Dodd-Frank is aimed at Wall Street. So why is it hurting the construction industry?
August 24, 2012 -
More evidence of the unintended consequences of the Dodd-Frank Act:
“With passage of the Dodd-Frank law, the banking and financial services industries face uncertainty that has locked credit markets and access to capital. Many companies have viable, low-risk projects or contracts that simply need funding in order to begin work. However, overregulation in the banking sector has made qualified businesses with a great borrowing track record a risk banks aren’t willing to take.
“For the construction industry, unjustified regulations and unnecessary bureaucratic red tape translate to increased costs, which, if a project does get off the ground, are inevitably passed to the consumer and ultimately impact their ability to hire and expand.”
The following column appeared in the Aug. 24, 2012 edition of the Montgomery Advertiser:
Taxes, regulations hurting businesses
by Rep. Robert Aderholt and Jay Reed
There is little question that our nation’s economy continues to struggle. The question remains, why?
Unemployment has been above 8 percent for 41 consecutive months, the longest stretch of high unemployment since the Great Depression. Since 2009, this administration has heaped on more bureaucratic red tape, more burdensome regulations, more complex and overreaching laws and provided more uncertainty regarding the tax code.
Together these factors have created a perfect storm. A storm that’s drowning job creators and keeping them from hiring at a time when we need jobs more than ever before.
This economic downtown has hurt nearly every sector and industry doing business in the United States. However, few industries have felt the effects and few industries want to provide sustainable, well-paying jobs for American workers more than the trade construction contractors that build the American economy one job at a time.
Today’s economic storm continues to rain down on job creators. While these small businesses are eager to help America’s economy grow jobs and once again prosper, another storm front is moving in and there is no relief in sight, which means there are no new jobs in sight for an industry that has lost more than 1.9 million jobs in just four years.
Like thunder, the current administration is unpredictable and does things with a bang. In 2011 alone, 32 major regulations were implemented, several of which have a direct impact on the construction industry and come with a price tag of $10 billion annually.
Bureaucratic red tape and ever-changing complex regulatory environment in other industries are indirectly impacting job creators. With passage of the Dodd-Frank law, the banking and financial services industries face uncertainty that has locked credit markets and access to capital. Many companies have viable, low-risk projects or contracts that simply need funding in order to begin work. However, overregulation in the banking sector has made qualified businesses with a great borrowing track record a risk banks aren’t willing to take.
For the construction industry, unjustified regulations and unnecessary bureaucratic red tape translate to increased costs, which, if a project does get off the ground, are inevitably passed to the consumer and ultimately impact their ability to hire and expand.
With thunder comes lightning. In a flash the passage of Obamacare ensured the storm continued for these companies. The law’s 2,000-plus pages of new taxes and complex regulations mean small businesses must devote limited dollars and time to compliance and paperwork rather than new jobs.
Unequivocally, the federal government should not be making individuals’ or businesses’ health care decisions. Instead, we need common-sense, step-by-step reforms that include greater choice and affordability and allow private insurers to compete for business.
Instead of helping employers provide quality, affordable health care coverage to employees, the new taxes, federal mandates and confusing regulatory provisions associated with Obamacare have become another burden affecting ABC member companies’ ability to hire.
Like gale force winds, America’s tax code has the ability to blow an industry in one direction or another. Since the last overhaul of the tax code in 1986, tens of thousands of pages of new regulations, loopholes and preferences have been added, amended or omitted creating great uncertainty and making it virtually impossible for firms to plan beyond the near term.
Further, the president recently announced his proposal to raise taxes on many of America’s job creators. According to the nonpartisan Congressional Budget Office, failure to extend current income tax rates will increase taxes on small businesses and hard working Americans by $4.6 trillion over 10 years.
Additionally, a recent study by Ernst and Young found that small-business job creation would be hindered by President Obama’s proposal to raise taxes on about 900,000 small companies, costing more than 700,000 jobs.
Raising taxes on individuals or small businesses that are already handicapped by the uncertain tax landscape is the wrong approach to economic recovery. We must extend the current tax rates for all families and job creators to stabilize and grow our economy, while ultimately seeking comprehensive reform to simplify our nation’s tax code. Until we do, small businesses will continue blowing in the wind and the storm will rage on.
U.S. Rep. Robert Aderholt represents Alabama’s Fourth Congressional District. Jay Reed is president of Associated Builders and Contractors of Alabama.