Obama Ignores Simple Solution to Stimulate Economy

President Barack Obama is a smart man, and he has no doubt surrounded himself with a multitude of well-educated and extremely intelligent individuals. With that in mind, it is difficult to understand why he has consistently ignored some of the most fundamental principals of the U.S. economy, and the suggestions of some of our nation's leading economic experts in drafting his stimulus plan.

President Obama's stimulus plan ignores the fact that 98 percent of all firms in the United States have less than 100 employees. Over 26 million firms fall into that category. They employ approximately 50.4 percent of the private sector workforce and create over 80 percent of all new jobs in America. These firms are responsible for over 90 percent of all U.S. exports and over 90 percent of all technological innovation in America. Large businesses on the other hand, have not created one net new job in America since 1977.

If President Obama wants to stimulate the national economy and create jobs, he needs to adopt policies and legislation to direct federal infrastructure funds to America's 27 million small businesses.

Recently, Carly Fiorina and Laura Tyson were on CNN regarding the economy. Dr. Laura Tyson was the Chair of the U.S. President's Council of Economic Advisers under the Clinton Administration. Carly Fiorina was the former CEO of Hewlett-Packard and one of Senator John McCain's top economic advisors. They both agreed the best way to stimulate the failing U.S. economy is to direct federal infrastructure funds to small businesses. (http://www.youtube.com/watch?v=jR-fWcpkOHM)

When Congress passed the Small Business Act in 1953, its members realized what President Obama seems to have missed, that small businesses are the heart and soul of the U.S. economy. The Small Business Act was an economic stimulus plan, and it worked. Existing federal law states that a minimum of 23 percent of the total value of all federal contracts and subcontracts shall be awarded to small businesses.

Unfortunately, during the Bush Administration, the Small Business Act and all the benefits it provided to our national economy were significantly damaged. Since 2003, over a dozen federal investigations found Bush officials in every federal agency allowed billions of dollars in federal small business contracts to be diverted to some of the largest firms in the U.S. and even Europe. (http://www.asbl.com/documentlibrary.html)

Investigative stories by ABC, CBS and CNN as well as many of the nation's largest newspapers have reported that hundreds of billions of dollars in federal contracts that by law were intended for small businesses, actually went to firms such as Lockheed Martin, Boeing, Northrop Grumman, General Dynamics, Raytheon, L-3 Communications, British Aerospace (BAE) and Rolls-Royce. (ABC, http://www.asbl.com/abc_evening_news.wmv; CBS, http://www.asbl.com/cbs.wmv; CNN, http://www.asbl.com/showmedia.php?id=1170)

The American Small Business League (ASBL) won a series of federal lawsuits against the Bush Administration that forced the release of over 30,000 pages of information on the actual recipients of federal small business contracts. Many of the federal investigations into the diversion of federal small business contracts to corporate giants were based on information provided by the ASBL. Based on information obtained through years of litigation, and information gleaned from several current and former government executives, the ASBL estimates over $100 billion a year in federal small business contracts are diverted to Fortune 500 firms and other large businesses.

So far, nothing President Obama has proposed to stimulate our nation's failing economy would be as effective and cost efficient as simply adopting policies and legislation that would redirect over $100 billion, year-after-year, back into the middle class economy.

If President Obama sincerely wants to create jobs and stimulate the national economy he needs to start by making good on a campaign promise he made in February of 2008 when he stated, "Small businesses are the backbone of our nation's economy and we must protect this great resource. It is time to end the diversion of federal small business contracts to corporate giants." (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php)

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Comments

[Tneese]

I believe the best thing the Obama administration can do to help small businesses is to simply free up the restrictions unnecessarily put upon them so that they are able to innovate, grow their businesses, create more jobs and help pull us out of this recession. As you noted, small businesses are the backbone of our economy and we need to be empowering this strength. For instance, in purchasing health insurance, small businesses are often discriminated against. Not only do they typically have to pay higher premiums, but they are not allowed to band together and purchase health insurance over state lines as big businesses and labor unions are able to do. What good is this policy doing for anyone? At the Family Policy Center with the National Center for Policy Analysis, we believe that businesses need less government intervention and more freedom! We also believe that small business owners should be able to purchase individually owned health insurance with pretax dollars; thereby, allowing employees to take their health insurance with them. http://www.familyissues.ncpa.org/

[Read2know]

So most jobs in America are created by small businesses, but you see most of the stimulus money going to the Banks, Wall Street and Corporations. On top of that small businesses are also having to compete with corporations for contracts that by law should go to small business. I guess it's not always who you know, but how much you contribute. Small businesses are the engine that drive America and it is sad to see them being ignored at a time that they should be in the spotlight helping to get us out of this economic mess.

[AIdol]

Good Grief! Whatever happened to helping out small businesses? Since Obama took office, I've seen more small businesses go out of business. Whatever ever happened to "Hope" and "Change"?

How about starting with eliminating large companies from getting contracts set aside for small businesses!

[Radar423]

It appears to me that the American Economy has been on life support since George Bush left office. Now Obama is trying to resuscitate it by strapping 2 double A batteries to America's chest instead of using a defibrillator. Nice idea, bad execution.
The American Economy was not Made in China. It is time we flew like the bald eagle and took small business and the SBA off of the Endangered species list. If we actually follow the Small Business Act of 1953, we can put America back to work one purchase order at a time.
The entire world hates us, (4 African pirates held the American armed forces at bay for days) and thinks we have no spine.. The stimulus package agrees with them. Small business is the backbone of the American Economy, and we are not even giving them a back brace to protect them from our economic heavy lifting injuries.
President Obama seemed to care about small business before all the campaign contributions from big business and venture capitalists started streaming in. I think it is time to let him know that his honeymoon is now over.
Hopefully he will not be remembered by historians based on the color of his skin, but by the content of his character.

[Kainman]

Small businesses play a major role in our economy through job creation, consumerism and much more. It pains me to see all the neglect that has finally hit the tipping point to what we see as our present economy. It seems nation-wide and now globally, problems and issues become sensationalized by the media and made much more complex than they really are. Simple solution and Obama needs to follow through, because prior to election he was a believer: Govt. contracts, federal grants, please actually award small businesses the contracts they deserve, we all know that is a heck of a lot more than 23%, but at least lets hits that marker, for once. It takes time to take effect, so politicians be patient, it is like turning on shower in the morning, it takes a while for the warm water to get there. 98% of America works for a small business mixed with rising unemployment and the fact that small businesses have never truly received appropriate contract consideration, hmmm, direct correlation, you think?

[love2dreambig]

I absolutely agree that President Obama has gone back on his word to the small business community. During the election process, he supported the small business community and said he was going to help them, and now after he has taken oath, he has ignored all small business plans. The economy is still on a downward spiral and will be for years to come if President Obama does not do something and help small businesses. This is where most jobs in the United States are created and currently where most jobs have been lost due to the recession.

In order for this economy to become prosperous again, Obama has to do something. Small businesses are closing their doors left and right because they cannot survive in this economy. All that needs to be done is to support small businesses which can easily be done if federal contracts were not diverted to large corporations. Give back to the community and save small businesses and the economy!

[kevlar0076]

I would have to agree that there has been a failure to focus on small business issues, but honestly, what do you expect. It seems like small business issues get trotted out by politicians every election cycle in order to score points and win votes, but then after the election, small business issues get put back on the shelves and forgotten. President Obama made statements about helping small businesses that work with the government, yet last month when he issued a memorandum on "cleaning up" federal contracting programs, there was nothing in there about small businesses. I agree that federal contracting programs need to be cleaned up and I sincerely hope that President Obama is willing to follow this through, because the federal contracting arena is really screwed up right now and it will be a much bigger job to clean things up than I think President Obama has recognized. With the current state of our economy, I hope President Obama begins soon to help fix improve federal small business programs because so far we have not seen squat.

[Joe Cicalese]

That's strange, isn't this kind of a repub concept? Don't get me wrong, I'm greeting this post with maximum concurrence, I'm just a little surprised to hear this kind of talk in this area of the internet.

[jhNY]

Is this article proposing that the Obama administration direct more or most of its infrastructure funding to work that would be performed by small businesses? If so, please show how Obama is not doing what you desire. Citing Bush administration failings is not proof of Obama's failure to do what you wish he would, unless what is actually being said here is that the Obama administration is following in Bush's footsteps to flout the 23% law passed in '53. If that's the law, where's the lawsuit? Does Carly Fiorina support the lawsuit?

[Sonia Meyer]

The economy is at a frightening point. I have several close friends that have lost their jobs, every industry from men's underpants to cars are suffering, and unfortunately, they way things are going, there doesn't seem to be a near end in sight.

If small businesses create over 99 percent of all new jobs, then why hasn't there been more focus on helping them? Credit lines and bank loans are seizing to exist which are crucial for the survival of any business. We need solutions and we need them fast! And we have to start from the grassroots, helping America's 27 million small businesses.

[SBBeliever]

You would think that with the economy in the state that it's in, Obama would be TAKING ACTION and ACTIVELY supporting small businesses. Talk, talk, talk is all he is doing. One thing that has proven itself through the years is that no matter how bad the economy is, the feds spend money. And here you have experts saying that if SOME of those federal funds went to small business contracts (like, lets just say, the amount that federal LAW states should be spent with small businesses and currently is NOT!!), it will stimulate the ecoomy. This seems like a no brainer, yet here's our President doing squat about it. Frustrating to see "Here's a way to stimulate the economy" and have the response be, "No thanks, we're going to ignore that!" Especially since during his campaign Obama talked about how "wrong" it was that contracts were being diverted from small businesses, and now he's ignoring the whole thing. And don't even get me started about his appointment of Karen Mills to head the SBA. He says he's pro small business and puts someone that is all about BIG business to head up the agency for small businesses!!! Obama clearly does not care about American Small Businesses. I am so disappointed. That was one of the reasons I voted for him. C'mon President Obama! Step up to the plate and support your small businesses!!! We are ready and you are not helping!!!

[truthtimeisnow]

Small businesses really are the backbone of our nation's economy. Recently I came across the following:

Small Business Stats:
27.2 million small businesses in the United States:
Employ about half of the country’s private sector workforce
Hire 40 percent of high tech workers, such as scientists, engineers and computer workers
Include 52 percent home-based businesses and two percent franchises
Represent 97.3 percent of all the exporters of goods
Represent 99.7 percent of all employer firms
Generate a majority of the innovations that come from United States companies

Bottom line: If we are going to get our economy back on track, we need to help our small businesses and it sounds like we really need to address this problem ASAP.