On Thursday, January 13, the Federal Deposit Insurance Corporation (FDIC) will host an Obama Administration forum on "Overcoming Obstacles to Small Business Lending." The American Small Business League (ASBL) believes the event will fail to address the #1 job killing issue facing small businesses: the diversion of small business contracts to corporate giants.
For the last five consecutive years, the Small Business Administration (SBA) Office of Inspector General has named the issue as the agency's #1 challenge. The ASBL has estimated that every year more than $100 billion in federal small business contracts are diverted to some of the largest corporations on earth.
In February of 2008, President Barack Obama promised to end the abuse. Despite, thousands of business closures and countless lost jobs, the Obama Administration has failed to honor its promise, and end the diversion of federal small business contracts to corporate giants.
The most recent information released by the Obama Administration shows large recipients of small business contracts such as Boeing, Lockheed Martin, Northrop Grumman, Raytheon, Dell Computer, Xerox, SAIC, General Dynamics, Bechtel and John Deere.
In addition to the concerns about billions of dollars in federal contracting abuse, the ASBL does not believe the Obama Administration's forum on lending is likely to create new jobs or stimulate the economy. The National Federation of Independent Businesses (NFIB) and the Congressional Oversight Panel have separately concluded that small businesses are in desperate need of demand, not loans. (Here and here.)
In December of 2009, the Obama Administration held its first forum on obstacles to small business lending. At the time, U-6 unemployment was 17.1 percent, according to the U.S. Bureau of Labor Statistics. More than a year later, U-6 unemployment has remained near 17 percent.
We've spent trillions of dollars and focused small business assistance on lending, yet unemployment remains unreasonably high. Let's just try something crazy like not giving federal small business contracts to some of the biggest companies in the world, and instead direct those dollars to the nation's 27 million small businesses. Ending the diversion of small business contracts to corporate giants would put more money into the middle class economy, and create more jobs, than anything the Obama Administration has proposed to date.
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