There has been much debate and discussion on Capitol Hill around the need to pass comprehensive tax reform to spur economic growth, investment, and job creation. Indeed, overhauling our complex, outdated tax code will accomplish all those goals with the House GOP tax reform blueprint being the best path forward. But more can be done to help the nation’s economy officially put the recession in its rearview mirror – meaningful regulatory reform.
Americans for Prosperity senior policy analyst Mary Kate Hopkins recently noted (http://www.insidesources.com/inside-look-border-adjustment-tax), “American companies want to be headquartered here, they want to do their business here. We have a strong dollar, the rule of law, its [sic] close to where they live. So, the best way to do that is to have the lowest tax rate for corporations in the world, and to have a regulatory system that makes it easy to do business.”
Right now, that is not the case.
Since 1975, the Code of Federal Regulations has grown from 71,000 pages to over 175,000. This growth has turned us into an over-governed society and the cost of excessive regulation stifles economic growth and represents a regressive tax on small and midsized businesses who can’t afford the lawyers and specialists needed to efficiently comply.
The price tag for existing regulations amounts to more than $2 trillion a year, per a 2012 study conducted for the National Association of Manufacturers. That’s about the size of Canada’s GDP. Households ultimately get hit with thousands of dollars of regulatory compliance costs in the form of higher costs for goods and services. Small businesses, who cannot readily pass their increased costs to their customers, are forced to absorb those costs or go out of business.
Now, rolling back the regulatory burden that has been imposed on business in recent years does not mean rolling back worker safety, environmental protections, or reasonable financial safeguards, although big government advocates assert that to be the effect of the President’s regulatory agenda.
The Trump Administration and Congress recognize the dead weight burden of too much regulation on economic growth and have given reform the high priority that it deserves. In late February, the President signed an Executive Order directing each federal agency to set up a task force to review existing regulations and identify those to repeal or modify. This is in addition to the directive that agencies cancel two regulations for each one issued. The President can also cancel Executive orders that impose unreasonable burdens on business and agency heads can cancel policy and guidance documents which have the same impact.
Congress has been doing its part, using the Congressional Review Act (CRA) to send to the President three resolutions of disapproval of regulations issued by the Obama Administration with at least a dozen more likely in coming months. But it can do more. There are two pieces of legislation before Congress that have bipartisan support and the strong backing of the National Black Chamber, as well as many other groups – the Regulatory Accountability Act and the Sunshine for Regulatory Decrees and Settlements Act.
The Regulatory Accountability Act would modernize the 1940’s vintage Administrative Procedure Act, which governs our federal regulatory process. It would require more transparency and public participation. Under the Sunshine Act, agencies would have to give the public plenty of notice when they want to settle a lawsuit with outside groups. Thus, interested parties such as states and affected industries would have a chance to voice their opinions before a settlement is finalized.
We need to have a regulatory system that makes agencies accountable to the people, allows the public to meaningfully participate, and upholds the rule of law. The business community must insist on good governance and only by reforming the rulemaking system itself will we achieve that goal.
The National Black Chamber of Commerce, which reaches 100,000 African American owned businesses, focuses on helping African American entrepreneurs and business owners pursue a successful course in our competitive economy. Today, African American owned businesses account for more than $138 billion in annual sales. Their contribution to the domestic economy is strong and has the potential for contributing more.
But as it stands, the modern-day regulatory state often prevents companies from acting, discourages them from investing, and creates an environment where regulatory risk blots out the entrepreneurial spirit. Regulatory reform is ultimately about good government, which leads to a better economy. If we are to hold on to our personal and economic freedoms—and our character as a can-do nation—we must act now.
Mr. Alford is the co-founder, President/CEO of the National Black Chamber of Commerce®.