Within the next few weeks, the federal government is expected to make spending cuts that will inevitably hurt legions of small businesses and place thousands of public-sector workers on unemployment lines. And African Americans will most likely feel the brunt of the harshest blows.
If the White House and Congress fail to reach an agreement on how to structure a comprehensive deficit reduction package by March 1, their action – or rather inaction – will trigger automatic defense and domestic spending cuts (excluding Social Security, Medicare and veterans’ benefits) totaling $1.2 trillion. Needless to say, suppliers will lose government contracts while agencies will slash payrolls and services.
So why are we in this jam? For years, Democrats and Republicans have been playing a game of political chicken. The end result has been to “kick the can down the road,” using an overused but apt expression of this travesty.
Just check out how they’ve dealt with pressing fiscal matters. Let’s start with “sequestration,” that process you’ve probably heard over and over again during the past 18 months. It grew out of the failure of the Obama Administration and Congress to exercise their negotiating chops or political will during the debt-ceiling battle of 2011. To end an impasse largely driven by ultra-conservative Tea Party House Republicans, our political leaders in their collective wisdom enacted the Budget Control Act, creating a bipartisan “super committee” to shrink the budget deficit by $1.2 trillion over the next decade. Unable to reach an accord from August to the late November 2011 deadline, members just gave up and then engaged in partisan finger-pointing to assign blame for the group’s ineptitude. The deadline for automatic cuts was then pushed to January 1, 2013 (Remember all that talk about “the fiscal cliff”). After President Obama’s re-election in November 2012, the White House and congressional Republicans once again jousted over the best way to trim the deficit. This time, the GOP caved on taxes and structured an agreement that once again called for delaying across-the-board government spending cuts for another two months.
Mindful of the ticking time bomb and a wimpy recovery – the economy contracted at annualized rate of 0.1% for the fourth quarter of 2012 – Obama said in a press conference on Tuesday that Congress “should at least pass a smaller package of cuts and tax reforms that would delay economically damaging effects of the sequester for a few more months. There is no reason that the jobs of thousands of Americans…should be put in jeopardy.”
If the president and Congress can’t sort out this mess and sequestration goes into effect, it would be devastating to business development and job creation.
Even though Obama recently signed as part of the military spending budget a series of measures to enable enterprises to compete for more federal contracts, many Black entrepreneurs believe across-the-board spending cuts would decimate procurement opportunities – especially those for defense contractors. For the 11th straight year, the federal government has missed its overall small business contracting goal of 23% for total procurement. And as for Black-owned firms, contracts dropped 8% to $7.12Â billion in fiscal year 2011, compared with fiscal 2010.
At a recent SBA conference, Ron Perry, president of the National 8(a) Association, a group of minority government contractors, advised firms to hold discussions with agencies and at the same time, batten down the hatches. Such moves, however, have a ripple effect: As companies downsize operations, they lay off employees and eliminate vendors who, in turn, will be forced to fire their workers.
For African American government employees, it will be even rougher sledding if government staffing is
slashed through a budget sequester. Even some Republicans had to admit that defense-related cuts alone could eliminate as many as 1 million jobs. The Black unemployment rate currently stands at 13.8%, and continues to be alarmingly high due to the fact that Blacks have been disproportionately impacted by the declining public sector. In fact, a UC Berkeley Labor Center study revealed African Americans are 30% more likely to hold government jobs than other workers; from 2008 to 2010, 21.2% of African American workers were employed in the public sector versus 16.3% of their non-Black counterparts. From January 2011 t0 January 2012, the total percentage of public-sector employees workers dropped some 9%; those employed by the federal government fell roughly 5%. Whether sequestration is implemented or not, expect the delivery of more pink slips.So how can we fix this problem? We cannot let a dysfunctional Washington wreck our businesses and employment status. For us, the kick-the-can approach is not an option.
We must make collective, proactive power moves. That means wearing out shoe leather, sending letters and emails and sing social media to get attention at 1600 Pennsylvania Avenue and Capitol Hill. We must force political leaders to exercise fair, prudent and responsible judgment in scaling back programs so they don’t further hobble those who have been the most challenged and unable to gain access to financing and contracts.
Business owners must mobilize and tap into groups like the Congressional Black Caucus, National Urban League, US Black Chamber and others to ensure the White House enforces provisions of the Small Business Jobs Act related to “parity†among federal procurement programs; unraveling “bundled†contracts; and holding primes accountable in meeting their subcontracting obligations. To further solve the unemployment conundrum, the Obama administration must develop a comprehensive program for urban America with job creation at its core. We must get them to improve government outreach efforts so those in need of support and services can effectively access offices of business advocacy and equal opportunity – and persist until you gain answers or assistance.
From my vantage point, the best way to help fix Washington and make a huge dent in the budget deficit is to develop more innovative, employee-producing companies and productive, tax-paying employees. It will require urgent advocacy to ensure our protection and advancement as full participants in the workforce and business mainstream.