Small Business Administration Testimony

June 17, 2011

I testified yesterday at a Senate Small Business Committee hearing on “eliminating inefficiencies, duplication, and fraud and abuse” in Small Business Administration programs. (My submitted testimony can be read here.)

I argued that waste, fraud, and abuse always comes with government programs the same way a Happy Meal always comes with a toy and a drink. Instead of trying to fix a problem that can’t actually be fixed, policymakers should abolish “corporate welfare” agencies like the SBA. The irony of the hearing is that the SBA’s existence is often justified on the need to correct the market’s alleged “failure” to provide sufficient credit to small businesses, yet there we all were discussing “government failure.”

Sen. Rand Paul (R-KY) was responsible for my appearance and did a typically excellent job of explaining the virtue of a marketplace free of government interventions. Chairwoman Mary Landrieu (D-LA) and Ranking Member Olympia Snowe (R-ME) deserve credit for agreeing to allow me to testify and treating the party’s skunk with respect. Going in front of the Senate Small Business Committee and stating that the SBA should be abolished is like going into a bar and telling the owners that alcohol shouldn’t be served.

Former Yale University professor James Payne wrote a Cato Policy Analysis entitled “Budgeting in Neverland: Irrational Policymaking in the U.S. Congress and What Can Be Done about It.” In it, Payne details how appropriations hearings are pro-government spending echo chambers. Payne surveyed 14 hearings and found that “1,014 witnesses appeared to argue in favor of programs and only 7 spoke against them, an imbalance of 145 to 1.”

The panel of witnesses that I was on had three people who were pro-SBA, one who was against, and one who was neutral (an analyst from the Government Accountability Office). I suppose one is much better than none.

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