VOICE OF SMALL BUSINESS: Think tanks should think twice about regs impact on small firms

The nation's normally optimistic small-business owners are struggling to hang onto their high hopes for better days. Even though fewer customers are dropping in and sales are weakening, these risk-takers still cling to their vision of the American dream.

They are doing everything they can to succeed and maintain their business in this tough economy. But they are also frustrated that Washington is ignoring the single biggest preventable obstacle to their growth: government regulations.

Behind the sluggish economy, government regulations are the biggest problem hampering small businesses today, according to a monthly survey by the National Federation of Independent Business. That research is backed up by a Gallup survey published recently which shows regulations are the number one problem facing small businesses right now. Around one-in-five small-business owners say it's the single biggest problem they face.

Why, they ask, is the barrage of useless rules and bureaucratic requirements increasing at a time when common sense calls for just the opposite? Why make things worse for those who have a proven record of strengthening the nation's financial backbone?

Their questions have gone unanswered. Worse yet, some Washington think-tanks have begun to assert, in the face of volumes of research on the subject proving otherwise, that regulations really aren't a problem. And the White House has started singing the same tune.

Despite the substantial number of small-business owners who claim regulations are the biggest obstacles to growth, liberal economists seized upon the evidence that a greater number--28 percent--had pointed to poor sales as their biggest headache. Thus, in their logic, regulations and red tape cause no injuries.

I would encourage the so-called experts at Washington think-tanks, as well as the folks living at 1600 Pennsylvania Avenue, to pay a visit to a few small businesses. Ask them what's costing them money that they could be reinvesting in their business. I am willing to bet the high cost of complying with government regulations would be high on the list.

We already know that this is wishful thinking. The culture of denial in Washington over the costs of government regulation continues. The one person in Washington, who could shut down the regulatory machine, won't. In a recent press conference, President Obama displayed his faith in big government and aggressive regulation by asking: "Does anybody really think that [reducing regulation] is going to create jobs right now and meet the challenges of a global economy that...is weakening with all these forces coming into play?"

The president should take a closer look at the impact his policies are having on the economy. And he should stop 4,226 new rules in the federal pipeline before even more harm can be inflicted upon small businesses. These firms have already suffered a 60 percent increase in major regulations--those costing the economy $100 million or more--since 2005.

Small businesses have grown accustomed to Washington's failure to deliver on its promises, but they're determined to survive and someday succeed. What they don't understand is why the government seems determined to make it harder for them to help lift the economy and create jobs.

Virtually everyone on Main Street can see the solution, but no one in the White House appears to even understand the problem, let alone offer an idea of how to solve it.

The problem can be stated in simple terms: excessive government regulation wounds small businesses. The solution is just as simple: reduce regulation, give entrepreneurs a break.

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Dan Danner is president and CEO of the National Federation of Independent Business in Washington, D.C.

Published: Thu, Nov 17, 2011

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