More (Millions of) Cuts on the Horizon for the SBA?

Rep. Sam Graves (R-MO), chairman of the House Committee on Small Business, is taking President Obama's proposed $28 million in budget cuts from the Small Business Administration to another level, proposing to cut an additional $100 million of funding from the federal agency.

Raymond Keating, chief economist at the Small Business & Entrepreneurship Council, said the federal budget in its current state is more of a threat to small businesses than these proposed cuts to the SBA.

"The effort has to be focused," Keating said. "The projected budget numbers for the next five to 10 years is downright frightening. From a small business standpoint those are the real threats to an increase in our tax burden."

Cutting ineffective programs is necessary at every level of federal government, Keating said, and the SBA should be no exception. The cuts should come down to which programs are effective, and which are not.

"There is room for areas that could be cut in terms of advice to small business," he said. "That is, quite frankly, already done in the private sector. We need to take a serious look at things, to see if some can be done more efficiently in the private sector."

Cynthia Magnuson, spokesperson for the National Federation of Independent Business, said the organization could not comment on specific cut proposals, however federal debt is top-of-mind for many of its members.

"Our membership is very concerned about the trajectory of our federal debt and its future impact on the economy," Magnuson said in an e-mail message. "At the local, state and federal level, they have called for fiscal responsibility from policy leaders."

Keating said the size of federal government needs to be reined in a substantial way, before small businesses can get the help they truly need.

"Small business will lead us out of the mess we are in, I have no doubt about that," he said. "If you really want to help small business, look at tax relief and regulatory relief—that will free them from those burdens. If we don't get government spending and the related deficit under control, that swamps everything else."