Last week, I flayed the American Small Business League’s Lloyd Chapman for his absurd claim that legislation introduced by Sen. Richard Burr (R‑NC) would close the Small Business Administration (see here). As I expected, Chapman’s response is equally absurd.

In an ASBL press release, Chapman actually threatens to take me to court over my calling him a “conspiracy theorist”:

The next time you call me a conspiracy theorist, be ready to back it up with facts. You just might find yourself in court.

Good luck with that, Lloyd. In the meantime, let’s allow the court of public opinion to decide if the following claim you recently made is the stuff of a conspiracy theorist:

Clearly Republicans like Senator Burr, his supporters and groups such as the CATO Institute are directed like puppets by the defense and aerospace industry.

I can’t speak for Sen. Burr, but Chapman’s assertion that the Cato Institute is being “directed like puppets by the defense and aerospace industry” is ridiculous. Cato’s Downsizing Government website, which I co-edit, lays out the case for cutting the Department of Defense.

My Cato colleagues past and present have consistently advocated for a limited U.S. presence abroad:

Cato’s foreign policy vision is guided by the idea of our national defense and security strategy being appropriate for a constitutional republic, not an empire. Cato’s foreign policy scholars question the presumption that an interventionist foreign policy enhances the security of Americans in the post-Cold War world, and maintain instead that interventionism has consequences, including the formation of countervailing alliances, the proliferation of weapons of mass destruction, and even terrorism. The use of U.S. military force should be limited to those occasions when the territorial integrity, national sovereignty, or liberty of the United States is at risk.

Does that strike the reader as anything the defense and aerospace industry would direct Cato to advocate? Clearly, Chapman is hopelessly lost in a fantasy world of his own creation.

Perhaps realizing that he embarrassed himself by threatening me with legal action, Chapman now says that he wants to take a different approach:

I am sure that Tad DeHaven and the staff at the CATO Institute have seen my press release in response to their attack on my credibility. I’d like to take this opportunity to try a different approach and appeal to their sense of patriotism, logic and reason.

He then proceeds to talk about all of the jobs that small businesses create and the fact that federal contracts set aside for small businesses sometimes end up instead benefiting large businesses. Uh, Lloyd, in my “attack” on you, I never said otherwise. I even noted that “Chapman is correct that government contracting is fraught with fraud and abuse.” In my testimony on the SBA before the Senate Small Business Committee, I discussed examples of fraud and abuse in government contracting, including federal contracts set aside for small businesses that ended up benefiting large companies like General Electric and Lockheed Martin.

As I noted in my “attack,” Chapman is focused on the contracting issue whereas I’m primarily focused on the SBA’s loan guarantee programs. I frankly don’t care what firms receive federal contracts so long as work is performed at the lowest cost to taxpayers. I’m more concerned with reducing the size and scope of government, which would mean lower taxes and fewer burdensome regulations for small businesses. Moreover, does Chapman not understand that those government contracts are paid for, in part, by other small businesses through taxes? I would argue that the strength of the small business community should be measured by the goods and services produced for private consumption, not government consumption.

Finally, if Chapman is so pro-small business/anti-big business, why isn’t he concerned with the SBA’s loan guarantee programs? I challenged Chapman on this issue:

I’m all for a serious discussion and debate on the SBA. The SBA’s loan guarantee programs benefit a relatively tiny number of small businesses at the expense of the vast majority of small businesses that do not receive government support. Moreover, the biggest winners from these loan guarantees are big banks who reap the profits but get to kick the bulk of any losses to the government. One would think a pro-small business/anti-big business guy like Chapman would be concerned by this. Instead, Chapman consistently resorts to wild exaggerations and conspiracy theories. As a result, I can’t take him seriously. It’s too bad policymakers do.

The silence from Chapman on this matter is deafening. In addition to resorting to wild exaggerations and conspiracy theories, we can now add the threat of legal action. Until Chapman dispenses with the antics, policymakers should stop taking him seriously.