WASHINGTON — President-elect Barack Obama promised Saturday to create the largest public works construction program since the inception of the interstate highway system a half century ago as he seeks to put together a plan to resuscitate the reeling economy.

With jobs evaporating and the recession deepening, Mr. Obama began highlighting elements of the economic recovery program he is trying to fashion with Congressional leaders in hopes of being able to enact it shortly after being sworn in on Jan. 20. His address on Saturday followed the report on Friday indicating that the country lost 533,000 jobs in November alone, bringing the total number of jobs lost over the past year to nearly 2 million.

Mr. Obama’s remarks showcased his ambition to expand the definition of traditional work programs for the middle class, like infrastructure projects to repair roads and bridges, to include new-era jobs in technology and so-called green jobs that reduce energy use and global warming emissions. “We need action — and action now,” Mr. Obama said in an address broadcast Saturday morning on radio and YouTube.

Mr. Obama’s plan, if enacted, would be in part a government-directed industrial policy, with lawmakers and administration officials picking winners and losers among private projects and raining large amounts of taxpayer money on them.

It would cover a range of programs to expand broadband Internet access, to make government buildings more energy efficient, to improve information technology at hospitals and doctors’ offices, and to upgrade computers in schools.

“It is unacceptable that the United States ranks 15th in the world in broadband adoption,” Mr. Obama said. “Here, in the country that invented the Internet, every child should have the chance to get online.”

President Bush and many conservative economists have opposed such large-scale government intervention in the economy because it supports enterprises that might not survive in a free market. That is the crux of the argument against a government bailout of the auto industry.

But Mr. Obama proposes to charge ahead, asserting that extensive government support is needed to preserve and create jobs while building the latticework of a 21st century economy.

Although Mr. Obama put no price tag on his plan, he said he would invest record amounts of money in the vast infrastructure program, which also includes work on schools, sewer systems, mass transit, electrical grids, dams and other public utilities. The green jobs would include various categories, including jobs dedicated to creating alternative fuels, windmills and solar panels; building energy efficient appliances, or installing fuel-efficient heating or cooling systems.

Paul Bledsoe, a former Clinton White House energy adviser, said that Mr. Obama had now settled whatever debate there was in his transition team and among Democrats in Congress over how to lift the economy in the short term and over a longer horizon.

“It’s now clear that Obama intends to stimulate the economy through large direct government spending on infrastructure projects as well as through business and individual tax cuts,” said Mr. Bledsoe, now an official of the National Commission on Energy Policy, a nonpartisan research group in Washington. “He is advocating things like guaranteeing every American a college education, wiring the entire country for Internet, putting in a smart electric grid. If he can do it, these will be major systemic advantages for the United States in the competitive global economy.”

Although Mr. Obama is weeks away from taking office, Friday’s grim jobs report heightened pressure on him to assert leadership before his inauguration.

Mr. Obama and his team are working with Congressional leaders to devise a spending package that some lawmakers suggest could total $400 billion to $700 billion. Some analysts forecast even higher costs. Mr. Obama has said he would direct his team to come up with a plan to save or create 2.5 million jobs in the first two years of his administration.

A big part of that will be public works spending. “We will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s,” Mr. Obama said. He did not estimate how much he would devote to that purpose, but when he met with the nation’s governors last week, they said the states had $136 billion worth of road, bridge, water and other projects ready to go as soon as money became available. They estimated that each billion dollars spent would create up to 40,000 jobs.

Local and regional transit systems have $8 billion more in projects that could begin immediately, like buying hybrid buses and expanding light rail systems, creating thousands of jobs.

“He hasn’t given us any commitment, but we are fairly certain it’s going to be large,” Gov. Edward G. Rendell of Pennsylvania, a Democrat and chairman of the National Governors Association, said in an interview Saturday. “I think he understands if you’re trying to reverse the economy and turn it around, this is not the time to do it on the cheap. This is not the time to do it in small doses.”

Mr. Bush and other Republicans have resisted such an approach in part out of concern for the already soaring federal budget deficit, which could easily hit $1 trillion this year. Borrowing hundreds of billions of dollars today to try to fix the economy, they argue, will leave a huge bill for the next generation.

Conservative economists have also long derided public works spending as a poor response to tough economic times, saying it has not been a reliable catalyst for short-term growth and instead is more about politicians gaining points with constituents.

Alan D. Viard, an economist at the American Enterprise Institute, told the House Ways and Means Committee recently that public works spending should not be authorized out of the “illusory hope of job gains or economic stabilization.”

“If more money is spent on infrastructure, more workers will be employed in that sector,” Mr. Viard added. “In the long run, however, an increase in infrastructure spending requires a reduction in public or private spending for other goods and services. As a result, fewer workers are employed in other sectors of the economy.”

Mr. Obama implicitly tried to counter such arguments by invoking the federal interstate highway program, seen as one of the most successful public works efforts in American history.

President Dwight D. Eisenhower signed the Federal Aid Highway Act in 1956, ultimately resulting in the construction of 42,795 miles of roads. In 1991, the government concluded that the total cost came to $128.9 billion, with the federal government paying $114.3 billion and the states picking up the rest.

Mr. Obama also responded to criticism of waste and inefficiency in such programs by promising new spending rules, like a requirement that states act quickly to invest in roads and bridges or sacrifice federal money.

“We’ll measure progress by the reforms we make,” Mr. Obama said, “and the results we achieve by the jobs we create, by the energy we save, by whether America is more competitive in the world.”

The green jobs portion of the economic package could run as high as $100 billion over two years, according to an aide familiar with the discussions.

A blueprint for such spending can be found in a study financed by the Political Economy Research Institute at the University of Massachusetts and the Center for American Progress, a Washington research organization founded by John D. Podesta, who is a co-chairman of Mr. Obama’s transition team.

Daniel J. Weiss, an environmental analyst at Mr. Podesta’s center, said Washington should invest more money in existing programs that create work while cutting energy use, like home weatherization programs that have been chronically underfinanced.

Fortune Small Business) -- President Bush's recent nomination of Santanu "Sandy" Baruah to head the Small Business Administration (SBA) was met neither by celebrations or jeers in the small business community, but by a resounding "Who?"

For the last two and a half years, Baruah has headed the Economic Development Administration (EDA), a relatively obscure Department of Commerce agency charged with making economic development grants (about $251 million in 2007) to distressed communities in order to foster innovation, entrepreneurship and job growth. While the agency says it created or retained some 52,134 U.S. jobs last year (at a cost of $4,000 per job), because its grants went primarily to government economic-planning agencies and local public works organizations, Baruah remained unknown in the business sector.

By all indications, Baruah is an intelligent and creative administrator, albeit one with little small-business experience. North Dakota Governor John Hoeven, a Republican, recalls that when the EDA made a grant to his state's Centers of Excellence, a partnership that places private-sector engineers in public universities to do research and developement, Baruah dug into the details.

"Sandy was directly involved on the ground, and he came out here many times to understand what we're doing," Hoeven says. "That's what you need in an SBA administrator: Someone who understands finance and loans and who's been out here and understands how rural economic development works, who understands that it's not 'fit the customer into the program' but 'fit the program to the customer.'"

Mario Bognanno, vice president of the Palladium Group, a consultancy that works with the EDA, refers to Baruah as a "21st Century Manager" - one who doesn't dominate meetings, but makes decisive moves.

"At one meeting, he said, 'We might as well get the issues on the table. I know there are differences in opinion around the room,'" Bognanno says. "He gave [participants] license to debate, and at the end he said, 'I understand everybody has an intelligent position but we have to take one and this is it.'"

Before he joined the Bush administration, in 2001, Baruah spent seven years at Performance Consulting Group (PCG), a small Portland, Ore. management consulting shop that advised large companies like Walt Disney World (DIS, Fortune 500), Intel (INTC, Fortune 500) and Key Bank (KEY, Fortune 500). Alan Shiffer, the PCG co-founder who hired Baruah, says that he distinguished himself by having both the sophistication to deal with large clients and the resourcefulness to work in a small business - PCG had about a dozen consultants before it shut down, around 2000. Baruah was also known as an auto fanatic who liked to be in charge of the rental car selection, as well as a snappy dresser.

"He dressed to the T. Everything was perfectly ironed," says Lisa Benson, a former PCG consultant. "I sat at a glass table with him when we were new and I learned some very good organizational skills from him. There was a place for everything, and he knew where it was." Baruah met his wife Lisa at a PCG engagement in Key Bank's Buffalo office, where she worked.

But is Baruah the guy to save the SBA? The agency has seen its budget cut from some $1 billion in 2001 to a proposed $657 million in 2009, and has been battered in recent years by revelations that corporate giants like Lockheed Martin (LMT, Fortune 500) had received billions of dollars in small-business contracts. It's also facing sharp questions about the success rate of its flagship 7(a) loan program, and its controversial set-asides programs.

Some who question President Bush's commitment to small business, like Senator John Kerry (D-Mass.), chairman of the Senate Committee on Small Business and Entrepreneurship, have struck a cautious note.

"The SBA needs strong leadership to fill the shoes left by [former administrator] Steven Preston, and we'll review Sandy Baruah's record carefully to make sure that he is the right person for the job," Kerry said in a written statement.

Others have been openly hostile. American Small Business League president Lloyd Chapman, a longtime critic of the SBA, says, "Sandy has no background, experience or interest in small business. Appointing a guy like Sandy is like appointing a mining engineer to head NASA."

Baruah supporters like Deborah Wince-Smith, president of the Council on Competitiveness think tank, maintain that direct small-business experience - of which Baruah has almost none, save as a consultant - may be overrated.

"I think sometimes we make a mistake thinking that because someone built a small business they would be good in a role like this. A small-business person may not be able to see across the panoply of all small businesses. Every sector is different," Wince-Smith says. And, she notes, "Sandy knows how to get something done with the government and Congress."

In the end, however, Baruah's talents and experience - or lack thereof - may not matter. In January, a new president will come into office, and with him a whole new roster of agency heads. President Bush nominated his first SBA head, Hector Barreto, Jr., three months after taking office, and had him installed in the job by early summer. The Senate has not yet set a date for Baruah's confirmation hearings; until he is confirmed, SBA deputy administrator Jovita Carranza will continue as the agency's acting head.

"If there's anybody that's ready to hit the ground running, it's this guy," says Chuck Gastón, a former SBA district manager who spent 29 years with the agency before leaving in 2003 over frustrations about budget cuts. "But what's he going to do in the limited time he has available? What are you going to do in six months?"

Baruah, then, may go out just as he came in: with a "Who?"

Source:  http://money.cnn.com/2008/07/08/smallbusiness/sba_baruah.fsb/index.htm

A decision by the Bush Administration to suddenly close a Small Business Administration program dedicated to helping veterans has touched off an uproar among Democrats on Capitol Hill.

"The Bush administration has failed to come forward publicly to announce they recently decided to close the SBA's veterans office…," said Sen. John Kerry, D-Mass., the ranking member on the Senate small business committee.

The government is required to award 3 percent of all federal contracts to small businesses owned by service-disabled veterans, and the SBA Office of Veterans Business Development was created to ensure that happens. Meanwhile, the SBA's Advisory Committee for Veterans Business Affairs, another group dedicated to helping veterans who own small businesses, will lose its charter when it expires in September.

The American Small Business League has sued SBA for access to records of size protests. The League and its president, Lloyd Chapman, believe the records will document widespread fraud by large businesses posing as small ones to get federal contracts.

"I don't think there is any question that the SBA is trying to withhold information that will show they have known about widespread fraud and blatant abuses in Federal small business contracting programs for several years," Chapman said in a statement. "It's time for the attorney general to stop helping the SBA withhold information on contracting abuse and begin investigating which federal officials have been involved in allowing Federal small business contracts to be awarded illegally to large corporations."

Chapman said the League has been trying to obtain the records for 18 months under the Freedom of Information Act.

The suit was filed in federal court in San Francisco. An SBA spokeswoman did not reply to a request for comment.

Chapman's complaints have sparked several investigations that turned up instances of large businesses receiving awards that were reported as going to small firms. SBA Administrator Hector Barreto has cited two primary reasons for that: a company was small when it received a contract, but outgrew its size standard during the life of the contract; or the small company was acquired by a large one. Barreto told the Senate Small Business Committee there is no widespread fraud. (SAA, 2/18)

GSA requires contractors on its Federal Supply Schedules to certify their small-business status only once every five years, when an option on the contract is exercised.

The Small Business Administration has a big job ahead of it as the agency tries for the second time in as many years to revise the rules that determine whether a business is small.

These size standards matter deeply to millions of small-business owners who covet this status because they get priority on certain federal contracts and lending programs. In addition, they can compete for programs open only to small businesses.

The SBA's current size standards provide a clue about just how difficult it is to define "small": They consist of 37 different benchmarks for 1,151 industries and 13 subindustries.

"The more standards there are, the more confusing it is," said Michael Shaw, the assistant state director of the National Federation of Independent Business. "There's a tendency for conflict, and it's more difficult to comply."

In hopes of streamlining the standards, the SBA is seeking public comments through Feb. 1 on possible changes, said Gary M. Jackson, assistant administrator for size standards at the SBA in Washington, D.C.

The stakes are high. Last year small businesses won more than $64 billion in contracts, about 23 percent of all goods and services purchased by federal agencies.

"When the government uses tax dollars to support small businesses, it encourages them to continue going," Shaw said. "If that was not the situation, you would have large companies doing mergers all over the place and reducing competition."

Although these businesses are relatively small in size, the SBA estimates that they employ more than half of the work force in the nation's private sector and create three of every four new jobs. Economists say they also play a crucial role in driving innovation.

Since federal contracts are a critical source of revenue for large and small businesses alike, the SBA's proposal to streamline standards generated thousands of comments.

Over the past 40 years, the number of standards has ballooned as the SBA tried to account for unique situations and varying industry needs. For instance, a flour mill can make a go of it with 500 employees or fewer, the agency has ruled, but a small wholesale office supply company can do quite well with 100 or fewer workers.

For accounting firms such as Sacramento's Macias, Gini & Co. LLP, the SBA limit comes with a dollar sign. The firm smacked up against the $7 million benchmark years ago.

However, partner Ken Macias still sees his firm as small. With 105 employees and revenue of about $11.5 million, he sometimes competes against tinier rivals, but his biggest competition comes from multinationals with thousands of employees.

"Why am I not a small business?" he said. "I don't feel like we're a medium-sized business ... you've got some of these big corporations with more than $100 million ... in revenues."

Macias said he would like to see the issues discussed.

"I'm not considered a small business, but I feel like a small business," he said. "I know every one of my employees, I know most of my clients."

Small-business owners disagree among themselves about how to make the rules fair. While Macias thinks any business under $50 million should be considered small, others think the limit should be $10 million.

Fred Costales, the vice president of business development at Netelisys Inc. in Sacramento, which has 10 employees, said it's difficult to compete against larger companies in the information technology world.

He advocates a size of 100 employees or fewer and a revenue ceiling of $10 million. "We can keep it simple," he said.

Simple, however, is not a word that comes to mind when discussing the SBA's size standards. Depending on the industry, they allow businesses with as much as $48.5 million in annual receipts - or as many as 1,500 employees - to be classified as small.

The SBA tried unsuccessfully to change its standards in March. The staff proposed reducing the number of standards to 10 and basing selections solely on the number of employees, ranging from less than 50 to 1,500, depending on industry.

This idea sounds fairer to Rick Doane, owner of CM IT Solutions in Elk Grove. He said his company of six employees is tiny compared with businesses that make millions of dollars. Still, he thinks money-making companies should not be penalized.

"I would like to see the size of the company based on employees," he said. "If you start making money, it's not fair to disqualify them because they're making too much."

The SBA's proposed change, which was shelved in July, would have knocked out 34,100 of the 23.7 million businesses now in the ranks of qualified contractors, SBA officials said, but 35,200 others would have gained access.

"When you change the rules, it will affect some companies positively and some negatively," said Michael Stamler, spokesman for the SBA. "The ones who were affected negatively will complain."

More than 4,000 comments flooded the agency when the rules were proposed last March, many of them from business owners and industry groups that feared losing their small-business status.

Others, like small-business advocate Lloyd Chapman, used the opportunity to lobby the agency to set the limit on work force at 100 employees for nonmanufacturers. The agency's rule of thumb is 500 employees or fewer for manufacturing companies and $6 million in annual revenue for retail and service businesses.

The SBA's rules would affect most businesses in Sacramento, Placer and El Dorado counties. About 98 percent, or 51,128, of all businesses in the three counties employ fewer than 100 employees, said David Lyons, the labor market consultant for the state's employment development department.

Companies with 500 employees or more do not need the extra help like the regular "mom and pop" shops, said engineering firm founder Jim Mahar, echoing Chapman's point.

Still, Mahar also allows that one size does not fit all when it comes to manufacturers and the rest of the world. "A CPA firm versus an aircraft company are different worlds," he said.

Mahar, owner of Folsom-based EDA Inc., had some state contracts, he said, but he hasn't landed a federal contract yet.

"It's very hard to figure it out to start with, and once you do figure it out, you have to review all these needs," he said. "It's time-consuming."

Mahar is concerned that the size-standard changes may increase the number of larger companies he will have to compete with and lower his chances for a contract.

Political and business leaders are relieved that the SBA is seeking fresh input on the standards.

U.S. Rep. Nydia M. Velázquez of New York City, ranking Democrat on the House Small Business Committee, said the shelved proposal would have blocked millions of the nation's small businesses from gaining access to government contracts, loans and technical assistance programs.

Carol Bowyer, a senior counselor and instructor with the Federal Technology Center, a nonprofit organization that helps small businesses get federal contracts, said she was pleased at how the SBA handled things.

"The businesses ... said, 'Wait a minute, you're implementing this so fast,' " she said. "They felt there wasn't enough hearing on this."

So, in December, the SBA said it would conduct a series of public meetings across the nation on size standards. The agency said it plans to release details about dates and locations but has not yet done it, leading some agency veterans to predict the timeline will be extended.

Among the questions that the SBA will be posing are:

* Should part-time employees be counted the same as their full-time counterparts?

* Should revenue be used to determine business size?

* Should companies that currently qualify be exempt from the revised size standards?