White House Readies for Regulation Battle

President Obama has fallen out of favor to many within the small business community. Yet new regulatory reform may represent his shining chance to bounce back and slash the red tape that's been persistently nagging businesses for years. If such reform is successful, it's a win/win situation for the SMB community.

Obama himself recently stated that economic recovery will come at the hands of small businesses and entrepreneurs, and that it won't be “driven by Washington.” Regardless, administration recently announced a $350 investment to rural small businesses over the next five years. Additionally, over $360 million in lending in part of the Small Business Jobs Act has been approved, meaning that the program is finally getting off its feet after much stagnation.

Good news, indeed. But what about regulatory reform?

Supposedly, it's coming. Earlier this year, the President outlined a plan to put current regulations under a microscope and ultimately eliminate billions in waste. A recent blog from the White House announced that the agencies behind this new regulatory reform are finalizing their plans, including “hundreds of initiatives that will reduce costs, simplify the system, and eliminate redundancy.” Some of the most significant cuts come from the Department of Labor, the EPA, and the Department of Transportation, with a reported $4 billion worth of cuts over the next five years.

Examples of reform as laid out by the White House include the following:

• The Department of Health and Human Services ridding reporting requirements on hospitals, anticipating $4 billion in savings over the next five years
• The Department of Labor simplifying hazard warnings for their workers, anticipating over $2.5 billion in savings over the next five years 
• The Department of Transportation eliminating railroad industry regulations, anticipating $340 million in the near future 
• The IRS eliminating 55 million hours in annual paperwork burdens and unnecessary reporting requirements 

The White House claims that many of the new reforms specifically help small businesses, citing a new ruling from the Department of Defense to accelerate payments on contracts to tens of thousands of small businesses. Over $10 billion in savings is being touted over the next ten years, with the outlying hope that regulations will continue to be held under great scrutiny in the future and won't be a one-time process. “We can make our economy stronger and more competitive, while meeting our fundamental responsibilities to one another.”

Cutting red tape is definitely a positive for the small business community, yet the announcement of such reform doesn't come without its share of skepticism. Will the reform actually deliver?

Of course, we certainly hope so. There is concern from many business leaders, however, who feel that current regulations on the financial sector and forthcoming healthcare legislation would offset the positives of the proposed reform. Diane Katz, a regulatory policy research fellow at the Heritage Foundation stated that the proposed regulatory cuts do indeed “matter,” but may not be significant in the face of what's to come. Bill Kovacs, vice president of Regulatory Affairs at the U.S. Chamber of Commerce described the Obama administration's review of current regulations as “a worthy effort.” He too believes, that his proposed reform will be “undermined by new regulations.” Vocal critics of the President such as House Majority Leader Eric Cantor described Obama's plan as “underwhelming.”

Regardless, there's no doubt that the President has his eye on regulations and has followed up on his desire to start cutting. Such attention will surely play into the upcoming election, both for his own campaign and the campaigns of his opponents. It's no secret that the economy is an issue that's been plaguing Obama for a majority of his time in office, and to get the economy under control prior to the election would certainly help his case for reelection in eyes of undecided and jaded voters.

Regulatory reform is often one of the most vocal desires of the small business community, and it seems that legitimate reform is indeed on its way. There will of course be skeptics, but anything that makes it easier to SMBs to do business is a step in the right direction. Only time will tell how much these reforms will truly do, yet in the midst of an ailing economy and so many fallen companies, one can't help but hold out hope for a brighter future for small businesses.