The Washington Monthly

December 29, 2005

WISH UPON A STAR....At face value, the Supplemental Terrorist Activity Relief Act (or STAR Act), passed shortly after Sept. 11, 2001, was a good idea. Countless businesses were badly hurt by the terrorist attacks, and the STAR Act was a federal loan program designed to help businesses avoid bankruptcy and recover.

The problem seems to have been in the execution of the idea.

A Texas golf course, a Nevada tanning salon and an Illinois candy shop were among small businesses that may have improperly received U.S. subsidized loans intended for firms hurt by the September 11 attacks, an internal government watchdog has found.

The Small Business Administration's inspector general said in a report made public on Wednesday that in 85 percent of the sample of loans it reviewed, a company's eligibility to receive the money through the program could not be verified.

If this story sounds familiar to you, details about bizarre STAR Act funding first surfaced several months ago. There was the money a Dunkin' Donuts shop in western New York received, despite not having been affected by terrorism. An air-testing services company in Wyoming received $158,500 through program, despite the fact that the company didn't even exist before 9/11.

Bear in mind, the businesses themselves are hardly to blame. They applied for routine Small Business Administration loans and had no interest in the terrorism-relief funds. The SBA, however, according to the report released today, failed to properly oversee lenders to make sure that only eligible borrowers obtained STAR loans.

On a related note, who's the head of the Small Business Administration? That would be Hector Barreto, the former Republican fundraiser recently featured by The New Republic as one of the Bush administration's most inexperienced hacks.

Senate Small Business Committee Chairwoman Olympia Snowe (R-Maine) said today that her panel would launch an investigation into STAR abuses. She said the same thing back in September, so we'll have to wait and see if substantive follow-up happens or not.

—Steve Benen 5:24 PM Permalink | Trackbacks | Comments (35)

Comments

You're doing a heckuva job...uh...Heckie.

Posted by: grape_crush on December 29, 2005 at 5:38 PM | PERMALINK

Is there any facet of this administration that isn't marred by incompetence or corruption? Seriously, I'm beginning to wonder.

On an unrelated note, how much energy goes into coming up with names of bills that make nice little acronyms?

Posted by: Royko on December 29, 2005 at 5:39 PM | PERMALINK

I'm moved to return to a question posed by D-squared many moons ago. Name for me anything that fits the following characteristics:

1. It is a Bush Administration endeavor
2. It's important that I'd have heard of it (or, should have heard of it)
3. It wasn't in a critical way botched up in its implementation

I remain at a total loss to think of even one.

Posted by: theorajones on December 29, 2005 at 5:58 PM | PERMALINK

And as usual, it was not the general concept that sucked so much as it was the execution.

The CEO Administration gets another notch.

Posted by: wishIwuz2 on December 29, 2005 at 5:59 PM | PERMALINK

I'm shocked, shocked to find corruption, self-dealing and incompetence in the Bush regime!

Posted by: Stefan on December 29, 2005 at 5:59 PM | PERMALINK

On an unrelated note, how much energy goes into coming up with names of bills that make nice little acronyms?

It took months during the lead up to the war, apparently, to come up with a replacement for Operation Iraqi Liberation.

For some reason it was not considered suitable...

Posted by: floopmeister on December 29, 2005 at 6:00 PM | PERMALINK

Many small businesses must regretting they missed an opportunity to take advantage of this very liberal give-away programme by the Administration.

Posted by: Steve Crickmore on December 29, 2005 at 6:02 PM | PERMALINK

The program serves its purpose, a government giveaway designed to appease the big government interventionists on the backs of the middle class.

Do not ask for something, you might just get it.

Try this, authorize government loans for businesses that have bad shoelaces and you will fund the same golf courses and dooughnut shops.

It does not matter, the money was a political giveaway.

Posted by: Matt on December 29, 2005 at 6:08 PM | PERMALINK

And Congress has cold feet about allocating the funds we need to rebuild down here in New Orleans because they are worried about misuse & corruption in Louisiana? That's pretty funny.

Posted by: Nathan on December 29, 2005 at 6:10 PM | PERMALINK

Pat: another favourite of mine comes from ASEAN, which I was involved with while living in SE Asia.

It was a committee set up to deal with drug trafficking in SE Asia, and comprised high-ranking law enforcement officials from the 10 SE Asian nations. It was called ASOD, which of course means ASEAN Senior Officials on Drugs.

After some time it was changed to ASODM - the M standing for Matters.

Posted by: floopmeister on December 29, 2005 at 6:10 PM | PERMALINK

Crony Capitalism.

Posted by: Hostile on December 29, 2005 at 6:17 PM | PERMALINK

what is it with you liberals, always against nevada tanning salons getting a piece of the pie? SHEESH.

Posted by: elfranko on December 29, 2005 at 6:42 PM | PERMALINK

I think it was a few years ago now when several conservative Canadian political parties attempted again to join together into a national conservative party (Canada currently has several regional conservative parties). The name for this new organization: the Canadian Conservative Reform Alliance Party.

Posted by: jefff on December 29, 2005 at 6:50 PM | PERMALINK

My home mail-order fishing lure business got a STAR grant; you don't see me complaining.

Posted by: tbrosz on December 29, 2005 at 7:44 PM | PERMALINK

Will there ever be one as good as Committee to RE-Elect the President?

Posted by: Boronx on December 29, 2005 at 8:00 PM | PERMALINK

jefff: C-C-C-C-CRAP! Very apt...

Posted by: floopmeister on December 29, 2005 at 8:00 PM | PERMALINK

this story is just business as usual for the government bureauacracy. a recent gao report about the dod shows that incentive fees ($6B) are paid irrespective of actual contractor performance. this stuff is chicken feed.

Posted by: TJM on December 29, 2005 at 9:11 PM | PERMALINK

Another position filled by a Bu$hCo rimjobber.

Posted by: Red_Neck_Repub on December 30, 2005 at 12:11 AM | PERMALINK

"I think it was a few years ago now when several conservative Canadian political parties attempted again to join together into a national conservative party (Canada currently has several regional conservative parties). The name for this new organization: the Canadian Conservative Reform Alliance Party."
Posted by: jefff on December 29, 2005 at 6:50 PM

True. There were two conservative parties in Canada: the Progressive Consevative Party and the Reform Party. The Reform Party held a convention at which it disbanded itself and established, yes, the Conservative Reform Alliance Party. Two problems: one, the name (obviously) and two, the fact that few Progressive Conservatives joined the alliance. The name was quickly changed to the Canadian Alliance Party, solving the first problem. The second problem was solved about a year ago when the Alliance and the PC's united as the Conservative Party of Canada.

Interestingly, the colours associated with the two main parties are the reverse of the US. The Liberal colour has always been red. "Rouge" (red) was slang for Liberal in Quebec. The Conservative colour has always been blue. The Progressive Conservatives held power in Ontario from WWII until the early 80's, and were known as the Big Blue Machine.

Posted by: Joe Canuck on December 30, 2005 at 12:12 AM | PERMALINK

Meanwhile, thousands -- nay, tens of thousands -- of Katrina victims have been waiting for more than two months for action on their SBA/FEMA loan applications. Rita and Wilma victims are undoubtely in the same boat. My congresscritter has tried to get information. At least his office called me to get my FEMA number; his colleagues in the senate haven't even had the decency to do that much.

Posted by: Brian Boru on December 30, 2005 at 12:52 AM | PERMALINK

测温仪
 涂料
 无纸记录仪

Posted by: hgfds on December 30, 2005 at 2:47 AM | PERMALINK

Most of the businesses affected by 9/11 were in New York City, which votes overwhelmingly Democratic. You don't think the Bush admin. wants to send any money their way, do you?

Posted by: Nancy Irving on December 30, 2005 at 3:01 AM | PERMALINK

jefff:

It could've been worse.

You could have graduated from the Seton Hall Institute of Technology :)

Bob

Posted by: rmck1 on December 30, 2005 at 3:10 AM | PERMALINK

Come now. Do y'all not consider that demand for suntans was affected by 9-11? And further trips to Los Vegas were affected? This despite patriotic entreaties to keep spending! Some Americans (not naming names here but you know who they are) failed in their patriotic duties. Should Republican businesses suffer for Dems unpatriotic unwillingness to spend?

Posted by: STAR Grantee on December 30, 2005 at 3:14 AM | PERMALINK

Can I ask a silly question here. I've just had a look at this, and it seems that the SBA provides loan guarantees to small businesses in normal circumstances as well as after disasters.

I'm just wondering what the justification for having such a service is. Isn't this something that the private sector can do perfectly well on its own? Isn't the "magic" of the private sector supposed to more efficiently allocate capital than what a ham-fisted government bureauracy could? And not to put too fine a point on it, from a Republican point of view, wouldn't giving the money spent on this department back in general tax cuts do more for the American economy than its continued existence would? So why aren't they gung-ho to abolish the thing?

And, frankly, why aren't Democrats, who periodically worry about the budget deficit, going after this program as wasteful business welfare?

Look, I'm not an American, so maybe it makes more sense your side of the ocean. But it ranks right up there with Democrats who support agricultural subsidies as one of the stranger facets of American politics.

Posted by: Robert Merkel on December 30, 2005 at 5:46 AM | PERMALINK

The SBA is arguably beneficial in that small businesses, especially start-ups, would not get funding without the guaranties. No bank would lend to these businesses since the failure rate is very high.

Posted by: TJM on December 30, 2005 at 7:58 AM | PERMALINK

Mr. Merkel:

The SBA does indeed provide loan guarantees to small businesses in normal circumstances. That is its function; all the post-disaster stuff has been tacked on.

The justification for this is twofold: firstly, in answer to your immediate followup question, this is precisely a place where the private sector does not do perfectly well on its own. Markets are not the perfect tool for all ends. In this case, small businesses are often started by individuals without sufficient credit history to obtain the necessary lending; the SBA's loan guarantee allows private capital to fund private enterprise when it otherwise would not. TJM is correct that the risk associated with small businesses is very high, and this is part of the consideration behind the SBA, but the more generally accepted market failure is not industry risk but the risk associated with first-time borrowers.

Note also that the "ham-fisted" bureaucrats are not choosing where to allocate the funds; it is the small businessperson who is doing that. The bureaucrats are merely supporting the businessperson's choice, and he/she is very definitely market-driven.

(I have tried desultorily to obtain the actual historical financial costs of the SBA, but failed in the time available. However, I suspect that a) the costs are not very large and b) they are marred by precisely the sort of incompetance discussed in the original post, which is not the fault of the program but rather of the implementation.)

Secondly, small businesses provide something on the order of half the jobs in the country and half of all sales, as well as the lion's share of job growth. Supporters of the SBA maintain that it greatly encourages small business growth - that whatever money the program spends is more than made up for by the effects on the general economy. And this view is generally held to be true by the majority.

Thus the SBA is not generally seen as a wasteful program. Nor is it the case that giving the money back as tax cuts is seen as a better alternative to spending it promoting business growth, except by the more radical anti-tax crusaders.

Emotionally, Republicans have historically liked the SBA because it funds one of their key constituencies - businesses - and Democrats have historically liked the SBA because it funds one of their key constituencies - small businesses, i.e. "the little guy".

Libertarians, of course, despise the SBA and all such programs.

The parallel with agricultural subsidies is interesting; originally, agricultural subsidies were supported by Republicans because of their pro-business stance and Democrats because of their pro-little guy (the family farmer) stance. However, by the end of the 20th century the family farmer had become effectively negligible as a portion of American agribusiness, and now agricultural subsidies are almost entirely multi-million dollar handouts to large corporations.

There are similar effects with the SBA, where franchise owners such as McDonalds charge new franchisees precisely the amount guaranteed by the SBA, effectively capturing 100% of the subsidy.

Posted by: S Ra on December 30, 2005 at 8:37 AM | PERMALINK

"Markets are not the perfect tool for all ends."

I hear this complaint when discussing the need for government intervention.

The way to guarantee small business loans is to crete something like FannieMay, or the other one; that is use government bond purchases to boost the market for high risk small loan re-selling. It is simple, and it works.

Government participation in market operations, similiar to the Fed open market purchases, is very very effective and we have to ask why is this method so ignored by liberals? It worked for housing. It works for monetary management. It works with the World Bank and third world loans (some would say).

These are common business loans. The SBA should fire its staff, and replace them with a few buyers and sellers. Then use SBA funds to purchase these loans from banks, at a discount. And the SBA can sell them later, creating a market.

Good grief, if the interventionists are right, then the SBA should, over the long run, operate at a profit from the successful small business economy.

Posted by: Matt on December 30, 2005 at 9:36 AM | PERMALINK

The problem with the SBA is that it is widely regarded as the biggest turkey farm in the Federal government with the lowest job satisfaction of any agency. The Republicans don't care, since it is useful for sloshing money in various directions with little real accountability. It's a good idea, but will need a real top-to-bottom overhaul, which is the most difficult thing to do in a bureaucracy.

Posted by: ericblair on December 30, 2005 at 9:59 AM | PERMALINK

Fannie Mae and Freddie Mac have, indeed, been very successful. They have significant problems of their own - both in terms of severe market distortion and institutional corruption - but on the whole they have abetted home ownership for millions of Americans in a very effective fashion.

Running the SBA on similar grounds is an interesting thought, although I don't agree with the underlying assumption that there is something wrong with the way things are supposed to work now, but a serious evaluation of the idea would require more labor than I'm going to give to a BBS comments section.

But Matt, please put down the "here's what liberals think" glasses and step away from them - Fannie Mae for instance was created, by liberals, in 1968. Economic approaches to the use of markets cut across the usual liberal/conservative labels.

Eric, you are spot-on that the SBA bureaucracy needs a complete overhaul. However, the idea behind the SBA is, IMO, sound.

Posted by: S Ra on December 30, 2005 at 11:54 AM | PERMALINK

genetics size

Posted by: genetics size on December 31, 2005 at 1:02 AM | PERMALINK

歌曲，歌词，歌手，新歌，歌迷，下载，MP3

map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map

歌曲，歌词，歌手，新歌，歌迷，下载，MP3
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map
map

歌曲，歌词，歌手，新歌，歌迷，下载，MP3

Posted by: 电影，明星 on December 31, 2005 at 2:12 PM | PERMALINK

办公用品
办公用品，办公用品网，北京办公用品，办公用品公司，办公用品管理，办公用品批发，办公用品超市，采购，配送，北京
办公用品
 办公用品
 办公用品
 办公用品
 办公用品
 办公用品
 办公用品
 办公用品
 办公用品
 办公用品
 办公用品
 办公用品网
 北京办公用品
 办公用品配送
 办公用品公司
 办公用品管理
 办公用品管理制度
 办公用品管理办法
 办公用品批发
 办公用品采购
 办公用品领用表
 办公用品报价
 办公用品价格
 办公用品地图
 办公用品推荐链接
蚊帐
蚊帐用品，旅游蚊帐，防虫蚊帐，儿童蚊帐，广东蚊帐厂
蚊帐
 蚊帐厂
 蚊帐
 针织厂

Posted by: 大饭店 on December 31, 2005 at 2:13 PM | PERMALINK

proextender

Posted by: proextender on December 31, 2005 at 9:19 PM | PERMALINK

adult personals - adult personals and adult singles top

choice

free adult personals - free adult personals, adult singles

and adult chat rooms

adult dating - adult dating for adult personals and adult singles

free adult dating - free adult dating with free adult web cam and

free adult chat - adult dating free

adult swingers - adult swingers and adult personals use this free

adult web cam and adult chat

free adult swingers - free adult swingers, free adult personals -

adult sex dating

adult chat - adult chat and free adult dating for adult personals

free adult chat - free adult chat and free adult web cam

adult friend - adult friend and adult personals free adult dating

adult web cam - adult web cam and free adult chat for sex

personals

adult finder - adult finder for adult personals

free adult web cam - free adult web cam and free adult chat

adult dating service - free adult dating service with free adult

chat

sex dating - sex dating for adult personals and erotic adult

personals

adult sex dating - adult sex dating for adult personals and adult

singles

adult singles - adult singles for adult sex dating

sex adult dating - sex adult dating, adult singles site

adult dating service - adult dating service, sex adult dating

adult models directory - top adult models free directory

adult friend finder - find adult friend for free

adult finder - adults find friends for free!

adult chat - best adult chat available here

best porn stars - best and most famous porn stars

adult dating - top adult dating site

adult dating chat -
adult dating chat - any adult welcome!

adult sex dating - adult sex dating portal

free adult dating - free adult dating available here

adult dating online - adult dating online best choice

adult dating personals - find adult dating personals here

adult dating site - best adult dating site

adult xxx dating - adult xxx dating available here

adult singles dating - adult singles dating top site

porn star gallery - most famous porn stars free gallerys

porn star gals - best porn star free gals

famous porn stars - most famous porn stars free photos

porn stars - porn stars and adult models free photos

free porn stars - free porn stars listings and galleries

top porn stars - top porn stars free listings

online dating service - free online dating

service

dating services - free dating services, online

personals

single dating - singles dating online

internet dating - best internet dating site!

christian dating - christians dating services

free

christian dating service - dating service for

christians

christian dating services - dating services

for christians

free online dating - free online dating services

online dating Louisville - Louisville online

dating

hispanic dating service - hispanic dating

services

dating lexington online -
dating lexington online singles and personals
Discount Pharmacy discount pharmacy best choice

Online Pharmacy cheap online pharmacy store,

Discount Online Pharmacy at best prices.

Sildenafil Citrate Sildenafil Citrate pills

Tadalafil - Tadalafil pills and Generic Cialis - Generic Cialis pills

Vardenafil HCI

6-Tablet Trial Pack

Carisoprodol (

href="http://www.rxwanted.com/generic-soma.html">Generic Soma

)

Finasteride (

href="http://www.rxwanted.com/generic-propecia.html">Generic Propecia

)

Atorvastatin (

href="http://www.rxwanted.com/generic-lipitor.html">Generic Lipitor

)

Sibutramine

Celecoxib (

href="http://www.rxwanted.com/celebrex.html">Celebrex

)

Metformin (

href="http://www.rxwanted.com/glucophage.html">Glucophage

)

Amlodipine (

href="http://www.rxwanted.com/norvasc.html">Norvasc

)

Simvastatin (Zocor)

Tretinoin

Atomoxetine (Generic Strattera)

Bupropion SR (Generic Wellbutrin)

Eszopiclone (Generic Lunesta)

Fexofenadine (Alegra D)

Loratidine (Claritin)

Ranitidine (Zantac)

Regalis (Cialis)

Sertraline

Free games free games

free ringtones free ringtones

free online games free online games

free screensaver free screensaver

free credit report free credit report

free clip art free clip art

free downloads free downloads

free stuff free stuff

free wallpapers free wallpapers

free email free email

free people search free people search

free translation free translation

free chat rooms free chat rooms

free chat free chat

free software downloads free software downloads

free sample and free samples

free desktop wallpaper free desktop wallpapers

Skin treatment skin treatment

natural skin care natural skin care

Natural skin treatment Natural skin treatment

Posted by: dating on January 1, 2006 at 9:06 PM | PERMALINK

November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004
September 2004
August 2004
July 2004
June 2004
May 2004
April 2004
March 2004
February 2004
January 2004
December 2003
November 2003
October 2003
September 2003
August 2003
July 2003
June 2003
May 2003
April 2003
March 2003
February 2003
January 2003
December 2002