Viewpoint: Red Tape Hurts
29 Sep, 2011
Editor’s Note: From time to time, LatinBusinessToday will present views from across the political spectrum on issues of vital interest to business people. Below, a perspective on government regulation’s impact.
Runaway spending by Congress and its effects on our national deficit are well documented. Less well-known is how the steady stream of regulatory red tape contributes to the battering of the U.S. economy.
A detailed analysis written by Heritage Foundation experts James Gattuso and Diane Katz, “Red Tape Rising: a 2011 Mid-Year Report,” lays out a sobering indictment on the startling costs of increased regulations on U.S. business. In just the first half of the 2011 fiscal year, the regulatory burden has increased by $5.8 billion in new annual costs, and $38 billion since January 2009, when President Obama was sworn into office.
Often escaping the glare of the media, the federal government has been able to impose on small businesses costly financial and regulatory burdens, making it increasingly difficult for them to spend their time and resources innovating and planning for the future.
This troubling trend could not come at a worse time. Our economy continues to shed private sector jobs at a record pace. The unemployment rate is hovering around 10 percent nationwide, and 11.3 percent for Hispanics, according to the Bureau of Labor and Statistics.
One example of the hidden costs of more red tape is the set of complex regulations coming from the Securities and Exchange Commission to regulate financial institutions. As my colleagues explain in their study, “while the SEC estimated the [new] costs imposed by these rules at just over $180 million, that figure only reflects a miniscule portion of the total burden.” The SEC’s estimate failed to include the cost of the 317,926 hours of paperwork that regulatory compliance requires.
And at a time when we are living in an increasingly competitive global economy, it is worth remembering the old truism that “time is money.”
With the Obama administration’s penchant for circumventing the legislative process, Congress must increase its oversight of the Executive Branch and the rising cost of government regulations. Specifically Congress can focus on (a) requiring congressional approval of new major rules, (b) creating a congressional office of regulatory analysis, and (c) establishing a sunset date for federal regulations.
As public polls continue to confirm Americans’ worry on the economy, Congress must lead by shining a spotlight on burdensome red tape on the small business owner — the lifeblood of the American economy.
(Note: The entire report referenced in this column can be found here.)
Israel Ortega is the Editor of Heritage Libertad, the Spanish language page of The Heritage Foundation, a non-partisan think tank in Washington, D.C. Ortega is a frequent contributor to Univision, Telemundo and Fox News. You can follow him on Twitter: @IzzyOrtega