[*Fifth in a series of policy papers from the Emken for U.S. Senate campaign.*]
Federal regulations act as a hidden tax on the economy.
The costs imposed by regulation are not just paid by large corporations, but also by small business owners and consumers. While responsible regulations help to keep us safe and protect our environment, over-regulation is a burden to our economy and a drain on family resources.
The fact is, Washington has become a red-tape factory, crushing American job creation under an avalanche of regulations written by unaccountable bureaucrats.
Here`s just one example: the case of a South Carolina businessman who runs a small Internet sales company and found himself embroiled in a dispute with the EPA over a shipment of engines he had imported.
According to the Wall Street Journal, "The issue came down to labeling. Although the product [the owner] was importing met the EPA`s environmental standards, regulators ordered the shipment seized because it contained labels that could be removed with a razor blade. (In other words, they were somewhat vulnerable to damage or tampering.) [He] thought the dispute could be easily resolved but was surprised by the EPA`s intransigence-its dedication to junking his entire shipment-when he tried to work with them."
This business owner had carefully studied the rules and took all appropriate steps to be compliant, and still got burned. And when he met with the EPA to resolve the issue –they doubled down on their position, becoming hostile and aggressive. He would have lost his business, all because of a label, if an expert on federal regulations hadn`t intervened.
Does it surprise anyone that a recent video revealed an EPA official comparing his agency`s methods of dealing with non-compliance with crucifixion?
This same story is happening every day, all over the country. Thanks to over-taxation, over-regulation and over-litigation, American companies are at a distinct competitive disadvantage. It`s much easier to do business everywhere else but here, so if we`re worried about "saving the environment," let`s keep America`s business environment in mind when we`re making those decisions.
The simple truth is that our economy will be more productive when our political class removes the barriers to growth.
The annual cost of federal regulations in the United States increased to more than $1.75 trillion, according to a study commissioned by the Small Business Administration. That`s equal to 12% of our entire economy. If every U.S. household had to pay an equal share of the federal regulatory burden, each of us would owe $15,586. That study was commissioned in 2008. Just imagine how much regulatory costs have increased in the last 4 years.
The burden is worse on small businesses, which constitute 89 percent of all business in the United States. Studies show that small business owners face an annual regulatory cost of $10,585 per employee. This disproportionate cost on small business causes inefficiencies in the structure of American enterprises, and the relocation of production facilities to less regulated countries, adversely affecting our ability to compete in the global marketplace.
And of course, there`s the growing burden of ADA compliance. As I travel across California, I hear from small business owners concerned not only about compliance but also the increasing number of ADA lawsuits that target businesses simply for the settlement money. On that subject in particular, I stand with Congressman Dan Lungren, who has introduced legislation to protect small business owners from these predatory lawsuits.
I support ADA. As the mother of a child who is profoundly disabled, I understand the need for accessibility for all of our citizens. But there is a real cost to small businesses, seen and unseen, and to provide the stability they need to survive in an already challenging environment, we need to make the regulatory burden on small businesses easier, not harder.
Frankly, Democrats like Dianne Feinstein don`t understand the average small business owner. They actually think they`re doing them a favor by promising "fairness" and "opportunity." What Washington elites like Feinstein misunderstand most is that it`s not about what job creators want – it`s what they don`t want.
Business owners don`t want special favors or breaks. They just want the government to leave them alone.
Why? Because anyone who`s ever run a business knows that, unlike the cost of taxation or the size of the federal debt, the cost of regulatory actions are hidden. It impacts such things as product design, material costs, company locations and dozens of other considerations - an unseen component that adds to the cost of every activity, product, and service consumed by a typical household on a typical day.
And our economy suffers for it. Intel`s CEO said a couple of years ago that it costs $1 billion more to build and operate a semiconductor factory in this country than overseas. And ninety percent of that additional cost is due directly to the tax and regulatory environment in this country. These are factories that should be built in California, but that are being driven away by the politicians who created this regulatory environment.
Regulations are also used by the government to hide spending programs. Instead of creating expensive government initiatives that make it even more difficult to balance the budget, the government creates new regulations requiring businesses to bear the cost of carrying out those same initiatives.
The sheer number and size of government regulation is truly mind-boggling.
For example, an "economically significant regulation" is one that will cost more than $100 million. From 1998 to 2007, federal agencies announced between 50 and 80 major regulations per year. Today, federal agencies have proposed 219 economically significant regulations. That`s over two and a half times the number of regulations from 5 years ago that will end up costing American taxpayers more than $100 million each.
In terms of total regulations, in each of the last three years more than 3,500 new regulations were adopted. At this very moment, there are 4,257 new regulations in the pipeline. That`s the only pipeline I can think of that absolutely needs to be turned down.
There can be no real, sustainable prosperity while our nation is saddled under the weight of this regulatory crisis. It`s like watching a NASCAR race where all the cars are forced to crawl behind one caution flag after another. The solution is simple: drop the flags and let America`s small business owners start revving their engines.
Here`s what I propose:
- Require Congress to take an up-or-down, stand-alone vote, and for the President to sign-off on all new major rules before they can be enforced on the American people, job-creating small businesses, or state and local governments.
- Further reform regulations by requiring that they be based on performance and utilize market incentives to achieve their goals rather than arbitrary prescriptions designed by bureaucrats.
- Place a moratorium on new regulations exceeding $100 million except for cases of national security and repeal all recently enacted regulations exceeding $100 million unless they pass rigorous benefit tests.
Prosperity doesn`t just happen by accident. And government, no matter how well intentioned, can`t produce it or protect it. Just the opposite. Government is responsible for America`s regulatory crisis and creating a climate that increases costs, handcuffs innovation and limits opportunity. To return to prosperity, it`s time to retire career politicians like Dianne Feinstein who created this red tape nightmare.