Starting or running a small business is hard work, and an abundance of regulations can make it even harder. Too many and too intrusive federal regulations burden the economy, which means they hurt American families and small businesses.
Often “the economy” can just seem like a buzz word, but the statistics that make up the economy represent real people and real life. Usually when we are talking about the economy, we are talking about gross domestic product, or GDP, which is just all the goods we produce plus all the services the private sector provides.
So how do regulations affect the economy? For one example, if current laws remain unchanged, America’s GDP is projected to increase by only 1.9 percent – which is about a percentage point below the average growth rate we have seen over the past 50 years. That is not good news.
The lack of growth creates economic uncertainty, which impacts how a business might invest. For example, this uncertainty is often taken into consideration when a company needs to decide whether or not to hire more workers, purchase new equipment or expand to a second town. In this way, government policymaking can affect business profitability, which in turn hurts the employees, those who rely on the businesses services or those who need jobs.
Government and private sector studies show that regulations have disproportionately hurt small businesses. The National Federation of Independent Business found that regulatory burdens rank as the second-highest concern of our nation’s small business owners (the cost of health insurance was the first). What concerns small businesses should concern all of us. They create two-thirds of new American jobs.
Congress and the Trump administration have started to provide regulatory relief, reducing the number of regulations and flow of new regulations in order to help revive the economy.
Changing or eliminating something in government once it is established can be incredibly hard. Normally, once a federal rule or regulation is in place, it can be a long and arduous process to reverse it – even if it is a bad rule.
Earlier this year, Congress was able to take advantage of a special procedure known as the Congressional Review Act. This provided an opportunity for Congress to quickly reverse some of the regulations from the end of the Obama administration that might have been pushed through as President Obama prepared to leave office. Congress was very successful in overturning many of those harmful or unnecessary rules, overturning 14 rules and saving Americans at least $3.7 billion and 4.2 million hours of paperwork according to the American Action Forum. However, this procedure was only available to Congress for a limited time.
For the long term, one of the best hopes for reducing regulations is President Trump’s Executive Order “Reducing Regulation and Controlling Regulatory Costs.” This order would require agencies to revoke two regulations for every new rule they want to issue. It is aimed at dramatically rolling back federal regulations, which could help our economy, add jobs and grow small businesses. The new administration’s attitude toward regulation is already having some pretty significant effects according to the American Action Forum. The group said the cost of the new regulations has dropped from an average of $26 billion (with a b) to $33 million (with an m), or about 1/10 of 1 percent of the past average for the first five months of the year. “The ‘Regulatory Freeze' that took effect on day one of the administration has persisted for roughly the first four months of President Trump's term. By virtually any measure, dating back through two Democratic presidents and one Republican president, the lack of regulatory output is historic," said Sam Batkins, the director of regulatory policy for American Action Forum, as reported by the Washington Examiner.
We cannot afford to accept the notion that we’re entering into what some are calling a ‘new normal’ of weak economic growth. We need to help our economy reach its potential, which will help small businesses across America and bring in more revenue without raising taxes. This cannot be done if the number and cost of significant federal regulations continues to rise.