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Small Business Focus: The Devil's in the Details
Release Date: 09/06/2002

by Jack Faris

Legendary New York Yankees manager Joe McCarthy joked that he once dreamed of dying, and on arrival in heaven, was asked to assemble a baseball team. Naturally, he called up such greats as Cy Young and Babe Ruth. They were unbeatable.

Then, the day came when his heavenly stars were called to face the Devil's team. McCarthy, knowing his players were the best, told the Devil he didn't have a prayer of winning.

"You're right," said the Devil, "but I've got all the umpires."

Here on Earth, the superstars of small business slug away daily on Main Street. They're great players, tirelessly hitting home runs for the nation's economy.

They have few rivals. According to the U.S. Small Business Administration's Office of Advocacy, small firms dominate several sectors of the American economy. For example, 99.9 percent of all construction firms are small, as are 99.6 percent of enterprises in professional, scientific and technical services. Add 99.3 percent of health care and social assistance firms for good measure.

They're the best players. But their strongest opponent, the federal government, has all the umpires. While the small-business sector generates nearly three-fourths of net new jobs, complying with regulations costs them 60 percent more than their big-business counterparts. Their cost just to meet federal rules is nearly $7,000 per employee.

It's no surprise then that most small-business owners are tired of being hassled by the regulator-umpires. NFIB research found that the federal government was considered the primary culprit by virtually half of those surveyed. Forty-four percent called regulation a serious problem.

But just a few days ago, something happened that should help level the playing field. President Bush stepped into the game, called time-out, and told the umpires to play fair. Officially issuing Executive Order 13272, the president demanded that federal agencies, when writing new rules and regulations, implement policies that protect America's small businesses.

Although the Regulatory Flexibility Act has been in the rulebooks for 25 years, federal umps have ignored its requirement to consider the impact on small firms before they regulate.

They often "don't care that the law is on the books," the president said when he unveiled his small-business plan earlier this year. That plan includes an initiative to "tear down the regulatory barriers to job creation for small businesses and give small-business owners a voice in the complex and confusing federal regulatory process."

The feds may have all the umpires, but the man who controls the rulebook clearly intends to challenge any bad calls. The Executive Order sets regulation-writing policies and directs SBA's Office of Advocacy to train agencies to measure the regulatory damage on small firms, and review proposed rules before they're published. What's more, the bureaucrat-umpires will now have to report annually on their compliance.

Small-business owners are encouraged by this effort, but they'll keep a wary eye on the federal umpires. They've learned that when dealing with the government, the Devil is always in the details.