In online opinion pieces this week, two leading observers of small business economics criticized the Obama Administration and Congress.

American Small Business League President Lloyd Chapman released a statement and blogged on the Huffington Post his prediction that “the Obama administration will try to use the momentum from the fiscal cliff debate to justify plans to dismantle the Small Business Administration” by folding it into the Commerce Department. Chapman questions the Administration’s estimates that such a move would save $3 billion over 10 years. He calls the potential agency merger “just a scam to direct 100 percent of federal contract dollars to large corporations.”

Chapman argues that “eliminating federal programs for America’s chief job creators would be economic suicide” and suggests that instead, the President should “triple the SBA’s budget and supercharge every federal program for the nation’s 27 million small businesses.”

In a blog post titled The Decline of Small Business is a Five Alarm Fire Leaders Are Ignoring, Jim Clifton, chairman and CEO of the Gallup research organization warns that the economy is “not even close” to moving in the right direction. Clifton blames the continued recession on “our elected officials, from the president, to Congress, to governors and mayors” who he said are not focused on creating wealth—or the minimum of 2 million startups per year that are necessary to create new jobs and GDP growth:

"What they should be focused on is revving up the engine that fuels most of the American economy: small business. And right now, small business desperately needs a jump-start. U.S. small-business owners are pulling back on how much they invest in their businesses, with their net capital spending intentions for the next 12 months now at the lowest level in more than two years, according to the Wells Fargo/Gallup Small Business Index. Small-business owners are also increasingly pessimistic and plan to hire less in the next 12 months."

Clifton argues that if the president, Congress, governors, or mayors really understood how crucial small businesses are to the U.S. economy, “they’d be responding to the decline of small business like the five-alarm fire that it is.” He goes so far as to argue that the only way Obama can save the country would be to declare himself President of the United States of Small Business, promising to remove any barriers to small business success.

If small business owners feel that they’re in trouble, Clifton says, it might be “because they don’t believe national and local leaders honestly respect them for the role they play as the engine of the U.S. economy.”

Surely Lloyd Chapman would argue that eliminating the Small Business Administration is not the way to change that view.

Is Medtronic a small business? How about General Dynamics? The federal government seems to think so. Both companies are among the corporate giants that have been awarded federal contracts specifically set aside for small businesses.

Federal regulations mandate that any contracts valued between $3,000 and $150,000 be reserved for small businesses, generally defined as companies with fewer than 500 employees and less than $7 million in annual revenues. But of the nearly $11 billion in contracts that fell within that range in fiscal 2011, nearly $5 billion, or 45%, went to large companies, Bloomberg reports. That's up from 38% in 2006.

Large companies have found several ways to get around those regulations. In some cases, they use small businesses they've acquired to bid on contracts. And federal agencies can exempt themselves for the rules by claiming they were unable to find small businesses capable of supplying the products or services needed.

What’s more, certain agencies, including the General Services Administration, are entirely exempt from set-aside regulations, says Brian Reeder, a spokesman for the American Small Business League. The GSA accounts for about $40 billion of all federal contracts, according to Reeder.

"Simply removing that exemption and putting a set-aside rule in place for all government contract vehicles would significantly increase the pool of contracts available to small businesses," Reeder says.

But with Congress staring down the fiscal cliff and budgets facing intense scrutiny, agencies are looking to cut costs wherever they can, government contractors say.

"There is major uncertainty in the market and federal agencies are not sure until the budget is passed and sequestration is resolved that they will continue, and they have really reduced the scale of work," says Zia Islam, founder of Zantech IT Services, a McLean, Virginia-based company that has worked for NASA, the U.S. Department of Housing and Urban Development, and other federal agencies. (Zantech was number 225 on the 2012 Inc. 500.)

Zantech has seen its work from HUD fall some 20 percent and that with NASA disappear completely. Islam speculates that contracts for which Zantech once competed are flowing to large firms, which have greater name recognition and economies of scale and can do the work for less money.

The Small Business Administration sets goals for the total percentage of federal contract funds that agencies should award to small business, which includes for disadvantaged and women-owned firms. But there is little oversight, particularly when it comes to smaller contracts, experts say.

In 2011, 21.7% of contract money went to small businesses, slightly short of the SBA's goal of having 23% of contracts go to entrepreneurs. Women-owned businesses received less than 4% of all federal contracts, less than the SBA's goal of 5%.

In a survey conducted by the U.S. Women’s Chamber of Commerce in the first half of fiscal 2012, which began October 1, 2011, 71 contracts worth $3 million were awarded to women-owned firms, says Margot Dorfman, the group’s chief executive. "There is a great disconnect here, and women-owned firms are not getting their fair share," Dorfman says.