A bigger Voice for Small Business

President Obama's Budget for the Small Business Administration is Below Reagan-era Levels

by | Feb 13, 2012 | Press Release

Press Release

President Obama's Budget for the Small Business Administration is Below Reagan-era Levels

By American Small Business League
February 13, 2012

The Obama administration’s fiscal year (FY) 2013 budget proposal includes less funding for the Small Business Administration’s (SBA) budget than the agency received 30 years ago during the Reagan administration.

This news comes less than a month after President Obama announced plans to combine the Small Business Administration with the Department of Commerce, which Washington insiders recognize as a ruse to close the SBA and end all federal small business programs.

During his 2008 presidential campaign, Barack Obama promised to restore the SBA’s budget and staffing to pre-Bush administration levels.

Small businesses create more than 90 percent of net new jobs, half the GDP, half the private sector workforce and 90 percent of all U.S. exports.

Despite the fact that small businesses are the primary engine of job creation and economic stimulus in America, the Obama administration has adopted policies that have weakened every federal program for small businesses.

  • In February 2008, Barack Obama stated: “it is time to end the diversion of federal small business contracts to corporate giants.” He has failed to keep that promise. Latest data released from the Obama administration indicates that of the top 100 recipients of federal small business contracts in FY 2011, 70 were large corporations. Large corporations that received federal small business contracts in FY 2011 include Lockheed Martin, General Dynamics, Harris Corporation, Rockwell Collins, Blue Shield and Blue Cross, British Aerospace, Rolls-Royce, AT&T and Boeing.
  • On September 9, 2011, the Obama administration announced plans to eliminate the nation’s oldest program to direct federal infrastructure spending to minority-owned small businesses. The program, which establishes a 5 percent minority-owned federal small business contracting goal, dates back to the legacy of Martin Luther King Jr. and the Civil Rights Act.

“Instead of winding-down federal small business programs, we need to reopen every SBA office Bush closed, rehire every SBA employee that Bush laid off, quadruple the SBA budget and expand every federal program for small businesses— the nation’s chief job creators,” said ASBL president and founder Lloyd Chapman.

Proposed Regulation Grants Agencies the Discretion to Waive Small Business Set-Asides

by | Feb 8, 2012 | Press Release

Press Release

Proposed Regulation Grants Agencies the Discretion to Waive Small Business Set-Asides

By American Small Business League
February 8, 2012

An interim rule from the Obama administration grants federal agencies the power to decide whether or not to set aside GSA Schedule contracts worth between $3,000 and $150,000 for small businesses. This proposed regulation is in obvious violation of existing federal law, and is the latest development in a 10-year-long battle between federal regulators and small businesses, during which upwards of $400 billion in small business set-asides have been diverted to large companies.

According to the Small Business Act, any federal acquisition within the simplified acquisition threshold ($3,000-$150,000) shall be set aside for small businesses. In clear violation of the Small Business Act, federal regulators have already exempted GSA Schedule contracts, which represent about $40 billion annually, from that requirement. Now, the Obama administration’s interim rule would allow small business set-asides on GSA Schedule contracts but only at the discretion of federal agencies, which would also violate the Small Business Act. The Small Business Administration (SBA), which will eventually write the final ruling, has supported the exclusivity of the simplified acquisition threshold for small businesses.

“The interim rule is the equivalent of telling small businesses that their rights to ‘justice,’ an inalienable right, would now be offered, butat the discretion of the government. How dare they!” said Raul Espinosa, a small business contractor and founder of the Fairness in Procurement Alliance (FPA). Espinosa has been fighting the exemptions since 2007, and was recently informed that the Government Accountability Office (GAO) dismissed his latest protest, refusing to address the issue.

Although the Small Business Administration has affirmed that the intent of Congress in the Small Business Act was unambiguous and that simplified acquisitions take priority over GSA Schedule contracts, the federal government’s most recent contracting data indicates that 3 out of 5 simplified acquisitions have been diverted away from small businesses.

“The small business community is not fooled by this latest anti-small business policy from the Obama administration,” said ASBL President Lloyd Chapman. “We will fight this policy and we won’t stop until every single contract worth less than $150,000 is awarded to a legitimate small business.”

Small business owners have until February 13, 2012 to oppose the interim rule. The American Small Business League (ASBL) strongly urges small business owners to tell federal regulators that simplified acquisitions, including those on the GSA Schedules, are exclusive for small businesses.

Visit the government regulations website: http://1.usa.gov/zMeTfn, click on the “Submit a Comment” link, and post a message to the regulators.

Small business polls reject anti-regulation rhetoric

by | Feb 1, 2012 | ASBL News

News

Small business polls reject anti-regulation rhetoric

By Frank Knapp, Jr.
The Hill
February 1, 2012

With Congress back in session, the Senate will have several bills to consider that seek to make it nearly impossible for federal agencies to implement regulations. The REINS Act, the Regulatory Flexibility Improvements Act and the Regulatory Accountability Act have already passed in the House.

Advocates for these radical measures claim they are primarily needed because regulations are the top reason for small businesses not hiring. But a new nationwide poll of small business owners released today adds to numerous other surveys that refute this position.
 
The poll conducted by Lake Research for three national business organizations – American Sustainable Business Alliance, Main Street Alliance and Small Business Majority – found that the top problem for small business was weak customer demand, not regulations. In fact, reducing regulations came in fifth when small business owners were asked what needed to be done to create jobs. Eliminating incentives for employers to move jobs overseas came in first.



Contrary to anti-regulations rhetoric, 78 percent of small business owners see government standards as an important tool to level the playing field with big business and 86 percent view regulations as a necessary component of a modern economy: 93 percent agreed that their business could live with fair regulations and 78 percent agree that some standards are important to protect small businesses from unfair competition. Moreover, 76 percent said that regulations on the books should be enforced.


Small business owners express strong support for specific rules and standards:

•    84 percent support food safety standards
•    80 percent support product safety standards
•    80 percent support disclosure and regulation of toxic materials
•    79 percent support ensuring clean air and water
•    78 percent support rules to prevent health insurance companies from increasing rates excessively
•    67 percent support rules to curtail financial speculation by Wall Street and banks.
•    61 percent support moving the country towards energy efficiency and clean energy.

There was much evidence of the same results to the “customer demand versus regulations” debate in 2011:

•    McClatchy News Service reported in September 2011 that they surveyed owners of small businesses, many of them mom-and-pop operations, to find out whether they thought they were being “choked by regulation.” Not one of the owners complained about regulation in their industries, “and most seemed to welcome it,” McClatchy reported.

•    In November 2011 the Hartford Financial Services Group reported that its survey of 2000 small businesses found that 75 percent of the respondents were struggling to succeed. The biggest barriers to their success were identified as lack of customer demand.

•    The National Federation of Independent Businesses survey of small business (conducted annually) reported that when asked what their most important problem is, almost 30 percent of small businesses reported "poor sales"; less than 14 percent reported regulation.

•    In May 2011, the U.S. Chamber of Commerce released a poll of small businesses, members and non-members. When asked what the top obstacle to hiring new employees was, only 8 percent said “too much regulation.”

Even an October Gallup poll being touted in the House Committee on Small Business hearing today as showing regulations as the top concern of small businesses actually, with more unbiased analysis, shows that the lack of customer demand is by far the number one issue of small business.

A recent big business survey shows similar results. The Business Roundtable reported last month that the main reasons for two-thirds of the biggest U.S. companies not planning on hiring in the next six months are this country’s “sluggish growth” and Europe’s economic problems. This result corresponds to the U.S. Bureau of Labor Statistics report that 30 percent of layoffs in the first half of 2011, according to the businesses themselves, were due to lack of business demand. Less than 1 percent of the layoffs were attributed to government regulations.

So if small businesses aren’t self-identifying regulations as their top impediment to growth and big businesses in general are not citing regulations for holding back hiring, who are the pushers of the anti-regulation bills really representing?

The answer is clear. Most of the complaints we hear in Washington are from only two industries -- those impacted by Wall Street reform (Dodd-Frank) and new Environmental Protection Agency regulations. K Street lobbyists regale Congress and the public about the dire economic consequences to small businesses of regulations that will prevent another Great Recession or protect the health and safety of our citizens. In reality, the financial giants who drove our economy off a cliff and the powerful oil/coal industries (and the surrogates of both) are driving the anti-regulation train in the name of small businesses.

The truth is that small business owners favor regulations to protect the air, water, food, financial system and themselves (from big business). Wall Street and the oil and coal lobbies should stop using small business as an excuse to run roughshod over regulations and take our nation backwards in time to the era before Theodore Roosevelt.

Frank Knapp Jr. is the vice-chair of the American Sustainable Business Council and the president/CEO of the South Carolina Small Business Chamber of Commerce.

Don't Merge the Small Business Administration

by | Jan 27, 2012 | ASBL News

News

Don't Merge the Small Business Administration

Combining the federal agency with others means weakening the only government advocate for millions of small business owners

By Scott Shane
Bloomberg Business Week
January 27, 2012

In mid-January, President Obama announced a plan to merge six government agencies, including the Small Business Administration. The merger, he argued, would save $300 million per year over the next decade and eliminate 1,000 to 2,000 positions, as employees of the merged agencies quit or retire and are not replaced. Several members of Congress on both sides of the aisle responded that the proposal was worthy of careful examination.

The SBA helps small business owners in three main ways. It provides guarantees on bank loans to small businesses, which reduce the lending risk, thus improving owners’ ability to get capital. It also helps with access to federal contracts by training business owners in government contracting and ensuring that federal agencies adhere to congressionally mandated small business set-asides. And it gives small business owners advice on how to run their companies better.

Compared with the multiple disadvantages to small business of eliminating the 3,400-person SBA as a separate agency, the benefits are small, even with the President elevating SBA chief Karen Mills to a cabinet-level post. Although the odds are low that Congress would give the President the authority to merge the agencies in a Presidential election year, small business advocates should push back against his proposal.

FIVE AGAINST ONE

Mergers make sense when the organizations being combined can achieve synergies. When they can’t, the cost of combining efforts and the greater bureaucracy that larger organizations entail make the mergers not worth the effort. The agencies the President proposes combining with the SBA—the U.S. Trade Representative, the Overseas Private Investment Corp., the U.S. Export-Import Bank, the Trade and Development Agency, and the parts of the Commerce Dept. focused on business and international trade—all have a common mission: the promotion of U.S. exports. By contrast, the SBA’s mission is “to aid, counsel, assist, and protect the interests of small business concerns.”

Only about 1 percent of U.S. small businesses export, 2009 Census statistics show, which makes it hard to see where the synergies exist between multiple government agencies designed to promote exports and one designed to help small businesses. Even if the President succeeds with his plan to double U.S. exports by 2015, which is questionable, we still won’t have many small businesses exporting. It’s difficult to see how a lot of them could, given the industries they are in. No matter how good your restaurant, barbershop, landscaping business, or insurance brokerage is—you aren’t likely to export much of anything.

The merger would eliminate the main advocate for small business in Washington. Big business has different objectives than small business. If you combine several agencies focused largely on big company issues with one focused on small company issues, most of the attention of the combined agency will be on big business’s needs.

NO LOVE FOR THE LITTLE GUY

Look at what happened during the financial crisis to see how small business would be hurt by the lack of an advocate. If the SBA did not exist, for example, which agency would have argued for policies to get banks to lend again when credit markets froze in 2008? An agency focused on the concerns of large companies wouldn’t have worried about small business bank loans. It would have advocated, instead, for policies to fix the bond market, since big business obtains much of its credit by issuing bonds.

Or consider the SBA’s efforts to ensure that federal agencies adhere to rules on small business set-aside contracts. Why would the new combined federal agency, whose mission would mostly address big business issues, spend much time ensuring small business’s access to federal contracts? After all, the big companies that would lobby the agency would likely push it to weaken small business set-asides.

Big organizations are often bureaucratic and inefficient. You don’t need to be a PhD economist with a dissertation on diseconomies of scale in administration to realize that creating one big government agency devoted to business and trade isn’t likely to make the government more nimble and responsive to the needs of business than six smaller ones are. Given what it’s like for a small business owner to deal with Washington bureaucrats in relatively small government agencies, one can only imagine what it would be like for them to deal with the larger and (almost certainly) more bureaucratic new agency.

Priced on a per-small-business basis, the SBA is a bargain. An estimated 27.5 million small businesses were operating in the U.S. in 2009, the most recent year data are available. Merging six government agencies, and getting rid of the SBA as an independent agency in the process, will save only $300 million per year. That works out to $11 per business per year. Surely having one part of the government focus on the interests of small companies generates that much value.

Scott Shane is the A. Malachi Mixon III Professor of Entrepreneurial Studies at Case Western Reserve University.

Don't Merge the Small Business Administration

by | Jan 27, 2012 | ASBL News



News


Don't Merge the Small Business Administration


Combining the federal agency with others means weakening the only government advocate for millions of small business owners


By Scott Shane


Bloomberg Business Week




January 27, 2012


In mid-January, President Obama announced a plan to merge six government agencies, including the Small Business Administration. The merger, he argued, would save $300 million per year over the next decade and eliminate 1,000 to 2,000 positions, as employees of the merged agencies quit or retire and are not replaced. Several members of Congress on both sides of the aisle responded that the proposal was worthy of careful examination.


The SBA helps small business owners in three main ways. It provides guarantees on bank loans to small businesses, which reduce the lending risk, thus improving owners’ ability to get capital. It also helps with access to federal contracts by training business owners in government contracting and ensuring that federal agencies adhere to congressionally mandated small business set-asides. And it gives small business owners advice on how to run their companies better.


Compared with the multiple disadvantages to small business of eliminating the 3,400-person SBA as a separate agency, the benefits are small, even with the President elevating SBA chief Karen Mills to a cabinet-level post. Although the odds are low that Congress would give the President the authority to merge the agencies in a Presidential election year, small business advocates should push back against his proposal.


FIVE AGAINST ONE


Mergers make sense when the organizations being combined can achieve synergies. When they can’t, the cost of combining efforts and the greater bureaucracy that larger organizations entail make the mergers not worth the effort. The agencies the President proposes combining with the SBA—the U.S. Trade Representative, the Overseas Private Investment Corp., the U.S. Export-Import Bank, the Trade and Development Agency, and the parts of the Commerce Dept. focused on business and international trade—all have a common mission: the promotion of U.S. exports. By contrast, the SBA’s mission is “to aid, counsel, assist, and protect the interests of small business concerns.”


Only about 1 percent of U.S. small businesses export, 2009 Census statistics show, which makes it hard to see where the synergies exist between multiple government agencies designed to promote exports and one designed to help small businesses. Even if the President succeeds with his plan to double U.S. exports by 2015, which is questionable, we still won’t have many small businesses exporting. It’s difficult to see how a lot of them could, given the industries they are in. No matter how good your restaurant, barbershop, landscaping business, or insurance brokerage is—you aren’t likely to export much of anything.


The merger would eliminate the main advocate for small business in Washington. Big business has different objectives than small business. If you combine several agencies focused largely on big company issues with one focused on small company issues, most of the attention of the combined agency will be on big business’s needs.


NO LOVE FOR THE LITTLE GUY


Look at what happened during the financial crisis to see how small business would be hurt by the lack of an advocate. If the SBA did not exist, for example, which agency would have argued for policies to get banks to lend again when credit markets froze in 2008? An agency focused on the concerns of large companies wouldn’t have worried about small business bank loans. It would have advocated, instead, for policies to fix the bond market, since big business obtains much of its credit by issuing bonds.


Or consider the SBA’s efforts to ensure that federal agencies adhere to rules on small business set-aside contracts. Why would the new combined federal agency, whose mission would mostly address big business issues, spend much time ensuring small business’s access to federal contracts? After all, the big companies that would lobby the agency would likely push it to weaken small business set-asides.


Big organizations are often bureaucratic and inefficient. You don’t need to be a PhD economist with a dissertation on diseconomies of scale in administration to realize that creating one big government agency devoted to business and trade isn’t likely to make the government more nimble and responsive to the needs of business than six smaller ones are. Given what it’s like for a small business owner to deal with Washington bureaucrats in relatively small government agencies, one can only imagine what it would be like for them to deal with the larger and (almost certainly) more bureaucratic new agency.


Priced on a per-small-business basis, the SBA is a bargain. An estimated 27.5 million small businesses were operating in the U.S. in 2009, the most recent year data are available. Merging six government agencies, and getting rid of the SBA as an independent agency in the process, will save only $300 million per year. That works out to $11 per business per year. Surely having one part of the government focus on the interests of small companies generates that much value.


Scott Shane is the A. Malachi Mixon III Professor of Entrepreneurial Studies at Case Western Reserve University.