Obama's Regulations Are Strangling America
Every single day an average of 68 new regulations or rules are posted by the federal government. According to an analysis by the American Action Forum, President Obama’s first-term regulations have resulted in $518 billion in unnecessary costs. These costs have burdened large and small businesses alike, stifling economic growth and hampering job creation.
This is only the tip of the iceberg, with The Associated Press recently reporting that “regulations giving force and detail to [Obama’s] health care law have gushed out by the hundreds of pages.” Now that Obamacare is finally being implemented, a regulatory storm is quickly approaching. This wave of new regulations could be a death sentence to the many American businesses that are struggling to hold on. This regulatory regime is feared by our job creators, so much so that a January 2013 survey by the National Federation of Independent Business (NFIB) found that 21 percent of respondents cited “regulations and red tape” as their single biggest problem tied with “taxes.”
The truth is, small businesses owned by every day Americans typically take the brunt of the regulatory damage. Such companies do not have the available capital required to afford the legal fees necessary to comply with the influx of rules. They are disproportionately affected by excessive regulations and are oftentimes driven into bankruptcy. America’s anemic growth has proven just how harmful the regulatory regime really is with the economy growing by only a tenth of a percent last quarter.
In order to forestall additional regulations and jumpstart our country’s economy, Congress and the president need to take action and protect Americans from over-burdensome regulations. There are two viable options for Congress and Obama to take. Under one plan, Congress could stem the tide of regulations by passing legislation that bans the adoption of new major regulations until the national unemployment is below six percent. President George H.W. Bush proposed a similar policy in 1991. The Heritage Foundation notes that such a freeze “is an important symbolic move, sending the message to regulators that now is not the time for new restrictions on the economy.”
Alternatively, Congress and the Obama administration could provide a more permanent solution by establishing a sunset date for federal regulations. Such an approach would require the government to re-determine whether or not each regulation is sound policy, ultimately preventing old regulations from being left in place when they are no longer of use. This would alleviate much of the stress placed on businesses by winding down some of the $1.75 trillion in regulatory costs that are annually imposed as estimated by the Small Business Administration (SBA).
American companies are being forced to pay record legal fees not just by government regulators, but also by trial lawyers. Both taxpayers and employers are being assaulted by trial lawyers who take advantage of America’s tort system for their own avarice. The Pacific Research Institute estimates that America’s tort system imposes a total cost on the U.S. economy of $865 billion per year, constituting an annual “tort tax” of $9,827 on a family of four. According to the study, the foregone research and development, due to excessive liability, results in lost sales of new products every year of over $367 billion.
The only winners in the current system are trial lawyers, whose pockets are lined by jackpot attorney’s fees. President Obama and Congress must enact national tort reform, similar to that of Texas and other states, aimed at reducing frivolous lawsuits. Such reform should include placing caps for non-economic damages (pain and suffering), a policy that many states have already implemented with great success. Non-economic damages involve no direct economic loss and are usually assigned an arbitrary dollar value by juries with minimal guidance from the courts, oftentimes resulting in excessive awards.
Excessive legal fees and other costs driven by the current regulatory regime and tort system have become an impediment to economic growth. It is more important than ever that elected officials promote a climate that fosters confidence and greater employment by taking both these issues head on.
