Mr. KERRY. Mr. President, I come to the floor today with this amendment as the ranking member of the Small Business Committee of the Senate, a committee which we all know is designed to try to help empower America's small businesses to do what they do best, which is to create jobs.

Everyone in the Senate knows that almost all of the job growth of our country comes from small businesses, and, frankly, I think it is about 80 percent of the jobs in the Nation that come from small businesses.

We have tried to do as much as possible in the Senate in recent years to encourage small businesses to be able to act as the incubator of our economy. Together with Senator Bond, chairman of the committee, I think the Small Business Committee has been able to be particularly responsive to the needs of those businesses.

We have heard Alan Greenspan talk a lot about the so-called ``virtuous economic cycle'' that we lived through in the course of the last decade, and I think all of us look with special sensitivity to the impact the bankruptcy bill might have on small businesses.

It is with that concern I come to the floor today with deep concern about a particular provision within the bankruptcy bill that, in my judgment, runs counter to the policies we have been putting in place in the last years as we tried to have low-documentation loans, lift the regulatory burden on small businesses, lift the paperwork burden on small businesses, and, indeed, expand the capacity for entrepreneurship and for growth.

There is no evidence at all that small business bankruptcies are a problem which somehow warrant the rather extraordinary increase in regulatory oversight this bill seeks to impose on those businesses.

I am offering an amendment that would strike the small business subtitle of the Bankruptcy Reform Act and include in its place a study of the causes of small business bankruptcy and how Federal law regarding small business bankruptcy can be made more effective and more efficient.

Let me preface my comments about the specifics of this particular section that I seek to strike by saying that I share with all my colleagues who support the bankruptcy bill the notion that a decision to file for bankruptcy obviously should not be used as an economic tool to avoid responsibility for unsound business decisions, nor should it be an effort to get out from under a reckless act by either an individual or a business.

There has been a decline, as we all know, in the stigma of filing for personal bankruptcy, and certainly we would agree that appropriate changes are necessary in order to ensure that bankruptcy not be considered a lifestyle choice.

During the 105th and 106th Congresses, I have supported

legislation that would increase personal responsibility in bankruptcy, and I have offered amendments that improve the number of small business provisions in the bill.

It has been Congress' long-held belief that regulatory and procedural burdens, however, should be lowered to whatever degree we can for small business--i.e., when it is possible and when it is rational to do so or when it doesn't somehow create another set of problems.

The Senate previously passed legislation to reduce that regulatory burden on small business, including most recently the Regulatory Flexibility Act and the Small Business Regulatory Enforcement Fairness Act.

Both of them have brought about fundamental changes in the way Federal agencies develop regulations.

In fiscal year 1999, changes to final regulations throughout the Federal Government reduced the compliance costs for small businesses by almost $5.3 billion.

I respectfully submit the provisions of this bankruptcy bill will set back those very efforts of the Senate, and most importantly they do so without an adequate showing and without any adequate demonstration that this is, in fact, necessary.

I ask my colleagues, What is the evidence on which we are going to potentially proceed in the Senate to literally punish entrepreneurship?

As we can see in this chart, the degree to which small businesses have been carrying the heavy load of creating jobs during our recent economic expansion for every single year over the last decade, small firms have developed more jobs than large firms. In many years, small firm job creation has exceeded the growth of large firms by 2 or 3 to 1.

In 1992-1993 it was extraordinary the degree to which small firms eclipsed large firms. But even most recently, from 1994-1995 and 1996-1997, we have had the same trend during which small businesses have clearly exceeded the extraordinary growth level of all of the economy.

It would be insane for us to come in here now without an adequate showing of need and turn around and burden some businesses with proceedings that will cost them extraordinary amounts of administrative time, which in a small business is exceedingly difficult to comply with.

I ask those who promote this legislation, are we imposing on small businesses these kinds of requirements because small businesses have somehow been egregious in the bankruptcy process? The answer to that is no. There is no showing. In fact, the showing is to the contrary. Business bankruptcy chapter 11 filings from 1987 to the year 2000 show a decline in the numbers in thousands of small business bankruptcies. In fact, over the past decade, we have gone from 24,000 in the year 1991 to just below 10,000 last year, 23.7 million business tax returns filed in 1997, and a record 885,416 new small firms with employees opened their doors.

The numbers show us that of approximately 23.7 million business tax returns, and 885,000 new small businesses, only 10,000 were forced to file for bankruptcy.

Are those that filed for bankruptcy somehow doing such an injury to our economy that it measures the kind of response we see in this legislation?

A 1999 SBA study found that 79 percent of small businesses that filed for bankruptcy had each incurred less than $500,000 in debt. The study also found that about 45 percent of bankruptcy cases had one or no employees. Less than 5 percent of the bankruptcy cases represented companies with 50 or more employees.

The median assets of small businesses that filed for bankruptcy was just $94,000. So, once again, we have to measure the intrusive nature of the reporting requirements placed in this legislation versus the overall positive impact that small businesses have had versus the extraordinarily small impact of those small businesses that have filed for bankruptcy.

In November of last year, Wei Fan of the University of Michigan and Michelle White of the University of California at San Diego released a report on personal bankruptcy and its effects on entrepreneurial activity. The study concludes that while the bankruptcy reform bill is intended to reduce abuse in the bankruptcy system, an unintended consequence of adopting those reforms would be a substantial reduction in the level of self-employment by U.S. households.

Elizabeth Warren, a professor of Harvard Law School, and a recognized leader on the bankruptcy issue, believes the small business provisions in the bankruptcy bill would be the first piece of Federal legislation that actively discriminates against small businesses and denies them protection available to large businesses.

Ms. Warren believes the additional reporting requirements will be extraordinarily difficult and expensive for small businesses to produce on a monthly basis. She concludes:

A decision by Congress in 2001 that small businesses should bear greater costs, face shorter deadlines, file more papers and lose any flexibility that a supervising judge might provide is a decision to shut down small businesses simply because they are small.


Not later than 2 years after the date of enactment of this Act, the Administrator of the Small Business Administration, in consultation with the Attorney General, the Director of the Administrative Office of United States Trustees, and the Director of the Administrative Office of the United States Courts, shall--

(1) conduct a study to determine--

(A) the internal and external factors that cause small businesses, especially sole proprietorships, to become debtors in cases under title 11, United States Code, and that cause certain small businesses to successfully complete cases under chapter 11 of such title;

(B) how Federal laws relating to bankruptcy may be made more effective and efficient in assisting small businesses to remain viable;

(C) what factors, if any, would indicate the need for any additional procedures or reporting requirements for small businesses that file petitions for bankruptcy under chapter 11 of title 11, United States Code;

(D) what length of time is appropriate for small business debtors and entrepreneurs to file and confirm a reorganization plan under title 11, United States Code, including the factors considered to arrive at that conclusion; and

(E) how often a small business debtor files separate petitions for bankruptcy protection within a 2-year period; and

(2) submit a report summarizing the study required by paragraph

(1) to the President pro tempore of the Senate and the Speaker of the House of Representatives, and the Committees on Small Business of the Senate and the House of Representatives.