Just 10 days after taking office, President Donald Trump continued to check items off his campaign promise list as he signed his latest executive order on limiting regulation of small businesses.
The executive action, titled "Reducing Regulation and Controlling Regulatory Costs" was signed Monday morning after President Trump met with small business owners. The four-page document outlined two key changes to current government operations. First, any new regulation an agency enacts must be met with two regulations that will be eliminated. And second, there will be a cap on the cost of new regulations for the federal government, which will be $0 for fiscal year 2017.
The action gives substantial power to the Director of the Office of Management & Budget, who has yet to be confirmed. Rep. Mick Mulvaney (R-South Carolina) is currently up for that position and Senate hearings were held last week as part of his confirmation bid. The Director, under Monday's executive order, would determine the incremental costs allowed for each agency as well as how the costs of regulations would be measured.
Experts on governance echoed skepticism at how the executive action would actually be implemented.
William Gale, a fiscal policy expert at the Brookings Institution, told the Washington Post, "The number of regulations is not the key. It's how onerous regulations are. This seems like a totally nonsensical constraint to me."
What Does This Mean for Your Business?
Levi King, CEO and Co-Founder of Nav, is concerned about the implementation of the action, but the spirit behind it is a step forward for small businesses.
"If small businesses are focused on paperwork and licenses, if half their money's spent satisfying government regulations, they won't be in business long," King said. "I support smart regulation, but eliminating bureaucratic rulemaking that stifles innovation and discourages new jobs and growth would be a welcome development. On the other hand, as we saw with the airport chaos this weekend, major policy changes require a thoughtful, measured approach."
While the executive action does a lot to limit the cost of additional regulation for the federal budget, the decreased cost to small business owners is yet to be seen. In the NSBA survey, nearly 40% of respondents said new regulations had a "very significant" impact on their plans to grow or expand their business.
Streamlining and simplifying government regulation of small businesses was a major topic of last week's Senate confirmation hearings for Linda McMahon, Trump's nominee to head the Small Business Administration, with Republicans and Democrats urging that there were necessary changes needed to make sure small business understand regulations and are also getting more access to government contracts. (You can read more about the hearing here.) So, it should come as no surprise that limiting regulations is a focus of the new administration.
President Trump was surrounded by small business owners as he signed the executive order Monday, but the law itself mostly pertained to limiting the cost of regulatory oversight on the federal government. A recent survey on small business regulations from the National Small Business Association found that small business owners reported spending an average of $12,000 a year on regulations and 58% of owners said federal regulations where the most burdensome source. The Internal Revenue Service, Environmental Protection Agency and Department of Labor were cited as the federal agencies with the most burdensome regulations in the survey, with the IRS dominating the vote.
For many small business owners, $12,000 a year is the difference between profit and loss, especially if you're in your first few years of business. And when margins are tight, taking out business loans to finance a new hire to help you become compliant or to pay for legal expertise to help you navigate the regulations can get expensive fast, especially if your business credit isn't great.