Monday, January 16, 2012

Smart Reorganization Coming To Federal Business Regulation

Sometimes Uncle Sam gets it right.  The White House has proposed a consolidation of several major business-oriented agencies into one federal department.  These agencies all grew out of multiple efforts over decades to make American businesses more competitive in the world marketplace.  Getting serious about promoting exports means getting regulatory messes out of exporters' paths.

Concerns that this reorganization will curtail federal contracts available to small businesses are legitimate but can be addressed.  Requirements for prime contractors to award portions of their contracts to small businesses will very likely always remain in federal law.  Big contractors have plenty of experience certifying small businesses as partners to fulfill this mandate and know the value of businesses owned by women, ethnic minorities, and veterans.

There is some bad news that reform-minded observers may not be willing to notice.  The inability of the U.S. government to balance its budget will eventually exhaust the bond market's patience, and either an austere balanced budget or a hyperinflationary economy will result.  There will then be less federal spending available for all businesses, large and small.  Agency consolidation won't prevent that outcome but it will make a bitter pill easier for all to swallow once the business community sees the federal government get ahead of the downsizing curve.

One odd thing about the effort is the elevation of the SBA to a Cabinet-level agency.  That cannot outlast the reform if the SBA is to be eventually folded into the Department of Commerce.  It's a no-cost political move in an election year, the equivalent of a shout-out to entrepreneurs.

Reformers have finally found a voice in Washington D.C.  They're from the government and they're here to help.