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Washington Slashes Budget for Small Business Administration

Obama and Congress gut funding for small business programs.

By Lloyd Chapman
MarketWired
April 17, 2014

Petaluma, Ca-President Obama and Congress have slashed the budget for the Small Business Administration (SBA) more than any other federal agency. Over the last two years the SBA’s budget has been cut by over 25%. In 2011/2012 the SBA operating budget was $985 million. For fiscal year 2015 the SBA’s annual operating budget plummeted to $710 million. While every other agency has seen net increases of up to 10% or miniscule budget cuts of 1% to 2% the SBA is the only agency in the federal government to see its budget cut by over 25%. The annual operating budget for the SBA was higher 30 years ago when Ronald Reagan was President than it is today. The Department of Commerce has seen its budget increased by as much as 10%, the Department of Interior as much as 5%, the Department of Agriculture as much as 3% and the Department of Energy by 2.5%. The Department of Labor, Education, and Department of Homeland Security have seen their budgets cut by 1% to 3%. (link to graph)

The Obama Administration’s decision to slash the SBA’s budget comes on the heels of a flurry of stories in the press that expressed concern that President Obama intended to implement Ronald Reagan’s plan to permanently close the SBA by combining it with the Department of Commerce.

The Obama Administration has been embarrassed by a series of federal investigations and media reports that uncovered wide spread fraud and abuse in virtually every program administered by the

SBA.

After investigating the SBA, the Government Accountability Office (GAO) released report 10-108 that stated, “By failing to hold firms accountable, SBA and contracting agencies have sent a message to the contracting community that there is no punishment or consequences for committing fraud.”

NBC and CBS have both reported the rampant diversion of billions of dollars in federal small business contracts to many of the largest Fortune 500 firms in the country. Some of the firms they uncovered were receiving federal small business contracts included, Oracle, IBM, Hewlett-Packard, Microsoft, Rolls Royce and Walmart.

Every year of the Obama Administration, SBA Inspector General, Peg Gustafson, has reported the diversion of federal small business contracts to large businesses to be the number one problem at the agency.

A recent legal opinion by Professor Charles Tiefer, one of the nation’s leading experts on federal contracting law, found small businesses may have been cheated out of as much as one trillion dollars in federal contracts due to the rampant fraud in federal small business contracting programs.

The dramatic cuts to the SBA’s annual operating budget will no doubt make investigating and policing the rampant fraud that has been uncovered much more difficult.

 

For any questions regarding the Small Business Administration, please contact their spokesman:

Terry Sutherland

(202)205-6919

 

 

 

 



 
 

 
 

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