Economy & Budget

Obama’s environmental agenda will crush small businesses

Obama’s environmental agenda will crush small businesses

President Obama is clearly serious about curbing the nation’s greenhouse gas emissions, but he seems to ignore how his “plan” to achieve that will affect America’s stalled economy, particularly small businesses.

In late June, Obama announced his new environmental agenda, brimming with proclamations about reduced energy use that were sure to please his environmentalist supporters.

But the president was notably vague about exactly how the Environmental Protection Agency would go about reducing emissions, even as he broadly cleared “an end to the limitless dumping of carbon pollution” and promised “complete pollution standards for both new and existing power plants.”

Also absent was any concern for the campaign’s impact beyond fossil fuels – such as that on small businesses and their expansion plans.

By one reckoning, small business is fine with the crackdown. A March American Sustainable Business Council (ASBC) survey suggested that a majority of small businesses support the President’s agenda.

The survey found 79 percent of small business owners support a national goal to increase domestic energy efficiency by 50 percent over the next 10 years, and 63 percent supported requiring utilities reduce carbon dioxide (CO2) emissions and to generate at least 20 percent of all electricity from clean energy sources by 2020.

ASBC head David Levine concluded that, “There’s a recognition that these clean energy policies really are better for (small businesses’) financial bottom lines.”

But a 2012-2013 U.S. Chamber of Commerce’s Quarterly Small Business Outlook Survey tells a very different story.

In that survey, 78 percent of small businesses said Washington was not doing enough to keep energy prices low and 75 percent called higher energy prices a direct threat to their business.

Tellingly, 39 percent of small businesses cited overregulation as their greatest challenge and 79 percent thought the amount of regulation was unreasonable.

This poll suggests small businesses are feeling squeezed by growing regulatory costs which increased more during President Obama’s first term than during President George W. Bush’s and President Clinton’s first terms combined, according to Susan E. Dudley of George Washington University.

So how did these polls come to different conclusions? It matters how the questions are asked.

In ASBC’s phone survey, interviewees were asked only if they “supported” certain policies with no mention of how they would affect their ability to operate their business.

In contrast, the Chamber survey was done through a focus group that directly addressed how actions in Washington would affect participants’ businesses.

Small business owners, like anyone else, may “support” the goals behind clean energy policies in the abstract, but that does not mean they believe environmental regulation comes without consequences.

Moreover, the ASBC poll did not address a crucial element of major new environmental regulation: uncertainty. The Chamber poll, by contrast, found 87 percent of small businesses stated they sought more clarity from Washington.

President Obama dismissed criticism that new environmental regulations will affect employment: “[Y]ou’ll hear…that this will kill jobs… that’s what they said every time America sets clear rules and better standards for our air and our water and our children’s health. And every time, they’ve been wrong.” Yet that is precisely what his proposals to require “less dirty energy, use more clean energy (and) waste less energy throughout our economy” would do. If small businesses are unsure about looming costs they will be hesitant to expand for fear new burdens may necessitate contraction. So they either sit tight or go into streamlining mode.

The new edition of the Competitive Enterprise Institute’s annual report, Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State, estimates environmental regulations cost American businesses $353 billion annually.

If President Obama wants to have an honest conversation about how to combat the dangers of climate change, he at least needs to specify exactly what costs he intends to impose on small businesses towards that goal.

David Rush is a research associate at the Competitive Enterprise Institute; Wayne Crews is vice president for policy and author of CEI’s annual Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State

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