The Regulatory Accountability Act is a threat to small businesses

By Leo Nguyen

In recent years, American conservatives have been publicly reminiscing about an imaginary time, the bygone heydey of the laissez-faire market created by our Founding Fathers.

“Overregulation is killing jobs! And entrepreneurship! And limiting economic growth!” are the cries from the right.

Within days of entering office, President Trump started taking steps toward mass deregulation. But history shows that federal regulation is the government’s ongoing effort to adapt to the ever-changing present. Small businesses need more those regulations - the types of common-sense, protective regulations that encourage competition, keep air and water clean, prevent financial markets from collapsing again, and ensure public safety.

For example, just over 100 years ago, Upton Sinclair’s masterpiece The Jungle described how our meat was packed in dirty warehouses in Chicago. After the book was published, the Meat Inspection Act of 1907 was signed into law by President Theodore Roosevelt and the Food and Drug Administration (then was Bureau of Chemistry) was established. Seventy years later, President Nixon created the Environmental Protection Agency and signed landmark policies such as the National Environmental Policy Act of 1970 and the Federal Water Pollution Control Act of 1972 as part of a more assertive push to mitigate environmental crises. Fast forward to the aftermath of the 2008 Great Recession when Dodd-Frank financial reform scrutinized irresponsible, risky practices on Wall Street, and established institutions and regulations that protect consumers and promote financial stability.

These regulations, whether big or small, all have a profound impact on small businesses: from making sure that restaurants across our country have safe and healthy products, to protecting small businesses and American taxpayers from another financial meltdown and having to bail out big banks.

Right now, the Regulatory Accountability Act of 2017 (RAA) poses a direct threat to the protections small business rely on for safe products, clean food and water, health care, worker protections, and financial stability, to name a few. Backed by Republicans in Congress, large corporations, and an army of high-paid lobbyists, the RAA is an unmasked effort to tilt the economic seesaw even more heavily in favor of the nation’s ultra-wealthy at the expense of small businesses, their customers, and their communities.

The RAA severely cripples the protective shield of federal regulatory agencies by making it harder, longer, and more expensive to regulate industries. According to the Coalition of Sensible Safeguards, the RAA would add 53 steps to the rulemaking process. That could double the average amount of time it takes to finalize a regulation, which already takes about one presidential term. The main goals of those additional 53 steps is simple - to buy time for lobbyists to influence the regulatory procedure, and undermine the work and expertise of the experienced, lifetime public servants in federal regulatory agencies.

In addition to severely delaying the rollout of new rules, the RAA crafts a new category of non-binding guidance documents and requires they go through a cost-benefit analysis requirement. This provision is particularly troublesome for small businesses since they primarily rely on guidance from agencies to comply with regulations, and the RAA is making it harder for agencies to provide that guidance. For instance, it is next to impossible to quantify in monetary terms the costs and benefits of preventing discrimination or sexual harassment in the workplace. This provision in the RAA could hurt small businesses the most because they lack the lawyers and compliance offers that large large corporations rely on to abide by regulations.

Furthermore, the RAA’s main goal is to put profit ahead of the public interest. One report from the Center for American Progress details the 72 corporations and trade associations that poured in more than $59 million lobbying for the RAA in the House or Senate between January and the end of March. And the legislation forces agencies across the board to adopt “the most cost-effective” regulations for corporations, not the regulations that “maximize net benefits” to the public. The implications come with a price tag that’s too high - we can’t afford more environmental, financial, or public safety crises. Expanding industries that only benefit a few at the expense of American small businesses, workers, consumers, and the environment is not only financially unsound, but also reckless, irresponsible and immoral.

Twenty first century small businesses are not angling for deregulation. In fact, small business owners often say they want more common sense, effective safeguards that help level the playing field with larger competitors. That starts with the our legislators and the executive branch prioritizing small business and public interests over corporate interests when it comes to the regulatory system.


Leo Nguyen is the Policy and Communications Intern at Main Street Alliance. He studies political science at Augustana College.