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Lloyd Chapman

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Republicans Trying to End Small Business Programs Again

Posted: 08/10/11 06:57 PM ET

Well, it looks like they are at it again in Washington. Republicans in the Senate are once again trying to end all small business programs for women, minorities and veterans. Senator Richard Burr (R-NC) has sponsored S.1116, the "Department of Commerce and Workforce Consolidation Act," which would combine the Small Business Administration (SBA) with the Commerce Department. Senator Burr and the seven other Republican co-sponsors are just the latest in a long line of Republican leaders who have sought to close the agency.

Republicans began their campaign to close the SBA when Ronald Reagan was president. In 1985, Reagan's budget director, David Stockman, argued for a complete shut down of the agency in front of the Senate Small Business Committee. President Reagan's 1986 budget recommended closing the SBA and merging its primary functions with the Commerce Department. Democrats in the Senate, led by Senator Carl Levin, stopped both efforts.

In 1995, Republican David Dreier introduced the Small Business Administration Transfer Act, which proposed closing the SBA and transferring it to the Treasury Department. The bill did not make it out of the House.

President George W. Bush removed the SBA Administrator from a cabinet-level position early in his first term, and proceeded to cut the SBA budget by more than 60 percent during his administration. It is now known that President Bush told then SBA Administrator Hector Barreto that he intended to close the SBA in his first term. In addition to slashing the agency's budget and staffing, Bush closed SBA offices coast to coast, and laid off what one SBA executive referred to as the "core competency" of the agency. When President Bush left office, the SBA budget was less than half of the approximately $1 billion budget during President Reagan's first term.

The motivation behind this latest bill is to redirect the 23 percent of all federal contracts that should be going to small businesses into the hands of the nation's largest corporations. Furthermore, if the SBA is merged with the Commerce Department, the door will be shut on the decade long scandal of diverting small business contracts to Fortune 500 firms through "false" and "improper" certifications and "vendor deception".

Historically, Republican leaders have used any possible crisis to justify closing the SBA. It is no surprise to anybody that the Republican party is the party of Fortune 500 firms. Although Republicans and most members of Congress will give lip service to small businesses, its virtually unheard of to see Congressional legislation aimed at benefiting the 28 million small businesses where most Americans work. The Republicans' desire to combine the SBA with the Commerce Department is just the latest affront to the middle class put forward in order to please the corporate giants that fund the GOP.

Allowing them to do so could be devastating to the economy. There are 28 million small businesses in America. Small business create more than 90 percent of net new jobs. 98 percent of US firms have less than 100 employees. Small businesses employ more than half of the private sector workforce, are responsible for half of GDP, and account for 90 percent of US exports. We have one small agency to help those companies. One. And now the Republicans want to close it. It would be a travesty if this were allowed to happen.

The evidence is irrefutable that the Republican's goal is not to save money, but to abolish the SBA entirely. If there is any doubt as to whether conservatives favor ending small business programs, the words of Veronique de Rugy, current adjunct scholar at the Cato Institute and long time conservative journalist, provide a clear summary of the conservative view of the SBA.

In reality the SBA budget should be restored to what it would have been had it not been cut by the Bush Administration. Considering that it was over a billion dollars when Ronald Reagan was President, the current SBA budget should be somewhere in the neighborhood of $3 billion.

If President Obama and the leaders in Washington want to create jobs, and save America from a 1929-like Depression, it is real simple: the SBA budget needs to be restored, their regional offices need to be reopened, and President Obama needs to issue an executive order that will stop federal agencies and prime contractors from diverting millions of dollars a day in federal small business contracts to some of the largest companies on earth.

If you were to survey the American people and ask them if they think Fortune 500 firms should be allowed to receive federal small business contracts, I am confident that 99 percent would say absolutely not. I think an equal number would also agree that it makes no sense, considering the dire financial circumstances we are in right now, to end federal programs that help the very companies that create the overwhelming majority of net new jobs in America.

Combining the SBA and the Commerce Department would certainly spell the end of the SBA and all the programs that it administers to help foster America's top job creators. Any member of Congress who votes for this bill should be run out of town on a rail.

 

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