Alphabet soup

It’s one thing for our federal government to sound like alphabet soup: EPA, FDA, SEC, FAA, IRS, CBO, etc. It’s another thing for it to act like alphabet soup.

President Obama promised in January to completely review the organization of the government. At that point, he questioned why salmon in freshwater was overseen by the Interior Department and by the Commerce Department in saltwater.

Interesting question, but we have bigger fish to fry.

Within the last week, I heard from two Silicon Valley entrepreneurs who bemoaned the state of two large and consequential federal agencies. The impact of the agencies’ incompetency can be felt in terms of dollars, jobs and even lives.

The first entrepreneur was Henry Nothhaft, CEO of Tessera Technologies and author of the recently released Great Again: Revitalizing America’s Entrepreneurial Leadership.

His company deals heavily with the U.S. Patent Office. Prior to 2002, he could get a patent application answer in twelve to eighteen months. Today, it takes three to four years. Korea grants them in under a year.

Fault should not be laid solely at the feet of patent office bureaucrats. Surprise, surprise, Congress is also to blame.

The patent office is the only self-sustaining agency of the federal government. Patent application fees completely fund its activities. According to Nothhaft, in recent years Congress has siphoned off $1 billion to go to other budget areas. As a result, patent office performance has plummeted and companies can’t get the investor funding necessary to take innovations to market.

Nothhaft also rightly critiques the Sarbanes-Oxley (Sarb-Ox) accounting reform legislation from 2002. In order to prevent future Enrons and Worldcoms, Congress slapped one size fits all regulation on all businesses including 15-20 person startups. The legislation disproportionately affects smaller innovators who will never cause a financial system meltdown.

Pre-Sarb-Ox, nearly two hundred venture capital-backed initial public offerings (IPOs) occurred every year. In 2009, there were twelve.

The second entrepreneur commercializes medical technology and bio-science solutions. Richard Ferrari, managing director of De Novo Ventures, lamented the “regulatory creep” of the Food and Drug Administration (FDA). Ferrari drove home (no pun intended) his point at a reception for InCube Labs, a San Jose-based incubator that has opened shop in San Antonio.

He claimed that it is so difficult to get a product approved by the FDA that medical device and drug companies are doing clinical trials and initial roll-outs in Europe rather than in the U.S. That means more jobs overseas and fewer at home. In the venture capital world, time is money. To be competitive, U.S. companies need an FDA that is committed to both safety and speed.

Let Mr. Obama’s reforms begin here. Bureaucratic, governmental red tape is not the American way. It’s just not in our DNA.

 
Kevin Thompson is vice president at Texas Heritage Bank and a political columnist for The Boerne Star. He can be reached at kevin@kwt.info.

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