Congress will begin work this week on President-elect Barack Obama's new economic stimulus plan. The American Small Business League (ASBL) is predicting President-elect Obama's stimulus plan may contain provisions that will allow wealthy venture capitalists to receive billions of dollars in federal contracts earmarked for small businesses.
Under the guise of "increasing access to capital for small businesses," the Obama stimulus plan may change the long-standing federal definition of a small business as being "independently owned," to include firms that are controlled by some of the nation's wealthiest investors.
Most economists agree the best way to create jobs and stimulate the nation's failing economy is to direct federal infrastructure funds to the 26 million small businesses that create over 85 percent of new jobs and employ over 55 percent of all Americans.
The new Obama loophole in federal contracting law would do just the opposite by forcing legitimate small businesses to compete head-to-head with firms controlled by wealthy investors and even some of the largest venture capital firms in the United States.
Thousands of legitimate small businesses would be negatively impacted. Billions of dollars in federal small business contracts would be diverted from middle class firms and into the hands of a very small number of firms controlled by wealthy venture capitalists.
The Obama plan may even include a provision that would exempt the venture capital owned firms from capital gains tax.
Similar proposals in the past were pushed by the National Venture Capital Association (NVCA) and opposed by the Small Business Administration, the ASBL, the U.S Chamber of Commerce, the Bush White House and virtually every major small business group in the country.
The NVCA and its members donated heavily to the Obama campaign and have donated millions more to dozens of key democratic members in Congress such as House Speaker Nancy Pelosi, Senator John Kerry, Senator Joseph Lieberman and Congresswoman Nydia Velázquez. The majority of the members of the House Small Business Committee and nearly all of the members of the Senate Committee on Small Business and Entrepreneurship received significant contributions from the NVCA and its members.
In the past, the NVCA has used the term "increasing access to capital for small businesses," to disguise legislation and policy changes that would allow wealthy investors to receive billions of dollars in federal contracts earmarked for legitimate small businesses.