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Big-business boondoggle

House bill rewards large firms at expense of small ones

By Lloyd Chapman
Rocky Mountain News
October 13, 2007

Politicians in Washington love to talk about how important small businesses are to our nation's economy. They use catch phrases like "small businesses are the heart and soul of America's economy."

They're right about that. According to the U.S. Census Bureau:

98 percent of all U.S. firms have fewer than 100 employees, 89 percent have fewer than 20 employees and the average U.S. firm has about nine employees.

These 25 million small businesses employ more than half of all Americans and create more than 97 percent of the new jobs, more than 90 percent of the exports and more than 90 percent of the technical innovation in America.

The reality of our government's true commitment to America's small businesses becomes clear when you quit listening to what politicians say and watch what they actually do. A perfect example happened recently in the House of Representatives. The House just passed HR 3567, the Small Business Investment Expansion Act.

Members of the House backed by the National Venture Capital Association and investment groups that would benefit from the bill pushed the bill through the House, telling their colleagues it would increase access to capital for small business.

What the bill actually does is allow some of the nation's largest venture capital firms and financial institutions to gain access to billions in federal small-business contracts. Under the Investment Expansion bill, multibillion-dollar venture capital firms can own up to 49.9 percent of a small business and still qualify for federal small- business contracting programs. The bill is written loosely enough that billionaire investors can start a venture capital company, buy 49.9 percent of a small business and qualify for a piece of more than $80 billion a year in federal small-business contracts. The bill was designed as a colossal loophole for wealthy investors who make big campaign contributions. Multibillion-dollar venture companies will be able to masquerade as small businesses and dominate virtually every industry small businesses participate in.

Billions in federal small-business contracts would go to firms that would essentially be subsidiaries or divisions of big businesses. Thousands of legitimate small business would be forced out of business. Imagine a typical Denver small business selling office products, trying to compete for even the smallest government order, going head to head with a firm that is 49.9 percent owned by Donald Trump.

The U.S. Chamber of Commerce, the American Small Business League and major small business groups across America all opposed HR 3567.

To make matters even worse, in June the Bush administration adopted a Small Business Administration policy that will allow the nation's largest defense contractors to keep billions in federal small-business contracts. Originally, Bush officials claimed Fortune 500 firms received small-business contracts through "miscoding." The new policy allows firms like Lockheed, Boeing and General Dynamics to keep their miscoded contracts until the year 2012. More than $300 billion in small-business contracts will go to very big business.

So what can we do? Plenty. Get on line, get on the phone and contact your senators and your representatives in Congress. Call the White House. Call your local Chamber of Commerce. Call the Colorado Association of Commerce and Industry. Tell them you want big business out of small-business programs.

Legislation like HR 3567 will never see the light of day if more people would just send an e-mail or make a call. Do Colorado and America's 25 million small businesses a favor and get involved in your government.

Lloyd Chapman is the president and founder of the American Small Business League and a former small-business owner. For more information: asbl.com.

Copyright 2007, Rocky Mountain News. All Rights Reserved.

Source: www.rockymountainnews.com