Republicans' JOBS Act Highlights Power of Problem Solving

Famed psychiatrist Theodore Rubin once said, “The problem is not that there are problems. The problem is expecting otherwise and thinking that having problems is a problem.”

We agree, but would add that in the specific case of Washington, the problem is that Congress sees a problem and comes up with a problematic solution, which only worsens the problem.

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The United States is always going to have problems. This blog has often likened it to whack-a-mole, the game in which you’re in a frenzy trying to smack down one mole, only to have another pop up in its place. Congress has a role to play in solving those problems, especially ones of their own creation.

Unfortunately, recent history has shown that Washington just isn’t very good at trying to fix things. Rather than get to the root of the problem Democrats have chosen one of two paths: use taxpayer money to spend the problem away, or come up with some new bureaucracy to regulate the problem out of existence.

Neither of these works. Inevitably the problem remains, but the country is left deeper in debt or buried under more red tape.

Seeing the pitfalls of big-government, Republicans are attempting to do the opposite. Essentially, they are trying to reverse engineer the process, break down the problem into its constituent parts and eliminate or reform the government failure that lies at its root.

This solution style will be on display tomorrow when House Majority Leader Eric Cantor will introduce a package of bills aptly titled the Jumpstart Our Business Startups Act, or JOBS Act for short. Rather than try to add more layers of government or sneak in some new “stimulus” to prop up some bogus “jobs saved or created” metric, this bill fixes some longstanding problems that have hindered small business growth.

The bills are admittedly wonky. They deal with things like when you have to register with the Securities and Exchange Commission, eliminating the ban against the general solicitation of securities, and amending Sarbanes-Oxley requirements for small businesses.

Although all of that may seem a little esoteric and trivial given the depth of the problems we face, the impact could be huge.

Currently, small businesses face a bevy of nonsensical and outdated regulations that prevent them from raising the capital they need to grow. For instance, current rules (crafted largely in the 1930s) require businesses to register with the SEC (an expensive proposition) if they try and attract anyone but “accredited” or “sophisticated” investors. This closes off a huge range of small-dollar investors that could help a small company get off the ground.

It’s not as if this is a small problem. The General Accounting Office estimates that financial markets fell $60 billion short in meeting the demand of small businesses in their formative phase. Think of all the jobs that are just sitting on the sidelines waiting for the right investor!

Another silly regulations is the “500 Shareholder Rule,” which compels private companies to become public companies (along with all the expensive red tape and loss of control that entails) once they reach 500 shareholders. Because many young companies pay their workers in stocks rather than salary this bill creates artificial strictures on the ability to grow and attract top talent. It’s one of the main reasons that there were 500 initial public offerings (IPOs) annually in the 1990s but only 248 in 2008, 2009, and 2010 combined.

These are simple fixes to old problems. Essentially they’re just updating regulations that haven’t been changed in decades to work in the modern marketplace.

You see, the problem isn’t that we have problems. It’s that higher taxes and more regulations are the only answers Democrats could come up with to those problems. That’s something Republicans are working to change.