In defense of the SBA



Lakers don’t go out of their way to help Celtics. Dunkin’ Donuts doesn’t run ads for Starbucks. And Ford doesn’t suggest that potential buyers should consider GM trucks instead. These are just a few examples of friendly competition in the marketplace. When it comes to Washington, there are several examples of government agencies that do an incredible job working with their various constituencies and few are better at serving theirs that the Small Business Administration (SBA).  


Unfortunately, last week during a Congressional hearing, two organizations  launched an all-out assault on one of the small business community’s top government advocates, the SBA. In congressional testimony, the two lobbying groups accused SBA of straying from its core mission of advocating for small businesses, and instead fighting for the interests of corporate behemoths.



I couldn’t disagree more. As part of its effort to help reform the way Washington creates new rules and enforces them, the SBA is working to gain a full understanding of the impact that poorly structured rules have on the economy. These rules are often designed with big business in mind, but compliance costs invariably trickle down to small businesses.  
 
For large and small businesses alike, commonsense regulatory reform is a top priority and the SBA recognizes that regulatory policy isn’t a binary proposition in which large business pain automatically translates into small business gain.  Both understand the burdens of regulations that are outdated or don’t achieve their intended outcomes.  
 
One example is the flawed process through which the EPA assesses risks. EPA relies on the so-called Integrated Risk Information System (IRIS), a system it developed in the mid-1980s, to determine the science-based risks associated with certain chemicals. It then invokes those determinations as the basis and justification for new rules.


IRIS suffers an enormous credibility problem as science has routinely taken a back seat to political agendas. In 2011, the National Academy of Sciences (NAS) found serious flaws in an IRIS assessment conducted around formaldehyde. It concluded EPA “overstated the chemicals effects on human health,” and that its assessment was logically inconsistent. NAS went as far as to mention that EPA’s chemical assessments have regularly displayed these problems in recent years. NAS is currently conducting a congressionally mandated review of the IRIS program.


SBA understands that when expensive new federal regulations are promulgated based on cherry-picked data and flawed research, the system isn’t working. And a broken system doesn’t protect consumers, workers and the environment, but it does force job creators small and large to absorb job-killing compliance costs.



Unfortunately Washington puts disproportionately more focus on the issuance and enforcement of new rules, than it does on ensuring every rule makes sense. In 2011, there were 281,832 full-time government employees dedicated to drafting and enforcing rules, while fewer than 50 employees at the Office of Management and Budget are responsible for reviewing the new regulatory mandates to ensure they are justified and accurate prior to implementation.



The National Federation of Independent Business’ coalition, Small Businesses for Sensible Regulations, recently outlined a set of regulatory reform principles, including: risk assessment, cost-benefit analysis, peer review, judicial review, and valuing compliance over enforcement. These principles should help produce science-based, cost-effective regulations capable of withstanding objective scrutiny during formulation and after implementation. 

Risk assessment, in particular, ensures that risks are measured and assessed using the best available data and science available.
 
As environmentalists and political groups continue to try to delay and stifle regulatory reform by attacking the SBA, it’s important that public policy makers understand not only how small businesses are impacted by a regulatory system run amok, but also what impact regulations have on the economy overall.



According to Gallup, 85 percent of small businesses aren’t hiring; half of those cite government regulations as the reason.



Now is the time to bring transparency and accountability to a system in desperate need of reform.
 
Lincoln is a former Democratic senator from Arkansas and the chairwoman of the NFIB’s Small Businesses for Sensible Regulations Coalition.

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