At a town hall discussion on jobs and the economy yesterday, President Barack Obama said he was looking for new ideas to help create jobs and expand economic growth. To be specific, President Obama stated, "We are open to new ideas that are out there, and if we think something is going to work to put people to work, then absolutely we're going to try to make it happen."
I have a great idea for President Obama, why don't you do what you said you would do back in February of 2008 when you said, "It is time to end the diversion of federal small business contracts to corporate giants."
Since 2003, there have been over a dozen federal investigations, which have found Fortune 500 firms and thousands of large companies around the world as the actual recipients of federal small business contracts. The Small Business Administration (SBA) Office of Inspector General has listed this problem as the number one management challenge facing the agency for the past five consecutive years and referred to this problem as, "One of the most important challenges facing the Small Business Administration and the entire Federal government today."
Report 5-16 from the SBA Inspector General referred to these misrepresentations as, "false certifications" and "improper certifications." Other federal investigations described the blatant fraud as "vendor deception."
This is real simple, small businesses are the backbone of America's economy, and a major engine for job creation. According to the U.S. Census Bureau, small businesses are responsible for more than 90 percent of all net new jobs, 50.2 percent of the non-farm private sector workforce, 50 percent of the gross domestic product (GDP) and 90 percent of exports and innovations.
Federal law states that a minimum of 23 percent of the total value of all federal contracts must be spent with small businesses. Unfortunately the government has never met that goal. So President Obama, why don't you do what you said you would do during the campaign? You knew what to do back then. What happened to your promise?
Ending the diversion of federal small business contracts to corporate giants, as you said, would infuse the nation's middle class economy with billions of dollars in federal small business contracts. This would do more to stimulate the nation's economy than anything proposed by your Administration and Congress to date.
While federal government claims that the official federal acquisition budget is only $500 billion a year. The truth is, when including domestic, foreign, classified and unclassified contracts, the total acquisition budget is over $1 trillion a year. So small businesses should be getting up to $230 billion in federal contracts every year.
The most recent information released from your administration, shows that for fiscal year (FY) 2009, the federal government only spent approximately $96 billion in contracts with small businesses. Research conducted by the American Small Business League (ASBL) found that out of the top 100 recipients of small business contracts for FY 2009, 60 were actually large firms that received 65 percent of the total small business dollars.
According to the Economic Policy Institute (www.epi.org), "The theory of tax cuts as economic stimulus has been put to the test - and failed - twice in the past six years alone." Alan Blinder, professor and co-director of Princeton University's Center for Economic Policy Studies, has stated that for every budgetary dollar spent by the government, on things like unemployment insurance or on infrastructure, the real economic growth to the GDP is the equivalent of $1.60 to $1.70. Whereas he stated that every dollar in tax cuts only creates $0.35 in GDP growth. So why does our government keep insisting that tax cuts for small businesses are the best way to create jobs and stimulate the economy?
Research and surveys conducted by the ASBL, NFIB and the Congressional Oversight Panel found that small businesses do not need loans they need contracts. So it is clear, small businesses need more business, and government contracts can provide a deficit neutral solution to increase demand for small businesses. Ending the diversion of small business contracts to corporate giants will create jobs. So lets stop relying on the same tired solutions that have not worked to date, and focus on a new solution that we know will work.
It is time to stop the diversion of federal small business contracts to corporate giants.
Directing more federal contracts to small businesses is not only reasonable, but it is prudent and honest. You already said you would do this, you said you were, "open to new ideas," and now it is time for you to keep your word.