A New Law to Liberate American Businesses
Mr. Stemberg, founder and former CEO of Staples Inc., is managing general partner of the Highland Consumer Fund and a member of the Job Creators Alliance.
Nearly 30 years ago, I started a company called Staples Inc. that went on to do pretty well. Launching a business like Staples in 2013 would be a much harder proposition, with success by no means certain. There are so many government impediments to business today that the next Staples – and its 50,000 jobs – might never get off the ground.
Chief among those roadblocks: the blizzard of bureaucratic red tape that buries businesses and stifles job creation. These include the additional 16 million hours that vending-machine and chain-restaurant business owners must spend complying with new food regulations each year. But there is also the license that magicians require to do a rabbit disappearing act, which mandates an annual fee, surprise inspections and a rabbit disaster plan. All told, American business faces 46,758 pages of rules to live by in the Federal Register.
This confounding web of federal regulations may be curtailed if Sens. Angus King (independent, Maine) and Roy Blunt (R., Mo.) have anything to say about it. Their Regulatory Improvement Act of 2013 could be a game changer.
The legislation introduced in late July would create a bipartisan Regulatory Improvement Commission, charged with recommending cuts in the regulatory regime, and the law would require Congress to vote on the proposals. This is desperately needed. The government has few processes at its disposal through which it can re-evaluate the efficacy of outdated regulations – and many members of Congress lack the expertise, time and courage to effectively scale them back.
The King-Blunt concept is tested and has already worked remarkably well. The Defense Base Realignment and Closure Commission, an independent, bipartisan commission of experts, was established in the late 1980s to reduce the number of military bases. Politics made it nearly impossible for Congress to do the job, as it was too easy for politicians to cut deals and protect each other’s pork. Instead, the commission selected the bases and reported its findings to Congress for mandatory, up-or-down, non-amendable votes.
It worked. Since 1988, there have been 121 major base closures, 79 major base realignments (which may close down part of a facility or transfer personnel away from it) and 1,000 minor closures and realignments under BRAC.
In short, the BRAC Commission gave politicians what they crave most: cover. Nobody back home could blame them for losing a military base. The King-Blunt proposal will give representatives the same cover with regulations.
The bipartisan Regulatory Improvement Commission – with members appointed by the president and congressional leaders – would tackle one area of regulation at a time. Its members would be charged with finding regulations that are duplicative, like the 642 million hours employees will spend complying with redundant regulations this year, according to the American Action network.
The panel also will try to identify obsolete regulations, maybe resembling the arcane rules the Federal Communications Commission leverages to achieve whatever regulatory aims the commissioners desire.
Finally, the King-Blunt commission will look for excessive regulation, perhaps scaling back the 1,659 pages of “simplified” mortgage disclosure and servicing rules the president’s new Consumer Financial Protection Bureau issued in July.
The public – people on all sides of an issue – would advise the commission in an open comment period while it considered which regulations to put on the chopping block. The resulting list of targeted regulations would then be reported to Congress, to be eliminated or curbed.
Here’s the best part: Both chambers of Congress would be required to vote on the recommendations within a month. Lawmakers could review, but not change, the report. There would be no deal making, no tricky amendments and no ducking of tough decisions. Lawmakers would be asked a simple question and could only give the simple answer: yes or no.
Job creators know that regulatory relief can’t come soon enough. In 2010, the Small Business Administration pegged the annual cost of complying with regulations at $1.75 trillion. The SBA report covered 2008 and the burden has certainly grown since. A May 2013 report by the Heritage Foundation, “Red Tape Rising,” found that new regulatory costs added in 2012 totaled $23.5 billion.
That’s a staggering amount of money to pay for government rules. In 2008, the GDP of the entire state of California produced slightly more than $1.75 trillion. At this rate, the current regulatory regime just kills more jobs and stifles the formation of new small businesses – the lifeblood of job creation in our economy.
In 1986, we founded Staples in large part because of what used to be an enormously productive American financial system. The system that fueled entrepreneurship 25 years ago is now being regulated to death under the Dodd-Frank financial overhaul, which requires as many as 398 new regulations. The next Staples, and its 50,000 jobs, may not happen because of this burden.
If the president and Congress are serious about creating jobs, they must take seriously the job-killing regulations that are holding job creators back. The King-Blunt proposal can get the job done?EUR”and jump-start the lagging economy in the process.