At a small business conference in Washington DC today, Federal Reserve Chairman Ben Bernanke had ‘encouraging words’ to attendees. Lending is back to “normal.” Actually, banking lending to small businesses is down $40 Billion in the past two years. But what Bernanke is implying that banks are now lending as they should have been all along, not as in the reckless days.
The lack of credit is hurting small businesses. But even more so is just the lack of business! To make matters worse, the Federal government under the Obama Administration is playing the game of ‘crony capitalism’. Every minute of each day, the Federal government is spending $1 Million dollars per minute on purchase contracts intended for small businesses to large corporations. It’s enough to make one cry!
The so-called stimulus package that Obama and Congress rammed down the throats of American taxpayers has been a failure. Most of the $787 Billion dollar package that has been spent went to pad state and local government budgets and payrolls. The fraction that did find it’s way to the private sector mainly went to firms with political ties either via campaign contributions or union connections.
Small business is the engine that drives America. In past decades, over 95% of all new jobs created have come from small companies with 50 or fewer employees. This is the heart and brains of our economy.
Ben Bernanke can say what he wants to about getting banks to lend more to small businesses. But the current political climate of uncertainty and threats of higher taxes, mandates and regulations is scaring small business from expansion. Until the Obama Administration reverses course on it’s progressive agenda, small business will continue to be stifled.