Shield Spirit

By contrast, the Obama administration talked about helping small businesses but continued to enact regulatory policies that limited the ability to profit and deterred new businesses from entering the market. In fact, towards the end the plan appeared to be one of speeding up regulations.

President Obama has said that “small businesses have always formed the backbone of the American economy. These entrepreneurial pioneers embody the spirit of possibility, the tireless work ethic, and the simple hope for something better that lies at the heart of the American ideal.” But the rate of growth for regulatory restrictions was approximately 38 percent larger for the Obama administration between 2009 and 2012 as it was during a similar number of years for President George W. Bush (2001 to 2004). Restrictions are actual regulatory requirements telling business what they “must’ or “shall” do. But, of course, these are just additions to regulatory restrictions that have been piling up since the 1870’s and now number more than 1 million. And yet Obama, more than any other president, has made decreasing the overall regulatory burden a high priority, issuing a specific executive order to require agencies to decrease the enormous volume of regulations.

But just as the administration continues to increase the rate of new regulations and restrictions, it is obvious that his executive order, which has the force and effect of law on federal employees, has failed to deliver. In an analysis of this effort, Randall Lutter found “that there is little new retrospective analysis by these agencies and that their plans for retrospective review appear to be leading to rulemakings that differ little from business as usual.”

As for new regulations that are crushing small businesses, the evidence is everywhere. A recent survey of small banks conducted by the Mercatus Center at George Mason found that "many respondents expressed frustration at how the rules would affect their ability to continue offering customers products that had worked well for both the bank and the customers.” These small banks talk of the implementation of the Dodd-Frank financial reform law of 2010 as a “maddening pace of illogical and unnecessary regulation” that would not have prevented the 2008 financial collapse.

Financial regulatory agencies are not the only ones responsible. Proposed Food and Drug Administration regulations banning the use of trans fatty acids will make it extremely hard for small bakers to continue operating. The Occupational Safety and Health Administration’s proposed silica (industrial dust) rule will have the largest impact on small businesses, as 59 percent of workers affected are employed by small businesses. OSHA failed to consider less onerous regulatory options that would make it cheaper for them to keep workers just as safe. When seeking to regulate a common industrial ingredient, formaldehyde, the Environmental Protection Agency ignored one-third of the Small Business Regulatory Enforcement and Fairness Act panel’s consensus recommendations to protect small businesses.

[Check out our editorial cartoons on President Obama.]

It’s not surprising that Obama has been unable to either restrain agencies from promulgating an excessive number of rules or to get them to voluntarily choose to remove ineffective and outdated regulations. The agencies jealously guard their unchecked monopolies on rulemaking and analysis of their own proposals. As Supreme Court Justice Kagan wrote, “Since the dawn of the modern administrative state, residents have tried to control the bureaucracy only to discover the difficulty of the endeavor.”

But a recent Mercatus Center study identifies a method that would help eliminate much of smothering rules that no longer work without trying to corral the unmanageable regulatory agencies. It requires a bold step by both Congress and the president, but one that will almost certainly pay dividends for small businesses and entrepreneurs wishing to start new businesses (most of which will start small).

The logic is simple: Appoint panels that are independent of agencies and have them make recommendations for groups of regulations that can be abolished. Congress would then simply vote the entire package up or down.

Just as President Clinton worked with a Republican Congress, President Obama can work with a Republican Congress, with the nation’s small businesses and would be-entrepreneurs being the primary beneficiaries.

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