Obama: "Dumb" red tape for business must go

Alisa Roth Jan 18, 2011


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.

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