Critics Fail “Maxine Waters Test of Political Moderation”
Washington, D.C., March 20, 2012 - As the Senate takes up the JOBS Act this week, the Competitive Enterprise Institute’s John Berlau urges Senators to pass the “Maxine Waters test of political moderation” by supporting all the regulatory relief measures of the House bill that she voted for. Despite garnering Obama administration support and 390 votes in the House, including 158 Democrats and all Republicans present, the Jumpstart Our Business Startups (JOBS) Act has been lambasted by some key Senate Democrats, including Carl Levin (D-Mich.), Mary Landrieu (D-La.), and Majority Whip Dick Durbin (D-Ill.).
In an article in the American Spectator, Berlau praises Waters (D-Calif.) for publicly backing the JOBS Act’s modest but significant liberalization of rules for entrepreneurs seeking access to capital and investors who wish to fund them. “Waters has made some inflammatory statements such as wishing the Tea Party would go ‘straight to hell,’ but she was sounding some congenial notes in the House debate leading up to passage of the JOBS Act,” writes Berlau, CEI’s Senior Fellow for Access to Capital.
By contrast, Berlau says, members of her party in the Senate “are mired in the 1930s when it comes to entrepreneurs' accessing of capital. “ By blasting options such as crowd funding – the ability for entrepreneurs to seek capital in small-dollars online without being subject to millions of dollars in Securities and Exchange Commission red tape – all JOBS Act critics are protecting is “the Wall-Street centric system of securities regulation enacted eight decades ago.”
In addition, Berlau praises the JOBS Act’s raising of the shareholder threshold for when a company must go public and be subject to regulations such as the Sarbanes-Oxley accounting mandates and Dodd-Frank proxy provisions. He also praises its creation of an "on-ramp" that would delay the most onerous of these rules for most new firms until five years after they go public. Investors would still be protected from fraud, but would be freer to choose whether they want to buy securities “burdened with all the accounting minutiae from the Sarbanes-Oxley Act of 2002.” Berlau notes that these mandates -- burdensome as they are for legitimate entrepreneurs -- didn't exactly protect investors from the implosions of Lehman Brothers and MF Global.
Berlau testified in support of many of the JOBS Act’s provisions last month at the House Energy and Commerce Committee’s hearing on “where are the jobs.” He calls the JOBS Act a very effective jobs growth package, because it lifts barriers for the new firms – less than five years old – the type of firms that Kauffman Foundation research has shown create nearly all net new jobs.