Assistant Secretary Larry Echo Hawk defended the Obama administration's proposed cut to a loan guarantee program at the Bureau of Indian Affairs.

Testifying before the new House Subcommittee on Indian and Alaska Native Affairs, Echo Hawk said the $5 million cut was one of the hard choices the BIA was forced to make. Unless Congress changes course, the program will only see $3 million in fiscal year 2012, down from $8 million in 2010.

"This has been something that tribal leaders support greatly," Echo Hawk acknowledged yesterday on Capitol Hill. "We've utilized those funds in the past effectively but the budget realities that we're in right now require some reductions."

Echo Hawk said the BIA is evaluating the program and said alternatives might exist at other federal agencies for tribes. He also noted that the American Recovery and Reinvestment Act provided $7 million for the program, but it was never allocated, resulting in it being rescinded.

"We were not able to get that money out the door as rapidly as we had hoped," Echo Hawk testified.

Rep. Dan Boren (D-Oklahoma) and Rep. Frank Pallone (D-New Jersey) questioned whether the cut was necessary. "One of the key goals for this subcommittee is for economic development in Indian Country," said Boren, the ranking Democrat on the panel.

"This is one of the few avenues for financing a lot of tribal economic development activities," added Pallone, who is not a member of the subcommittee but sits on the House Natural Resources Committee. "It seems to me if you are eliminating it or significantly reducing it, there's going to be a void."

The reduction in the program means that tribes will see less backing for loans in 2012. According to the White House Office of Management and Budget [page 95], the $3 million will only guarantee $25 million in loans, down from $90 million under current levels.

Rep. Don Young (R-Alaska), the chairman of the subcommittee, said the final decision on the program and other Indian programs rests with Congress. "It's our job to write the budget," he noted at the hearing.

Committee Hearing:
Oversight Hearing on "The effectiveness of federal spending on Native American programs, and on the President’s FY 2012 budget request for the Bureau of Indian Affairs and the Office of the Special Trustee for American Indians" (March 8, 2011)

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