Tear Down Regulatory Barriers to Job Creation and Give Small Business Owners a Voice in the Complex and Confusing Federal Regulatory Process
The complex, confusing, and cumbersome maze of federal regulations costs small businesses 60 percent more per employee than it costs large businesses. Entrepreneurs cannot operate effectively in an environment of uncertainty and confusion. Such an environment makes entrepreneurs spend more time with their lawyers and accountants and less time with their customers. And compliance with these regulations can be very costly averaging $7,000 per employee by one estimate. The President believes that the following proposals would improve the regulatory environment for entrepreneurs:
Strengthen the SBA Office of Advocacy. The Small Business Administration Office of Advocacy should ensure that the interests of small businesses are fully considered when agencies begin crafting new regulations. Agencies should thoroughly review the potential impact of regulations on small businesses well before they submit new regulations to the Office of Management and Budget. To better ensure this outcome, the President will provide the Office of Advocacy with greater enforcement powers through an Executive Order. Under this order, the Office of Advocacy will have the power to compel agencies, if they fail to study the impact of a new regulation on small businesses, to explain in writing why they did not undertake a study. The Office of Advocacy would make these explanations public (consistent with applicable laws) and work with the OMB Office of Information and Regulatory Affairs (OIRA) to ensure that regulations are well prepared before they are submitted to OMB.
Increase coordination between OIRA and the SBA Office of Advocacy. Today, the Office of Advocacy and OIRA are signing a memorandum of understanding that is designed to ensure that these two offices work closely together to ensure that agencies consider small business issues as early as possible in the regulation writing process.
Allow small businesses to earn interest on their checking accounts. Due to outdated, depression-era laws, small businesses are not allowed to earn interest on their checking accounts. For many small businesses, the interest income on their checking account balances would defray other significant costs. The President believes that banks should be able to pay interest on small business checking accounts.
Seek comments from small businesses on ways to improve regulations. The President has instructed the Director of the OMB to seek the views and comments of small businesses on existing federal government regulations, paperwork requirements, and guidance documents. Today, the OMB OIRA is announcing a 60-day public comment period under the Regulatory Right to Know Act. OIRA is also releasing the 2002 draft Report to Congress on the Costs and Benefits of Federal Regulations. This report focuses special attention on the needs and concerns of small businesses.
Strengthen enforcement of the Regulatory Flexibility Act. The President has also instructed the Director of the OMB to work with the SBA Office of Advocacy to strengthen the enforcement of the Regulatory Flexibility Act. This Act requires agencies to prepare an analysis of the impact of new regulations on small businesses before they are put in place. OMB will send back to agencies any proposed rules that have not taken the impact on small businesses into serious consideration, as is required.