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The Arizona Republic - Business Leaders Tell Quayle Federal Regulation Gets in Way of Growth

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By Eugene Scott

For some small-business leaders, excessive federal regulations are impeding job growth in Phoenix.

That's what they told U.S. Reps. Ben Quayle and Kevin McCarthy at a business roundtable this week at Motorcycle Mechanics Institute in north Phoenix.

The host of the discussion was Quayle, a freshman Republican congressman who represents northeast Phoenix, Paradise Valley, Cave Creek and Carefree.

He was joined by House Majority Whip McCarthy, R-Calif., and about 20 businesspeople.

McCarthy, who had experience opening and running a deli as a young adult, said he wanted to come to Phoenix after multiple discussions with Quayle about the economy's impact on Valley small-business owners.

"If we're going to turn this country around, it's really going to come to small business," McCarthy said.

Business leaders said innovation has been discouraged due to federal regulations, difficulty in acquiring funding and anxiety about international companies stealing American ideas and implementing them at cheaper costs.

"We're at our lowest point of new startups in the last 16 years," McCarthy said.

MaryAnn Guerra, CEO of BioAccel, a Phoenix-based non-profit that encourages entrepreneurship in the science field, said federal regulations often prevent small businesses from thriving. Guerra said federal workers aren't encouraged to study the intent of the law and instead follow laws as literally as possible.

"Government employees don't take risks," she said. "They have no incentive to be thoughtful, creative or to work with it."

Quayle said elected officials have given too much decision-making power to bureaucrats in federal agencies in terms of enforcing laws affecting small businesses.

"When you give that power away, it's really hard to get it back," said Quayle, who founded Tynwald Capital, a Scottsdale-based firm that develops small businesses.

John Musil, CEO of Phoenix-based Apothecary Shops Specialty Pharmacy, said regulations prevent him from selling some unused medical products to hospitals - products that could save lives while allowing his business to make money off something it doesn't need anymore.

"If I had the ability to repackage (pharmaceuticals), I could sell to these hospitals that need a single dose, but current regulations won't allow me to do that," he said.

Many of the regulations regarding lending are vague, said Dave Howell, director of state government relations at Wells Fargo.

"Then the reaction is to do the most conservative thing possible," he said.

Several small-business owners spoke of how an increasingly global economy at times works against them.

"Money is going to companies in Europe because they can get the products to the market faster," Guerra said.

Part of the problem, she said, is that many countries send their best and brightest to the United States to be educated. The students then return to their native countries with new knowledge.

"The people we need to drive our economy, we don't let them stay," Guerra said. "You don't have to give them citizenship, but let them stay here and figure it out."

McCarthy plans to take the information gathered at the roundtable to members of the House Committee on Financial Services.

"Where capital is king, jobs get created," he said. "When you punish wealth creation, you get less of it."


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