THE BLOG
02/07/2009 05:12 am ET | Updated May 25, 2011

Obama Stimulus Plan Could Favor Venture Capitalists Over Middle Class Firms

In a recent appearance on CNN's Late Edition with Wolf Blitzer , two of our nation's top economic experts agreed on how to best stimulate the faltering American economy. Former Clinton Administration economic adviser Laura Tyson and one of Senator John McCain's top economic advisers and former Hewlett-Packard President Carly Fiorina noted the simplest and most powerful way to create jobs and boost the national economy would be to channel government infrastructure funds to America's nearly 27 million small businesses.

U.S. Census Bureau statistics tell us 98 percent of all U.S. firms have less than 100 employees and these firms are responsible for creating over 85 percent of all new jobs and employ over 56 percent of all private sector workers.

Congress realized the vital role small businesses play in the U.S. economy when they passed the Small Business Act in 1953. Longstanding federal laws, which established federal contracting goals for small businesses and firms owned by women, minorities and veterans are based on the understanding that small businesses are the heart and soul of our nation's economy.

President Barack Obama and Democratic leaders in Congress will likely ignore economic experts like Laura Tyson and Carly Fiorina when they roll out the latest economic stimulus plan. (http://transcripts.cnn.com/TRANSCRIPTS/0812/21/le.01.html)

As opposed to proposing policies and legislation that could create millions of new jobs for middle class American's, the Obama stimulus plan will likely propose changes in federal law that could dismantle existing federal programs designed to direct government infrastructure funds to the small businesses where most Americans work.

Obama's plans will likely include support for a change in the federal definition of a small business as being "independently owned." The new definition will be promoted as "increasing access to capital" for small businesses. In reality, it will allow firms that are not "independently owned" but are actually owned and controlled by some of our nation's wealthiest venture capitalists to have increased access to billions of dollars in federal contracts earmarked for legitimate small businesses.

Legitimate small businesses will find themselves in a head-to-head battle with firms controlled by wealthy individual venture capitalists and possibly even some of the largest venture capital companies in the country for even the smallest orders for government goods and services.

Billions of dollars in federal small business contracts will be diverted from middle class America and into the hands of a small number of wealthy venture capitalists. Thousands of legitimate small businesses will be forced out of business and thousands of jobs will be lost. (http://www.youtube.com/watch?v=E5QBPVJAeIE)

The National Venture Capital Association (NVCA) and its members have contributed millions of dollars to President Obama and key Democratic leaders in Congress like House Speaker Nancy Pelosi. The new loophole looks more like a political payback to wealthy contributors than a legitimate attempt to stimulate the national economy.

The new Obama economic stimulus plan will also most likely allow widely reported fraud and abuses in existing federal small business programs, which have diverted billions of dollars in federal small business contracts to Fortune 500 firms to continue.

Although President Obama and the Democratic Congress will propose an economic stimulus plan that will offer some assistance to Americans struggling to deal with the failing economy; it will most likely be offset by their refusal to address longstanding fraud and abuse in existing federal small business programs, and the creation of a new loophole in federal contracting law for venture capitalists that will devastate the middle class economy. (http://www.youtube.com/watch?v=BucI3cCET1o)

If President Obama supports a new loophole for venture capitalists under the guise of "increasing access to capital" for small businesses, billions of dollars in federal infrastructure dollars will be diverted away from the 26 million small businesses where most American's work.

An Obama economic stimulus plan that does not address the abuses in existing federal small business programs and creates more loopholes for venture capitalists will probably kill more jobs than it will create.