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June 08, 2009

A Quick Note on Stimulus and Small Business

Marc Tracy

bizbox.slate.com

Summary

Small businesses and the small business blogosphere have tended to view the Obama administration's $787 billion stimulus package from the pe

Small businesses and the small business blogosphere have tended to view the Obama administration's $787 billion stimulus package from the perspective of how it is likely to throw extra federal contracts small businesses' way. 

Certainly we've covered the stimulus in this manner; more recently, Fortune did, noting that 75% of the $787 billion set to be spent is likely to be spent by August 2010. And it's true! The stimulus will increase federal contracts, and, given a mostly (though not fully) followed law mandating that 23% of all federal contracts go to small businesses, the stimulus will indeed increase federal contracts won by small businesses.

But to fixate on this aspect of the stimulus is to miss the stimulus's larger point. Though this is far from always the case, here the stimulus's biggest benefit for the economy as a whole is also its biggest benefit to small businesses: by manufacturing $787 billion in extra demand autonomously, it is likely further to juice demand and to increase consumer spending. Even if not all of that goes to small businesses, much of it will. And achieving a new plateau of responsible spending is the absolute single most important thing for helping the country's small businesses.

Something to keep in mind as we debate future ways for the government to take pro-small business steps. Until demand reaches the necessary point, the rest is commentary.


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