Senator Lankford Floor Speech on Removing Regulatory Burdens on Small Businesses
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WASHINGTON, DC –Senator James Lankford (R-OK) today delivered a speech on the floor of the Senate to urge his colleagues to pursue regulatory reform and pass the Small Business Regulatory Flexibility Improvements Act (S.584) to remove unnecessary burdens on small businesses. Lankford also discussed the broken budget process.
Last week, the Senate Homeland Security and Governmental Affairs Committee favorably reported three pieces of regulatory reform legislation sponsored by Lankford: The Small Business Regulatory Flexibility Improvements Act, the Providing Accountability Through Transparency Act, and the Early Participation in Regulations Act. The Committee also passed the Federal Agency Customer Experience Act with Senator Lankford as the leading Republican cosponsor.
On the broken budget process:
One of them is, when we go through the budget process, I encourage my colleagues to deal with the budget gimmicks that are still in place in the budget process. There are areas that seem to bring down the deficit, but we all know actually do not. Those don’t help us as Americans. That may help some sort of scoring issue, that doesn’t help where we are. The second aspect of that is, let’s actually put the Appropriations bills on the floor. For the last several years, there has been continuing resolutions or omnibus without an any amendment process. We should be able to, in a bipartisan way, agree to bring these Appropriation bills to the floor, actually have an amendment process, actually deal with this in a public setting.
On the effects regulations have on small businesses nation-wide:
For small businesses, it is not typically small regulations, it is the hundreds of little ones that they are constantly trying to live under. It is the culmination of all these different regulations and trying to figure out where they are. Most small businesses don’t have lawyers, they don’t have compliance people. They don’t have folks lined up to be able to monitor all of these things. They have to figure it out as they go. They are a small business, they are a family owned business. They are trying to take care of their family and the neighbors around them. Yet all of these regulations come with them as well. Let me read what Karen Kerrigan, the president and CEO of the Small Business and Entrepreneurship Council wrote in an on op-ed just last week. She wrote that red tape is strangling our small business and undermining entrepreneurship. Indeed, according to the Small Business and Entrepreneurial Council research, the cumulative loss of new businesses over the last decade totals $3.42 million missing businesses—not workers—businesses in America’s economy. For existing small businesses, the per employee cost per regulation is just over $11,000 per employee. Excessive regulation in the US has hurt our competitiveness in the global economy. The US ranks 51st in the world for ease of starting a business according to World Bank. The same report is consistent with other global studies that have found that America’s friendliness and general ease of doing business has eroded year after year. That is according to Karen Kerrigan, President and CEO of the Small Business and Entrepreneurship Council…
On the effects regulations have on Oklahoma small businesses:
Each new regulation on small businesses adds another cost, another burden, another requirement which small businesses have to comply with. This cumulative burden is crushing small business. Let me give you some examples. Julian lumber company in Antlers, Oklahoma… that family owned business makes wooden fence posts, treated poles. If you have a telephone poles in that area or other post and poles, it often came from Julian Lumber Company. It also has a small trucking company to be able to haul post to retail stores across the Midwest and southwest. Julian employs about 50 people, but recently had to shift a part-time employee doing compliance to being actually full time doing nothing but compliance 40-hours a week because of all the federal regulations. When Robert Julian founded his business in 1974, he didn’t set out to create jobs for compliance officers, he actually set out to do lumber work. Unfortunately, his business now includes federal compliance.
On the Small Business Regulatory Flexibility Improvements Act:
I introduced the Small Business Regulatory Flexibility Improvements Act. It has now passed its way through committee… It closes loopholes in the Regulatory Flexibility Act, which became law in 1980. That bill was designed to help small businesses, but there are so many loopholes that the agencies are going around it. This is not a bill I came up with on my own. It is a bill that was drafted in direct response to small businesses and small business leaders around the country. It has been discussed for a long time but for whatever reason it has never been passed. I want to run through a few quick things that it does.
First, the agencies should account for the economic impact of regulations, especially on small business, and it should be the full economic impact. Agencies have this little caveat that they will do. They’ll say if it is not a direct cost, it is an indirect cost on businesses. They will put a new regulation on them and say we only count direct cost of regulations, but we’re not counting anything indirect like electricity usage or like a state, if they put a federal regulation down and a state entity is then required to create new regulations based on it they won’t count the state regulations, or if it is permitting from a different agency, they say that is somebody else that does that. If you’re a small business, cost is cost is cost. The federal government plays this game of what’s a direct and indirect cost to a business. A small business doesn’t get to play that game. They have to pay the bills for it…
Second, we require the IRS to listen to small businesses before they release IRS rules. So many hours are spent by every small business complying with IRS regulations and requirements. We would like for the IRS to actually engage with small businesses when they put out policy and guidance, to say ‘how is this going to affect small businesses? How can they work this out to be as easy as possible for small business owners?’.
Third, increase the transparency in the rule-making process. Small businesses tell me that when they learn of new regulatory requirements, they are often blindsided. They had no idea the rule was coming. In the rare instances when a small business owner speaks out to an agency, they are confused when they see the final rule because it doesn’t look at all like what they had recommended or had raised. Years ago, there was something created called the SBREFA panel. It is small businesses that were supposed to be able to engage with the federal government on designing how regulations would come out. The loopholes were so present in the law that the agencies are just going around them. We need to close that. As simple as it sounds, when an agency is creating a rule, don’t you think they should call a small business and ask how it will work at their place, or will it work at all?
Fourth, let’s deal with old rules. There are lots of regulations that are out there that are old that become very complicated for small businesses to be able to maintain and no one has ever gone back to look at them. Let’s create a simple system that when a rule comes out, it has to be reviewed within ten years, that way we have no rule that is 40, 50 years old and no one has even touched it to look at it to make sure it still works and it’s not overly complicating the process.
Finally, here is something straightforward. Give first-time forgiveness for paperwork violations. Small businesses, when they have a paperwork violation, they have a paperwork violation. They are not trying to break the law or they’re not trying to violate regulations, they missed one… Now, I wouldn’t say that if it’s violating health and safety issues. Obviously, those are things they should take care of… We have so many small businesses that get a fine because they missed a piece of paperwork… This is still a government that works for them. They don’t work for the government. So, my simple recommendation is for small businesses, give them first-time paperwork forgiveness rather than a federal compliance person showing up at their place with a fine.