Trump Budget Kills Nixon-Era Affirmative Action Corporate Welfare Agency

The Trump administration’s first budget would shutter the fifty year old Minority Business Development Agency (MBDA).

The MBDA hands out grants and runs federally funded “management consulting operations” around the country. It has long been targeted by conservatives as a form of corporate welfare.

The agency has also been criticized for encouraging a “flight from white.” Since it offers aid only to business owned by officially recognized minorities, it creates an incentive for Americans to seek to have themselves recognized as non-white minorities. In 1977, Americans Indians successfully had their classification changed from white to Asian. More recently, some Americans of Middle Eastern descent have been lobbying to be recognized as minorities as well.

One effect of designating more Americans as officially recognized minorities has been to dilute the benefits of affirmative action and the MBDA to the originally intended recipients, African Americans.

The MBDA was created by Richard Nixon with a 1969 executive order under its original name of the Office of Minority Business Enterprise. The idea was that the agency would work to remedy the effects of past discrimination. It was a precursor to a series of programs that what would later be labeled “affirmative action” policies.

At its creation, the MBDA was tasked with the mobilization of federal and local resources for the promotion of minority business efforts in the United States with a focus on Black, Hispanic, and Native Americans. In more recent years, this group was expanded to include Hasidic Jews, Asian Americans, and Pacific Islanders.

The agency currently maintains approximately forty walk-in centers across the US, designed to provide consultation to minority businesses. These centers assist walk-ins with loan acquisitions, grant applications, and the navigation of forms and certifications for the purpose of securing government procurement contracts. In addition to their walk-in centers, the MBDA establishes guidelines for all federal agencies in attracting and selecting minority enterprises for the purpose of procurement contracts.

Though the details of this agency’s closure are still up for approval by the House and Senate, it is expected that the Small Business Administration (SBA) will continue to support a subset of the functions that the MBDA currently provides.

The Small Business Administration (SBA) pre-existed the MBDA, but has historically worked side by side with the agency on its minority-facing initiatives. Funding for the SBA in the 2018 budget proposal is reduced slightly (by about five percent), but has fared better than most agencies outside of national security sectors. Nonetheless, the SBA itself has also been in the firing line in recent decades, itself having narrowly survived termination during the Clinton administration.

The MBDA will not go quietly, of course. Lobbyists are already besieging lawmakers to restore funding to the agency.

As proposed, closeout of the MBDA is expected to cost six million dollars, and is slated to begin at the start of 2018.


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