It seems the president will say just about anything nowadays to reclaim the hearts of the American citizens, particularly when it comes to the topic of government regulation of business.
“I know that there’s a perception sometimes that there’s all kinds of regulations coming out of Washington, the truth is actually we’ve seen fewer regulations coming out of my administration than the previous administration.” – Pres. Barack Obama, June 11, 2012.
It is no perception, but a reality, for those dealing with the burden of regulation on a daily basis. Although the President has created slightly fewer regulations in his first three years than his predecessor—10,215 to 10,674—the cost to businesses and the impact on job creation have been far worse.
The amount of major business regulations that the Obama Administration created in its first three years outnumbers those created by Bush 4:1. 106 new major regulations were created by the Obama Administration that cost businesses $46 billion annually. The Bush Administration created 28 new major regulations in its first three years that cost businesses $8.1 billion—nearly 5 times less.
This is not to say that George Bush deserves a pat on the back. Business regulation is harmful to the economy and job creation at any level.
The Small Business Administration estimates (SBA Cost Of Regulation.pdf) that it costs small businesses more than $10,000 in regulation costs per new employee annually. These costs are economically devastating and have done nothing to improve the condition of the economy. The national unemployment rate has remained above eight percent for 42 straight months and the economy has grown at an abysmal pace—only 1.9 percent GDP growth in June.
So what is a solution? Eradicate regulation.
If the government eliminated all regulations on businesses, the economy would see immediate job creation. It is simple: everything held constant, if you take the $46 billion annual regulation costs and divide it by a salary of $40,000—an amount that many of the 12.7 million unemployed citizens would gladly accept—it would equal more than one million jobs.
And that is just the effect in the immediate future.
Freeing up billions of dollars of resources will encourage saving, capital investment, and entrepreneurship—all three of which lead to increased job creation in the future.
American citizens have endured this stagnant economy for far too long. Businesses must be loosened from the choke-hold of bureaucratic red tape so they can expand and put American back to work.
The Obama Administration must stop pointing fingers and take responsibility for the policies that are harming this economy and the American people. If this administration can humble itself enough to do so, America will see immediate results.