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Federal Small Business Programs Will Be Doomed With Republican Congress

Say Bye Bye To The SBA With a Republican Controlled Congress

I am not a Democrat and I’m not a Republican. What I am is a realist and a student of political history. I know now that Republicans control both houses on Congress, the Small Business Administration (SBA), the only federal agency to assist American’s 28 million small businesses will soon be gone.

Republicans have been trying to close the Small Business Administration and end all federal small business programs since Reagan was President. President Reagan made no bones about the fact he wanted the SBA closed for good. His budget director David Stockman went before Congress and argued for Reagan’s plan to shutter the SBA by combining it with the Department of Commerce. Combining the SBA with the Department of Commerce has always been the clandestine plan to actually close the SBA and end all federal programs for small businesses, women-owned firms, minority-owned firms and even disabled-veteran owned firms.

Bush Junior tried to close the SBA by starving the agency to death. During his administration Bush cut the SBA budget and staff by close to 50%. I have spoken to individuals that were in the room when Bush told SBA Administrator Hector Boretto he wanted the SBA closed by the end of his first term. Of course the ASBL was the only small business advocacy group that fought to keep the SBA open. One 29-year veteran SBA Executive told me Bush “laid off the core competency of the agency.”

Why have Republicans been trying to close the SBA for over thirty years? Simple, the Fortune 500 firms that finance the Republican Party, particularly those in the Defense and Aerospace Industry want 100% of every dollar the federal government spends. And that includes the 23% that is supposed to go to small businesses under federal law.

There is a second reason Republicans want to close the SBA. They want to cover up the rampant fraud and abuse that has been uncovered in virtually all-federal small business programs for over a decade, particularly those at the Pentagon. A long series of federal investigations and investigative reports in the media have found many of the nation’s largest Pentagon prime contractors have been some of the largest recipients of federal small business contracts for over a decade.

Every major newspaper in the country has written about the diversion of federal small business contracts to Fortune 500 firms. NBCCBS,ABCCNN,CNBCMSNBCRTTV and Fox News have all reported on the diversion of federal small business contracts to corporate giants.

Even President Obama acknowledged how serious the problem was when he released the statement, “It is time to end the diversion of federal small business contracts to corporate giants.”

The first federal investigation into the diversion of federal small business contracts to big businesses was based on information I provide the GAO back in 2003. In that investigation they uncovered over 5000 large businesses were receiving federal small business contracts.

Here is the really sad thing about all of this. An Election Day poll found 45% of voters said the number one issue they were most concerned about was the economy. Here are the facts about small businesses and the economy. According to the most recent data from the U.S. Census Bureau, 98% of all U.S. firms are small businesses. Those 28 million small businesses are responsible for over 90% of the net new jobs in this country. Those firms are responsible for over 50% of the Gross Domestic Product, over 50% of the private sector work force and over 90% of all U.S. exporters.

The SBA is the only agency in government to assist the small businesses that are the irrefutable engine of economic growth in America. The Small Business Act of 1953 that today mandates that a minimum of 23% of all federal contracts be awarded to small businesses is probably the most efficient and effective economic stimulus program in US history. As I have said a hundred times before, what better way to invest 23% of federal infrastructure spending than to reinvest those funds with the small business where most Americans work and create the overwhelming majority of all net new jobs in America.

Back to the reality of a government that is owned and operated for the financial benefit of Fortune 500 firms. I predict that Congress and President Obama will adopt legislation within six months to permanently close the SBA buy combing it with the Department of Commerce under the guise of “streamlining government.”

The Department of Commerce is the federal agency that represents the interests of the Fortune 500 firms that have been lobbying to close the SBA for decades. No two federal agencies have interests that are more diametrically opposed than the SBA and the Department of Commerce. Combining the SBA and the Department of Commerce would be like combing ISIS and the Department of Homeland Security.

Here is the funny part and when I say funny I guess I really mean ironic and insane.  The SBA is one of the smallest agencies in government. The annual operating budget for the SBA is less than $900 million. That is what the Pentagon spends on candy and donuts in a year. Congress will close the only tiny agency in government to assist the small businesses where most of their constituents are employed, the only agency to assist the 28 million small business that are the heart and soul of our national economy under the guise of “streamlining government”.

At the same time Congress and the President will do absolutely nothing to address the rampant fraud and unaccountability at the Pentagon. According to a number of reports by the Pentagon’s own auditors, the Pentagon “misplaces” more money in a day than it would take to operate the SBA for a full year.

So while the Pentagon cannot account for hundreds of billions of dollars a month, the United States Congress and the President will close the miniscule $900 million dollar a year SBA and will be very successful in convincing the media it was done to “streamline government”

When this happens, you will notice how not a single Washington based organization that claims to represent small businesses will say a word in opposition. That’s because all of those groups are actually funded by Fortune 500 firms.

As it has been for over a decade, Lloyd Chapman and the little California based American Small Business League will be the only organization that will object to a plan to cheat the middle class out of billions to increase the profits of corporate giants that are shipping jobs overseas at a record rate and pay a smaller and smaller portion of the taxes collected by the government year after year.

One last thing, when this happens, most likely the story will go virtually unreported and it is unlikely even a single journalist will question the logic of closing the teeny tiny $900 million dollar a year SBA while the Pentagon is allowed to continue to lose trillions.

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Lloyd Chapman

Lloyd Chapman