Small Businesses, or Big Banks?

I would not be exaggerating much if I said that most of the federal government's programs, departments, and agencies do not result in a net positive effect on our nation or economy.  Many are actually destructive, negative vehicles through which the government exerts control over various industries, property, or persons, while still others are merely good PR items - that is, they sound like they are really doing good, but in effect are providing virtually no help to anyone. 

The Small Business Administration (SBA) is one of those government departments that sounds crucial to an economic recovery by helping small businesses compete against larger ones, and putting Americans back to work, fueling the American economy.

In reality, the SBA really only helps big banks become bigger, and richer.  According to the Congressional Budget Office (CBO), the SBA helps small businesses compete by enabling them to borrow at more attractive terms, such as lowered interest rates, than they would otherwise obtain.

However, only 0.5% (that's 1/2 of 1%) of all companies in the top 15 industries receiving SBA loans qualify as small businesses.  Additionally, about 25% of all SBA loans are owned by just 10 private banks, including Wells Fargo (7.3% of all SBA loans), J.P. Morgan Chase, U.S. Bancorp, and PNC Financial Services.

So instead of being a flagship program for helping small businesses, the SBA is, in reality, an engine driving profits for major U.S. banks.

This is just one example of clever nomenclature the federal government employs for programs, departments, and agencies so they sound better than they really are.  I mean, is anyone really going to sound like he is trying to help our economy recover if he proposes cutting funding for the Small Business Administration?

You should question every penny the federal government spends.  In most cases, notwithstanding how beneficial a particular government venture may sound, you'll be correct in assuming that any given government program, department, or agency provides little to no real benefit to persons and industries in need, or actually has a negative impact on our economy.

Perhaps our government should rename the SBA the Big Bank Profit Enhancement Program.

Sources:  CBO, Government Accountability Office, SBA.

Check out why The Cato Institute feels the SBA should be abolished (as you might imagine, I agree with Cato)...

http://www.downsizinggovernment.org/sba