Small Business

In Washington, Odds Stacked Against American Small Businesses

Lloyd Chapman, The Huffington Post

The super committee was so politically deadlocked this week that they called it quits early (just in time for Thanksgiving).


The delay makes no difference though — whether it comes through mandatory cuts or congressional compromise, a $1.5 trillion cut to federal spending means that competition for federal contracts will heat up.

And with less federal money to be had, Fortune 500 corporations are going to stake claim over all federal contracts, which represent hundreds of billions in purchases a year. This is a disaster for America's 28 million small businesses, which employ more than half the private sector workforce.

The top 25 contributors to the members of Obama's debt super committee were an all-star lineup of corporate giants including Microsoft , AT&T , GE , Citigroup , Verizon , JP Morgan Chase, Ernst and Young, Bank of America , Boeing , Dow Chemical , Goldman Sachs , and Time Warner .

The Washington Post reported last week that nearly 100 former congressional aides who had previously served for members of the super committee are presently working as lobbyists on K Street. These insider lobbyists are now employing old tricks to get their former bosses to support their new corporate bosses.

On the other hand, small businesses are not significant donors to these political representatives' campaigns. Small businesses also don't own properties alongside the Capitol and don't employ politically savvy former congressional aides.

Can you guess where small business interests register on these representatives' list of priorities?

When Ronald Reagan was president, the Small Business Administration (SBA) budget was $1 billion a year. That was 30 years ago; today the SBA budget is less than a billion. Under former president George Bush the government pretty much tried to eliminate the SBA by starving the agency to death, cutting their budget and slashing their staffing.

The next time Congress attempts a deficit reduction plan, I predict that it will likely propose either cutting the SBA's budget or eliminating the agency altogether (probably by combining it with the Commerce department).

It seems like a ridiculous idea — the SBA's budget is less than one-tenth of one percent of the Pentagon's budget — but politicians in Washington will never pass up any excuse to cut the SBA and therefore eliminate federal small business contracting programs.

And when Congress is facing mandatory cuts of $1.5 trillion over the next decade if they don't come to a bipartisan deficit reduction solution soon, many will find excuses to try and get rid of the SBA, under the banner of government-wide cuts.

This seems counterintuitive considering that the U.S Census Bureau has found that small businesses create over 90 percent of all net new jobs. Small businesses generate over half the GDP and 90 percent of U.S. exports. As our nation's main source of domestic job creation, small businesses deserve equitable treatment.

A logical, reasonable Congress would boost the SBA budget and boost all federal programs to help America's top job creators. But that's not going happen because Fortune 500 firms want every penny that the federal government spends.

So instead we're going to see more attempts in the future by President Obama and the next administration to use any excuse to attack federal small business programs.

What's it going to take for small businesses to finally have a voice in Washington?