Red Tape Putting Chokehold on Small Businesses?

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Frank and Nancy Barnett run their business out of their basement in rural Virginia.

Industrial Maintenance Solutions distributes products to repair and protect practically anything, from holes in Navy vessels to leaky pipes in power plants.

Their growing business could use more full-time workers, but there's a problem.

"Everything is uncertain. Nobody knows what's going to happen tomorrow," the company's owner, Frank Barnett, told CBN News. 

"We would love to be in a situation where we could hire more full-time people," Barnett's wife, Nancy, said. "The difficulty is -- at what cost?"

America's Economic Recovery

Small businesses employ more than half of the nation's private sector. Their health is vital to America's economic recovery, but many small business owners say instead of making their path to prosperity smoother, the federal government is building barriers.

Like the Barnetts, 67 percent of small business owners believe there's too much uncertainty for growing their businesses.

What's causing this hand wringing? Taxes, government regulations, and red tape.

Even with only five employees, the Barnetts spend four to six hours a week going through regulations, often consulting with their accountant and attorney to make sure they're in compliance.

"It forces all of us to look at staying right around nine or 10 employees so that we don't have to run into a full-time compliance officer…we're not having to face these massive fines and we're having to do business -- and we can't hire," Nancy Barnett said.

Dan Bosch reviews regulatory policies at the National Federation of Independent Businesses.

"Right now there are more than 4,100 regulations in the pipeline that are due to come out over the next several years and they're uncertain as to how that's going to affect their business," Bosch said.

"Do you have to be a lawyer basically to know everything that you're supposed to do and not to do?" he asked. "The thing is, even if you are a lawyer, you probably don't know everything."

According to Bosch's group, nearly 70 percent of small business owners blame Obama administration policies for stifling their growth.

At a recent press conference, CBN News White House Correspondent Jennifer Wishon asked if the administration's regulations are stifling small business growth.

"This President is committed to helping small business, as evidenced by the fact that he has signed into law -- proposed and signed into law -- 18 small business tax cuts," White House spokesman Jay Carney responded. "He understands clearly that small businesses are the engine of economic growth in this country."

But Frank Barnett said they haven't seen any of the cuts Carney referred to.

"Maybe he can send me something to show me how those tax cuts impact my business because I'm not sure that we've seen any that would help us," Barnett told CBN News.

At a time when more than 12 million Americans desperately need work, 55 percent of small business owners say they would not start their company today.

"Today if you were sitting down with your husband thinking about starting this business, would you do it?" Wishon asked.

"We've never discussed this," Nancy Barnett said. "If we were making that evaluation now I don't think the business plan would prove out -- whether we wanted to do it or had the skills -- I just don't think the business plan would be there in today's world."

Although the Obama administration has taken heat, Bosch said eliminating federal regulations would be tough for whoever sits in the White House.

"Regulations are so entrenched in the agency that it's hard to get them out, and when you have agencies going through their own books to undo work that they've done in the past, they're pretty reluctant to do that," Bosch said.

Like many small business owners, government regulations, taxes, and red tape are stifling their company's growth.

"We have the ability to hire if we could get rid of the uncertainty related to affordable care and taxes and get some long-range planning opportunities, this economy could really take off again," Nancy Barnett concluded.

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Jennifer Wishon

CBN News White House Correspondent

Jennifer Wishon is the White House correspondent for CBN News based in the network’s Washington, D.C. Bureau.  Before taking over the White House beat, Jennifer covered Capitol Hill and other national news, from the economy to the 2010 oil spill in the Gulf of Mexico.  Follow Jennifer on Twitter @JenniferWishon and "like" her at Facebook.com/JennWishon.