Some of the zanier happenings in the world of regulation:
Have a listen here.
Cass Sunstein, President Obama’s regulatory czar, announced today that the administration intends to repeal regulations from 30 different agencies. CEI Vice President for Strategy Iain Murray thinks this is a good step, though a small one. He estimates today’s proposal would save about $1.5 billion, which is one-tenth of one percent of the $1.75 trillion total burden of federal regulation.
Winston Churchill observed that “Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.” We may finally be seeing a small step in that direction. The Bush and Obama administrations have tried fiscal stimulus to speed up economic recovery. It didn’t work. The Federal Reserve tried increasing the money supply, which they called “quantitative easing” because it sounds much more pleasant than “printing money.” That didn’t work. Then they tried it again. That didn’t work, either. What to do?
We at CEI have been pushing a deregulatory stimulus for years. Now that all other possibilities are exhausted, the administration appears to be taking small steps in that direction. Regular readers are aware that federal regulation costs about $1.75 trillion, and that the Code of Federal Regulations is over 157,000 pages long. Both of those numbers grow every year, as over 3,500 new rules hit the books annually. This morning, OIRA chief Cass Sunstein is announcing a 30-point plan that would “save American companies billions of dollars in unnecessary costs,” according to The Washington Post.
This new initiative stems from Obama’s Executive Order from earlier this year that ordered agencies to comb their books and recommend obsolete or harmful rules for elimination. Agencies hardly have an incentive to reduce their size or scope, which is why an independent commission would be a better vehicle for getting rid of old rules. The rules Sunstein is proposing to eliminate are very modest. But it’s better than nothing.
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Spending, deficits, and taxes are getting all the attention from reformers in both parties. In today’s Investor’s Business Daily, Wayne Crews and I argue that regulation is not to be forgotten:
Regulations cost the average business $8,086 per employee per year. Small businesses are especially hard-hit. Firms with fewer than 20 employees pay $10,585 per employee per year for regulatory compliance, according to the Crains’ report. When hiring employees becomes more expensive, fewer get hired. No wonder unemployment is so persistent.
We also offer up some reform ideas:
One reform is to purge the books of obsolete and clearly harmful rules. There is no need for Washington to have rules still on the books for a Y2K crisis that never even materialized. Nor is there any need for it to regulate the size of holes in Swiss cheese, which it does in great detail.
President Obama should appoint an annual bipartisan commission to comb through the Code of Federal Regulations and recommend rules for elimination. Congress would then be required to vote up-or-down on the package without amendment.
Read the article here; for more intellectual ammunition, see the just-released 2011 edition of Wayne’s “Ten Thousand Commandments” study.
Wayne Crews and I have a piece in today’s Sacramento Bee summarizing the main findings of Wayne’s “Ten Thousand Commandments” study. We also point out that regulatory costs are not limited to the $1.75 trillion it takes to comply with them:
The total cost of federal regulation is $1.75 trillion. That’s true in terms of money. But money isn’t everything. Regulation also has opportunity costs. Workers spend millions of man-hours every year filling out forms and following procedures. That time could be spent on other things instead, such as finding ways to lower costs, improve quality and increase worker productivity. When there’s too much regulation, progress and innovation slow down.
There is a second opportunity cost that is often overlooked. Companies don’t sit idly by when regulators propose new rules. They try to influence the process. Most companies, especially larger ones, often favor new regulations in their industries. They will pay lobbyists a lot of money to influence the rules in a favorable way – say, by handicapping a competitor.
The 2011 edition of Wayne Crews’ “Ten Thousand Commandments” was released today. The annual study gives a big-picture view of the regulatory state. You can read it here. Some of the main findings:
- Federal regulations cost $1.75 trillion per year. That’s equivalent to about half of federal spending. Government’s cost is actually about 50 percent bigger than most people think.
- Agencies issued 3,752 final rules in 2010. At that pace, a new rule comes into effect every two hours or so.
- Another 4,225 rules are in the pipeline right now.
- The Federal Register hit an all-time high 81,405 pages in 2010.
- Economically significant regulations are way up. These are defined as rules that have over $100 million of economic impact. There were 224 in 2010. That’s a 22 percent increase over 2009′s 184.
Wayne and other CEI scholars will have a lot more to say about regulations and how to reform them in the coming weeks; keep an ear out.
HHS is about to issue over 1,000 pages of new regulations stemming from last year’s health care bill. That’s not a huge surprise, considering the bill is about 2,000 pages long.
But these regulations all come from a six-page section covering accountable care organizations, or ACOs.
According to Politico, John Gorman, who runs a health care consulting firm, “expects a 1,000-page rule to come out on Thursday, March 31 — because he doesn’t think HHS will want to deal with releasing the regulations on April Fool’s Day.”
Have a listen here.
CEI Senior Fellow Greg Conko discusses his recent trip to Kenya where he met with members of Parliament and other officials about the best way to regulate the introduction of genetically modified crops to the country.
It is against the law to sing in public in Anderson, South Carolina. But the ban could be lifted as soon as today. The city council will vote on the right to sing as part of an effort to clean out the books of obsolete, redundant, and just plain weird laws.
Other obsolete rules set for repeal would cover “bomb shelters, parking meters (which no longer exist in the city) and house numbering rules that predate the current 911 system.” Still other ordinances are already covered by state law.
Laws that might have made sense in the 19th century might not today. Washington, D.C., still has rules on the books for how to herd livestock through city streets, for example. A big part of regulatory reform is doing a better job vetting new rules before they hit the books. But old rules shouldn’t be exempt from scrutiny, either.
Cities, states, and the federal government should make it a priority to comb through the books and eliminate old rules that don’t apply to today’s world, or that are already covered by other levels of government.
Image credit: davidastin’s flickr photostream.
Congress never actually votes on most regulations. Over 3,500 regulations hit the books most years. But Congress usually passes fewer than 200 bills. As Wayne Crews and I explain in today’s Investor’s Business Daily, this is regulation without representation.
Only Congress, and not agencies, have the power to legislate. But that is exactly what is happening now. Bills to regulate carbon emissions, regulate the Internet, and more all failed in Congress. But agencies are enacting rules. If you can’t legislate, regulate. This is wrong.
It allows politicians to escape blame for unpopular or controversial regulations. Don’t blame me, blame bureaucrats! It also gives agencies little incentive to rein in their worst impulses. If they can do whatever they want, they will work to expand their budget and authority.
The first step in solving the problem of regulation without representation is requiring Congress to vote on major regulations. Not all regulations — 3,500 votes is a bit much. And agencies do deserve some independence on administrative affairs and minor detail work. But requiring 200 votes on major rules costing at least $100 million each is the least Congress should do.
The REINS Act, recently introduced by Rep. Geoff Davis and Sen. Rand Paul, would do just that. There are many facets to regulatory reform. There is much more to do. But putting a damper on regulation without representation is a good start.
You can read Wayne’s and my article here.
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