Today, U.S. Senators Jim DeMint (R-South Carolina) and John Barrasso (R-Wyoming) introduced the Startup Expansion and Investment Act, legislation that would offer young and growing companies regulatory relief from the costly burdens of the Sarbanes Oxley Act of 2002. This bill is based on similar legislation from Rep. Ben Quayle (R-Arizona) in the House of Representatives, H.R. 2941.
"Dodd-Frank is only Congress's most recent attempt to solve regulatory failures by layering on even more needless and counterproductive regulation, as the Sarbanes Oxley Act of 2002 took the same approach and has demonstrably harmed the job creation engine of our economy," said DeMint. "This legislation would allow real job growth by encouraging companies to seek capital through the markets, a proven model for success, rather than government subsidies, which companies like Solyndra have proved is a broken model and leaves taxpayers bearing the consequences."
"Our bill will chip away at the burdens faced by American businesses -- particularly for new innovative companies who want to expand and create jobs. Since it mirrors recommendations put forward by the President's Council on Jobs and Competiveness, it deserves bipartisan support," said Barrasso. "For far too long, American free-enterprise has been squeezed and shackled by heavy-handed government regulations and mandates. In this troubled economy, government needs to move aside and let the job creators do what they do best -- invent, invest, and grow."
There is widespread agreement on the nature and severity of this problem:
Back in 2007, New York City Mayor Michael Bloomberg, along with U.S. Senator Charles Schumer, said that the U.S. regulatory framework is a "thicket of complicated rules," and that the Sarbanes Oxley Act of 2002, "which produced far heavier costs than expected, has only aggravated the situation."
With the burden of federal regulations costing more $1.75 trillion annually, it's no surprise that a recent survey by the Financial Services Forum and the Small Business & Entrepreneurship Council indicated that 7 out of 10 entrepreneurs and small business owners say federal policies have hurt their businesses. Of that same group, 79% say they simply want the government to either stay out of the way of business or merely create the right environment for business to flourish.
President Obama's Jobs Council, who recommended reform in line with the Startup Expansion and Investment Act, also found that over the past three years, the number of new businesses started has fallen by 23%
This year's World Bank "Doing Business" report showed that the cost of starting a business in the U.S., measured as a percentage of per capita income, has doubled from 0.7% in 2007 to 1.4% today
The IPO Task Force recently estimated that the average cost for a company to go public is $2.5 million, and the annual cost to stay public is $1.5 million