Does more red tape create jobs or destroy jobs?

By Tom Quiner


The president and his party believe in red tape.

They have created new, expansive, and costly government regulations in record numbers.

Writing in this morning’s Des Moines Register, Iowa Congressman Tom Latham spelled out the consequences:

“Last year, the Obama administrationproposed or enacted over 760 new major and complicated regulations, taking more than 75,000 pages of paper just to explain them. These new regulations cost the economy about $230 billion and created 120 million additional hours of annual paperwork requirements.”

Each new regulation carries a compliance cost. Each new regulation increases the cost of running a business and decreases profitability, which in turn hurts job creation.

That’s not to say that all regulations are bad, nor are they all good. The trick is to balance the needs of the state with the needs of the business.

The Obama administration has our regulatory climate way out of balance.

The annual cost of regulation in the U.S. is estimated to be $1.75 TRILLION. That’s double what the government collects in income taxes.

As you can see in the video above, the Obama administration imposed $38 billion in new regulations (through mid 2011) which is the fastest increase of regulations in that time frame ever.

Small business is choking to death.

Bernie Marcus was the co-founder of Home Depot. This entrepreneur has created hundreds of thousands of jobs in the U.S. He flat out tells us that the president’s economic policies are doing grave damage to small business:

“Having built a small business into a big one, I can tell you that today the impediments that the government imposes are impossible to deal with. Home Depot would never have succeeded if we’d tried to start it today. Every day you see rules and regulations from a group of Washington bureaucrats who know nothing about running a business. And I mean every day. It’s become stifling.

If you’re a small businessman, the only way to deal with it is to work harder, put in more hours, and let people go. When you consider that something like 70% of the American people work for small businesses, you are talking about a big economic impact.”

The key to surviving the Obama economy is to “let people go.”

It’s no wonder jobs aren’t being created under the Obama regulatory climate.

Congressman Latham has proposed legislation to help business begin creating jobs again. It’s called the Regulatory Accountability and Economic Freedom Act. He explains:

“The legislation brings accountability to the regulatory process and helps to lift the uncertainty plaguing American families, farmers and small businesses. My legislation would require a cost-benefit analysis of all the available options before a federal agency can initiate any new regulation. It would also prevent agencies from overstepping their authority by requiring all major regulations to be approved by Congress and the president.”

In other words, he would regulate the regulators.

He would inject some balance in our approach to regulation and remove the impediments to job creation imposed by Mr. Obama and his party.

Some detractors will legitimately point to the recent collapse of the Peregrine Financial Group in Cedar Rapids, Iowa, as proof that we need more regulation, not less. After all, it looks like Peregrine may have bilked investors out of $200 million. So they may be right. On the other hand, the regulators who reviewed the forged documents supplied by CEO Russell Wasendorf didn’t pick up the phone to verify the key piece of info provided: that they in fact actually had $200 million in the bank.

Ronald Reagan always said “trust, but verify.” Regulators in this case trusted but didn’t verify.

Does more red tape create jobs or destroy jobs? Simply look at Obama’s record for a quick, irrefutable answer.

Tell your Congressman to support the Regulatory Accountability and Economic Freedom Act.