Monday, December 13, 2010

Virginia Senator Mark Warner should get some credit for at least that "Washington regulators are stifling fresh investment and discouraging innovation through new rules and requirements."

However, his proposal, that federal agencies eliminate one regulation for every newly issued regulation, would do close to nothing to improve the situation.

Leaving aside that Washington never gets rid of old laws, it isn't the absolute number of regulations that is causing businesses to sit on their hands, it is the fear that Washington will change the rules governing the activities they're now doing.

Businesses (or, more accurately, the people who own and manage businesses) don't just evaluate the economy when deciding whether to hire and expand, they also look at the regulatory and legal environment. And just as very few businesses want to expand right before an economic downturn, businesses are scared off expanding when they're constantly in danger of being hit with new - and expensive - rules.

Take, for example, a business that is thinking about hiring some new workers. As part of their planning, they look at the cost of the benefits that each newly hired worker will receive. How are they supposed to do that if Washington is threatening to issue new laws that increase the costs of those benefits? Or with Washington to impose new rules governing financial transactions?

If Mark Warner wanted to give businesses some peace of mind, he'd propose a moratorium on Washington issuing new regulations.