Red Tapeworm 2014: Small Businesses Beaten Down by Recordbreaking Federal Regulations

This is Part 23 of a series taking a walk through some sections of Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State (2014 Edition)

The “Small Business Anthem,” heard on the Small Business Advocate syndicated radio program, goes in part:

Even though you make payroll every Friday,

you don’t have a guaranteed paycheck.

You’re a small business owner, and you eat what you kill.

Policy hairsplitters like to proclaim that small busnesses aren’t the main engines of new jobs, that it’s new businesses that do.

Well, OK. Maybe, or maybe it’s different ways of saying the same thing. Regardless, upstarts and small firms take it on the chin when it comes to regulation. Neither can suck it up the way large companies do, especially when large companies seek out regulation, crony-style.

Something called the Regulatory Flexibility Act directs federal agencies to assess their rules’ effects on small businesses. Further, as the Federal Register notes:

The Regulatory Flexibility Act requires that agencies publish semiannual regulatory agendas in the Federal Register describing regulatory actions they are developing that may have a significant economic impact on a substantial number of small entities.

The chart nearby shows the number of rules annually requiring a Regulatory Flexibility Analysis (RFA) since 2001. It also shows other rules anticipated by agencies to impact small business, but that happen to not require the RFA.

It is the case that annual rules acknowledged to significantly affecting small business dropped substantally in 2013, to 669, the lowest of the period.

But this drop is partly attributable to already noted changes in Unified Agenda reporting, particularly the collapse in disclosure and politically driven rule delays. Disclosure has suffered, hopefully not irreparably.

The reality is that before 2013—President Obama’s claim to have issued fewer rules than his predecessor notwithstanding—small business rules had trended upward since 2009. As the chart shows, they popped up from 753 in Bush's last year to 854 in 2012.  

In fact, before the 2013 “drop,” the number of rules with small-business impacts under Obama regularly exceeded 800, which had not been the case since 2003.

Now look a little more closely at the subset of rules requring the Regulatory Flexibility Analysis.

Of these 669 rules in play with small-business impacts in 2013, 391 required regulatory flexibility analysis, a 16.8 percent drop from 470 requiring an RFA in 2012.

The 470 rules in 2012, however, had been a 12.4 percent increase over 2011 and far above anything seen in the past decade. In fact, despite the drop to 391 rules in 2013, the number of rules requirng a Regulatory Flexibility Analysis is still higher than any other non-Obama year shown except for 2008.

Bottom line, Obama’s level of rules requiring small business Regulatory Flexibility Analysis is unsurpassed.

Another 278 rules were otherwise deemed by agencies to affect small business in 2013, but to not rise to the level of requring an RFA; these had dropped from 384 in 2012. 

For further detail, Table 7 in Ten Thousand Commandments, breaks out the 2013 Unified Agenda’s 669 rules affecting small business by department, agency, and commission.

Six of them—the departments of Commerce, Health and Human Services,  Transportation, Agriculture and Treasury; and the Federal Communications Commission (FCC)—account for 435, or 65 percent, of the rules affecting small business.

The overall proportion of all federal rules with small business impacts, as noted in Table 7, stands at 20.2 percent, but the range is quite wide among agencies.

(For even further detail regarding the numbers of rules affecting small business broken down by department and agency for Unified Agenda editions since 1996, see Appendix: Historical Tables, Part H. in Ten Thousand Commandments.)  

2014 Red Tapeworm Series:

  • Part 1: Guess Which Is the Largest Government on Earth?
  • Part 2: Tardy Bureaucrats Gone Wild
  • Part 3: Reckoning the Dollar Cost of Federal Regulation
  • Part 4: Regulations Catching Up to Government Spending?
  • Part 5: Regulations Cost More than Federal Income Taxes
  • Part 6: The Federal Government “Eats” 31 Percent Of The U.S. Economy
  • Part 7: U.S. Regulation Compared to the World’s Largest Economies
  • Part 8: The High Cost of Overcriminalization 
  • Part 9: Thousands of Federal Register Pages
  • Part 10: A Record Number of Federal Register Final Rule Pages
  • Part 11: Federal Register Pages Per Decade
  • Part 12:  Number of Proposed and Final Rules In the Federal Register
  • Part 13: Cumulative Final Rules in the Federal Register
  • Part 14: The Expanding Code of Federal Regulations
  • Part 15: A Fourth of July Reflection on Presidential Executive Orders and Loss of Liberty
  • Part 16:  Over 24,000 Pen and Phone “Public Notices” Annually
  • Part 17: When Regulations Get Delayed
  • Part 18: Federal Regulatory Disclosure Becomes More Confused
  • Part 19: Federal Regulatory Agenda Consistently Tops 3,000 Rules
  • Part 20: Here Are the Federal Agencies that Issue the Most Regulations
  • Part 21: Big Dollar Federal Regulations in the Pipeline Highest Under Obama
  • Part 22: Completed Economically Significant Rules at Record Levels