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Federal Regulations Remain the Biggest Hurdle for Many Small Firms

May 29, 2012, 06:30 AM
Filed Under: Economy

More small businesses say government regulations are the top problem facing their business. In the May issue of the National Federation of Independent Business’ (NFIB’s) Small Business Economic Trends report, 20% of small-business owners said “government regulations and red tape” was the single most important problem facing their business last month. That issue received the greatest response, ahead of poor sales and taxes.

While small-business owners understand the necessity for some government regulation to ensure clean and available natural resources and safety, the flow of costly new regulations being proposed today is excessive. According to the Office of Information and Regulatory Affairs there are over 4,000 new federal regulations in the pipeline. Pending major regulations – those costing the economy $100 million or more – have increased 60% since 2005.

More small-business owners are calling for a more sensible regulatory process. This includes more feedback from small businesses built into the regulatory process and government enforcement that aides compliance rather than punishing with fines. NFIB is leading the coalition Small Businesses for Sensible Regulations, chaired by former Democratic Senator Blanche Lincoln, to advocate for this cause.

NFIB is pushing for common-sense regulatory reforms in Congress. The Regulatory Flexibility Improvements Act (H.R. 527) passed in the House in December and is now awaiting consideration in the Senate. It would require federal agencies to estimate the both the direct and indirect economic impact of new regulations on small firms. It would also force agencies to do periodic reviews of rules determined to have a significant impact on small businesses. The Senate should follow the House’s lead and send this bill to the President’s desk.

One of the most immediate and impactful actions that the Administration could take to help small business would be to implement sensible reforms to the regulatory process. That could give instant relief to small businesses uncertain about the looming wave of federal regulations and the punitive enforcement that is sure to follow.

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