Lloyd Chapman: Obama Ignores Simple Solution to Stimulate Economy

President Barack Obama is a smart man, and he has no doubt surrounded himself with a multitude of well-educated and extremely intelligent individuals. With that in mind, it is difficult to understand why he has consistently ignored some of the most fundamental principals of the U.S. economy, and the suggestions of some of our nation's leading economic experts in drafting his stimulus plan.

President Obama's stimulus plan ignores the fact that 98 percent of all firms in the United States have less than 100 employees. Over 26 million firms fall into that category. They employ approximately 50.4 percent of the private sector workforce and create over 80 percent of all new jobs in America. These firms are responsible for over 90 percent of all U.S. exports and over 90 percent of all technological innovation in America. Large businesses on the other hand, have not created one net new job in America since 1977.

If President Obama wants to stimulate the national economy and create jobs, he needs to adopt policies and legislation to direct federal infrastructure funds to America's 27 million small businesses.

Recently, Carly Fiorina and Laura Tyson were on CNN regarding the economy. Dr. Laura Tyson was the Chair of the U.S. President's Council of Economic Advisers under the Clinton Administration. Carly Fiorina was the former CEO of Hewlett-Packard and one of Senator John McCain's top economic advisors. They both agreed the best way to stimulate the failing U.S. economy is to direct federal infrastructure funds to small businesses. (http://www.youtube.com/watch?v=jR-fWcpkOHM)

When Congress passed the Small Business Act in 1953, its members realized what President Obama seems to have missed, that small businesses are the heart and soul of the U.S. economy. The Small Business Act was an economic stimulus plan, and it worked. Existing federal law states that a minimum of 23 percent of the total value of all federal contracts and subcontracts shall be awarded to small businesses.

Unfortunately, during the Bush Administration, the Small Business Act and all the benefits it provided to our national economy were significantly damaged. Since 2003, over a dozen federal investigations found Bush officials in every federal agency allowed billions of dollars in federal small business contracts to be diverted to some of the largest firms in the U.S. and even Europe. (http://www.asbl.com/documentlibrary.html)

Investigative stories by ABC, CBS and CNN as well as many of the nation's largest newspapers have reported that hundreds of billions of dollars in federal contracts that by law were intended for small businesses, actually went to firms such as Lockheed Martin, Boeing, Northrop Grumman, General Dynamics, Raytheon, L-3 Communications, British Aerospace (BAE) and Rolls-Royce. (ABC, http://www.asbl.com/abc_evening_news.wmv; CBS, http://www.asbl.com/cbs.wmv; CNN, http://www.asbl.com/showmedia.php?id=1170)

The American Small Business League (ASBL) won a series of federal lawsuits against the Bush Administration that forced the release of over 30,000 pages of information on the actual recipients of federal small business contracts. Many of the federal investigations into the diversion of federal small business contracts to corporate giants were based on information provided by the ASBL. Based on information obtained through years of litigation, and information gleaned from several current and former government executives, the ASBL estimates over $100 billion a year in federal small business contracts are diverted to Fortune 500 firms and other large businesses.

So far, nothing President Obama has proposed to stimulate our nation's failing economy would be as effective and cost efficient as simply adopting policies and legislation that would redirect over $100 billion, year-after-year, back into the middle class economy.

If President Obama sincerely wants to create jobs and stimulate the national economy he needs to start by making good on a campaign promise he made in February of 2008 when he stated, "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." (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php)