Don't divert small-business aid to big business

On paper, 2005 was a very good year for Americans with small businesses. A "record breaking" $79.6 billion worth of federal contracts were given to small businesses, according to a press release issued by the Small Business Administration.

This is exciting news; small business, we're told (at least 10 times a week during election cycles) is the engine of innovation and hard work that drives the American economy.

So who are some of these little dynamos scooping up federal dollars? See if any of these names ring a bell: Northrop Grumman. Boeing. Bechtel. General Dynamics.

Since 2000, federal contracting has exploded in terms of annual volume, growing 55 percent to $377 billion in 2005. By law, at least 23 percent of that money should be awarded to small businesses – in order to nurture new ideas, the nimble exploitation of new economic opportunities, and the revitalization of neighborhoods that are down on their luck but trying to make a new start.

But nearly $5 billion of contracts – coded as "small business" – went to 13 of the largest government contractors, according to a recent review by The New York Times of data provided by Eagle Eye, a research firm based in Virginia. The same firm found that the percentage of federal contracts given to small businesses decreased last year from 20 percent to 17 percent.

Moreover, an unknown percentage of that 17 percent went to big businesses due to error, fraud, or loopholes. Some of the confusion surrounding these figures has been created by the Small Business Administration itself; newly appointed SBA administrator Steven Preston is refusing to release to the American public a list of firms coded as small businesses in fiscal year 2005.

A preference for massive, politically connected firms has been this administration's stock-in-trade. From Vice President Cheney's secret energy task force to the former industry lobbyists who weakened or destroyed federal environmental protections to the military contracts awarded to cronies of elected officials, a tone has been set: Big firms with Republican officers have prospered at the expense of transparency and the public good.

But small business has been central to this administration's economic policy. On issues ranging from fighting the estate tax to its aggressive campaign for tax cuts to its resistance to raising the minimum wage, the administration's war of words has been distinguished by its intense public devotion to the American small-business owner.

Putting its money where its mouth is – and was – wouldn't just help the Bush administration match its deeds to its rhetoric; it would be a politically shrewd way to court the votes of the millions of Americans who depend upon small businesses for their livelihoods.

From that perspective, using the SBA to rob small business on behalf of big business is a foolish long-term strategy.

But beyond that, it's also downright un-American. To the people of Western Europe, inventor and entrepreneur Ben Franklin represented the spirit and promise of America more than anyone else – including George Washington. Franklin turned new ideas into useful goods – everything from the lightning rod to an odometer to the revolutionary Franklin stove. And over the next couple of centuries, Franklin's spirit of industry – which he relentlessly flogged in a brand-building campaign that would turn Coca-Cola marketing executives green with envy – matured into a shorthand for the independent entrepreneurial spirit that remains one of America's most attractive features to the world as a whole.

Small businesses bring the small-scale but big-impact innovation of Ben Franklin into the modern era; as Republican leaders have said time and again on public occasions, small businesses are the front line of capitalism, and often the vehicles for helping outsiders and new immigrants get ahead.

Cozying up to big business is a proven way to maintain political power, but if the Bush administration wants to bet on the future, it needs to put its money on the little guy. A good start would be to follow the directives of the SBA's own inspector general – and make sure small business contracts go to small businesses.

James Norton is a former Middle East editor of The Christian Science Monitor and the author of "Saving General Washington: The Right Wing Assault on America's Founding Principles."

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