Obama Administration Ignores Simple Solution to Job Creation with QE3, According to the American Small Business League

PETALUMA, Calif.--(BUSINESS WIRE)--The following is a statement by the American Small Business League:

“It is time to end the diversion of federal small business contracts to corporate giants.”

The American Small Business League (ASBL) is disappointed at the latest move by the Obama administration to stimulate the economy. Based on past efforts by the Federal Reserve, the ASBL does not believe that a third round of Quantitative Easing (QE3) is the most efficient and cost-effective way to stimulate the economy.

Economic data indicates that to create jobs, stimulus must be aimed at the middle class and America’s 28 million small businesses. U.S. Census Bureau data indicates that small businesses generate more than 90 percent of all net new jobs. The Kauffman Foundation released a report in 2010 stating that small businesses have created virtually 100 percent of all net new jobs in the past three decades.

There is no guarantee QE3 will compel banks to lend more money to small businesses and the middle class. Based on data following QE1 and QE2, banks will not lend more to small businesses. In fact, banks such as Bank of America have recently slashed lending to small businesses.

If the Obama administration wants to create jobs and stimulate the economy, the simplest way would be to cease the practice of diverting federal funds that by law should be going to small businesses to some of the biggest companies in the world.

Investigations by the General Accounting Office and Inspectors General throughout the government have consistently found that the Obama administration has awarded funds meant for small businesses to companies such as Lockheed Martin, Boeing, Raytheon, AT&T, Hewlett-Packard, Motorola, General Electric, General Dynamic, and even foreign companies like Thales, Finmeccanica, British Aerospace and Russian defense broker Rosoboronexport.

The Small Business Administration Office of Inspector General has named the diversion of federal small business contracts to large corporations as the number one management challenge at the SBA for the past seven years.

If President Obama, Fed Chairman Bernanke and Congressional leaders are serious about creating jobs, the ASBL’s suggestion is for President Obama to keep his February 2008 campaign promise when he said, “It is time to end the diversion of federal small business contracts to corporate giants.”