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White House unveils streamlined business rules

The regulatory reforms are intended to save businesses time and money, but critics say other new rules offset the improvements.

August 24, 2011|By Christi Parsons, Los Angeles Times
  • Among the regulatory changes unveiled by the Obama administration are simpler federal tax forms, which officials estimate will save businesses 55 million staff hours in paperwork.
Among the regulatory changes unveiled by the Obama administration are… (Daniel Acker, Bloomberg )

Reporting from Washington — The Obama administration is unveiling a slate of regulatory changes it says will cut government red tape and save businesses more than $10 billion over the next five years — and, the White House hopes, bolster its effort to promote job and economic growth.

The plan includes about 500 changes aimed at saving businesses money in a variety of ways, such as consolidating their IRS paperwork, simplifying hazard warnings they must post for workers, and expediting payment to government contractors.

The changes represent Obama's answer to what has been a source of rising criticism of his term: that his regulatory reforms are more costly.

Top advisors assert the Democratic president has shown more restraint in regulation than his Republican predecessor and promoted a common-sense approach. The administration estimates it imposed less-costly requirements on business in 2009 and 2010 than did the George W. Bush administration in 2007 and 2008.

Obama has managed to "change the culture" of the regulatory system, said his regulation czar, Cass Sunstein, "by having openness to public concerns, by getting a sense of how rules are operating on the ground."

Business leaders and Republicans said the new plan contains smart ideas but doesn't take on costly regulations that have been approved but not yet implemented. Obama has made things worse, critics contend, with a crackdown on the financial sector and with the rules that accompany his healthcare legislation.

When all the regulations imposed in the first two years of Obama's term are fully implemented, they will cost businesses roughly two-thirds the total expense from the rules generated in Bush's eight years in office, said Diane Katz, a regulatory policy research fellow at the Heritage Foundation, a conservative think tank in Washington.

"It's all relative," Katz said. "It's significant that this administration is acknowledging that regulatory costs matter. But are the savings they're proposing significant? Not compared to the torrent of new regulations."

Big-ticket items among those new rules include the Wall Street Reform and Consumer Protection Act passed by Congress to regulate the nation's financial services industry. The administration has stood by the increased regulation of Wall Street as prudent in the aftermath of the 2008 financial crisis.

The issue of how much regulation is appropriate is already the subject of debate as all sides stake out economic positions for the 2012 presidential campaign.

Obama is struggling to find ways to respond to the economic crisis at a time when his major initiatives are meeting stiff resistance from Republicans in Congress.

In January, he ordered a top-to-bottom review of existing federal regulations, telling agencies and departments to come up with ways they could cut red tape and streamline the many requirements the federal government imposes on businesses. The administration also solicited suggestions from the public.

On Tuesday, Sunstein released the final plan, an 800-page document he said would "eliminate redundancy and inconsistency," especially in the Labor and Transportation departments and the Environmental Protection Agency.

The simpler warnings required by Labor are expected to save employers more than $2.5 billion over the next five years, according to administration projections. The streamlined tax forms of the IRS will save businesses an estimated 55 million staff hours in paperwork.

Sunstein said the plans "recognize that the regulatory look-back is not a one-time endeavor" and that such reviews will continue.

The administration's review was a "worthy effort" to get rid of duplicative and confusing regulations, said Bill Kovacs, senior vice president of Environment, Technology and Regulatory Affairs at the U.S. Chamber of Commerce. But the effort is undermined by new regulations, he said.

For example, farmers previously confused by conflicting water quality regulations from the EPA and the U.S. Department of Agriculture now have more certainty about which regulations apply. But new regulations also have broadened the EPA's authority over farm production.

"It is always worthwhile to protect citizens from conflicting federal regulations," Kovacs said. But "the agency has already dramatically expanded its control over the waters in the U.S."

House Republicans were less charitable to the Obama announcement, certain to become part of the president's narrative about his efforts to spark the economy. House Majority Leader Eric Cantor (R-Va.) called the plan "underwhelming."

Obama is expected to unveil a jobs plan shortly after Labor Day.

The administration's initiative drew a skeptical response from the National Federation of Independent Business, a conservative small-business group and leading critic of the new healthcare law.

The law is designed to make it easier for small businesses to shop for health plans for their employees and it exempts businesses with fewer than 50 employees from a mandate that requires larger employers to provide health benefits starting in 2014.

But a federation spokeswoman said the law will still be a paperwork burden for many businesses.

"We have high hopes for the president's job plan," said Cynthia Magnuson, "but we don't have a lot of confidence, given what we've seen. This regulation reform only adds to our concern."

christi.parsons@latimes.com

Times staff writer Noam Levey in Washington contributed to this report.

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