With the 2012 election behind us, and American voters retaining an electoral status quo in Washington, the weak U.S. economy remains the primary concern of the electorate. For American small business owners, the policy issues that are most important to them are resolutely clear. The November 2012 National Federation of Independent Business (NFIB) Small Business Economic Trends survey, based on a sample of 2,029 usable responses from small business owners/members acquired in October, reports that the three most important problems that they face are "poor sales" (22 percent), "taxes" (20 percent), and "government regulations and red tape" (19 percent) - with the next most important problem "cost/availability of insurance" registering only 8 percent.

In a Wall Street Journal ("Journal") article published on November 12, 2012 ("The Readers Weigh In", The Journal Report: Small Business), Journal readers polled overwhelmingly that the best thing government can do to help small business is to "lower taxes" (32.7 percent) and "cut red tape" (30.2 percent), and "pull back on health-care mandates" (16.3 percent). What is perhaps the most interesting Journal survey result is that only 6.9 percent of readers believed that government should "provide more financing" to small business, while in the NFIB survey, only 3 percent of respondents reported that financing was their top business problem. These survey results are contrary to a Wall Street Journal/Vistage Small Business CEO Survey of 797 small business owners conducted between October 10 and October 19, 2012, in which 46 percent of respondents, whose firms generate annual revenue of between $1 million and $20 million annually, deem "access to capital" as a "critical" issue. But this divergence in survey results on the issue of "capital access" may have more to do with what definition of "small business", i.e., the choice of economic and/or financial metrics, is being utilized.

As to the issue of lowering taxes, small business owners are faced with a looming federal budgetary "fiscal cliff" where President Obama has staked out his tax negotiating position - and one not amenable to many small business owners. By not renewing the Bush-era tax rates affecting upper income Americans whose flow-through income would fall into the revised 36 or 39.6 percent rate brackets, the President wants $1.6 trillion in tax hikes over the next decade on households earning more than $250,000 annually, or $200,000 annually for individuals. In August 2011, economists in the Office of Tax Analysis, Department of the Treasury released a technical paper ("Methodology to Identify Small Businesses and Their Owners") in which they developed both a "broad" and "narrow" definition of "small business owners" which utilizes relevant characteristics of small business owners, such as reported Adjusted Gross Income (AGI) and applicable marginal tax rates. Using the broad definition of a small business owner, 11 percent of tax returns reported 64 percent of small business owner AGI over $200,000 in 2007. Likewise, under the narrow definition of a small business owner, eight percent of tax returns and 57 percent of narrowly defined small business income were reported in 2007 by taxpayers in upper income classifications. In 2013, these are the small business owners who are going to be negatively impacted by a Congressional compromise embracing the Obama administration's tax proposal.

The “Patient Protection and Affordable Care Act,” generally known as “Obamacare,” remains the law, and starting in 2014 small businesses employing 50 or more full-time (30 hours or more per week) workers will be required to offer their employees affordable health care insurance. If the employer does not meet federal standards for “affordable” health care coverage, the small business owner could face federal fines of up to $3,000 per infraction. Moreover, if they choose not to offer their employees affordable health care coverage, the small business owner is assessed by the U.S. government $2,000 annually per full-time employee beyond the enterprise's first 30 employees. No “pull-backs here (for small businesses) on health care mandates,” as many small business owners will re-consider their full-time hiring plans in the next year, or where feasible opt for using independent contractors. Also found in the Obamacare law, small business owners are confronted with a payroll tax of one percent on their annual individual income above $200,000, or $250,000 for couples filing jointly, to assist in funding Medicare.

In September 2012, the National Association of Manufacturers and the NFIB sponsored a nationwide poll of 800 small business owners, manufacturers and decision-makers at small and medium-sized companies. Public Opinion Strategies, who conducted the poll, found that 69 percent of survey respondents believe that President Obama's Executive Branch and regulatory policies hurt American small businesses and manufacturers. While many business leaders believe that an Administration effort over the next four years to streamline business regulations could help ease American business pessimism, the regulatory performance of the Obama administration's first four years does not ring optimistically for its second term.

In January 2011, President Obama issued an executive order calling for all executive agencies to undergo a retrospective review to eliminate ineffective and economically harmful regulations. In a 2012 progress report from the federal agencies, the Administration claimed that its reform, if implemented, would reduce regulatory costs in the economy by $10 billion per year. Fox News business reporter Doug McKelway notes in his November 14, 2012 article (“Anxiety over ‘fiscal cliff,’ ObamaCare has businesses holding back”) that in the past 90 days the Obama administration has posted nearly 6,000 regulations and notices on its regulations.gov Website, or an average of 68 per day.

Interestingly, in the November 2012 NFIB Small Business Economic Trends survey, the percentage of small business owners who are uncertain as to whether business conditions will be better or worse six months from now hit a survey record high, surpassing the previous record established under President Carter by 8 percentage points. While American small business owners are clear on what economic policies they want from the U.S. government to strengthen their economic outlook, it appears that the Obama administration has a contrary agenda.

This article originally appeared in Real Clear Markets.

No, these regulators aren’t the British on horseback.  Led by the “Four Horsemen of the Acronym” -- outgoing Federal Trade Commission (FTC) Chair Jon Leibowitz, Federal Communications Commission (FCC) Chair Julius Genachowski, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, and Commodity Futures Trading Commission (CFTC) Chair Gary Gensler -- the Administration is erecting its own “regulatory cliff.”

In 2012 alone, these four managed to publish more than $5.2 billion in regulatory burdens, and that’s just a warm-up act for what could happen in 2013.  The “War on Coal” made its way into the presidential debates, but the real regulatory war being waged is against the U.S. tech industry.

Focus on the record of FTC Chair Jon Leibowitz, the least-known of the Four Horsemen.  During the past three years, his regulatory push has antagonized business, stifled U.S. competitiveness, and wasted millions of taxpayer dollars.

Proof? Ask Facebook (FB), Twitter, Apple (AAPL), and Google (GOOG) about their regulatory compliance costs, and their legal bills.  Leibowitz is currently in month 15 of his ongoing showdown with Google, investigating why Americans continue to use its search engine when they could freely choose hundreds of possible rivals.  His proof of actual consumer harm?  He’s still looking and the legal bills are piling up.

But it’s not just the legal bills – it’s also the impact of the government always looking over these companies’ shoulders.  The U.S. tech industry is a rare bright spot in our stagnant economy, and the products it creates – iPhones, Facebook, Google’s new driverless cars – are the envy of the world.  Even though consumers are happy with these services, President Obama’s FTC believes it needs to “protect” consumers from those companies – and tweak their products to make them “better.”  I’ve yet to hear a consumer say that these great online services need more involvement from government.

Facebook and MySpace are also familiar with FTC’s costly, paternalistic oversight.  Both were forced to agree to 20 years of enhanced regulatory inspection (some would be surprised that MySpace even still exists).  It took Facebook five months to complete its acquisition of Instagram, a company with little revenue or competitive clout.

The FTC is pursuing its investigation of the tech industry under expansive, some say almost limitless, “Section 5” powers.  Last year Leibowitz noted that “one of the commission’s priorities is to find a pure [FTC Act] Section 5 case under unfair methods of competition.”  It appears the government can’t prove monopoly damage through traditional antitrust law, so they are reaching out to use Section 5 as a catchall.  

Traditionally, Section 5 would not apply to a single firm so the government would make the case that a company violated the Sherman Antitrust Act and Section 5, but Leibowitz can’t conjure any traditional per se violations.  It looks like Leibowitz is on a fishing expedition, but fishing with dynamite guarantees collateral damage for the tech sector.

Google, Facebook, and Apple all mentioned enhanced regulatory oversight in their most recent statement to investors.  According to Facebook, “The FTC [has] investigated and audited aspects of our products and practices, and we expect to continue to be the subject of regulatory investigations and audits in the future…”  As a result, Facebook admitted “regulatory authorities could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business.”

No reasonable observer expects no oversight.  But oversight comes with costs as well as benefits. The goal should be an oversight regime that matches the President’s commitment on technology: “Ensuring that the  U.S. continues to lead the world in science and technology will be a central priority for my administration.”

The U.S. still leads the world in technology; the Internet alone accounts for 4.7% of our GDP growth.  Google and Apple generate almost $150 billion in revenue, more than the GDP of New Zealand.  Unfortunately, growth in the tech sector increasingly occurs despite the actions of the regulators.

President Obama has said the U.S. should “reward success instead of failure.” Agreed.  If only his FTC showered successful companies with praise, rather than subpoenas and new regulations.

This article originally appeared on Fox Business.