By: Sen. Olympia Snowe
June 22, 2011 10:02 PM EDT
Close to 15 million unemployed people are eager for work in the United States.
Despite President Barack Obama’s talk about how his administration seeks to boost employment, his federal agencies are helping to create this remarkably difficult job market. The cost of complying with inefficient, ineffective and needlessly onerous government regulations is one thing preventing job creators from hiring.
One of the most effective ways government can spur job creation is to pass substantial regulatory reforms — immediately.
Small-business owners regularly tell me that Washington’s actions work against their ability to create jobs. Specific complaints relate to the lack of predictability in regulations or how laws will be interpreted, the failure to consider small businesses — our No. 1 job creators — when bureaucrats write rules and the need for agencies to examine certain indirect economic effects.
Small-business owners have good reason to be wary of new regulations — they suffer a disproportionate share of the cost of compliance.
Firms with fewer than 20 employees shoulder an average of $10,585 in regulatory costs per employee, according to a 2010 study commissioned by the Small Business Administration’s Office of Advocacy, a staggering 36 percent more than the cost for their larger counterparts. Certainly, there is a cost to doing business. But any cost incurred because of outdated or ineffective government policy is inexcusable.
Americans understand and respect the need for government-set standards to protect workers and the environment, and that benefit is congruent with a healthy business climate. What is unacceptable is an unchecked and unaccountable federal overlord arbitrarily wielding power over entire sectors of our economy.
On Thursday, the Senate’s Homeland Security and Governmental Affairs Committee will hear a number of legislative proposals designed to reduce regulatory burdens. Among those proposals is legislation I recently offered with Sen. Tom Coburn (R-Okla.) called the Freedom Act.
This act is the culmination of a great deal of work and collaboration between Democrats and Republicans. It is designed to force agencies to craft rules and regulations that take into consideration the effect on jobs in the real world.
Among its provisions:
• Require federal agencies to incorporate indirect economic effects. Regulations that take into account only those directly regulated and ignore reasonably foreseeable indirect effects on other businesses can unintentionally cause significant harm. For example, a paper mill’s closure can devastate whole communities but, to date, such predictable outcomes have not been part of required Regulatory Flexibility Act analyses.
• Expand judicial review requirements. This can allow small companies to seek review at the proposed rule stage. Currently, small entities can only seek review on the date of the final regulatory action.
• Require small-business review panels. These already exist at the Environmental Protection Agency, Occupational Safety and Health Administration and, because of legislation I wrote, at the new Consumer Financial Protection Bureau. Given the potentially substantial economic effect agency rules have on small employers, phasing in panels at nine additional federal agencies will provide small businesses a stronger voice.
• Expand the Regulatory Flexibility Act’s provisions to Agency Guidance Documents. This will require federal agencies to conduct small-business economic analyses before publishing guidance documents. Many agencies, including OSHA, have repeatedly subverted the rulemaking process by relying on guidance documents so that they don’t have to adhere to their RFA obligations.
• Ensure agencies periodically review existing rules. This is where Congress is ignored by most federal agencies. Federal agencies already are required by law to conduct a periodic review of their rules. Few do, however, and there is no penalty for ignoring the law. My bill requires regular review — or else offending agencies lose 1 percent of their budget for salaries.
The Senate voted on the Freedom Act two weeks ago. It garnered a majority of senators, 53, and a majority of members on the committee of jurisdiction, but it failed to reach the 60-vote threshold set by Majority Leader Harry Reid (D-Nev.).
Opponents now contend the bill was “too complex” to be given adequate consideration without first obtaining the benefit of a committee hearing. Although I disagree, Thursday’s hearing solves that objection, so I can look forward to seeing this bill advance through Congress.
President Ronald Reagan, just two days into his first term, announced his Presidential Task Force on Regulatory Relief. “Government regulations,” Reagan noted, “impose an enormous burden on large and small businesses in America, discourage productivity and contribute substantially to our current economic woes.”
Those words remain true today. Policymakers must do a better job of removing impediments to American prosperity — starting with long-overdue regulatory reform.