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 at the behest of large companies. This small and largely unaccountable office, the paper argues, exerts significant influence over the federal rulemaking process, and its work all too often does not benefit truly small business. Rather, the Advocacy office typically echoes the viewpoints of large corporate interests who are already well represented in the rulemaking process, often with the result of watering down or bottling up safeguards needed to protect people and the environment against unreasonable risks.
The white paper concludes by offering several recommendations aimed at creating a more productive role for the Office of Advocacy to play in the federal regulatory system. First, it recommends reorienting the Advocacy office’s mission so that it works toward promoting small business competitiveness—that is, finding ways to help small businesses meet effective regulatory standards without undermining the capacity to compete with larger firms (what we call “win-win” regulatory solutions). Second, mindful that some of the "small" businesses the Advocacy office thinks are its constituents have as many as 1,500 employees, the white paper recommends restricting the Advocacy office’s focus to truly small firms—those with 20 or fewer employees—which lack the resources and expertise to participate meaningfully in individual rulemakings on their own.
Though many of these recommendations will require legislative action, there is much the next SBA Administrator can do to begin reforming the Office of Advocacy—and it should be a top priority. He or she can start by taking the following steps:
As President Obama considers potential candidates to nominate for the next SBA head, he should look for individuals who share a commitment both to promoting small business interests and to pursuing the public's interest in effective safeguards for protecting people and the environment.