Lloyd Chapman: Does Obama Want to Close the Small Business Administration to Cut the Deficit or to Destroy the Crime Scene?

PETALUMA, CA--(Marketwire - Nov 5, 2012) - The following is a statement by American Small Business League President Lloyd Chapman:

Let's see if we can figure this out. During his campaign in February of 2008, Barack Obama released the statement, "98 percent of all American companies have fewer than 100 employees. Over half of all Americans work for a small business. Small businesses are the backbone of our nation's economy and we must protect this great resource. It's time to end the diversion of federal small business contracts to corporate giants." 

Now, he is talking about essentially closing the Small Business Administration (SBA) by combining it with the Department of Commerce. Closing agencies by combining them is an old, tried and true, Washington trick aimed at closing agencies that contain information the public would object to.

Federal law requires a minimum 23 percent of the total value of all federal contracts be awarded to small businesses. Corporate giants, like the ones running the Department of Commerce, don't like this law because they want to intercept every dime the government spends. Big greedy government contractors in the defense industry have lobbied for years to close the SBA so they can get their hands on every contract.

Let's take a quick look at the facts. We know from U.S. Census Bureau data that 98 percent of all U.S. firms have less than 100 employees and that these 27 million small businesses are responsible for more than 90 percent of all net new jobs, 50 percent of the private sector work force, more than 50 percent of the gross domestic product (GDP) and more than 90 percent of all U.S. exporters. In the midst of the worst economic downturn in 80 years, you would think President Obama would want to expand every aspect of the SBA and double its budget and staffing. But he's not proposing that, is he?

The facts show that the rampant abuses against America's top job creators have actually worsened.

Every year of the Obama administration, the SBA's Office of Inspector General (SBA OIG) has named the diversion of federal small business contracts to corporate giants as the number one management challenge facing the SBA.

Some of the firms the Obama administration has awarded small business contracts include Boeing, Hewlett Packard, AT&T, Motorola, Raytheon, Lockheed Martin, Apple, John Deere, Rockwell Collins, General Electric, General Dynamics, Office Depot, Xerox, Dell and ManTech.

To try and cover up the rampant fraud and abuse in federal small business contracting programs, the Obama administration attempted to permanently remove the parent company Dun & Bradstreet number from every government contractor in the Central Contractor Registration (CCR) database. Federal investigators and journalists use this number to expose large businesses trying to fraudulently misrepresent their divisions and subsidiaries as independent, small businesses. I successfully sued the Obama administration in federal court and forced them to restore this data.

Section16 (d) of the Small Business Act stipulates that the penalty for misrepresenting a firm as a small business to illegally secure federal small business contracts is a maximum sentence of 10 years in prison and a fine of up to $500,000. There is a lot of information housed at the SBA that proves thousands of big businesses are guilty of misrepresenting their divisions and subsidiaries as legitimate small businesses. I would imagine this information makes the Obama administration nervous -- they would love to see the SBA and the Department of Commerce combined so that the damaging information can evaporate.

Plus, there are several more practical ways to cut the deficit that don't involve closing the SBA. The U.S. spends more than $800 billion annually on defense. Some say that number may be closer to surpassing the one trillion dollar mark. Funding for the SBA is currently less than one tenth of one percent of that of the defense budget. Does it really make sense to try and cut the deficit by closing the only agency servicing the 27 million small businesses that employ most Americans and create the overwhelming majority of net new jobs?

Of course it doesn't make sense. Don't believe any crooked politician telling you the way to cut government spending is to close what may be the single most important agency in Washington DC.

Small businesses are the heart and soul of our nation's economy and always have been. Their agency, the SBA, needs to be protected.