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New Obama Policy Won't End Diversion of Federal Small Business Funds to Corporate Giants

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President Barack Obama presented his new economic stimulus plan in Ohio today.

One thing he said really caught my attention. "You elected me to do what is right," he
said.

I think if President Obama would "do what is right" for small businesses, it would create
more jobs than anything he or anyone in Congress has proposed to date. Of course, I'm
talking about ending the diversion of over $100 billion a year in federal small business
contracts to corporate giants around the world.

Since 2003, over a dozen federal investigations have found billions of dollars a month
in federal small business contracts actually wind up in the hands of many of the largest
businesses in the world. Some of the firms that have received federal small business
contracts include: Lockheed Martin, Boeing, Raytheon, L-3 Communications, British
Aerospace (BAE), Northrop Grumman, General Electric and Dell Computer.

The diversion of federal small business contracts to large businesses is such a severe
problem, that the Small Business Administration Office of Inspector General (SBA
IG) referred to it as "One of the most important challenges facing the Small Business
Administration and the entire Federal government today..."

President Obama recognized the magnitude of the problem during his campaign when he released the statement, "It is time to end the diversion of federal small
business contracts to corporate giants."

We don't have to spend another $50 billion on infrastructure projects, and another $200
billion in tax cuts to create jobs. Why don't we just quit giving billions of dollars a month
in federal small business contracts to some of the largest corporations in the world?

You don't have to be a Nobel Prize winning economist to figure this out. According to
the U.S. Census Bureau, small businesses create over 90 percent of all net new jobs.
Federal law requires a minimum of 23 percent of all federal contracts to be awarded to
small businesses. With an actual federal acquisition budget of over $1 trillion, American
small businesses should be receiving at least $230 billion a year in federal contracts.

The Obama Administration is only claiming to have awarded $96 billion to small
business during fiscal year (FY) 2009, and most of that money actually went to large
corporations. An analysis by the American Small Business League (ASBL) found that
of the top 100 recipients of federal small businesses contracts reported by the Obama
Administration, 60 were actually large businesses, and those firms received 65 percent of
the dollars awarded to the top 100.

It looks like small businesses are actually receiving roughly $35 billion a year. That's

approximately $195 billion less than the law requires.

If President Obama would simply insure that the federal law, which requires that small
businesses receive a minimum of 23 percent of all federal contracts, was fully enforced,
it would create more new jobs than anything he has ever proposed. Ask any economist
what the impact of redirecting $195 billion a year in existing federal infrastructure
spending into the middle class will have on job creation. The Senate Small Business
Committee found that every 1 percent increase in federal contracts to small businesses
would create 100,000 new jobs. Increasing federal contracts for small businesses from
$35 billion to $230 billion would create over 2 million new jobs.

The best part of redirecting federal small business contracts away from large businesses
and back to legitimate small businesses is... it's free. No new taxes, no new spending.
You can't beat a deficit neutral stimulus program that will actually create millions of
net new jobs. All of the programs the Obama Administration has proposed are one-time
programs. Redirecting existing federal infrastructure spending to America's 27 million
small businesses, which create over 90 percent of net new jobs will work year-after-year
for years to come.

Now here's the best part, this can be accomplished without any new legislation.
President Obama can issue an executive order simply directing that no federal small
business contracts will be awarded to large businesses. He could also direct the SBA to
immediately abolish federal policies that have allowed corporate giants from around the
world to hijack federal small business contracts.

In closing, what's not to love here? An economic stimulus program that will shift billions
of dollars in existing federal infrastructure spending directly into the hands of the small
businesses where most Americans work; the very firms that create over 50 percent of
the gross domestic product (GDP), over 90 percent of all U.S. exports and create over
90 percent of all net new jobs. A program that is deficit neutral that can be implemented
immediately with out any new legislation.

Now the sad truth... President Obama is not going to "do the right thing" here. This
perfect stimulus plan has no hope of ever being implemented. Why? Because it
won't help the unions, and it won't help any of President Obama's biggest campaign
contributors. The Fortune 500 firms that currently receive billions of dollars in federal
small business contracts will also spend as much as it takes kill it.

Too bad... double-dip here we come.