Obama Prefers Some Minority Businesses and Punishes Others

Lurita Doan
Monday, October 04, 2010

Here we go again. Obama, the self-designated "post-racial" president, has once again used race as a standard for privilege and has shown preference for certain minority groups, such as Alaskans and Hawaiians, over others.

When given a choice to do something to help small business development, President Obama has instead, exacerbated the problems and compounded the challenges facing small business. The latest Obama misstep with small business was a recent decision to extend favored status to particular small businesses operating as Alaskan Native Corporations (ANC) or as Hawaiian Native Corporations, while eroding the competitiveness of companies located in the many, different, historically underutilized, economic zones (HUBzone) located throughout the U.S. in areas of sky high unemployment.

The unintended consequence of Obama’s recent decision is that businesses and entrepreneurs may be reluctant to locate their companies in regions of acutely high unemployment where investments are most needed. If Obama really wanted to help small businesses and encourage job creation, he should be providing all the tax and regulatory aid possible to small businesses and direct these incentives toward helping small businesses that are willing to employ, train, and invest in the areas across the nation that suffer from the highest unemployment rates.

What makes President Obama’s decision even more painful is the extension of contractual privileges to companies that can claim a dubious, historical, social-economic victimhood. In particular, Obama’s decision will favor Alaskan Indians and Hawaiians, who have argued successfully to the Administration that they deserve preferential treatment.

Team Obama, once again, is counting on sound-bytes and hype to convince Americans that the Small Business Jobs Act will benefit small businesses and encourage job creation. No doubt the Administration is convinced that few people will ever read or understand the details buried in the bill. And, the small business bill provides much-needed cover for Democrats seeking re-election who need talking points and are trying to generate distance between themselves and the disastrous healthcare reform legislation. Of course, it is also possible that Team Obama simply does not understand the true ramifications of the Small Business Jobs Act (H.R. 5297).

The HUBZone designation was one of the few governmental initiatives that had as its goal creation of jobs within, and growth of, economically distressed regions in the U.S. In addition, HubZone regions are economically distressed areas which tend to be heavily populated by minorities.

But, Obama, influenced by unions and his old-boy network of legislators, tilted toward legislation that was designed to satisfy unionized labor’s voracious appetite for “more”, rather than an effort that would help minorities.

Oh sure, “preferred” minorities will do well--maybe. Many Americans may be unfamiliar with the nuances government contracting, but those who are knowledgeable are aware of the schemes involved in the billions of dollars of federal contracting funding awarded each year to Alaskan Indian firms--few of which employ more than a handful of Alaskans, and yet, receive billions of dollars of preferential, bundled, set-aside contracts. But solving that problem would mean that Obama would have had to tackle powerful legislators.

So instead of eliminating an unfair preference that the nation can no longer tolerate or afford, President Obama decided to expand it to include Hawaiian native corporations. Exactly why Hawaii native companies need a special, protected status and are allowed to submit no-bid contracts of unlimited value remains a mystery. Other small businesses certainly can’t do that.

The Small Business Jobs Act legislation is a canard. It fraudulently posits that it will improve the lot of the small business community, while the real business of growing the economy and creating jobs has been stifled with excessive governmental interference. But perhaps, the legislation simply shows just how stupendously Obama misunderstands the needs of small business and what it takes to encourage economic growth.

In the end, President Obama’s recent decision will spark a disinvestment in many of the hardest hit economic zones across the country as small businesses either move, or reduce their hiring. How dumb is that?