Got this from Bizzy Blog:
Obama's Strangulation of Business (Robert Roll Column)
<http://www.bizzyblog.com/2011/01/25/obamas-strangulation-of-business/>
Filed under: Economy <http://www.bizzyblog.com/category/economy/>,Taxes
& Government <http://www.bizzyblog.com/category/taxes-government/> ---
Rob Roll @ 10:31 am
President Obama made news this week when he published an op-ed in The
Wall Street Journal saying that he was going to sign an executive order
requiring all federal agencies to continually review the regulations
they put in place to make sure that they are actually useful and to make
sure that they are worth their economic costs. Some in the media praised
this move as the president's attempt at "triangulation" or "moving to
the center." Please pardon me if I seem skeptical, not in the least
because the executive order President Obama signed is identical to one
President Clinton signed during his term in office; Clinton's order
should still be in effect. I have another reason to be skeptical of
President Obama's sincerity toward reducing regulations: his record.
In his first two years as President, Obama's administration has
instituted 39 "major" regulations versus 37 for the entirety of George
W. Bush's second term. A major regulation is one that has an economic
impact of over $100 million. Only in Washington can $99 million be
considered "small". One could argue that these regulations were
instituted by individual agencies and that the president had no direct
control over them. Okay then, look at a few of the bills the president
has signed into law: the Dodd-Frank Act, which regulates banks; the CARD
Act, which severely restricts who can be issued credit cards; and, most
importantly, Obamacare, which gives the Secretary of Health and Human
Services the power to create over 700 new rules.
All of these new laws will add to the 800,000 pages already in the
Federal Register, which contains all federal regulations. But, at the
end of the day, it doesn't matter how many pages of regulations there
are, it matters how they are enforced, and the Obama administration has
been unduly aggressive in enforcement. Recently, Goldman Sachs told its
American clients that they will not be able to buy shares of Facebook
because Goldman was taking heat from the Securities and Exchange
Commission. Because the offering of shares was not open to the general
public, under SEC rules, Goldman was not allowed to advertise the
offering. The thing is that Goldman did not advertise the offering. The
SEC viewed media coverage that the offering received as "advertisement."
The SEC forgets the fact that Goldman had nothing to do with the
decision of news companies to cover the story. Now because of the SEC's
new interpretation of a rule, Americans will not have a stake in
Facebook, one of the most innovative companies in the world. This whole
situation could have been avoided if the regulations from the
Sarbanes-Oxley Act did not discourage companies from going public, but I
digress.
In another example of regulatory overreach, Arch Coal was recently
forced to scrap a planned $250 million dollar mining investment in West
Virginia because the EPA, for only the second time in its history,
revoked an already-issued permit. That investment would have created 250
jobs in one of the poorest areas in the country. Sadly, these stories
are not few and far between; open up any major newspaper.
Do not get me wrong, I am not saying that we should abandon all
regulations. So how much better off are we with all of these
regulations? We are very much worse off. Not only do these regulations
destroy jobs, they also prevent new jobs from being created. Possibly
the worst part of the jungle that is government red tape is that it
hurts small business the most. While large corporations have the money
to comply with new rules, small businesses do not.
What will come of Obama's new executive order? If I had to guess, I
would say that it will get rid of regulations like those that limit the
amount of water used in each flush of a toilet or restricting the kind
of light bulb you can use (I am not kidding, those are actual
regulations). In short, nothing much will come of it. I will hope
against hope that I am wrong because, right now, we have as system that
does not regulate our businesses: it strangulates them.
____________________________________________
/Robert Roll
<http://www.bizzyblog.com/index.php?s=%22Robert+Roll%22&search=Search>
is a freshman majoring in Finance at Ohio Northern University, and the
blog owner's nephew./
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