"It is better to Lend than Spend!" SBA and USDA's Role in Economic Stimulus
by Mike Thomas, Thomas USAF
February 1, 2010

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Last week President Obama outlined to the nation his plan to get the economy
back on track. The President's plan, if put in place, should create "Jobs, Hope
and Prosperity." In Summary:
Make America, not China the leader in innovation, new technology and "greenness"
Lend the funds to entrepreneurs to "take a chance on of their dream" and become
their own "boss," as small businesses create the jobs
Give community banks the funds and structure to make relatively cheap loans to
entrepreneurs
Give small business tax breaks for new jobs, equipment and technology
Beef up the treasury support, $30 billion in tarp funds, for banks and job
creating agencies such as SBA and USDA's Business & Industry Program
Keep the dollar low so exports can double over the next 5 years
Put a lid on and control all non-essential government spending
A Brief History
Thirty-three years ago, when I was in charge of reorganizing SBA for President
Carter, Administrator Weaver and I received a call from the White House asking
us to build a team to conduct a study on SBA's role as an economic stimulus
vehicle. This team of six individuals included SBA's Economist, a person from
both Labor and Treasury, and other SBA staff members. The task was to determine
how many jobs SBA loans created. In summary, the published study presented to
the White House and Congress showed that SBA's loss rate could reach $0.20 on
every dollar guaranteed before SBA's losses exceeded the new revenues the
government received on taxing the new employees. SBA now only looses 5 to 6% of
every dollar lent. The findings of this study were reconfirmed by a subsequent
independent report published by PricewaterhouseCoopers which was distributed to
the White House and Congress.
One only has to look back at the Clinton Administration (1993 to 2001) to see a
live working model of President Obama's plan. During President Clinton's 8 years
in office, the following was achieved:
Record job creation of 23 million jobs vs. none over the past 9 years
A reduction of government outlays as percentage of GDP from 22% in '92 to 18% in
'00
Record Exports
Major advances in innovation and technology
A 300% growth in SBA loans
A 1,000% growth in USDA Business & Industry loans
A 300% growth in the stock market's value
A turnaround from deficits of $290 billion in '92 to a budget surplus of $236
billion in '00
The absence of the United States being involved or starting wars
In general, "a more prosperous and happy America"
In conclusion, let's get on to "jobs, hope and lending" and cut out the
"wasteful spending!"
Mike Thomas
mike@thomasusaf.com
(404) 365-2042
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