By Vicki Needham - 03/22/12 09:00 AM EDT
Karen Mills has more than just a seat at the table with President Obama — she has a chair with her name on it.
In January, Obama elevated Mills, the head of the Small Business Administration (SBA), to his Cabinet, a role that came with a unique distinction — a plaque etched with her name on the back of a chair in the Cabinet room.
“The president has been very clear: He is going to make sure small business’s voice is heard,” Mills said in an interview with The Hill. “And I think he has demonstrated that by elevating me to the Cabinet level.”
Mills wasn’t exactly stuck on the sidelines before — she has held a spot on the National Economic Council from day one and had attended Cabinet meetings before she was an official member.
“The president has always been very focused on small business and its role in the economy, so small business has always had the president’s ear,” Mills said.
“We have a pretty good track record now in showing that we’re giving the taxpayer a good bang for their buck,” she said of the SBA.
Mills said she supports President Obama’s plan to consolidate a number of federal agencies, including her own, in an effort to streamline the government. She said Congress should grant the president the authority he needs to implement the plan.
“The president has made it very clear that with this reorganization authority that he will work with Congress, and that he is going to make sure that the voice of small business and the activities of small business continue to be heard and important,” Mills said.
Putting similar activities under one federal umbrella is “very, very important to small business,” she said.
Mills said she is working to streamline her own agency by eliminating paperwork and consolidating websites to make resources easier to find.
She plans to highlight those efforts as she heads to Capitol Hill next to defend the agency’s $1.115 billion budget request — an increase of nearly $200 million from last year — to skeptical lawmakers who are looking for places to cut spending.
The House Small Business Committee recently released its SBA budget review. While acknowledging the agency needs more funding for its core lending and disaster loans programs, the committee’s review panned Obama’s budget request for SBA.
“Rather than making necessary cuts, the president’s budget actually requests additional funds for more duplicative programs. That is simply unacceptable given the current state of the federal deficit,” the review said.
In looking for cuts, lawmakers are targeting one of Mills’s favorite projects, the Regional Innovative Cluster program. The SBA requested $3.35 million in funding for the program, which teams up similar businesses in communities to help grow industries and make them more competitive.
But the committee’s review concluded, “There is no evidence that the government or the private sector can artificially create clusters” and said SBA “has not provided sufficient information on the results of its cluster efforts to continue its funding.”
Mills begs to differ.
“We’re supporting clusters all over the country, which are built on the assets you find in the regions,” she said.
Mills says her work with a cluster in her home state of Maine was what led her to public service. In 2007, she was asked to bring together boat builders with composite material manufacturers and researchers at the University of Maine, which she said was not an easy task.
“There is no one less likely to cluster than the Maine boat builders, but they did,” Mills said.
Her support for clustering industries goes back at least four years — she co-authored a paper in April 2008 for Brookings on how clusters stimulate regional economies.
“We know that clusters work; we have academic research that shows they work,” she said.
So far, with cooperation through multiple federal agencies, 40 clusters have been created around the country, she said.
“It has really gained tremendous traction and momentum,” she said.
The SBA does not lend directly to businesses, but instead backs loans to encourage banks to invest in small businesses as part of a nearly $90 billion portfolio.
The agency also counsels businesses and helps small firms land about 23 percent of all federal government contracts, for a total of $100 billion per year.
During her tenure, Mills has guided the SBA through lean times for small businesses, signing up an additional 1,200 community banks for SBA lending and persuading the nation’s 13 largest financial institutions to commit to loaning $20 billion over the next three years.
“If you want to have prosperity here, we really have to see our small businesses able to grow and compete around the world,” she said.
“And that’s what we’re seeing, and we’re seeing it because we’re investing in innovation, we’re investing in technology and we’re allowing these small businesses access and opportunity to innovation and capital and they’re turning it into jobs.”
She points to the $30 billion in loans provided to small businesses in 2011 — an SBA record — as evidence of the agency’s impact.
Mills was working to make SBA a priority for Obama within days of his election victory in 2008. She was part of the SBA transition team that crafted a plan to pull the agency out of a quagmire — when the financial crisis was in its infancy and the credit markets were frozen.
“I saw the SBA with just enormous potential, and that’s what I told the president — this is really a jewel,” she said.
The 2009 stimulus law got the ball rolling, allowing the agency to reduce and eliminate fees and raise loan guarantees to 90 percent of the total. Mills said that move helped lower risks for banks at a time when they were sitting on cash.
“I knew that we had the opportunity to use SBA products to fill that gap in a rapid manner, as we ended up doing in the recovery act,” Mills said.
Mills, who travels regularly to visit businesses and has hit 40 states so far as administrator, said the SBA is striving for “continuous improvement.”
“People are beginning to understand that they can come to us; whatever door they open, they can find a way to a program that will help them,” Mills said.
For that effort, Mills has heard and seen the rhetoric of small businesses change from “needing a loan to survive” to asking for cash to expand.
“Our economy is recovering now,” she said. “Maybe it’s a slower recovery. But I’m very encouraged by what I’m seeing on the ground.”