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Wednesday, February 25, 2009

Stimulus Bill Spending Excludes Ninety Percent Of U.S. Firms

February 25, 2009

Petaluma, Calif. – According to the latest statistics from the U.S. Census Bureau, 98 percent of all U.S. firms have less than 100 employees. Ninety percent of all firms in the U.S. have less than 20 employees and are responsible for over 97 percent of all new jobs in America. These 27 million firms employ over 50 percent of the entire private sector workforce. (

The stimulus bill signed last week by President Obama was designed primarily to create and preserve jobs. Yet not one line of the bill contains specific language to direct any of the stimulus bill's spending to the 98 percent of American firms that create over 97 percent of all new jobs.

In the absence of legislative language to specifically direct the billions of dollars in stimulus bill spending to small businesses, over 90 percent of all prime contracts from the stimulus bill will likely go to approximately 2 percent of U.S. firms. This would seem to run contrary to the bill's stated mission of creating jobs.

Congress realized the vital role played by American small businesses when the Small Business Act was passed in 1953. Existing federal law, based on the Small Business Act, stipulates that a minimum of 23 percent of all federal contracts and subcontracts be awarded to small businesses.

Unfortunately for small businesses and the American economy, during the eight years of the Bush Administration, the Small Business Administration (SBA) and federal agencies diverted hundreds of billions of dollars in federal small business contracts to Fortune 500 firms. (

Over a dozen federal investigations have been released since 2003, which have uncovered the wholesale diversion of federal small business contracts to large businesses. ABC, CBS and CNN aired stories on the investigations. (ABC,; CBS,; CNN,

President Obama seemed to realize that the vital role small businesses play in our nation's economy when he released this statement in February of 2008, "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 is time to end the diversion of federal small business contracts to corporate giants." (

Without provisions to direct new federal spending to the small businesses that create over 97 percent of new jobs or provisions to stop the diversion of federal small business contracts to corporate giants, it is questionable whether the stimulus bill will be able to achieve its primary goal of creating new jobs in America.


Christopher Gunn
Communications Director
American Small Business League
(707) 789-9575

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