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The One Sentence Solution to Job Creation and Economic Stimulus

A permanent and deficit-neutral solution to job creation in America is hidden in plain sight.

In fact, the path to job creation is astonishingly simple: the nation’s 28 million small businesses— which create at least 90 percent of all new net jobs— are the key to America’s economic salvation.

But because politicians and key media seldom acknowledge that rampant federal contracting fraud is responsible for diverting hundreds of millions of dollars meant for small businesses every day, U.S. small businesses barely stand a chance in today’s economy.

All it would take for our government to redirect $200 billion annually to the nation’s small businesses is one sentence from the President.

That’s right— one sentence.

Imagine my frustration, then, when very few politicians and journalists will take the time to listen to the answer— who in their right mind doesn’t want to create millions of new jobs for America?

I’ll tell you who – the privileged politicians and corporations who stand to gain hundreds of billions of taxpayer money a year while the rest of the nation suffers.

From the beginning of economic recession in 2007 to early 2010, the number of Americans receiving unemployment benefits more than quadrupled, up to 11.5 million people. The AP reports that about one-third of the nation’s 14 million unemployed have not had a job for at least a year.

But government unemployment benefits aren’t enough to sustain people for long periods of no work.

Unfortunately, while Congress currently debates whether to divert $45 billion for emergency unemployment benefits to the nation’s most economically-downtrodden states, the federal government is completely ignoring a much simpler solution that would create nearly 2 millions jobs in the U.S. by this time next year.

What’s even more astonishing is that the solution to job creation in America has existed in federal law since 1953— the only thing holding it back is the illegal diversion of federal small business dollars to corporate giants.

If President Obama stated, “The federal government will no longer report awards to publically traded companies as small business awards,” as an executive order, that one sentence would prompt lasting change that you can actually believe in— I’ll tell you how:

Were it an executive order, that one sentence would stop the government from illegally diverting billions of federal small business contract dollars to large corporations every year.

Under the Small Business Act of 1953, the federal government has a congressionally mandated goal of awarding 23 percent of the total value of all contract dollars to small businesses. By estimating the federal acquisitions budget (including black projects) at $1 trillion, we can extrapolate that small businesses should be receiving around $230 billion in federal contract dollars, every year.

It makes economic sense to aim federal spending at the 28 million small businesses in America that drive our economy. They’re responsible for producing half the national GDP, half the private sector workforce and 90 percent of all U.S. exports.

According to the U.S. Census Bureau, small businesses also create over 90 percent of all net new jobs. Third party organizations like the Kaufman Foundation report that small businesses have created virtually 100 percent of all net new jobs in the country since 1980.

But the American Small Business League (ASBL) calculates that every year up to $200 billion in federal infrastructure spending is illegally diverted to large corporations through abuse of federal small business contracts.

This year, the ASBL conducted a report of the 100 top federal small business contractors for 2010. Of the top 100 federal small business contract recipients, 60 were large businesses.

And I’m not just pulling this story out of thin air. More than a dozen federal investigations confirm that billions of dollars a month in federal small businesses contracts are actually diverted to fortune 500 companies in the U.S. and some of their subsidiaries in Europe and Asia, but still reported as federal awards to small businesses.

A bill written by small business advocate and ASBL President Lloyd Chapman is currently working it’s way through Congress, and would have the same effect of the proposed executive order I mentioned in this post. Titled “The Fairness and Transparency in Contracting Act,” the bill was introduced by Georgia Representative Hank Johnson in October. The essence of the bill (H.R. 3184) says the government will no longer report awards to publicly traded companies as small business awards. H.R. 3184 is another simple, clean, easy, cost-effective and permanent solution to job creation and economic stimulus in our country, and would require no new taxes and no additional spending.
Last month, Federal Reserve Chairman Ben Bernanke called long-term unemployment a “national crisis”, and named it as a top priority for Congress to address.

So let’s deal with this national crisis the right way. Instead of adding billions in debt to our already staggering deficit with emergency unemployment measures, let’s address the root of the problem and end the diversion of federal small business contracts to corporate giants.

The bottom line is that small businesses equal jobs; any good economist can tell you that.

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ElliottRosenfeld

ElliottRosenfeld

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