Time to check in again and see if Mr. King's assertions have panned out or if mine are closer to reality than his.
In May I claimed true small businesses under 20 employees were not going to see anything directly and almost nothing indirectly from the stimulus. Mr. King and Small Biz Labs claimed that "a lot of small businesses would benefit."
First, the ARC loan - the only loan created in the last 50 years by the SBA that is truly targeted at small businesses (under 20 employees). The $255 million program constituted 1/100th of one percent of the $1.5 trillion doled out in Oct 2008 and Feb. 2009 - the rest went DIRECTLY to big banks, big business, and big government (states, etc.)
Of that miniscule $255 million aimed at the 56% of GDP and 65% of job creation created by small business, $131 still has not been loaned ten months later!
Of the $124 million that has been loaned, almost all of it has gone to extremely healthy businesses with perfect credit who are laughing all the way from the bank. Karen Mills, head of the SBA, claimed ten months ago that the ARC loan would provide "immediate relief" for "distressed but viable" small businesses. Didn't happen.
It gets worse. Not only is the direct aid to small business 1/100 of one percent of the pie, not only has only half of the crumb been doled out, and not only has the half of a crumb gone to businesses that largely don't need it, the politicians are now hell-bent on shutting down that program immediately and cutting off everyone involved.
And what of the trickle down effect that SBL claimed as the "logic behind our forecast"?. We went from 8% to 10.2% unemployment - that's the only hard statistic we have as to how the stimulus has directly affected small business (small business accounts for 65-70% of all job creation - if job losses are going up, small businesses are not getting the "stimulus" they need to create jobs.)
SBL will likely respond with more anecdotal and theoretical "logic", but the statistics say something quite different. And if we randomly acquired 1,000 anecdotal stories of how the stimulus has affected small business, the negative stories would be very close to 1,000.
Chuck Blakeman
of CO
@
Nov 21, 2009 12:36:59 PM
Setting the Record Straight
Chuck:
Please try to get your facts at least close to straight:
1. I never said very small businesses would not benefit from the stimulus package. What I said was there are programs within the stimulus package (mass transit, for example) where it is unlikely very small businesses will directly benefit.
Other programs - both spending programs and tax changes - will directly benefit very small businesses. For example, my own very small business (2 employees) is benefitting from the tax changes.
2. The broadly accepted defintion of a small business is less than 500 employees. There is no one correct defintion and there will always be disagreements on how to define small business. You think 500 is way too big, others feel companies up to 1000 or 2000 employees should be classified as small. As researchers we have to choose and choosing the commonly accepted defintion is the obvious choice.
3. I never said only 4% of small businesses will benefit nor do I have any idea where you got this.
4. Intuit had no involvement in this study.
It clear you don't like the stimulus package. Fine. But please don't misrepresent my position or the facts.
Also, I continue to urge you to read the actual study and get a better grasp on the legislation.
Steve
Steve
of CA
@
Jul 23, 2009 12:59:17 PM
King's research is completely flawed
I talked with Steve King for 90 minutes. In private he admitted to me that it is unlikely very many businesses under 50 employees will benefit from the Stimulus, and it is quite like that none in the 20 employee or less range will benefit.
Yet he continues to say "small" business will benefit. The reason he can get away with this is that he doesn't tell you how he defines "small". Mr. King is using the SBA definition of "small" - businesses with less than 500 employees, which contsitutes 99.97% of all businesses in America.
Using that definition of "small" Mr. King can continue to claim that "small" businesses will benefit, but in private conversation with me, his admittance that business under 50 employees will be unlikely to benefit creates a more accurate picture of reality.
The reality, according to Mr. King's own admission, is that less than 4% of businesses in America will benefit directly from the Stimulus (businesses with less than 50 employees constitute 96% of all businesses).
Mr. King's definition of small is like calling anyone under 7" 6" "short". Using that definition, it's irresponsible to even proceed with a study - the study group range is so broad as to make any conclusion meaningless.
By Mr. King's own admission, only 4% of businesses will benefit. But his study was funded by Intuit and sponsored by SCORE, who will wave this study at true small business owners (SCORE's clients are virtually all businesses with less than 20 employees), and will mislead them into thinking the government stimulus is going to help them.
That is deceptive at best.
Chuck Blakeman
of CO
@
Jul 23, 2009 00:40:50 AM
We have no Capitalism anymore in USA - it's So Monopolism now
During past 10-15 years of "global economic" reform and "free trade" our Feds and financial clans have been successfully working on conversion of our system into monopolistic body with socialistic engine. They wanted to give birth to an ugly mutant and they did it. I call the new system Mastrubism, or you give it your name. It's partly socialism due to high spending on people at the bottom and free huge money for selected by government leading giants/companies in their industries. This reminds me Soviet Union/USSR a lot. We used to have full government control of all industries starting with manufacturing, then distribution to warehouses and ending with large government controlled chains of small and large stores/retailers. That basically what's going on now slowly but surely here in USA. Government taking over large giants by borrowing them fresh printed money which costs government almost nothing. This is hidden type of step-by-step privatization of these formerly privately own chains. This is why government was demolishing our normal capitalistic economy starting from 1970 by almost uncontrolled import of import cars and other products and making local manufacturers go out of business. It started with manufacturers, then professionals such as programmers and engineers in 2000 and up. Then the most deadly hit was introducing and empowering by credits and patronage "small business killer chains" like Walmart, Kmart, HomeDepot, Lowe's, Staples, Target, BestBuy, Sears, Marshals, Liquidator, Ikea, etc. They all say to us "Save More, Live Better" or "More Saving, More Doing". Oh yes! However what they not telling us, that we eventually will close most of our small businesses operated by us, our family members, friends, neighbors, etc. Who will benefit from buying from these stores? Mostly people in need who are on government assistance, people with stable jobs with stable companies, government employees, and similar individuals. If you have more money then you can spend per month you will survive without going to this kind of large stores which are basically working for government now. The goal here is to socialize the retail industry by slowly and surely killing small independent retailers with "price beating"/ "wholesale to public" concepts and tools. Who is wining here? Nobody, but government and its direct investors/clans. What it does to our Capitalism and USA market? It kills it. The first rule of Capitalism is to protect small businesses and local manufacturers from monopolists in their industries. There are has to be no blood sucking giants, if we want to preserve healthy capitalism and its creative spirit. Government was created to protect small businesses from giant monopolies and uncontrolled imports. It failed to do so and sold its soul to clans. Every smart and talented small business owner knows that it's impossible to fight a wholesale to public giant, and most of businesses give up to fight or just not being given new births anymore.
AC
of NY
@
Jul 19, 2009 04:39:12 AM
stimulous fiasco
Could someone explain to me how South Carolina's purchasing of a fleet of new school buses or building a new rec center in Charleston can stimulate our economy? I don't understand it. It's like throwing good money after bad. And folks, we're going to have to pay all this back one day. How? How knows. Insanity!
Sharon
of SC
@
Jul 11, 2009 23:30:39 PM
Small Business
This so-called stimulus is a miserable failure. I have a small Civil Engineering Business and was optimistic about some Gov't work. Now I had to lay off all 4 of my employees.
Problem is "shovel ready" means no work for Civil Engineers.
We had met with some local government representatives about doing some rehabilitation projects for some of the sewer systems. Everybody was optimistic about this because to rehabilitate a sewer system costs about 20-30% of the amount it takes to repair a system once it failed. They figured they could spend the money now and it would save their budgets large amounts of money in years to come. Economically it made sense.
Problem is we would not be able to qualify these projects due due stipulations in this so-called stimulus about being shovel ready. It takes about 9 months to permit these jobs through the Department of Environmental Protection.
So instead of spending the mooney on projects that would save future costs the local governments instead had to spend them on projects that could be under construction in a more timely manner. They are now doing landscaping projects because they can be ready in a shorter time. And the local government told us they had never planned on doing these landscaping projects but was the only way for them to qualify for the so-called stimulus money. Teporary projects producing temporary jobs for essentially useless infrastructure.
As part of the so-called stimulus application the local governments msut estimate the amount of jobs that would be part of the project. It is in these applicants best interest to have a high estimate as it gives them the best chance to receive the stimulus money.
This so-called stimulus has turned out to be a boondoggle.
Chuck Blakeman of CO @ Nov 21, 2009 12:36:59 PM
Steve of CA @ Jul 23, 2009 12:59:17 PM
Chuck Blakeman of CO @ Jul 23, 2009 00:40:50 AM
AC of NY @ Jul 19, 2009 04:39:12 AM
Sharon of SC @ Jul 11, 2009 23:30:39 PM
Jim Fraser of FL @ Jul 01, 2009 11:44:45 AM
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