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Lloyd Chapman is President of the American Small Business League
Despite at least $3 trillion in government spending aimed at stimulating the economy, a multitude of economic indicators now show that the economy is poised to slip into a double dip recession. I believe, as I am sure you do, that we need to bring down unemployment in order to stimulate the economy. To date, none of the actions taken by Congress or the Obama administration have met that need.
As you may know, small businesses create the overwhelming majority of net new jobs in America. According to the U.S. Census Bureau, businesses with less than 20 employees create over 97 percent of net new jobs. Statistics from the Small Business Administration (SBA) Office of Advocacy indicate that small businesses create over 90 percent of all net new jobs. Any effort to create jobs must be focused on small businesses.
One of the most effective economic stimulus programs ever passed by the U.S. Congress was the Small Business Act of 1953. The Small Business Act requires that 23 percent of the total value of all government contracts must go to small businesses. This makes perfect sense, considering the important role small businesses play when it comes to the U.S. economy and job creation.
Since 2003, over a dozen federal investigations have found that most small business contracts actually go to Fortune 500 firms, European conglomerates and thousands of other large businesses around the world. Some of those companies are: Lockheed Martin, Boeing, British Aerospace (BAE), Rolls-Royce, Raytheon, Dell Computer, General Electric, Honeywell International Corporation, Ssangyong Corporation headquartered in Seoul, South Korea and Finmeccanica SpA, which is located in Italy and has 73,000 employees.
In March of 2005, the SBA Inspector General referred to this problem as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today.” The SBA Inspector General has listed this problem as the number one management challenge facing the agency for the past five consecutive years. Even President Obama recognized the magnitude of the problem in February of 2008 when he said, “It is time to end the diversion of federal small business contracts to corporate giants.”
Ending the diversion of small business contracts to large businesses would redirect over $100 billion a year in federal contracts back into the middle class economy. This would be the most powerful economic stimulus to date and can be used to drive demand directly into the hands of our nation’s small businesses. With this economic stimulus in mind, I urge you to support H.R. 2568, the Fairness and Transparency in Contracting Act. It was introduced by Georgia Congressman Hank Johnson, and currently has 26 cosponsors. This bill is a deficit neutral means of ending the 10-year-old contracting scandal that has facilitated the diversion of over $1 trillion in small business contracts to corporate giants.
The single most effective and deficit neutral way to create jobs is to direct existing federal infrastructure spending to the middle class. So if you want to stimulate the economy and create jobs, H.R. 2568 would be the most effective way to do that. It could be passed and signed into law as soon as Congress comes back in session. I believe that H.R. 2568, which would bring over $100 billion a year, and every year, to small businesses, would be more effective than a one-time shot of $30 billion in loans.
As our nation slides into its worst economic disaster in history; it would be inexcusable to allow the continued diversion of billions of dollars a month in small business contracts to corporate giants. I think that the Democratic Party and President Obama would be wise to take dramatic action to stave off a double dip recession before the November election, and I think that H.R. 2568 would accomplish that.
19 Comments
Mr. Chapman:
Tax cuts at this point in time are putting the cart miles before the horse.
For too many reasons to list here, far more spending on infrastructure is indicated. Period.
Our (so-called) “leaders” in Washington need to get a clue. The fact that they refuse to do so indicates one of two things: Either they’re stupid or their counter-productive actions are deliberate. I’m going with the latter.
Thank you.
Where are tax cuts mentioned by Mr Chapman?
I’m confused. Did you post a reply to the wrong diary? I agree with your sentiment, but don’t understand its relevance in the context of this diary.
Can you explain how you arrived at your comment?
I was not suggesting that Mr. Chapman was advocating tax cuts. I was simply reinforcing that point, since the tax cut meme is all the rage these days. If the idea of infrastructure vs. tax cuts can be floated in any way, to any person, with any amount of influence, I don’t hesitate to do that, however redundant it might be. Sorry for the confusion. I should have been more clear.
Follow the money.
Campaigns are expensive — and getting more so. Big corporations can afford to write bigger checks than small businesses.
This is yet another thing that actual campaign finance reform would solve.
I’ve been advocating campaign finance reform for a very long time. Clear out the
bribescampaign contributions and a whole lot of corruption goes out right along with it.As for following the money, I always do. Occupational hazard.
I could not agree with you more, so many problems would be fixed with real campaign finance reform. I have always wondered what exactly is the tipping point of when a “contribution” becomes a “bribe.”
When looking at the House Small Business Committee for example, a majority of those members have taken a lot of contributions from the same large prime contractors who are currently receiving small business contracts. The Chair of that committee, Rep. Nydia Velazquez, has taken so much money from venture capital firms that only thing she, and the small business committee, has done of real substance this entire Congress, has been to quarterback legislation through the House that will open up small business programs to billionaire venture capitalists.
Bingo!
reading yours and Jane Hamsher’s earlier posts on this – glaringly obvious the Small Business Committee is about anything but Small Business.
p.s. girls and boys, there is no more vocal opponent to this common sense bill than the U.S. Chamber of Commerce – now go back and look at that membership list :D
you are so completely right about the US Chamber…we conducted an analysis of their board of directors last year and found that the US Chamber currently has at least 17 members on its board who are Fortune 1000 firms that are getting small business contracts. The US Chamber is a complete and total sham when it comes to small business issues…
Welcome to the Lake, Mr Chapman
saw this last night and did some reading up – I heartily endorse this common sense bill and made calls to both the Speaker’s office and Chairwoman Velazquez’s office – gonna ask my Small Business Employer to do the same.
Thank you for comment and your support. We need many more people to follow your actions and make those calls! We need Congress to pass H.R. 2568 as soon as possible. Our small businesses are purging jobs, and we are moving ever closer to a double dip recession. It would be irresponsible for Congress to ignore this bill in the face of the nation’s economic problems.
Mr. Chapman has pulled his punches in this piece, compared to a recent one on HuffPost — extracts follow:
Obama-Administration Fabricated Small-Business Contracting Data Coming Soon
Administration officials will claim to have awarded just over 22 percent of the government’s purchases to small businesses. In reality, less than 5 percent of government contracts will have actually gone to legitimate small businesses.
The ASBL projects that over the last decade this fraud and abuse has diverted more than a trillion dollars away from the middle class. Unless the mainstream media starts making this issue a priority, another trillion dollars in small-business contracts will flow into the hands of large businesses over the next decade.
No White House Correspondent will ever ask President Obama why his administration is diverting federal small-business contracts to large businesses, despite his campaign promise to, “end the diversion of federal small-business contracts to corporate giants.”
http://www.huffingtonpost.com/lloyd-chapman/obama-administration-fabr_b_693359.html
“fabricated”, “fraud and abuse” etc. — powerful stuff
Excellent, well-considered and thought-provoking post, Lloyd Chapman, Thank you.
One hopes you will post your thoughts here, at FDL, with regularity.
DW
I plan on continuing to bring this issue to the attention of FDL as we to more forward with H.R. 2568, and our push to end the diversion of federal small business contracts to corporate giants. Thank you for your support.
I’m really glad that I landed on this post, although I recognize the point made by kscalkin regarding sub-contracting networks of very, very big firms.
I look forward to future posts on this bill, and related topics.
I’ll need to do more homework, but this post is encouraging.
Also, an observation: the tags on this post are good — you’ve tagged bill numbers, relevant names, “AMERICAN SMALL BUSINESS LEAGUE”, and other related topics. However, I’d be more likely to type “ASBL” into the search box, rather than the entire organization name.
In other words, although I think there’s a good chance this post would come up if I searched under “ASBL”, the odds would improve (to 100%) if you would be so kind as to add the tag “ASBL” to this post’s category tags.
I’m really heartened to see you here; I don’t bother with my local Chamber. And the national Chamber… bleh.
David Dayen has a fresh cross-post already in progress: Warren’s Class Schedule Shift
I am a dedicated progressive who happens to work for a very large aerospace company. When my company receives a government contract, we contract out a huge amount of the work to hundreds of small manufacturing businesses. We also purchase components from thousands of small suppliers.
I’m not saying the that government couldn’t do more to direct work to small business, but I just wanted to make people aware of this reality.
Thank you for your comment. That said, as a small business advocate I feel compelled to make the following points:
1. The federal government is missing its goal of awarding 23 percent to small businesses. The government is not awarding more than 5 percent to small businesses on a given year.
2. Large prime contractors, especially those working for DoD, have virtually no oversight over their compliance with small business subcontracting goals. Today, the American Small Business League has more than 30 outstanding FOIA requests for documents pertaining to prime contractor compliance with small business subcontracting goals. Many of which have received outright denials. This begs the question. What are they trying to hide?
Bottom line, the federal government needs to do more business with small businesses.
Dear Mr President,
knowing that this common sense solution is languishing in committee while you publicly berate Republicans for their obstruction of your Admin’s weak tea small business proposals does nothing for my enthusiasm gap
HA! So true, after the unemployment numbers from today, it just makes no sense that the White House is still just so focused on tax breaks or tax incentives as a means to create jobs when it has been proven time and again to not work to create jobs…Perhaps you should write an open letter to the President…