How regulatory ‘reform’ hurts small business

The Hill

By Frank Knapp, Jr.

While purporting to help small business, the regulatory “reforms” proposed over the last six years have actually been crafted to help big business, especially multinational corporations. While it would be convenient for all businesses to have the same needs, the facts are otherwise. And today’s small business owners are too savvy to believe they can somehow join the Fortune 500 simply by supporting big multinationals’ anti-regulation tactics.

So, while the country’s largest lobby group, the U.S. Chamber of Commerce, is holding what it calls its National Fly-In to Roll Back Regulations today, I will be speaking about the importance of regulations at a different event on Capitol Hill. The contrast could not be more striking.  For example, while the Chamber says that regulations are strangling small businesses, I will point out the many ways in which regulations are helping small businesses. Take one example.

A big goal for anti-regulation “reformers” is to undermine the Regulatory Flexibility Act (RFA). Congress wisely put this rule in place to protect small businesses from unnecessary burdens while passing needed regulations. And it works. Yet some, like the U.S. Chamber, are trying to weaken the RFA by adding more federal agencies to be subject to it, or by add more administrative duties and requirements to those agencies already covered by the RFA — all without any additional resources.Small businesses need fair, well-crafted regulations, produced in a timely fashion. The results of these reforms will be just the opposite.

–         Federal agencies will take even longer than the current years or even decades to promulgate regulations,

–         Opponents of regulations will have even more avenues to delay regulations through litigation,

As result businesses will face even more uncertainty due to the longer time needed to promulgate regulations and handle increased litigation.

How can small business owners fight back? First, we need to give the public the complete picture about federal regulations. Big business, its organizations and its political allies have fostered a public impression that all regulations are evil, and if we would just get rid of them, the economy will thrive. This message has stuck because we only hear about costs. In fact, federal agencies don’t publish analyses showing the sometimes millions or billions of cost savings and direct, dollar-value benefits that come from regulations. In addition to improved health and social outcomes, benefits include new demand for goods and services that will create jobs and lift economies at the national, state and local levels.

Business owners know accurate data is key to good decisions. We need to support federal agencies’ capturing real-world data on the benefits as well as the costs of regulatory compliance. Then, we need to make sure the public not only sees the costs but understands those benefits – and not just when lack of regulation compliance leads to local economic and health disasters.

How do we get regulators to do more outreach and better analyses of their impact when promulgating a rule? We’ve starved our regulatory agencies of resources while demanding they do more. Then, when the process bogs down, we attempt to fix the wrong problem, which makes more problems. To run more effectively, our existing RFA process simply needs adequate resources so regulators can both perform their everyday tasks and conduct the quality rulemaking analysis and outreach we all want.

Then there’s compliance. Once a rule has been promulgated and (ideally) the small businesses burden has been minimized, the government must have the resources to educate time-crunched small business owners on new rules and give compliance assistance as needed. Congress has a process for this, both within each regulatory agency and through the SBA Office of the National Ombudsman, which helps small businesses with regulatory compliance.

But, like outreach and analyses, compliance support is woefully underfunded, and thus underutilized. If Congress really wants to help small businesses deal with needed federal regulations, it must invest more in this sensible outreach and support.

The current process can produce good rules and regulations while protecting small businesses from unnecessary burdens — if we provide adequate resources for agencies to fulfill the requirements Congress has already put in place. Let’s stop trying to fix what isn’t broken with questionable “reform,” and help the existing system do its job right.

Mr. Knapp is the co-chair of the American Sustainable Business Council and the president and CEO of the South Carolina Small Business Chamber of Commerce.

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