarded the interests of American manufacturers by requiring the Federal Government to purchase domestically manufactured products for government usage. To qualify as a domestic product, the content cost of the components must be ``substantially all'' produced in America. Most people would say that term ``substantially all'' means 80 to 90 percent or even 99 percent. However, the regulators at the Federal Government say ``substantially all'' means only 50 percent. I am glad to say that at the Federal Aviation Administration, ``substantially all'' is defined as 60 percent for the acquisition of steel or manufactured goods according to the 1995 acquisition regulations which the FAA authorized back then. I am disturbed, however, at the instance of waivers allowed by the FAA. Civil aircraft and aircraft components purchased by the FAA are not subject to the Buy American Act due to the provisions of the Agreement of Trade on Civil Aircraft negotiated by the U.S. Trade Representative. Currently the FAA is advertising on its Web site a requirement for an airborne research and development multi-engine jet aircraft at $14.9 million that could be bought with U.S. taxpayers' dollars from foreign countries at a time when tens of thousands of air and space workers in this country are unemployed. It has been 8 years since the Secretary of Transportation was last required to report to Congress on procurements that were not domestic products. This amendment will require a report that will bring us current information on this subject. We do not even know how many aircraft or other products the FAA is procuring each year from foreign countries because of waivers to the Buy American Act. We are asking that this Congress, that this House of Representatives adopt this amendment to help stop the hemorrhaging of the loss of the American base in this country. I urge my colleagues to support this commonsense amendment. Mr. Chairman, I reserve the balance of my time.

Mr. MANZULLO. Mr. Chairman, I offer an amendment.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I rise today in support of the Walter Craig American Legion Auxiliary Post 60 located in Rockford, Illinois. This auxiliary post is dedicated to supporting the veterans and their families in my congressional district, and I would like to acknowledge the many accomplishments of the Walter Craig American Legion Auxiliary Post 60: Americanism Patriotic Conference; and Youth Conference, Spirit of Youth Fund Scholarships for Jr. Girls Nation and Youth Conference; Auxiliary Emergency Fund for Displaced Homemakers; American Legion Child Welfare Foundation; Dept. Children and Youth Christmas Gifts for Institutional Children; Children and Youth Scholarships for teaching field of handicapped children; Children's Heartlink Heart surgery for needy children; Children's Miracle Network hospital care for children in need; Special Olympics; Spinoza Buddy Bear Project; Department Scholarship Fund for All Dept. Scholarship Funds; Funding for Special Field Services 7 VA Hospitals; Dept. National Security Fund ROTC Awards 7 Patriotic Conference; Nurses Scholarship Fund; Six Point Program extras for hospitalized veterans; North Chicago Medical Center; Crime Stoppers; World War II Nurses; Rescue Mission. Mr. Speaker, the Walter Craig American Legion Auxiliary Post 60 is an exemplary post, and its members take great pride in helping their local veterans. This post is to be commended for its many accomplishments and steadfast support of the veterans in the 16th Congressional District of Illinois.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I recently had the honor of attending the memorial service for a heroic young man from Roscoe, Illinois, who selfishly gave his life to protect our families and our freedoms in the United States and to give the Iraqi people a future without terror and oppression. Brandon Jacob Rowe would have turned 21 years old on April 14, 2003. But on March 31, the Army Specialist from the 101st Airborne Division was killed in an ambush near Najaf, Iraq. Brandon, who earned a waiver and was promoted to Specialist early, was one of two machine gunners in his infantry rifle platoon. According to Major Gen. Robert T. Clark, who presented Brandon's mother with her son's Purple Heart at the memorial service, machine gunners are the most important soldiers in a rifle platoon because they provide the firepower that protects the rest of the men. As Brandon's older brother, Brent, so aptly put it, ``He was my short little brother, but he was one hell of a man.'' I never met Brandon Rowe. But I learned of his character and his love for his country after meeting his courageous family. Brandon's mother, his father, his brothers, his sister, and his aunts, uncles and cousins are obviously in tremendous pain right now after losing him. Even amid that anguish, their pride for Brandon and their support of his mission shines through. Brandon made a tremendous impression on his family and all who knew him. I wish I had known him, Mr. Speaker. I have enclosed a tribute to Brandon written by his Aunt Cecile shortly after his death. Brandon's sister, Leah, read the tribute at his memorial service on April 12 at Hononegah High School in Rockton, Illinois: Unnamed Soldier, Roscoe, Illinois Now we can tell his name. His name is Brandon Jacob Rowe. He had other names--our son, our stepson, our grandson, our brother and brother-in-law, our nephew, our cousin, our boyfriend, our dear friend, our co-worker, our comrade-in- arms, our buddy, our neighbor and more. For what seemed to us a long, long while, though it was only a few days, he was known through media reports only as the first combat casualty from the 101st Airborne in Operation Iraqi Freedom. His name is Brandon Jacob Rowe and he died in Iraq because he was committed to a cause. His death is not senseless, but full of purpose and meaning. He appreciated his freedom, and felt that everyone deserved to be free. He was proud of the job he was doing to serve his country. He died trying to make life better for others, trying to do his part to rid the world of those who oppress the innocent. Brandon put his life, his heart, on the line so others he didn't even know wouldn't have to continue to live in terror. He had great admiration for his grandfather, who fought for our country's freedom and earned a Purple Heart as an Army paratrooper during the Second World War. Brandon wanted to do something with his life that had real value and merit. Brandon's life certainly had both. Brandon was known for his sense of humor and fun, but he had a quiet, deep spirituality that others did not always see. They did know he was strong, and kind, and always looking out for others' welfare before his own. He sensed when others were lacking, or hurting, or needing a friend; he became that friend. Brandon always put others before himself, concerned about the welfare of his buddies, his teammates, his family and friends. From his first smile to his last, the kindness and sweetness in his face shone out of him. His goodness drew people to him for all of his nearly 21 years. One could not see his smile without feeling happier, without feeling glad to know him. We in his family love and honor Brandon, and thank all those who have shown love and support at this difficult time. We are grateful to his hometown friends and the members of the 101st Airborne he was so proud to be associated with, and with whom he served his country. He offered up the ultimate sacrifice. It was not in vain, Brandon, and we will not ever forget.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, today we are considering H.R. 2, the Jobs and Growth Tax Act of 2003. The bill will provide tax cuts for American taxpayers of $550 billion over the next 10 years. This reduction in taxes is an appropriate measure to kick-start a lackluster economy and will permit the economy to grow at a faster rate for many years to come. As Chairman of the House Small Business Committee, I am particularly pleased that the bill before us includes a number of significant provisions to assist America's small business owners. By quadrupling small business expensing from $25,000 to $100,000, many small business owners will be able to increase capital investment in their businesses. The increase in the overall investment limit to $400,000 and the fact these figures will be indexed for inflation are also tremendously helpful. The acceleration of the tax rate cuts, originally enacted in 2001, will also greatly assist small business owners. More than 85 percent of all small businesses pay individual, instead of corporate, income taxes. Accelerating the scheduled reduction in the individual income tax rates will immediately put money back into the hands of small business owners, allowing those owners to infuse their businesses with much needed capital. Also, according to the Joint Economic Committee, small business owners receive 80 percent of the tax relief from reducing the top marginal rate to 35 percent. Marginal rate cuts increase the likelihood that a small business owner will hire additional employees and will lead to higher wages and/or benefits for those workers. Lastly, the reduction in the taxation of capital gains also will benefit small business owners who sell their businesses at retirement or at other times. In addition, small business owners will benefit from the general improvement in the economy that will result from the lower taxation of capital gains and dividends generally. I urge my colleagues to join with me in support of America's small businesses. Join with me in voting for the bill on final passage.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, on that I demand the yeas and nays.

Mr. MANZULLO. Mr. Speaker, I yield back the balance of my time.

Mr. MANZULLO. Mr. Speaker, I continue to reserve the balance of my time.

Mr. MANZULLO. Madam Speaker, I move to suspend the rules and pass the bill (H.R. 205) to amend the Small Business Act to direct the Administrator of the Small Business Administration to establish a program to provide regulatory compliance assistance to small business concerns, and for other purposes

Mr. MANZULLO. Madam Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on this legislation.

Mr. MANZULLO. Mr. Speaker, I reserve the balance of my time.

Mr. MANZULLO. Madam Speaker, I yield myself such time as I may consume. Sometime ago, the gentleman from New York (Mr. Sweeney) came to me and said, Chairman, I have got a very interesting piece of legislation; and I took a look at it, and this is the type of legislation that really helps out small business people. The gentleman from New York (Mr. Sweeney) is the former labor commissioner for the State of New York, undoubtedly proud of Syracuse, and even though I am a graduate of Marquette, I am still here supporting the bill. He explained how difficult it is, and I agree with him, for small business people to understand the web of regulations. He has experience in the private/public sector. Madam Speaker, I yield as much time as he may consume to the gentleman from the Empire State (Mr. Sweeney), whose idea fostered this legislation.

Mr. MANZULLO. Madam Speaker, H.R. 205 is identical to legislation this House passed unanimously on October 2, 2001. Unfortunately, this bill did not pass the Senate last year. We are here today to try again. H.R. 205 was so strongly supported by the Committee on Small Business that both the ranking member and I decided to skip the markup process and bring this bill straight to the House floor. It contains all the compromises within our committee and with the Senate. For those interested in the legislative history of the bill, I would encourage them to examine the committee's report from the 107th Congress on H.R. 205. This bill is designed to help small businesses cope with the maze of Federal, State and local regulations that have created such a heavy burden on Main Street America. Every day we all receive complaints from our constituents about their inability to understand regulations that are written in legalese rather than in plain English and about arbitrary actions taken by some regulatory agencies. Instead of creating a new program, H.R. 205 uses the existing Small Business Development Center network to provide regulatory compliance assistance to small businesses. The SBDC network has a good track record with small businesses. Because many small business owners fear going to regulatory agencies for compliance advice, SBDCs can serve as a buffer so that small business can receive the hands-on assistance it needs without retribution. Already this fiscal year, the Small Business Administration received an additional $1 million appropriation for SBDCs to provide regulatory compliance assistance to small businesses. H.R. 205 simply builds upon this initial first step. In addition, the legislation includes enhanced privacy protections for small business clients of SBDCs. I urge my colleagues to support H.R. 205. Madam Speaker, I reserve the balance of my time.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I am delighted that we were able to expeditiously move this legislation on the floor today. This bill is identical to legislation this House unanimously approved on December 5, 2001. It is unfortunate that the Senate was unable to take this legislation up on the Senate floor last year but we are here today to try again. The purpose of H.R. 1106 is to create jobs, to spur entrepreneurship, and to stimulate the economies and foster economic development on Indian lands. Further, the purpose of the Act is to help in the creation of new small businesses owned and managed by Indian tribe members, Native Alaskans, and Native Hawaiians and to help expand such small businesses that already exist. The Act will provide much needed management, technical, and research assistance to small businesses owned by Indian tribe members, Native Alaskans, and Native Hawaiians. The Act will help insure that Indian tribe members, Native Alaskans, and Native Hawaiians have full access to existing counseling and technical assistance provided through the Small Business Development Center (SBDC) program. In providing entrepreneurial assistance, a State receiving a grant under the provisions of the Act is required to seek the advice of local Tribal Councils on where small business development assistance is needed. Approximately 60 percent of Indian tribe members and Native Alaskans live on or in the immediate vicinity of Indian lands and suffer from an average unemployment rate of 45 percent. Currently, Indian tribe members and Native Alaskans own more than 197,000 business enterprises and generate revenues in excess of $34 billion. The service industry, the largest sector, accounts for 17 percent of the businesses, and 15.7 percent of the total revenues. The second largest sector is construction, which accounts for 13.9 percent of the businesses and 15.7 percent of the total revenues. The third largest sector, the retail trades, accounts for 7.5 percent of the businesses and 13.4 percent of the total revenues. The number of businesses owned by Indian tribe members and Native Alaskans grew by 84 percent during the period from 1992 to 1997, while businesses, generally, grew by only seven percent. During the same period, the gross receipts for Indian tribe members and Native Alaskan business owners increased by 179 percent, in comparison with the business community, as a whole, where the gross receipts for the same period grew only by 40 percent. In the past, the SBDC program with more than 1,100 offices throughout the United States has provided cost-effective business counseling and technical assistance to small businesses. For example, clients receiving long-term counseling under the program in 1998 generated additional tax revenues of $468 million, which was approximately six times the cost of the program to the Federal government. By using the existing infrastructure of the SBDC program, it is anticipated that small businesses owned by Indian tribe members, Native Alaskans, and Native Hawaiians, who receive services under the Act, will have a higher survival rate than the average small businesses not receiving such services. Further, increased assistance through SBDC counseling has in the past been able to reduce defaults under Small Business Administration (SBA) lending programs. The business counseling and technical assistance, provided for under this Act, is critical on Indian land where, without such assistance, similar services are scarce and expensive. Past and current efforts by SBDCs to assist Native American populations located on or along reservation lands have proven difficult. In addition, the lack of resources makes it difficult to raise an equal amount of matching funds to specifically assist Native Americans. H.R. 1166 will establish a three-year pilot project providing grants to SBDCs for assisting Indian tribe members, Native Alaskans, and Native Hawaiian populations with their entrepreneurial needs. The purpose is to stimulate the economies on reservation lands through the creation and expansion of small businesses by ensuring the target population has full access to important business counseling and technical assistance through the SBDC program. Any SBDC in a State, whose Indian tribe members, Native Alaskan, and Native Hawaiian populations are one percent of the State's total population, can apply for a grant from the SBA. Such grants must be used to provide SBDC program assistance to Native Americans. Grants under the Act are limited to $300,000 and the amount authorized to be appropriated annually, in each of the fiscal years 2004, 2005, and 2006, is $7 million. No matching funds are required from the States. Services by SBDCs are to be provided to benefit the target population on tribal lands and reservations, but an individual center need not be located on each tribal land location or reservation. If the target population is in more than one location or reservation within a State, the center should be situated in a location that optimizes access by all those serviced by the center. H.R. 1166 does not limit in any way, the number of centers or subcenters a state program may implement. I expect the SBA Administrator to balance the need for multiple sites with the quality of assistance and counseling when awarding grants. Consultation with the local Tribal Council is required in determining those locations in most need and where the best access may be attained. SBA is responsible for designing the grant application, which should provide essential information, but should not be burdensome to applicants. At a minimum, the application should contain information concerning the applicant's (1) goals and objectives, (2) prior experience in providing entrepreneurial and technical assistance to small businesses, (3) the ability to provide training and services to Indian tribe members, Native Alaskans, and Native Hawaiians, and (4) the extent of consultation with local Tribal Councils. In addition, the applicant should identify the location of a proposed center, and the amount of funding required. Within 180 days after the enactment of H.R. 1166, the SBA Administrator is required to issue final regulations, after a notice and comment period, that implement the requirements of the Act. Such regulations shall include standards for the educational, technical, and support services to be provided and for a work plan for providing assistance to the targeted community. The Act's predecessor, H.R. 2538, was subject to a hearing and a committee mark-up in the 107th Congress. The Congressional Budget Office (CBO) estimated that implementing the bill would cost $20 million over the next four years and contains no intergovernmental or private sector mandates. H.R. 2538 also unanimously passed the House on December 5, 2001 but unfortunately saw no action on the Senate floor, even though a companion bill was discussed and marked-up in the Senate Small Business and Entrepreneurship Committee. That's why I am pleased to join again with my good friend from New Mexico, in cosponsoring H.R. 1166 in this Congress and seeing it pass the House yet once again. Hopefully, the other body will look more kindly upon the legislation this year.

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, I rise today in support of H.R. 534, the Human Cloning Prohibition Act of 2003. Human cloning is accomplished by a technique called ``somatic cell nuclear transfer.'' One takes the nucleus from a body (somatic) cell and transfers it into a female egg which has its nuclear material removed. Using an electric current or chemical stimulus, the cloned embryo beings to divide as does a fertilized embryo. Thus, the product of human cloning would be a human embryo, regardless of how the embryo will be used. Mr. Chairman, I am opposed to human cloning for a variety of reasons. When animals are cloned, 95-98 percent of the attempts end in failure, and those that are successful have genetic abnormalities. Most scientists will agree that human cloning poses a serious risk of producing children who are stillborn, unhealthy, severely malformed or disabled. Many opponents of this bill think the cloned embryos will produce stem cells that can be used to cure a variety of ailments. However, there are no models in animal cloning in which scientists derived stem cells to cure the animals. The prospect of creating clinical treatments from stem cells derived from cloned embryos is completely speculative. The attempt to perfect human cloning despite the high risks of injury would constitute a violation of the fundamental principle of all human research: DO NO HARM. To proceed on the basis that the eventual benefits may outweigh the probable harms to woman and child is akin to the Nazi experiments at Nuremberg. Efforts to create human beings by cloning shift human reproduction into a manufacturing process in which children are made in laboratories to preordained specifications and in multiple copies. Human cloning also poses a significant risk to women's health. In order to create human embryos, great quantities of women's eggs will be needed. To obtain eggs, women will be injected with supervulatory drugs and then will undergo an invasive procedure. The risks of this procedure are just starting to be documented. The side effects from these injections are known to be abdominal pain and nausea, in three to five percent of cases of hyperstimulation of the ovaries occurs, causing severe abdominal pain, and on rare occasions surgery is required which may leave the woman infertile. Women of lower economic means are particular targets for exploitation. Women may be paid to donate their eggs for failed human cloning experiments. But it will not just be a few women who will be needed. In order to generate enough cloned embryos to carry out research on the scale that is envisioned, thousands of eggs will need to be solicited from numerous women. Just to treat 16 million Parkinson's patients, it is estimated that a minimum of 800 million human eggs would be needed from a minimum of 80 million of childbearing age. I strongly support the development of cell and tissue-based therapies based on research involving the tissue based on research involving the cloning techniques to produce molecules, DNA, cells other than human embryos, tissues, organs, plants, or animals other than humans. Already, these scientific methods have enabled researchers to develop innovative drugs to treat diseases such as breast cancer, and aid in treatment techniques for injuries, such as cloning skin cells for skin grafts. The bill I support restricts the use of cloning technology only on human embryos. Mr. Chairman, I believe that human life at every stage of biological development is deserving of respect and protection, regardless of the circumstances under which that human life was created. That is why I am supporting H.R. 534 and will oppose Mr. Greenwood's substitute amendment.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I yield myself such time as I may consume. In closing, let me say that we are going to miss the gentlewoman from Ohio (Mrs. Jones) on the committee, and request a waiver from the Democratic leadership that she be on the Committee on Ways and Means and the Committee on Small Business at the same time. Mr. Speaker, I yield back the balance of my time.

Mr. MANZULLO. Mr. Speaker, I yield myself such time as I may consume, and I want to thank again the chairman of the committee, the gentleman from Iowa (Mr. Nussle), for his leadership. And I also want to thank, in particular, the gentlewoman from New York (Ms. Velazquez) for the tremendous work that she has put into this. If there is any name to be placed on this bill, her name should have a prominent place on it. Mr. Speaker, small businesses are having a tough time obtaining credit around the nation. The Small Business Administration's 7(a) and 504 loan guaranty programs are a vital source for nearly $13.5 billion of new capital to small businesses every year. Over 48,000 small businesses are served each year by these programs. In fact, the 7(a) program alone provides 40 to 50 percent of all the long-term financing that goes to small businesses, which have led to the creation of thousands of small firms, contributing to job creation and economic growth. However, last October, the SBA cut back both the amount of loans made and the maximum loan size under the 7(a) Loan Guaranty Program. This hurts companies like Ryden Heavy Hauling of Woodstock, Illinois, which is caught in a credit limbo while we try to fix this problem. Initially, Ryden sought an SBA guaranteed loan of $1 million to generate eight new full-time and part-time jobs and sustain the jobs of the 16 employees already working at Ryden. However, Ryden has been caught in a credit squeeze, and it could only apply for a loan of $500,000, creating serious ramifications that impact their future growth. We need to pass S.141 as one step in the process to lift the SBA-imposed loan caps. Mr. Speaker, I submit for the Record a letter I received from Ryden Heavy Hauling in this regard. Ryden Heavy Hauling Inc. Woodstock, IL, February 7, 2003. Congressman Don Manzullo, 181 North Virginia Ave. Crystal Lake, IL. Congressman Manzullo: Ryden Heavy Hauling provides transportation services for persons or companion looking to haul heavy equipment. Major customer segments include the Construction, Utility and Manufacturing industry. The mission of Ryden Heavy Hauling, Inc. is to be the most reliable heavy hauling company servicing the midwest. Ryden Heavy Hauling prides itself in hiring the best drivers, competitive pricing and updating and maintaining equipment to insure the highest level of safety for our customer's equipment. We strive to support the economy by expanding and creating additional jobs to stimulate the business community. We presently are applying for an SBA backed loan in the amount of $500,000.00 dollars. Originally we asked for $1 Million but the cap for the SBA guarantee was dropped to $500,000.00 dollars. This decision has created serious ramifications that impact our future growth. Our projected program will generate 8 new full-time and part-time positions as well as retain the existing 16 jobs in our work force. Therefore it is in the interest of the business community to reinstate the original limit of $2,000,000.00 so companies like Ryden Heavy Hauling can survive. Respectfully, Leonard R. Ryden, President. Mr. Speaker, how did we get in this situation in the first place? In December 2001, the President signed into law a provision to reduce fees charged to borrowers in the 7(a) program, starting on October 1, 2002. The 7(a) program has netted the government handsome profits every year, taxing small businesses more than $1.4 billion over the last 10 years beyond the cost of operating the program. This is all because of an overly conservative credit subsidy calculation model used by SBA and the Office of Management and Budget that requires charging more fees than is necessary to cover potential bad loans. This model simply averages the annual default rate going back to 1986, even though Congress dramatically changed the 7(a) Loan Guaranty Program in the 1990s that made the program more safe and secure for the taxpayer. Yet current small business borrowers are now penalized, in their ability to access one of the few remaining sources of credit, for old mistakes in a program that have been changed. This is the worst possible time for these actions. Small businesses create over three-quarters of the new jobs in the U.S. S.141 begins to correct the problem. The bill simply authorizes OMB to adopt a new economic model for calculating the 7(a) program subsidy rate to take effect this fiscal year, beginning October 1 of 2002. The General Accounting Office has long advocated this approach. SBA has already developed and OMB has approved an econometric model for the 7(a) program in the 2004 budget cycle. OMB pledged to use this model for 2003. Mr. Speaker, I submit for the Record, a letter dated November 14, 2002 from OMB Director Daniels and addressed to me regarding this subject matter. executive Office of the President, Office of Management and Budget, Washington, DC, November 14, 2002. Hon. Donald A. Manzullo, Chairman, Committee on Small Business, U.S. House of Representatives, Washington, DC. Dear Mr. Chairman: Thank you for your letter of November 12, regarding the subsidy rate for small business loans. As you know, the Administration is committed to improving the Small Business Administration's (SBA) ability to more accurately estimate the cost of subsidizing small business loans. This will enable the agency to allocate its resources more effectively, determine program risk more precisely, and increase its ability to target loan programs to the most deserving recipients. In accordance with the commitment that the Administration one year ago, the Office of Management and Budget has just approved SBA's 7(a) econometric subsidy model to calculate its fiscal year 2004 resource requirements. Further, in light of the fact that this improved subsidy calculation procedure is now available, the Administration would support legislation that allows us to implement the econometric model for fiscal year 2003 as well. Applying the econometric model would produce a subsidy rate of 1.04 percent rather than 1.76 percent submitted in the FY 2003 budget. Please let us know if you need any more information. Sincerely, Mitchell E. Daniels, Jr., Director. The subsidy rate using an econometric model in 2003 dramatically drops from 1.76 percent to 1.04 percent, a 41 percent reduction. S. 141 allows SBA to guarantee $3.4 billion in new lending to the small businesses. Congress must now act to increase access for small business lending. To its credit, the administration was the first to recognize the problem and begin to work on solutions within a few months of taking office. Their willingness to retroactively use the econometric model for 2003 in the 7(a) program is another example of their openness to finally correct this festering problem. However, OMB cannot change the assumption in the President's 2003 budget request on their own after its proposal has already been sent to Congress. That is why we are here today for a legislative remedy. The same cooperation should also extend to the 504 program. The subsidy rate calculation error in the 504 is proportionately a bigger problem than the 7(a). There is some question as to whether or not S. 141 would cover the Supplemental Terrorist Activity Relief loan program, known as STAR. STAR loans have always been viewed by the SBA as a subset within the 7(a) program. Mr. Speaker, I include for the Record two SBA procedural notices and a copy of the statutory language creating the STAR loan program. SBA Procedural Notice To: To All Employees. Subject: Guidelines for Implementation of the Fee Reduction on Loans to Small Business Adversely Affected by the Terrorist Activities of September 11, 2001. SBA Procedural Notice 5000-775 provided information regarding the 7(a) program fee reduction authorized in the Defense Appropriations Act of 2002 which was signed into law on January 11, 2002. The purpose of this notice is to provide more detailed guidance on the implementation of that fee reduction. In order to distinguish loans made under the Defense Appropriations Act from other 7(a) loans made during the same period, loans with the fee reduction will be known as ``Supplemental Terrorist Activity Relief'' (``STAR'') loans. 1. background information on SBA's Annual Fee Section 7(a)(23) of the Small Business Act authorizes SBA to collect an annual fee on each outstanding SBA guaranteed loan equal to 0.5 percent (50 basis points) of the guaranteed share of the outstanding balance of the loan. The Defense Appropriations Act authorized a reduction in that fee from 0.5 percent to 0.25 percent (25 basis points) for loans made to small businesses adversely affected by the September 11th attacks. This reduced fee will apply for the life of the loan. Both the original and temporarily reduced fees are subject to the provisions of Section 7(a)(23)(B) which states that this fee is ``. . . payable by participating lender and shall not be charged to the borrower.'' 2. period of applicability The reduction in the annual fee is effective for eligible loans approved (funded) by SBA between January 11, 2002, and January 10, 2003, or until the approximate $4.5 billion program level provided for this initiative has been used up, whichever occurs first. Any 7(a) loan approved before January 11, 2002, will continue to be subject to the 50 basis points fee, subject to the following exception. If the lender finds that a borrower that had its 7(a) loan approved prior to January 11, 2002, was adversely affected by the terrorist actions, AND, if the loan is fully undisbursed; the lender may cancel the approved loan and submit a new application which will then meet the criterion of having been approved after January 10, 2002. If SBA approves the new loan, a new loan number must be issued. 3. definition of ``adversely affected'' small business As indicated in the previous notice, for purposes of the STAR program, the term ``adversely affected small business'' means a small business that suffered economic harm or disruption of its business operations as a direct or indirect result of the terrorist attacks perpetrated against the United States on September 11, 2001. Some examples of economic harm are: difficulty making loan payments on existing debt; difficulty in paying employees or vendors; difficulty in purchasing materials, supplies, or inventory; difficulty in paying rents, mortgages, or other operating expenses; and, difficulty in securing financing. As previously noted, SBA does not intend that this list be considered all-inclusive. The Agency anticipates that there will be other circumstances that are appropriate for use to illustrate that a business has suffered economic harm or a disruption of its business operations. Agency guidance should not be construed as limiting eligibility to any particular geographic area or to any specific type(s) of business. A loan to a start-up business may qualify for the STAR program if, for example, the business planned to commence operations earlier, but its ability to do so was hampered by the terrorist actions and their aftermath. SBA believes that a high percentage of businesses finding it necessary to seek SBA-guaranteed financing may be found to have been adversely affected by the terrorist actions. In order to qualify for the reduced fee, however, the lender must: (1) find that the loan applicant was adversely affected by the terrorist events of September 11, 2001; and, (2) prepare and maintain in its loan file a write up summarizing its analysis and its conclusion that the loan is eligible for the STAR program. A lender will not be found to have met its responsibility for determining that a borrower was adversely affected if the lender statement merely states that conclusion, but does not provide a narrative justification demonstrating the basis for the conclusion. 4. Steps Required for Lender to Submit a STAR program Application In order for a loan to qualify as a loan under STAR, the SBA lender must: (a) Determine that the applicant business was ``adversely affected'' by the terrorist activity of September 11, 2001, and must document the basis for this conclusion in its loan file. This documentation must be available for review by SBA, but need not be submitted to SBA. (b) Indicate that the loan is being submitted under the STAR program by writing ``STAR Loan'' at the top of the SBA Form 4-I, ``Lender's Application for Guaranty or Participation,'' or 4-L, ``Application for LowDoc Loan,'' as applicable. (c) Amend the loan authorization provision-regarding the on-going fee to be paid to SBA on the loan to indicate that the fee will be 0.25 percent per annum. 5. Collection of the Reduced Fee Lenders will submit to Colson Services, Inc. (Colson), the 0.25 percent fee using the same SBA Form 1502 process as it uses for other SBA loans. SBA will provide Colson with a list of loans that are subject to the lower fee. As with all other fee collections, Colson will work with a lender to make any necessary corrections to the fee and reporting submissions. 6. PLP/SBAExpress/Community Express The PLP center will provide additional direction to PLP lenders regarding STAR program requirements. 7. Processing STAR Loan Requests The SBA Loan Accounting Tracking System (LATS) has been modified to provide a STAR program indicator to track STAR loans. Data must be entered into this indicator field as follows: (1) An ``S'' must be entered for any loan submitted by the lender under the STAR program; and, (2) An ``N'' (for ``no'') must be entered for any non-STAR loan. This data must be completed for each loan (including a 504 loan) even if the loan is not STAR eligible. When the STAR Indicator is filled in with an ``S'', it will mean that: (a) The lender has informed SBA that the loan is eligible for the STAR program; (b) The lender will be charged the reduced 0.25% annual fee; (c) The loan will be subject to the STAR program subsidy rate; and (d) The loan will be funded out of the separates STAR loan fund. There are four sets of circumstances that may occur in connection with a loan that is potentially eligible for the STAR program. The attachments to this Notice (described below) provide instructions for SBA's data input under each of these circumstances. a. new loan application submitted by a lender after the effective date of this notice The Star program Indicator field shown on LAS001 must be completed as part of the data input for all new loan applications. For any loan designated by a lender as a STAR loan, the ``S'' designation must be entered. For any non-STAR loan the ``N'' designation must be entered. [Attachment A provides instructions for processing a STAR-qualified loan submitted to SBA by a lender after the effective date of this notice.] b. re-classification of a Loan after Submission, but prior to sba approval If a loan was originally input as a non-STAR loan, but prior to SBA's approval, the lender provides a written request to SBA to reclassify the loan as a STAR loan, the SBA processing office must use the LSA005 Screen to input an ``S'' in the STAR program indicator field. [Attachment B provides instructions for re-classifying a loan as a STAR- qualified loan after SBA's initial data input, but prior to SBA approval.] c. re-classifying a loan as a star loan after approval but before disbursement For any loan approved by SBA on or after January 11, 2002, that was not initially classified as a STAR loan; if, subsequent to SBA approval and prior to any disbursement, the lander provides a written request to SBA to reclassify the loan as a STAR loan, the SBA field office servicing the loan must: 1. Verify that the loan is fully undisbursed; 2. Prepare a SBA Form 327 action to support cancellation of the regular 7(a) funded loan and re-instatement of the loan as a STAR loan; 3. Cancel the existing loan, thus returning the regular 7(a) funds to the regular 7(a) program account; and, 4. Wait at least one business day after completing step 3 and reinstate the loan and enter an ``S'' in the STAR Indicator on LAB00 screen. [Attachment C provides instructions for re-classifying a fully undisbursed loan as STAR-qualified after approval by

Mr. MANZULLO. Mr. Speaker, I reserve the balance of my time.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, yesterday the House Small Business Committee held a roundtable with sixteen small business owners and representatives on the President's Economic Growth Package. The small business groups were unanimous in their support for the small business provisions of the President's proposal. Specifically, the small business groups cited the acceleration of the tax rate reductions enacted as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 and the expansion of the small business expensing provisions for new investment as vital. According to the participants, the President's proposal would enable them to purchase more equipment immediately. In addition, the capital freed up by the acceleration of the tax rate reductions would permit the vast majority of small businesses to reinvest that money into their businesses. At the roundtable, we were honored to have the Honorable Hector V. Barreto, Administrator of the U.S. Small Business Administration, present the President's Economic Growth Package. In my opinion, Administrator Barreto's statement was an exemplary testament on the state of small business in our economy today and a compelling account of why small businesses need economic growth assistance. Small business creates jobs. The President's proposal will ensure short-term and long- term growth for small business and ensure sustained growth for our economy. The Administrator's statement was so compelling that I wish to share it with my colleagues. Statement of Hector V. Barreto, Administrator U.S. Small Business Administration Good Morning, Chairman Manzullo and distinguished Members of the Committee. I am pleased to be here this morning to participate with all of you in this roundtable discussion on the small business provisions of the President''s economic growth package. It's good to be among so many friends who share the President's views on these important changes. Small businesses are the backbone of our economy--they employ more than half the private work force, generate about 50% of the nation's gross domestic product, and create two- thirds to three-fourths of the net new jobs. And research shows that the vast majority of these new jobs are established in the first two years of the business. Small business entrepreneurs are key to our economic vitality, and the President's plan offers specific relief and the opportunity for them to grow and create more jobs for American workers. This roundtable is a perfect way to talk about the President's plan and narrow in on making sure government policy helps small business. This format is one that the President personally believes in. I have been with the President quite a few times over the past year at roundtables where the President solicits feedback and support from the small employer community. From the economic summit in Waco, TX, to Louisville, KY, to St. Louis, MO, to Alexandria, VA-- the President's purpose is clear--to hear from the employer community about what will work best for this country. The President has called on Congress to act swiftly to pass his economic growth package. Your voice will be critical to this effort and we thank you for your commitment and active participation in these deliberations. Through a combination of income tax rate reductions, an increase in allowable deductions for expenses and the permanent repeal of the estate tax, American small business owners and their families will get to keep more of what they earn. The President has pointed out that under his plan, ``a family of four with an income of $40,000 will receive a 96 percent reduction in federal income taxes.'' That's nearly a complete elimination of that family's federal income tax burden and translates to more disposable income to be invested, saved or spent. For small business owners, many of whom are subject to personal income tax rates on their business, the reduction in rates will mean an increase in capital to expand their business, hire new workers and provide new or improved products. As proposed, the reduction in the top marginal rate scheduled to take effect in 2006 (to 35 percent) would take place retroactively in 2003, resulting in tax cuts averaging $2,042 for some 23 million small business owners. These hardworking entrepreneurs would receive 79 percent (about $10.4 billion) of the $13.3 billion in tax relief from accelerating the reduction in the top tax bracket. Since small business owners are so closely tied to the personal tax rates, lowering individual marginal rates will have a positive affect on the ability of many entrepreneurs to expand. As Princeton University Economist Harvey Rosen stated in a May 2001 report to the SBA, ``Taxes matter. As tax rates go up, entrepreneurial enterprises grow at a slower rate, they buy less capital, and they are less likely to hire workers.'' Additionally, a proposed 200% increase in year one expensing deduction for new investments--``Section 179 expensing''--would encourage small business owners to purchase the technology, machinery and--other capital equipment they need to expand. The amount of investments that may be immediately deducted--beginning in 2003--by small businesses would increase from $25,000 to $75,000. This new amount is permanent and indexed to inflation. Expanding the eligible write-offs for small business investments has strong support in the small business community. All White House Conferences on Small Business have recommended increases in direct expensing. Moreover, SBA's Office of Advocacy has long supported proposals to increase such write-offs and testified in support of this change before the Senate Finance Committee in March of 2001. From an economic development perspective, this is more than a simple tax code change. There have been several studies that have found links between taxation and investment. A 1998 Bureau of Economic Research paper concluded that marginal tax rate changes significantly change investment spending patterns. The study suggested that tax rate changes would alter the cost of capital for new investment decisions, and that the lower tax rates would make more projects viable. And by making this change permanent and predictable for small businesses, it will yield greater results as capital spending patterns rise from year to year. According to SBA's Office of Advocacy, there are over 22 million small businesses in the United States. [Note that of these about 16 million have no employees.] If, with the President's plan, on average, they increased their equipment purchases by only $10,000, almost $230 billion would be pumped into the economy annually, creating jobs and expanding the tax base. As the President stated in his recent visit with me to a flag manufacturing company in Alexandria, VA, ``this is a plan that says if you're willing to take risk and invest more, that there's a benefit for doing so. It's an incentive for small business to increase.'' The President has also proposed the permanent repeal of the estate tax so small business owners will no longer be faced with the prospect of leaving their family an insurmountable tax bill along with the family business--and the difficult decision of whether or not to sell the business to pay the tax. Instead of forcing their heirs to sell the business to pay the government, the repeal will provide certainty for family-owned small businesses that want to transfer the business to the next generation of entrepreneurs. And finally, the President's plan to abolish the double tax on dividends will help businesses to grow and create jobs by reducing the cost of capital. Most dividends received by shareholders will be tax free. Small businesses that retain corporate earnings will not face capital gains taxes on the increase in the value of the firm from retained earnings that could have been distributed as dividends. This will benefit the owners of 2 million ``C'' corporations, including many small corporations. Our President and Administration are strongly committed to helping small business by removing or reducing barriers that stand in the way of faster economic growth. Besides the significant changes outlined in the plan, let me take this opportunity to mention a couple of other items the President talks about in his agenda for small business--streamlining small business regulations and the need for tort reform to curtail frivolous lawsuits. We know that small businesses are hardest hit by regulations. Firms employing fewer than 20 employees face an annual regulatory burden of $6,975 per worker--60 percent more than a firm employing 500 or more people. And tax compliance costs are twice as burdensome on small businesses compared with their larger counterparts. The Federal government has a new web site--www.regulations.gov that makes it easier to participate in Federal rulemaking. Small businesses can review and submit comments on proposed regulations that are published in the Federal Register. Americans spend nearly a trillion dollars a year complying with state and federal regulations, so having this website provides an opportunity to hear from those unfairly burdened. Tomorrow, I will be testifying before the Senate Committee on Small Business and Entrepreneurship on another Administration priority--the need for Congress to pass Association Health Plan (AHP) legislation to help small business have access to affordable health care for their employees. Another issue that the community has been very pro-active in pursuing. Taken together, these changes send a strong signal that this Administration understands that our economy can thrive only if our small businesses thrive. As the economy continues to trend upward, America's small businesses can be counted on to continue to provide strength, resilience and optimism. Thanks to the President's aggressive agenda, small business owners can count on an environment in which their efforts will be encouraged and their success will be sustained. Thank you again for including me in today's discussion, and I look forward to working with you in the months ahead to achieve passage of the President's economic growth plan.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, on rollcall No. 471 the bells in my office failed to work. Had I been present, I would have voted ``nay.''

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, on rollcall No. 472 the bells in my office failed to work. Had I been present, I would have voted ``yea.''

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, please excuse my absence from the votes this morning. Had I been present I would have voted: ``Yes'' on H.R. 5557 (rollcall 451); ``yes'' on H.R. 3580 (rollcall 450); ``yes'' on H.J. Res. 113 (rollcall 449); and ``yes'' on H.R. 5542 (rollcall 448).

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I rise in support of H.R. 5385, the Miscellaneous Trade and Technical Corrections Act of 2002. I am pleased that two of the provisions in this legislation will help enhance the competitiveness of a constituent company in the northern Illinois district I am proud to represent. Of these two provisions, one would suspend the duty on certain types of magnets used in automotive sensor applications. Although no one in the United States presently manufactures the same magnets, this provision had been objected to in its earlier form when H.R. 5385 was considered in the Committee on Ways and Means in September. The objection was based on the concerns of a handful of constituent firms located in the districts of my colleagues, Representatives Ted Strickland and Bob Ney. Specifically, these firms, who manufacture other types of magnets domestically, were concerned that the earlier language did not clearly enough specify the types of magnets to which the suspension of duty would apply. Understandably, these companies just wanted to be sure that my legislation was going to extend benefits only to those magnets intended to be covered and not to imported versions of the types of magnets that these firms produce in the United States. Because my objective in introducing duty suspension legislation was to help, not inadvertently hurt, U.S. industry, I instructed my staff to work closely with staff from the offices of Representatives Strickland and Ney to try to find a mutually acceptable compromise. Based on these efforts between our respective offices and our constituents, and with strong and critical support from Ways and Means Committee Staff Dave Kavanaugh, Michael Walsh and Viji Rangaswami, as well as representatives of the Bush Administration, we were able to find just such a compromise. This mutally acceptable language is now included in H.R. 5383 as it appears before the full House today. I thank all those associated with tirelessly working out the compromise provision. I also thank Chairman Thomas and Representatives Rangel, Crane and Levin for their leadership in moving legislation that has so measurable an impact back in our home districts, especially during such uncertain economic times. The Deputy Secretary of State, Washington, DC. Hon. Joe Knollenberg, House of Representatives. Dear Mr. Knollenberg: Our staffs have recently discussed the Turkey-Armenia border issue. To follow-up on the questions raised in those discussions, I want to let you know our views. The Administration is pressing Turkey to restore economic, political and cultural links with Armenia, and is encouraging Turkey to open its border with Armenia. We believe that such action would promote the economic development of both Turkey and Armenia. We are aware of the economic impact that this border closure has on Armenia. The Department of State, in coordination with the U.S. Trade Representative, will provide to Congress by March 31, 2003, a report on the economic impact of the border closure on Armenia and Turkey, and on diplomatic contacts with both parties on this issue. In addition, as you know, the United States has largely completed its negotiations with Armenia with respect to accession talks with the World Trade Organization (WTO) and is now prepared to make Armenia's accession to the WTO an Administration priority. To that end, we are working with other WTO members to complete, by the end of this year, negotiations with Armenia for its accession to the WTO. We look forward to working with you on these important issues. Sincerely, Richard L. Armitage.