Following Senators Landrieu and Snowe, Senator Rand Paul began his line of questioning by noting that many thought the number one issue for small business loan programs wasn’t access to capital, but taxes and regulations. He asked the panel whether they were concerned over the increase in taxes for those making over $250 thousand dollars a year, claiming that many small businesses would be affected.
Ms. Mills responded that only 2 percent of those who make $250 thousand dollars or more are small businesses. Senator Paul followed up, noting a previous conversation with Ms. Mills where she had claimed that small business loans were a great help when there was a “market failure”. Senator Paul asked whether or not the term “market failure” was arbitrary, and put forth his contention that the market does not fail, but simply makes a choice. Senator Paul contended that it was not the governments job to decide which businesses receive loans.
Ms. Mills gave the example of both the housing and credit bubbles, and the aftermath of these crises, noting that indeed those private sector forces making loan decisions (namely lending banks) had closed their doors to small businesses, and that the government necessarily could step in through the facilitation of the SBA.