Lloyd Chapman: Why Are the Mainstream Media and Washington Deaf, Dumb and Blind to All Logic and Reason on Economic Stimulus?

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

“ONE OF THE MOST IMPORTANT CHALLENGES FACING THE SMALL BUSINESS ADMINISTRATION AND THE ENTIRE FEDERAL GOVERNMENT TODAY.”

For several years I have been watching news programs with pundits talking about the economic downturn and various strategies to stimulate the economy and create jobs. I think I should be in the running for the next Nobel Prize in economics because I seem to be the only person on the planet that understands the single most basic fact about the U.S. economy.

SMALL BUSINESSES CREATE THE OVERWHELMING MAJORITY OF NET NEW JOBS.

According to the latest U.S. Census Bureau data, small businesses are responsible for over 90 percent of all net new jobs in America.

The Kaufman Foundation released a study that found new businesses have been responsible for virtually 100 percent of all net new jobs in America since 1980.

98 percent of all U.S. firms have less than 100 employees. These firms employ 50 percent of the private sector workforce and are responsible for over 50 percent of the gross domestic product (GDP). Also, over 90 percent of all U.S. exporters are small businesses. Any plan to stimulate the economy and create jobs must be focused on the nation’s 28 million small businesses.

In the final presidential debate, Governor Mitt Romney came close to reality when he said small businesses were responsible two thirds of new jobs in America.

The irrefutable facts about small business and job creation are almost completely absent from any discussion on economic stimulus and job creation by President Obama, Federal Reserve Chairman Ben Bernanke, Congress and the legions of political pundits that have streamed across every major television news program for years.

Today the largest federal program to invest in the middle class is the Small Business Act. That law mandates that a minimum of 23 percent of the total value of all federal contracts be awarded to small businesses. Doesn’t it make sense to reinvest a minimum of 23 percent of federal infrastructure spending in firms where most Americans work and over 90 percent of the net new jobs are created? Of course it does.

Here is the problem. Since 2003, a series of federal investigations have found a large portion of the federal contracts that by law should be going to the nation’s top job creators have been diverted to the largest companies in the world.

The Small Business Administration Office of Inspector General (SBA OIG) has been sounding the alarm on these rampant abuses for years. In 2005, the SBA OIG released Report 5-15, describing the diversion of federal small business contracts to corporate giants around the world as:

“ONE OF THE MOST IMPORTANT CHALLENGES FACING THE SMALL BUSINESS ADMINISTRATION AND THE ENTIRE FEDERAL GOVERNMENT TODAY.”

Every year for the past seven consecutive years the SBA OIG has named the diversion of federal small business contracts to corporate giants as the number one management challenge facing the SBA.

In Report 5-16 the SBA OIG found large businesses had committed felony federal contracting fraud by making “false certifications” and “improper certifications.” The SBA Office of Advocacy released a report that found large business had illegally received federal small business contracts through what they described as “vendor deception,” which means fraud. In Report 5-14 the SBA OIG found the SBA itself was awarding small business contracts to corporate giants. One of the firms the SBA awarded millions of dollars in small business contracts was a Dutch firm headquartered in Amsterdam with 26,000 employees.

Some of the firms that have received hundreds of billions of dollars in federal small business contracts include Lockheed Martin, IBM, Oracle, Hewlett Packard, Dell, John Deere, Raytheon, Microsoft, Northrop Grumman, The New York Times, Apple, Rockwell Collins, Harris Corporation, Motorola and Office Depot.

Some of the foreign firms that have received U.S. Government small business contracts include British Aerospace, Thales, Rosoboronexport, Finmeccanica and Qinetiq.

To date, no federal legislation or policies have been adopted to stem the tidal wave of federal small business funds being diverted to the largest firms around the world.

Look at it this way: In the midst of the worst economic downturn since the Great Depression, our government is knowingly, willfully and intentionally diverting federal funds away from our chief job creators.

I have worked tirelessly for over ten years to end these vile abuses against the American people. In 2003, when I testified before Congress and compelled the GAO to investigate this issue, I never imagined it would be going on nearly a decade later.