Democrats and the Stimulus Drug

Lurita Doan
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Posted: Sep 20, 2010 12:01 AM
Democrats and the Stimulus Drug

Democrats in congress have become addicted to stimulus-type legislation as the cure to all ills. The Senate recently passed another stimulus, the Small Business Jobs Act (H.R. 5297) that is unlikely to create jobs, and shows that Democrats understand little about government contracting and even less about the needs of small businesses. But the small business stimulus drug sure makes Democrats feel good.

Democrats view a $30Billion dollar facility to subsidize bank loans to small companies as the legislation’s centerpiece. But, the problem isn’t a shortage of legislation allocating funds for small businesses; the problem is a shortage in confidence in legislators who have proven themselves hostile to the business community.

Democrats in congress seem determined to increase regulatory requirements and tax levies on business. Confiscatory taxes and hostile reporting/auditing environments create uncertainty in the business community. This uncertainty translates into a gowing level of caution in lending that is harmful to small businesses—the current bill does little to change that.

If anything, the bill has made the situation worse.

The legislation also proves that Democrat leaders in congress don’t know diddly about government contracting or the challenges facing contracting professionals. Over the past five years, multiple congressional studies reported that there are not enough federal procurement professionals to handle the bloat in federal spending. But, Democrat leaders are oblivious.

Federal spending has increased each year, but the federal work force directly responsible for properly administering all the spending has not. Ten years ago, one contracting officer existed for every three hundred thousand dollars ($300,000) in federal contracts.

With current contract spending growing to one trillion dollars, and no growth in the number of federal contracting officers, our government now has one contracting officer for every one hundred million ($100,000,000) in government spending. HR 5297 will place an even more dramatic burden (Sec. 1311, p.83) on contracting officers which will likely slow down procurement and decrease the number of contracts processed. All bad for small businesses.

Section 1313 (p. 88) appears to make a bold move against further bundling of government contracts. (Bundling is where several small procurements of a few million dollars are combined as an enormous multi-million or multi-billion dollar procurement which makes it difficult for small businesses to compete for the contract). Anti-bundling legislation is not new, but is rarely enforced because congress is eager for contracting professionals to award funding quickly for pet projects.

Congress has known for years that there are too few contracting officers, but during the past 19 months of bloated spending, they have made the problem dramatically worse. Instead of increasing the number of contracting officers and removing bureaucratic impediments to good contracting, democrat leaders have elected to grandstand.

The rationale is hard to fathom that calls for so much new spending, on so many questionable programs, without any attempt to increase the number of contracting officers who are solely responsible for directing the funds. But, it seems that Democrat stimulus addicts require increasingly large doses to satisfy their voracious appetites regardless of the strain on the system.

While the bill (Sec. 2103) increases the amount of the allowable start-up capitalization deduction, the increases are negligible and are of insufficient benefit to offset other, more intrusive requirements of the legislation. Furthermore, the legislation seems to encourage tax avoidance and sleight-of-hand for declarations of taxable activity (Sec. 2041).

The Small Business jobs Act provides much-needed window dressing and political cover for Democrats facing angry Americans during the final 6-weeks leading to the mid-term elections. Democrats can claim they supported small businesses though the sad reality is that their policies over the past 19 months have crushed small businesses.

Comprehending the full scope of the 237 page legislation and counting its true cost requires the reading of almost 10,000 pages of existing legislation, since, the small business bill is affected by requirements created in the Healthcare reform bill and amends portions of the 1986 IRS Tax Code.

The House still has to vote on the legislation. It’s likely that less than 10% of that legislating body has read the requisite documents to understand the bill’s long-term consequences. Congress should treat Obama’s newest “stimulus” like the addictive drug it is—and just say “no”.