The SBA's Office of Advocacy Criticism of Its ‘Crain and Crain' Report: A Dollar Short and A Day Late
Call it buyer’s remorse. The Office of Advocacy of the Small Business Administration (SBA) is publicly—albeit meekly—tiptoeing away from a now-infamous report that it commissioned, in which economists Nicole Crain and Mark Crain purported to find that federal regulations cost the economy $1.75 trillion in 2008. After being roundly criticized by CPR, the Congressional Research Service, and others, SBA’s Office of Advocacy now explains, referring apparently to the $1.75 trillion figure that “the findings of the study have been taken out of context and certain theoretical estimates of costs have been presented publicly as verifiable facts.” While this admission is welcome, it does not go nearly far enough in light of the antiregulatory crusade this misleading, taxpayer-supported report fueled.
Soon after the Crain and Crain report was released in 2010, CPR published a White Paper that demonstrated the unreliability and implausibility of the Crain and Crain report’s methodologies and findings. A few months later, the nonpartisan Congressional Research Service (CRS) released its own analysis of the Crain and Crain report, and its findings were equally damning. Then the Economic Policy Institute (EPI) separately analyzed the Crain and Crain report, and concluded the Crain …
When you say “small business,” most people probably imagine a mom-and-pop corner grocery. Actually, the federal Small Business Administration’s concept of small goes well beyond that. For instance, it includes a computer business that does up to $25 million per year in business. A convenience store can do $27 million and still be considered “small,” while a grocery store can go up to $30 million. If you’re in parts of the financial sector, you can do $175 million in business a year and still be a “small business.”
In many other areas, the size requirement is set in terms of numbers of employees—usually 500, but sometimes 1000 or more. There are wonderfully detailed sub-categories such as “Motor Vehicle Steering and Suspension Components (except Spring) Manufacturing” and the nostalgia-inducing “Carbon Paper and Inked Ribbon Manufacturing.” (Couldn’t find a heading for buggy-whip manufacturers, however.) Anyway …
This morning, CPR President Rena Steinzor testifies before the House Committee on Small Business's Subcommittee on Investigations, Oversight and Regulations. From the witness list, it would appear that this'll be another in a series of hearings structured by House Republicans to inveigh against the regulations that protect Americans from a variety of hazards in the air we breathe, water we drink, places we work, products we buy, food we eat, and more.
If history is any guide, most of the testimony and discussion will focus not on how best to protect Americans from such problems, but on the costs to small business of doing so. Steinzor is the lone witness permitted to the minority party -- the Democrats, that is -- and as such, could well be the only person who mentions the benefits of regulation. Study after study has demonstrated that the economic benefits of regulation vastly exceed …
Earlier this week, Karen Mills, the current Administrator of the Small Business Administration (SBA), announced her intention to leave office, opening up another second-term vacancy for President Obama to fill in the coming months. The SBA position is unlikely to attract as much media attention or pundit speculation as the EPA or Energy Interior posts, but it could have a big impact on whether the Obama Administration is able to take on the long to-do list of public health, safety, and environmental challenges that the nation currently faces. The next SBA Administrator can and should begin the critical process of reshaping the controversial SBA Office of Advocacy so that it focuses on helping truly small businesses, without undermining regulatory safeguards.
A recent CPR white paper I co-authored examined how the Office of Advocacy uses federal tax dollars to try to block health, safety, and environmental regulations, often …
Congress created the Office of Advocacy (Office) of the Small Business Administration (SBA) to represent the interests of small business before regulatory agencies. It recognized that, unlike larger firms, many, if not most, small businesses can’t afford to lobby regulators and file rulemaking comments because of the expense involved. The Office was supposed to fill this gap by ensuring that agencies account for the unique concerns of small businesses when developing new regulations. Instead, as new reports from the Center for Progressive Reform and the Center for Effective Government document, the Office of Advocacy is using its resources and influence to weaken the regulatory process, usually at the behest of big business.
The Office of Advocacy has steadily expanded its role in the rulemaking process, creating numerous opportunities to oppose regulation, slow the regulatory process, and dilute the protection of people and the environment against unreasonable …
A draft of the Republican party platform, posted by Politico on Friday afternoon, reveals that the party has incorporated some of the more absurd claims and proposals on regulations pushed by House Republicans and some more radical trade organizations.
The draft claims regulations cost $1.75 trillion each year – that’s from a discredited study sponsored by the Small Business Administration’s Office of Advocacy. It turned out that 70 percent of that figure came from a regression analysis based on opinion polling on perceived regulatory climate in different countries (and much of the rest of the number came from cherry-picking the highest available estimates). The SBA study was debunked by a CPR white paper, the non-partisan Congressional Research Service, and the Economic Policy Institute (twice).
The draft platform says: “Constructive regulation should be a helpful guide, not a punitive threat.” In other words, we suggest that …
Last week, Bloomberg News ran a curious story conflating a range of issues under the banner of regulatory rollbacks. The piece keys off of the ongoing GOP push to deregulate America. That effort has been going on for decades, of course, but in the wake of the recession (made possible, not coincidentally, by deregulation in the economic sector), GOP leaders and their business allies and funders have rebranded it, and now argue that that "burdensome" economic, health, safety and environmental regulations are in fact the cause of economic distress.
Most of the GOP rhetoric has been aimed at federal regulation. But the Bloomberg piece breaks some new ground, sweeping together a hodgepodge of state regulations and laws, overlaying it with an uncritical reference to some shoddy right-wing research, and presenting the resulting brew as the state and local expression of the GOP's anti-regulatory campaign.
In the first …
The Economist’s February 18 edition offers a cover package of five articles on “Over-regulated America” (1, 2, 3, 4, 5). Our British friends want you to know there’s a problem here in the States that needs fixing:
A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee. It’s a wonder the jobless rate isn’t even higher than it is.
You can almost feel The Economist’s pain: the jobless rate should be a lot higher than it is, if the premise about the costs of regulations is correct. Surely if the regulatory burden were actually 12 percent of GDP – that’s what the SBA numbers say, if you draw them out – things would be far worse than they are. Ideologically unable to consider the obvious alternative – that regulations don’t add …
What would you do if a report you funded was debunked by a scathing critique from the nonpartisan Congressional Research Service? What if you found that the researchers you funded had based 70 percent of their analysis of the costs of regulation on a regression based on opinion polling data? What if the researchers who had published that opinion polling insisted publicly that their data was never meant to be used for such purposes? What if a member of Congress had publicly lambasted you for keeping the underlying data used in the study from being examined by the public?
For the Small Business Administration’s Office of Advocacy, the answer appears to be: Stay the Course. In new research proposal requests I noticed recently posted on the SBA’s website, the SBA appears to have learned little.
The Office of Advocacy’s flawed report that got so …
Former Senator Blanche Lincoln, now heading the National Federation of Independent Business’s new anti-regulatory campaign, faced criticism in recent days for citing the debunked SBA study claiming regulations cost $1.75 trillion in a year. The NFIB used that stat last week in launching its campaign (see ThinkProgress), and Lincoln cited the number in a National Journal forum post on Monday:
While some federal regulations are important, it costs the U.S. economy a staggering $1.75 trillion a year to comply with them, according to a report commissioned by the Small Business Administration last September.
Two respondents on the forum, CPR President Rena Steinzor and Public Citizen President Robert Weissman, specifically criticized Lincoln’s use of the thoroughly debunked number. In a new post Wednesday, Lincoln didn’t mention “$1.75 trillion” but instead wrote:
Currently, federal regulations are draining nearly 12 percent of U …
