Mr. KERRY. Mr. President, I ask my colleagues to support the small business subsidy rate improvement bill before the Senate today. It is not perfect, but it takes us a step in the right direction. It takes us a step in the right direction by reversing a current 60-percent cut in loan dollars available to small businesses through the Small Business Administration's flagship 7(a) loan program, and it includes a budget change mid-year with OMB's blessing, which is unprecedented. However, it does not go far enough in correcting the way the government calculates thecost and fees of the SBA's small business loans. Specifically, the Administration would not also support our proposal to correct the errors in the subsidy rate used for the 504 development company loan program--errors that result in severe overcharging of thousands of dollars to 504 borrowers and lenders.

As so many of us in the Senate, House and White House have heard for moths, the small business community supported the Senate's plan to enact a recommendation by the General Accounting Office as part of one of the continuing resolutions. However, that provision was blocked time and again by a few Republican Congressmen on behalf of the Administration. We are now faced with leaving small businesses strapped for financing until next year or enacting this bill that would put in place something called an econometric model to calculate the subsidy rate for the 7(a) program immediately, but for one year only.

Our goal--that of Senator BOND, Senator CONRAD, Senator DOMENICI, Senator HOLLINGS, Senator BYRD, and myself--was to right years of wrong in which the government has played budget games with the two largest loan programs at the Small Business Administration. Our goal was to end a double-standard in which the government cooks the books but small businesses get penalized if a comma is missing on their financial statements. Our goal was to put transparency, accuracy, and fairness into a system that has overcharged small business borrowers and private-sector lenders more than $2 billion fees, fees that are tantamount to a tax on small businesses.

Specifically, our goal, in technical talk, was to put in place budget systems in this fiscal year that would more accurately calculate the cost of providing loans through the SBA's 7(a) and 504 lending programs, thereby maximizing appropriations to leverage an additional $6 billion in small business loans and assessing fees that are more in line with the true cost of providing the loans. In the end, it would stimulate lending by creating a greater incentive for lenders to loan in these uncertain economic times, it would leave more money in the pockets of small businesses, and it would allow almost 190,000 jobs to be created or retained.

There is a lot of concern among small business trade groups, bankers, and members of Congress about adopting an econometric model at this stage because the administration has not been forthcoming with supporting documentation and the estimated subsidy rates over the testing period have varied greatly. Without that information, it is unreasonable to expect the small business community to trust the government. They have been fighting this problem for too long to settle for mere promises, when promises have been broken time and again. In the coming months I look forward to working with the Administration to get this information and give all of us confidence that this model is more predictive and accurate.

On the plus side, as I mentioned earlier, passing this legislation would reverse the 60-percent cut in the 7(a) loan program by patching together $6 billion in lending dollars. That restoration of loan dollars is significant on a micro and macro level. In my home state of Massachusetts, small businesses stand to lose $121 million in loan dollars and almost 3,700 jobs if this bill isn't passed. Nationwide, a loss of $6.2 billion in loans would translate into 189,000 jobs either lost or not created. In this economy, we can not afford to lose any more jobs or block job creation.

To my many colleagues who have courageously fought for small businesses on this issue--from Senator BOND and Senator CONRAD to Congressman MANZULLO and Congresswoman VELAZQUEZ--I thank them. To the small business groups--from 7(a)'s NAGGL and 504's NADCO to the small business coalition lead by the U.S. Chamber of Commerce, which included among many others, the National Black Chamber of Commerce, National Small Business United, and the American Bankers Association--I am proud to work with them. Because of your grassroots efforts, probably every member of Congress knows what a subsidy rate is and how it hurts the small business community when it is left uncorrected year after year. Last, I thank the Office of Management and Budget for reaching this agreement with our Committee, the Committee on Small Business & Entrepreneurship, the Committee on Budget, and the Committee on Appropriations. I know they are strongly opposed, in general, to changes to their subsidy rates, and, in particular, to any adjustment to the budget mid-year. But, small businesses do not care about technicalities and budget intricacies; they care about access to capital. This bill accomplishes that.

Mr. President, I ask unanimous consent that the following be printed in the RECORD: a letter from the small business coalition; a letter to OMB from our Committee with the Committee on budget regarding this issue; and a letter from OMB Director Mitch Daniels regarding the FY2003 subsidy rate for the 7(a) loan program.