Reining in the Executive Branch Bureaucracy, Part 3: Make Regulations Transparent Like the Budget

by Wayne Crews on January 27, 2014 · 1 comment

in Deregulate to Stimulate, Economy, Features, Regulation

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Since the Federalist Papers, America has debated “Energy in the Executive.” But President Obama’s 2014 agenda framed by his State of the Union address heralds a class warfare agenda, one fusing an “income inequality” theme with federal industrial policy.

When I can act on my own without Congress, I’m going to do so,” Obama promises. This spend-and-transfer fixation makes Americans poorer and dependent except for the lucky few running things.

Others have argued for federal budget rationality as essential to any anti-poverty agenda. This series proposes a greater prosperity enhancing opportunity, streamlining the nearly $2 trillion regulatory state and ending the uncertainty, wealth destruction and job loss it creates.

The often-cited number of Federal Register pages is well worth reporting (80,330 in 2013 by my count) but reveals little about actual regulatory burdens.

We need better official presentation of regulatory trends and costs.

In the 2013 Draft Report on the Costs and Benefits of Federal Regulations (the final remains overdue, hello @OMBPress?), Office of Management and Budget (OMB) outlined what it says it believes to be the bulk of the costliest rules for the 2012 fiscal year, and during the past decade.

OMB’s Draft Report summaries of available cost-benefit data for these rules is useful, but skimpy compared to the more than 3,500 rules issued each year, and the un-reported activities of the independent agencies.

It would be of immense value to go farther, to quantify and present detail as a chapter in the Federal Budget, the Economic Report of the President, the Benefits and Costs report itself, the daily Legislative Calendars in the House and Senate — anything to acknowledge the significance of regulation in the economy.

Constitution notwithstanding, most of our lawmaking is happening via regs.

A “Regulatory Report Card” or whatever it gets called need not require enactment of enhanced benefit-cost requirements; those are problematic and used to grow regulation not control it (they should be replaced with cost analysis only). OMB could summarize quantitative and non-quantitative data and provide historical tables. Trends would enable cross-agency comparisons.

Here is a sampling of the kind of summary data to officially publish annually by program, agency and grand total, as I’ve described before in The Other National Debt Crisis: How and Why Congress Must Quantify Federal Regulation.

Regulatory Transparency Report Card:
Recommended Official Summary Data by Program, Agency & Grand Total

(with Five-Year Historical Tables)

• Tallies of “economically significant” rules and minor rules by department, agency, and commission.
• Numbers and percentages of rules impacting small business
• Depictions of how laws and regulations accumulate as a business grows.
• Numbers and percentages of regulations that contain numerical cost estimates.
• Tallies of cost estimates, including subtotals by agency and grand total.
• Numbers and percentages lacking cost estimates, with a burst explanation for the lack of cost estimates.
• Analysis of the Federal Register, including number of pages and proposed and final rule breakdowns by agency.
• Number of major rules reported on by the GAO in its database of reports on regulations.
• Ranking of most active rule-making agencies.
• Identification of rules that are deregulatory rather than regulatory.
• Rules that affect internal agency procedures alone.
• Number of rules new to the Unified Agenda; number that are carry-overs from previous years (and whether or not this squares with the actual number of rules finalized annually).
• Numbers and percentages of rules facing statutory or judicial deadlines that limit executive branch ability to restrain them.
• Rules for which weighing costs and benefits is statutorily prohibited.
• Percentages of rules reviewed by the OMB and action taken. (This could resemble “The Funnel“)

Much of this material became incorporated into S. 3572, the “Restoring Tax and Regulatory Certainty to Small Businesses Act” introduced by Sen. Olympia Snowe (R-Maine) in the 112th Congress, but never passed.

Requiring annual highlight reporting would affirm principles of disclosure and transparency and help reveal whether or not we can say regulation is doing more good than harm.

Transparency can clarify to what extent Congress itself is responsible for the regulatory burden. Congress set many of the statutory deadlines that make subsequent vigorous regulatory analysis difficult or impossible. That would shift future debate back toward congressional accountability, a perhaps more helpful formulation than “regulatory reform.”

If the U.S. isn’t going to control regulation, it can at least measure it better. Each year, the federal budget and Congressional Budget Office reports portray fiscal realities, the on-budget scope of government.

Now it’s time to better understand the off-budget scope of government; if not in terms of actual regulatory costs, at least in terms of trends in numbers of rules at the agencies. That will inspire better cost consciousness.

Next Time: Designate Multiple Classes of Major Rules in Transparency Reporting

Frank Manheim February 4, 2014 at 11:51 pm

My research supports the concern about regulatory overkill. Even Obama supporters in charge of renewable energy development acknowledge that this is being inhibited by regulatory thickets and the NIMBY attitudes laws like NEPA foster. But there’s a tragic equilibrium here. The harder conservatives push to roll back or reform regulations, the more liberals are energized to defend them. My book of 2009 tracks the roots of this contretemps to Presidents Carter and Reagan. Carter’s “land grab”, using the 1906 American Antiquities Act to sequester 56 million acres of Alaskan land as National Monuments, angered Ronald Reagan. This and burgeoning regulations created by the environmental laws of the 1970s caused him to appoint leaders pledged to roll back the regulatory tide at EPA and the Department of Interior. But Ann Gorsuch and James Watt used such zealous tactics that they not only created a backlash from Congress, but radicalized environmental organizations – which in turn radicalized industry. The rift over environment widened into partisan conflict.

I think that revealing the full extent of our regulatory morass is important, but change will have to come not by restraining new regulations, trimming and pruning here and there (for the trend is opposite), but by complete overhaul and replacement of the current system – perhaps incrementally – with systems more similar to those – I anticipate lifting of the eyebrows here – used by advanced European nations. Few people aware aware that Sweden has only one environmental law or code, and that is only around 170 pages long. Environmental regulation is completely decentralized, their EPA is highly respected but has no enforcement authority, and their system is very efficient.

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