Chairman Graves in the Hill: We Can't Create Jobs Without Lifting the Weight of Regulations

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Washington, Jun 16, 2011 | comments

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We Can't Create Jobs Without Lifting the Weight of Regulations
By: Rep. Sam Graves
June 16, 2011 

On Tuesday, the National Federation of Independent Businesses (NFIB), a small business advocacy group, released their monthly small business optimism index. As expected, the index dropped for the third consecutive month. The report of more than 700 randomly sampled small businesses in NFIB’s membership signaled that our nation’s most robust job creators are struggling as they fight their way through our nation’s sluggish recovery.

NFIB chief economist Bill Dunkelberg summarized the report by saying, “Corporate profits may be at a record high, but businesses on Main Street are still scraping by. Washington is throwing misdirected policies at the problem, offering tax breaks for hiring and equipment investment, but acting surprised when they don’t bear any fruit.”

The president and Senate Majority Leader Harry Reid (D-Nev.) have promoted overregulation, overtaxing and overspending policies in the name of “stimulus” and “infrastructure” funding, but three years of this simply hasn’t worked. Uncertainty is the big problem. Small business owners are experiencing great uncertainty because of the possibility of tax increases, the inconsistent flow of credit, an outrageous national debt, high energy costs, and overreaching federal regulations.

On Wednesday, our committee held a hearing to examine the weight of regulations that small businesses are operating under. This is a significant problem because small firms bear a regulatory cost of about $10,500 per employee, which is 36 percent higher than the cost of regulatory compliance for large businesses. For example, compliance with environmental regulations costs small businesses four times more than large firms.

Small businesses are the life blood of our nation’s economy – creating more than half of the nonfarm private GDP. Small firms have also generated 64% of net new jobs over the past 15 years. If we really want to get this economy moving again, we must look at ways to help small businesses prosper. One of those ways is by lifting the burden of overregulation.

In 1980, Congress passed the Regulatory Flexibility Act (RFA), which was aimed at relieving the stress of onerous regulation on small businesses. The RFA mandates that all federal agencies examine the impact of their proposed rules on small businesses, and if those impacts are significant, the agency must consider less burdensome alternatives. However, it does not require they choose the least burdensome choice.

Wednesday’s hearing examined two bills designed to ensure that federal agencies comply with the RFA - the Small Business Size Standard Flexibility Act of 2011 (H.R. 585), which I introduced, and the Regulatory Flexibility Improvements Act of 2011 (H.R. 527), which Judiciary Chairman Lamar Smith (R-Texas) and I introduced in February. Specifically, these two bills would ensure that federal agencies comply with the RFA and close loopholes used by agencies to avoid compliance with the RFA. These bills would also require a better assessment of the impacts that regulations will have on small businesses, forcing agencies to perform better periodic review of rules, and granting the Chief Counsel for Advocacy at the Small Business Administration greater powers for enforcement of the RFA. 

The "one-size-fits-all" regulations produced by the administration disproportionally hinder small businesses and these two bills will help alleviate needless burdens. Economic recovery begins with our small businesses. But this will not happen unless we rein in the mass of regulations coming from Washington.

The witnesses from Wednesday’s hearing provided very useful information on what changes may be necessary to further refine the bill and make sure it is widely followed by the administration. I look forward to working with my colleagues and getting this bill worked through Congress as soon as possible and then off to the president’s desk for his signature.

We must get government out of the way and help foster an environment where small businesses are free to grow and create jobs. At a time of nine percent unemployment, we should be looking for every avenue possible to create jobs and get Americans back to work. Enforcing the RFA and eliminating unnecessary costs and burdens on small businesses would be a logical first step in doing this.

Rep. Sam Graves (R-Mo.) is the chairman of the House Small Business Committee.

To read the op-ed online CLICK HERE.
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