11/11/2011 11:20 am ET Updated Jan 11, 2012

The One Sentence Solution To Job Creation

President Obama signed a new executive order on Wednesday to cut federal spending on promotional souvenir trinkets such as government pens, coffee mugs and t-shirts.

While it's nice to hear that taxpayers no longer have to pay for the government's fan gear (although some field trips to the White House are definitely going to leave disappointed without their autographed Joe Biden beanies), this most recent executive order from President Obama has no significant potential to boost our economy.

In other news, I am proposing that aside from ordering paltry cuts to federal spending on souvenirs, President Obama issue an executive order that could actually benefit the entire nation.

For instance, the executive order that I am suggesting would create an estimated 1.8 million net new jobs annually. It would require neither new spending nor spending cuts. It wouldn't even require new taxes. It would be a truly deficit-neutral and permanent solution to job creation and economic stimulus.

By stating "The federal government will no longer report awards to publicly traded companies as small business awards," President Obama would make history.

Were it an executive order, that one sentence would stop the government from illegally diverting billions of federal small business contract dollars to large corporations every year.

Under the Small Business Act of 1953, the federal government has a congressionally mandated goal of awarding 23 percent of the total value of all contract dollars to small businesses.

It makes economic sense to aim federal spending at the 28 million small businesses in America that drive our economy. They're responsible for producing half the national GDP, half the private sector workforce, and 90 percent of all U.S. exports.

According to the U.S. Census Bureau, small businesses also create over 90 percent of all net new jobs. Third party organizations like the Kaufman Foundation report that small businesses have created virtually 100 percent of all net new jobs in the country since 1980.

But the American Small Business League calculates that every year up to $200 billion in federal infrastructure spending is illegally diverted to large corporations through abuse of federal small business contracts.

I've talked about this subject tirelessly on a daily basis now for almost a decade and I'm going to keep campaigning on behalf of small businesses until the government does something about it or I drop dead.

The Small Business Act defines a small business as being independently owned. My lawyer tells me that "independently owned" means many things, the most basic meaning being that you can't be publicly traded and also be a small business. That means that there should be zero small businesses listed on any stock exchange. However in practice, a majority of small business awards are fraudulently diverted to large publicly traded corporations.

This year, the ASBL conducted a report of the 100 top federal small business contractors for 2010. Of the top 100 federal small business contract recipients, 60 were large businesses.

And I'm not just pulling this story out of thin air. More than a dozen federal investigations confirm that billions of dollars a month in federal small businesses contracts are actually diverted to Fortune 500 companies in the U.S. and some of their subsidiaries in Europe and Asia, but still reported as federal awards to small businesses.

U.S. Small Business Administration Inspector General Peg Gustafson recently testified before Congress that for the seventh consecutive year her office named the diversion of federal small business contracts to large businesses as a "top management challenge."

All it would take for this abuse of federal small business contracts to stop and for our government to redirect $200 billion annually to the nation's 28 million small businesses is one sentence from the president.

Unfortunately, it appears as if President Obama, all his economic advisors and the media don't understand that small businesses create virtually all the net new jobs in America. The stimulus packages of the Bush and Obama administrations have almost completely ignored small businesses at a time when the economy is failing.

A bill that I wrote is currently working it's way through Congress, and would have the same effect of the executive order I am proposing. Titled the "Fairness and Transparency in Contracting Act," the bill was introduced by Georgia Representative Hank Johnson in October. The essence of the bill (H.R. 3184) says the government will no longer report awards to publicly traded companies as small business awards. H.R. 3184 is another simple, clean, easy, cost-effective and permanent solution to job creation and economic stimulus in our country, and would require no new taxes and no additional spending.

Passing H.R. 3184 could redistribute $200 billion a year from the large corporations that illegally receive federal small business contracts to the small businesses that are actually supposed to receive the money.

Sadly, I don't think H.R. 3184 has any hope of passing because it makes too much sense. Our government is ruled by corporate money, not logic. The same Fortune 500 firms that receive the lion's share of federal small business contracts today dominate the congressional committees charged with reviewing H.R. 3184.

So make sure to stock up on official White House mugs the next time you're in the capitol, because the president says no more souvenirs. Thanks to today's executive order maybe your government trinket collection will be worth something once they're out of production.

That's probably the only way a small business-owner can profit from the type of executive orders currently being signed by the president.

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