Providing certainty on tax and regulatory policy


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According to a recently released survey from Morgan Stanley, uncertainty coming out of Washington is forcing American manufacturers to slow investment and delay their plans to hire indefinitely. The poll, conducted in August, found more than 40% of employers are avoiding new investments as a result of the looming $100 billion in automatic federal spending cuts and the end of the Bush-era tax cuts appear on the immediate horizon, impacting businesses of all sizes across the country.   



That poll comes just months after a Wells Fargo/Gallup Small Business Survey found that, 85% of small businesses aren’t hiring, about half of which blame uncertainty about the potential costs of new regulations. 
Some advocates of greater government oversight argue that regulations don’t affect America’s most effective job creators – small businesses. But studies show compliance costs for regulations are significantly higher for small businesses than their larger competitors. 
  


Moreover, what hurts big businesses hurts small businesses. Many large companies are supplied by smaller businesses, so policies targeting large employers invariably have negative effects on downstream suppliers. The administration clearly recognizes this to be the case, which is why Vice President Biden correctly credits the bail out of GM for saving thousands of small business jobs that are indirectly supported by the company.  The same principles apply when it comes to policy uncertainty.   



Job creators are hungry for regulatory and tax certainty. President Obama should use the presidential debates to give it to them. He can do it by leading our party and the nation in three areas:



Reassuring rhetoric - The president deserves credit for resisting pressure from some of the more ideologically extreme elements of the party on issues like Cap-and-Trade and ozone regulations. 



But while many of the president’s policy decisions have been sensible, too often the rhetoric of some in the Democratic Party is rightly perceived as anti-business. The president can’t control the rhetoric coming from his base any more than Mitt Romney can control the Tea Party, but he is uniquely positioned to give the Democratic Party a calming posture that gives reassurance and certainty to job creators. 


Sensible regulatory reform - Uncertainty around regulations is as pronounced among small businesses as it is among large employers. There are currently more than 4,100 federal regulations looming in Washington with a price tag in excess of a half trillion dollars. 



The president could alleviate the fears of thousands of job creators who are convinced the next four years may bring a tidal wave of costly new regulations by implementing a moratorium on new regulations. We can unleash a new of era of American growth while also protecting the environment, workers and consumers, but that requires smarter regulations and better enforcement of existing regulations, rather than slew of very expensive new rules. 
 


Our government can do a better job at developing and updating regulations to meet the challenges of the modern world.  In short, we have a 21st Century high-tech economy and we should have a regulatory system that matches.  Smarter government at home will allow us to be more competitive in the global economy we have fought so hard to be a part of.   


Competitive tax reform - Early this year the president proposed reform that would make our tax system more competitive globally and fairer by lowering the corporate rate and eliminating thousands of tax loopholes. That was a good idea then, and it’s a good idea today. Reforming our system of international taxation will encourage U.S. companies to bring their profits home for reinvestment by removing existing impediments.



President Obama has a remarkable opportunity to lead this country into a more robust economic recovery, but he cannot do it alone. He needs buy-in from job creators big and small. He can get that by providing predictability to businesses and giving them some much-needed certainty on tax and regulatory policy.



Lincoln is a former Democratic U.S. Senator from Arkansas and chairwoman of Small Businesses for Sensible Regulations, a project of the National Federation of Independent Business.