The Small Business Administration’s (SBA) stated mission is to aid small businesses and strengthen the economy. Under its popular 7(a) program, SBA provides private lenders with loan guarantees. In the case of default, SBA steps in to cover up to 85percent of the lender’s losses.

When it comes to reporting on the Small Business Administration, it seems to me that most journalists simply assume that if a government agency exists to “help” small businesses then it must be good. So I was pleased to read a weekend piece from two investigative journalists with the Dayton Daily News that challenges the conventional wisdom on the SBA.

The Small Business Administration was created in the 1950s to make it appear as though federal politicians cared about the plight of the “little fellow.” A more helpful expression of concern would have been a rollback of the federal government’s increasingly heavy hand in the post-New Deal economy. Instead, they went with the more politically alluring option of using the heavy hand to deliver handouts.

Washington Post reporters Jerry Markon and Alice Crites deserve kudos for turning the spotlight on the Obama administration’s use of taxpayer funds to curry voter favor in the critical battleground state of Ohio. Markon and Crites cite a laundry list of largess that has poured into the state in recent years:

It’s always nice to hear from readers in the “real world” who deal with government programs first hand. I recently received an email from a credit analyst with a commercial bank who read my essay with Veronique de Rugy on terminating the Small Business Administration. I think it’s worth sharing (name withheld):

That’s the question being debated at the Wall Street Journal’s website. Representing the pro-abolition position is Cato adjunct scholar Veronique de Rugy. Veronique and I wrote an essay for Downsizing Government that makes the case for terminating the Small Business Administration.

Contrary to what various news outlets are reporting, President Obama is NOT proposing to cut government. The administration is proposing to take four independent federal agencies that specialize in corporate welfare – along with the Office of the U.S. Trade Representative – and combine them with corporate welfare programs at the Department of Commerce to form what I would argue should be called the Department of Corporate Welfare.