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Obama: "Dumb" red tape for business must go
President Barack Obama at a town hall meeting.
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Kai Ryssdal: In between getting ready for Chinese President Hu Jintao's visit and thinking about the State of the Union speech next week, President Obama found some time this morning to do some paperwork. He ordered a review of federal regulations to ensure they don't stifle economic growth. He wants to get rid of rules that might be old or unnecessary or are, in his words, "just plain dumb."
For small businesses, though, from whence this economy gets most of its new jobs, it's not just federal regulations that're the issue. Marketplace's Alisa Roth reports.
Alisa Roth: Just like taxes, regulations vary from state to state. And even from county to county. And not surprisingly, they can outlive their relevance.
Geiger: We for a long time in Ohio, still had on the books regulations that governed how you hitched up horses in front of businesses.
Roger Geiger is with the Ohio chapter of the National Federation of Independent Business. He says even existing rules can be silly -- he knows a company that was fined for hanging fire extinguishers a few inches too low.
It's especially hard for small businesses, because they don't have the large compliance departments to help them deal with the rules. And the rules are often one size fits all, whether you're a major car maker or a local parts supplier.
Geiger: Do we create a rule for the General Motors and expect them to be able to comply the same we way want Vermeer Auto Parts Store to comply with? There's very, very differing environments there. And there needs to be sometimes flexibility particularly for small businesses.
For small companies, onerous local regulations can force business decisions. Susan Misgen is president of a junkyard in Minnesota. She says expensive workers' compensation insurance is the biggest reason she hasn't added to her 12-person workforce.
Susan Misgen: It is just sky high here, again triple what Iowa pays. I bet it's 10 times what South Dakota has to pay.
States are starting to realize that they have to cut red tape, too, to spur their economies. Ohio's new governor is already reviewing and revising its rules to eliminate redundant ones, and bring them more in line with his plans to create more jobs.
I'm Alisa Roth for Marketplace.
I was a little dismayed by this one-sided and uncynical piece of reporting about regulatory excess. In addition to discussing outdated rules about hitching horses (unburdensome because they are never enforced) you interviewed the owner of a wrecking yard who did not want to pay worker's compensation insurance for employees who work in a very dangerous trade, and an industry representative who bristled at the enforcement of fire ordinance designed to ensure the efficacy of fire safety equipment. If providing for injured workers and preventing fires are examples of noxious government meddling, I hate to think what your reporter would think of the complex rules that apply to children’s toys and clothing. This was not market place at its best.
I agree with this plan. Another concern are the regulations that the EPA wants to burden society with regards to limiting CO2 emissions. This is based on an unproven theory that CO2 emissions causes global warming. Even if we cut emissions, the CO2 reductions that we come up with would be miniscule when compared with increased CO2 emissions world wide. We would be shipping our business to Red China and India where such regulations will not be implemented.
There is a danger that this effort will focus on the outdated (eg, hitching post) laws that don't really matter, and miss the redundancy and stupidity that comes from the culture of govt self-perpetuation.
Please monitor this story, and give us regular follow-up.
I have been thinking of setting up a business with one or two employees. Most states (at first) seem to act like, "Please bring your business here! We'll do anything to help!"
Then in the same breath it becomes, "Oh by the way, here's our state minimum wage...and here's the amount you must pay into the state disability fund...and here's the unemployment tax you must pay, plus half of all social security taxes...and you also are mandated by law to purchase workers comp...and ALL construction/repair work must be done by UNION carpenters, plumbers, and electricians...and for every violation you will be charged $500...and and and and and and and...".
Then customers call up and scream that I should be arrested for charging the outrageous rate of $125 an hour for my work?? Pffft.
This is the sort of *obvious* thing Obama should have been doing two years ago---except that most of the "red tape" is designed to employ Democrat supporters, so even if he'd tried the Democrat-controlled Congress wouldn't have gone along. Now that we have a House that would do this anyway and a Senate where it would most likely pass, Obama is setting himself up to take credit for his opponents' agenda.
Whenever the subject of reviewing regulations comes up, business trots out through the front door the usual list of silly regulations, like "regulations that governed how you hitched up horses in front of businesses." Ha ha! regulating the hitching of horses in the 21st century? How silly! But watch out! What business is bringing in through the back door is the axe to chop up the regulations that keep your drinking water clean and toys made in China from poisoning your kids. Those are the kinds of regulations that actually cost business money, and the kind that they are really after.
So Alisa, you agree that we should turn back the clock on all the progress that workers have made? Do you remember the triangle shirtwaist factory fire? Or child labor laws? You (and capitalism)believe that the pendulum must swing the other way in business favor. This is what you really mean when you believe government should cut red tape is it not?
