Obama's Stimulus Plans Will Favor Venture Capitalists over the Middle Class

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The latest economic stimulus plan that will come from President-elect Barack Obama and the Democratic Congress will likely contain new loopholes in federal laws and policies that will benefit wealthy venture capitalists that contributed heavily to Obama’s campaign and key Democratic leaders in Congress.

One of the most likely changes we could see in an Obama stimulus plan is an attempt to modify the Small Business Act’s definition of a small business as being “independently owned.”

The National Venture Capital Association (NVCA) and it’s well-heeled members want the definition of a small business as “independently owned” changed to include firms that are actually not independently owned, but controlled by some of the wealthiest individual venture capitalists in the country and possibly even some of the country’s largest venture capital firms.

Over the last few years, the NVCA and its members have spent millions of dollars lobbying Congress for changes in federal small business policies that would allow them to hijack billions of dollars in federal contracts earmarked for small businesses.

The colossal loophole for venture capitalists will be sold to the press and the public as a necessary change to “increase access to capital” for small businesses as a means of stimulating the economy.

The Bush Administration used the same tactic with great success to push the Wall Street bailout bill. President Bush went on national television and stated the Wall Street bailout bill was necessary because small businesses needed “ increased access to capital.” Using small business as a ploy to pass pro-big business legislation and policies is a common tactic in Washington.

If President-elect Obama and Democratic leaders like House Speaker Nancy Pelosi are successful, the middle class economy could be damaged even further. Millions of middle class jobs could be lost as billions in federal contracts, which are currently flowing to legitimate small businesses, will be diverted to a small number of firms controlled by wealthy venture capitalists.

Two pro-venture capitalist bills have been already passed in the House, H.R. 3567 and H.R. 5819. Since the Small Business Administration (SBA) and most of the major small business organizations in America opposed those bills, the new economic stimulus plan would provide another vehicle to pass-off the pro-venture capitalist and anti-small business policies as part of an economic stimulus plan.

Look for President-elect Obama and Democratic leaders to use the same tactics used in the selling of the Wall Street bailout bill to sneak their pork and loopholes past uninformed members of Congress, the press and the public. The most obvious loopholes will most likely not be available to the public until just before the bill comes up for a vote. Then the pressure will be ramped up on members of Congress to vote on the bill on an emergency basis since the economy is in such a dire state and small businesses desperately need “increased access to capital.”

If President Obama sincerely wants to stimulate the national economy he should honor his February 2008 promise to end the diversion of federal small business contracts to “corporate giants” and resist any pressure to create new loopholes that will divert more federal infrastructure funds away from the nearly 27 million small businesses that employ most Americans and create over 85 percent of all new jobs.

Lloyd Chapman is the President of the American Small Business League.