Attacks on programs that support economic mobility

By Alphonso David

In the middle of the recent government shutdown, with federal workers furloughed and basic services having ground to a halt, the administration found time to push through sweeping changes to the Disadvantaged Business Enterprise (DBE) program, with little to no public awareness.

The DBE program, first instituted under President Ronald Reagan in 1983, was created to address systemic racial and gender exclusion in federal transportation contracting. The program sought to ensure that minority- and women-owned businesses had a fair shot at competing. Now, four decades later and on the first day of the federal government shutdown, the Department of Transportation stripped the program’s core presumption of disadvantage through emergency regulations. That fact and its timing are telling, as it underscores the strategic and relentless campaign to dismantle programs designed to expand opportunity.

This same campaign to undermine economic mobility is also being waged against the Minority Business Development Agency (MBDA). In October, Russ Vought, director of the Office of Management and Budget, stated that there will be a continued focus on reductions in force (RIFs) for the remaining staff at the MBDA. The legality of the administration’s initial executive order effectively gutting the MBDA is questionable and currently subject to litigation. But legality aside, it is simply bad economic policy. The ramifications will not just be felt in Black and Brown communities – they will ripple across the country. If the administration is serious about keeping the United States as the world’s largest engine for prosperity, it should expand the MBDA, not dismantle it.

It might surprise some people, but the MBDA was formed under Republican President Richard Nixon. The agency’s primary mission is to assist “minority businesses” in overcoming social and economic barriers-–especially in securing federal contracts. Through technical assistance programs, it offers resources to minority entrepreneurs that enable their businesses to compete and thrive.

In the 1968 presidential campaign, then-candidate Nixon embraced the idea of “Black Capitalism.” Nixon’s push for minority entrepreneurship was not born out of some pronounced fealty to social justice. Rather, he understood that removing the racial barriers to entrepreneurship was good economics, not just good politics.

To Congress’s credit, funding for the agency—at the direction of some Republican majorities—more than doubled over the past decade. In 2021, Congress passed the Bipartisan Infrastructure Law, making the MBDA a permanent agency. Despite the current push for government spending cuts, the MBDA is a proven investment, not a wasteful bureaucracy. In 2023 alone, the MBDA facilitated over $1.2 billion in capital, secured over $1.6 billion in contracts, and generated and saved more than 14,000 jobs.

The administration’s decision to effectively dismantle the agency ignores our economic reality and the underlying premise of the free enterprise system. We achieve maximum economic growth when everyone can fairly compete for the same opportunities. The same is true for the DBE program. By removing the presumption of disadvantage, the Department of Transportation is requiring individual business owners to prove barriers that the government’s own data already shows exist. It’s an unnerving sleight of hand: Pretending discrimination is invisible unless each entrepreneur personally documents it.

When it comes to federal contracting, the competition could not be less fair. The federal government spends more than $1 trillion annually on contracts, but 94% of those dollars go to white-owned companies. Minority-owned firms make up 22.6% of U.S. employer businesses, yet capture only 11% of federal contracts, with Black- owned businesses only receiving 2% of those contracts. The idea that minority-owned businesses are receiving special advantages is simply false. Contracting disparities mean the government is not drawing from the full set of capable suppliers—limiting its ability to secure the best services for taxpayers. Expanding opportunities for minority-owned businesses strengthens the economy for everyone. Minority-owned firms generate $363.6 billion in economic output and sustain over 1 million jobs, yet remain almost entirely shut out of federal contracting. That $363.6 billion reflects the total value of everything these businesses produce—including the goods they manufacture, the services they deliver, and the projects they complete across sectors like construction, technology, transportation, consulting, and more.

Further, by shutting out communities of color from these opportunities, we are cheating the entire country out of greater prosperity and wealth. After all, minority-owned businesses employ members of their local communities. By limiting the resources and assistance of their employers, the administration risks putting some of its own supporters out of work.

The numbers speak for themselves. Black-owned businesses generate $206 billion in annual revenue and support 3.56 million U.S. jobs. And, according to 2023 Census data, minority-owned businesses collectively employ roughly 8 million people and generate $363.6 billion annually. If all those businesses closed today, it would be the equivalent of all of New York City being out of work.

Rather than dismantling the MBDA and undermining the DBE Program, policymakers should strengthen them, particularly if economic opportunity and growth for communities are the goals. Targeted tax incentives could help minority businesses invest in technology, making them even more competitive for federal contracts. Cutting these programs does the opposite—it exacerbates disparities, stifles job creation, and undermines economic growth, hurting all people in America in the process.

The administration faces a choice: continue to dismantle key programs that drive economic success or support policies that foster prosperity for all people in America. Attacking the MBDA and the DBE programs won’t grow the economy or make America great—it will do the exact opposite.

Alphonso David is a civil rights attorney, co-counsel to the Fearless Fund and the president and CEO of the Global Black Economic Forum.