THE BLOG
01/16/2013 06:53 pm ET Updated Mar 18, 2013

Will Obama Succeed Where Reagan Failed in Closing the Small Business Administration?

President Ronald Reagan tried twice to close the Small Business Administration. His method of closing the SBA was to combine it with the Commerce Department.

Now President Obama has proposed to essentially close the SBA in the very same manner Reagan proposed, by combining it with the Commerce Department.

Many people don't realize that combining the SBA with the Commerce Department is synonymous with closing the agency. Make no mistake, combining the SBA -- the
only federal agency that represents America's 28 million small businesses -- with the federal agency that represents the interests of the nation's largest corporations is absolutely a move to close the agency and end all federal programs for small businesses, minority-owned firms, women-owned firms and veteran-owned firms.

Lets take a look at the facts. According to data from the U.S. Census Bureau, 98% of all U.S. firms have less than 100 employees and 89% have less than 20 employees. These small businesses are responsible for over 90% of all net new jobs, over 50% of the private sector work force, over 50% of the gross domestic product, and over 90% of all U.S. exporters are small businesses. Looking at the facts, small businesses are undeniably the engine of economic growth and job creation in America.

Aren't we trying to stimulate the economy and create jobs in America? So why would President Obama want to close the only agency in government to assist America's irrefutable job creators? Here is my theory on that.

Federal law mandates that a minimum 23% of the total value of all federal
contracts be awarded to the nation's 28 million small businesses. That's 23% that does not go to Fortune 500 firms. Corporate giants in the defense and aerospace industry are particularly determined to see the SBA closed. They stand to gain the most if all federal contracting programs for small businesses are abolished.

Depending on who you believe, the federal government's annual acquisition budget is somewhere between $500 billion and over $1 trillion. If small business contracting programs are abolished, small businesses would lose somewhere between $115 billion and $230 billion annually. That is between $1 trillion and $2 trillion over the next ten years.

What impact do you think it would have to pull between $1 trillion and $2 trillion out of the middle class economy over the next decade? Do you think that might kill some jobs?
Absolutely it will. Millions of small businesses will likely be forced to close their doors and millions of middle class jobs will be lost.

Who will get the billions and trillions that will be pulled from the millions of middle class small businesses? Simple -- the greedy corporate giants that are already getting the lion's share of all federal contracts. The very same large businesses that have created few if any net new jobs in America. The same corporate giants that we have all watched ship American jobs overseas at a record rate. The very same corporate giants that pay only a small fraction of the federal income tax small businesses pay. In 2011, among the ten most successful U.S. firms, the average federal income tax was 9%.

So why would President Obama want to close the only small agency in Washington to assist the 28 million small business that are the heart and soul of our nation's economy?

The answer is simple. Money, and lots of it. How much do you think the greedy corporate giants, that stand to gain up to $2 trillion in additional federal contracts over the next decade, would be willing to spend in lobbying dollars and campaign contributions to get their hands on that money?

Apparently enough to get Obama to sell out the American people, using the very same tactics Ronald Reagan used -- trying to close the SBA and cheat the middle class out of hundreds of billions, maybe even trillions of dollars. And it's all to pander to the greedy corporate giants that seem to call the shots in the nation's capital.

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