Trump's regulatory rollback a relief to small business
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Earlier this week, President Trump signed an Executive Order (EO) directing regulators that, for every rule promulgated, two shall be identified for elimination.

The EO also established a zero-growth regulatory financial cost cap for 2017 and directed the Office of Management and Budget to develop guidance for standardizing how regulatory costs are determined.

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While a great deal remains to be clarified, namely, how the costs will be estimated and how a “regulation” will be defined, this EO is an important first step in easing the regulatory burden weighing down America’s small businesses. 

Recently, the National Small Business Association released a survey, the 2017 Small Business Regulations Survey, which showed that the average small-business owner is spending at least $12,000 every year dealing with regulations.

When asked to estimate their businesses’ first-year regulatory costs, the average fee was a whopping $83,019! Nearly one-third of small-business owners spend more than 80 hours each year complying with federal regulations.

This burden is becoming a barrier to entrepreneurship and a likely driver in the lagging start-up rates we’ve seen in recent years.

It’s not just the cost of complying with regulations that creates a rub for small businesses. Nearly three-fourths of small firms say they have read through proposed regulations, yet 63 percent say they only have to comply with those regulations they read half the time or less.

This represents a huge waste of time for many small firms.

Clearly, small business needs help. Efforts to rein-in regulations and ease complexity ought to be taken seriously given the sweeping impacts over-regulation can have. More than half of small businesses have held off on hiring a new employee due to regulatory burdens.

There have been a number of recent regulatory proposals which pose a major burden for small businesses. The Department of Labor’s overtime rule would have doubled the current income threshold under which employees must be paid overtime.

The Waters of the U.S. rule would greatly expand the jurisdiction of the water protection statutes to include small water bodies like puddles and ditches.

The U.S. Equal Employment Opportunity Commission requirement would ensure that certain employers submit pay data that would place massive and unnecessary burdens on smaller employers and waste federal resources on fruitless “fishing expeditions” based on incomplete and misleading information.

These regulations all have one thing in common — their authors failed to fully analyze and understand their direct and indirect costs on America’s small businesses.

Small businesses bear a disproportionately high percentage of the regulatory burden in America — 36 percent higher per employee than large firms, according to the Office of Advocacy. 

The regulatory process is deeply flawed, but there are checkpoints designed to prevent it from veering completely off-course. These checkpoints need greater congressional and administrative support, however.

The U.S. Small Business Administration Office of Advocacy is the federal government’s watchdog against over-regulation with respect to small business. The Office of Advocacy’s efforts saved America’s small businesses almost $1.4 billion in foregone regulatory costs in fiscal year 2016.

Congress must ensure that the Office of Advocacy has ample resources, including a Senate-confirmed chief counsel and appropriate funding, to continue protecting America’s small businesses.

While it is good that the president has made regulatory reform a priority, significant relief will still require congressional action. In addition to supporting the Office of Advocacy, Congress needs to overhaul the entire approach to regulatory policy.

Specifically, Congress should pass the National Regulatory Budget Act, previously introduced by Sen. Marco RubioMarco Antonio RubioAnother VPOTUS tries for POTUS: What does history tell us? Tensions swirl around Iran as administration to brief Congress Tensions swirl around Iran as administration to brief Congress MORE (R-Fla.), that would impose strict, enforceable constraints on regulatory growth.

In addition, they can pass laws that are straight-forward, specific and transparent, giving regulators a clearer path toward the law they envision. 

 So, while details still must be provided, President Trump’s EO has the potential to provide significant relief to small businesses, provided it focuses on reducing regulations for smaller businesses.

NSBA looks forward to working with the administration and Congress in this new era of regulatory reform and restraint.

  

Todd McCracken is president and CEO of the National Small Business Association, the nation’s first small-business advocacy group, operating on a staunchly nonpartisan basis. 


 

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