For years I've been listening to pundits and politicians talk about job creation in America and I'm constantly stunned and frustrated because no one is talking about the single most fundamental issue related to job creation in America.
Our political representatives have tried everything except the only thing that will work, which is to spend existing infrastructure dollars with small businesses.
Small businesses create virtually all the net new jobs in America while every year large businesses and Fortune 1000 corporations employ fewer and fewer Americans. According to the Kaufman Foundation, virtually 100 percent of the nation's net new jobs since 1980 have come from small businesses. Conversely, Fortune 1000 companies haven't created one net new job in over 30 years.
There is no question that small businesses are the heart and soul of our nation's economy, yet President Bush and President Obama's stimulus efforts have relied solely on large corporations. Even worse, for over a decade our political leadership has diverted hundreds of billions of dollars a year in federal small business contracts to Fortune 1000 firms.
In Report 5-15 the Small Business Adminstration Office of Inspector General (SBA OIG) described the abuse of federal small business contracts as, "One of the most important challenges facing the Small Business Administration and the entire federal government today." SBA Inspector General Peggy Gustafson recently testified before Congress and named the abuse of federal small business contracts a top management challenge facing the SBA for the seventh consecutive year. While this blatant federal contracting abuse has been well documented for more than a decade, media coverage has been rare.
Think of the lunacy of trying to create jobs by giving between 80 to 90 percent of all federal contracts to the Fortune 1000 firms that haven't created one net new job in 30 years!
When you look at all the economic indicators, things are not going well. The economy overseas is sliding downward. Large businesses worldwide are laying-off employees at record rates. The U.S. economy doesn't show any signs of improvement.
To me, the simplest way to create jobs would be for President Obama to keep his February 2008 campaign promise when he stated, "it is time to end the diversion of federal small business contracts to corporate giants."
Congress knew in 1953 that small businesses are the economic engines of our country, which is why they passed the Small Business Act, requiring a minimum of 23 percent of federal contracts to go to small businesses.
The Small Business Act of 1953 defines a small business as being "independently owned." That excludes any publicly traded companies from receiving federal small business contracts. If President Obama were to issue an executive order stating "the federal government will no longer report awards to publicly-traded companies as small business awards," that could redirect well over a $100 billion a year to the middle class and right into the hands of America's chief job creators.
Of course I have come to understand that will never happen because the Fortune 1000 corporations that pretty much own our government won't allow that. These Fortune 1000 corporations that are getting most of the federal small business contracts are the same corporations that control about 90 percent of the advertising in the media and probably 90 percent of all the lobbying dollars on K Street.
I'm ashamed of our government. It's a tragedy that I'm afraid we may never recover from economically because rampant fraud and corruption in Washington has allowed this abuse to go on for too long.