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Wednesday, February 4, 2009

Senate Bill Should Address Abuses In Existing Federal Stimulus Programs

February 4, 2009

Petaluma, Calif. – The Senate is in the process of debating an economic stimulus plan that will cost taxpayers up to $900 billion with no guarantee of success. Before the Senate tries to reinvent the wheel, it should consider including one sentence in its stimulus bill that will address widely publicized abuses in existing government economic stimulus plans.

In 1953, Congress passed the Small Business Act as an economic stimulus plan. Current federal law, which is based on the original Small Business Act, directs that a minimum of 23 percent of the total value of all federal contracts and subcontracts shall be awarded to small businesses.

Economic experts agree that directing federal infrastructure funds to America's 27 million small businesses, which create nearly 80 percent of all new jobs and employ over 50 percent of all private sector workers, is an efficient and cost effective way to stimulate the United States economy.

The primary purpose of the Small Business Administration (SBA) is to administer and oversee this economic stimulus plan. In addition to thousands of SBA employees, an extensive national network of government and private sector staff already exist to ensure that the economic stimulus the Small Business Act was designed to deliver is properly administered.

Every federal prime contract is required to contain a small business subcontracting plan. Every prime contractor is required to have a small business liaison and submit quarterly reports on their compliance with their small business subcontracting goals.

Unfortunately, since 2003 more than 15 federal investigations have found billions of dollars in federal small business contracts wound up in the hands of Fortune 500 corporations and some of the largest corporations in the U.S. and Europe.

The American Small Business League (ASBL) estimates that as much as $100 billion a year in federal small business contracts are diverted to large businesses.

Hundreds of stories in the mainstream media have chronicled the diversion of federal small business contracts to Fortune 500 firms. ABC, CBS and CNN have all covered the story.

Existing federal law defines a small business as a firm that is "independently owned." Firms that are publicly traded are certainly not "independently owned."

If the Senate sincerely wants to stimulate America's failing economy, one line could be inserted into the economic stimulus plan which would provide a free and easy way to stimulate the economy by redirecting up to $100 billion a year in current federal infrastructure spending to the small businesses that create nearly 80 percent of all new jobs in America.

The one line that should be included in the economic stimulus plan is, "Federal contracting officials and prime contractors can no longer report awards to publicly traded firms as small business awards."

Most American's would probably agree that to ignore a free and easy solution to our current economic dilemma, which would utilize existing federal laws and programs to create millions of jobs, would be the pinnacle of governmental stupidity.


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