Regular readers know that the federal government issues about 3,700 new regulations in an average year. But how many of those rules actually receive proper review, with cost and benefit estimates? Wayne Crews and I did some digging on that front, and the answer is not pretty: the Office of Management and Budget reviewed a grand total of 47 regulations last year, or a little more than 1 percent of the total. In today’s Washington Times, we lay out the problem and propose some solutions:
The OMB should ensure any new proposal creates more value than it destroys. One reason agencies regulate so recklessly is that they know few people are paying attention. Expanding Executive Order 12866 to include independent agencies would allow the agency to review more rules, though it would still fall well short of transparency. The Code of Federal Regulations contains more than 1 million regulations, with thousands more being added every year, according to George Mason University’s RegData project.
If only Washington paid as much attention to regulations as we’re learning it pays to our private phone calls and emails.
Read the whole thing here.
Have a listen here.
Vice President for Policy Wayne Crews is author of the new CEI study, “The Other National Debt Crisis: How and Why Congress Must Quantify Regulation.” He discusses a few of his many ideas for deregulating the economy, including a regulatory budget, improved cost analysis, and lowering the threshold of “economically significant” regulations from $100 million to $25 million. This would require OMB to review more than the roughly 5 percent of new rules that it currently analyzes. The other 95 percent should not slip through the cracks.
Have a listen here.
In a speech tonight, President Obama is expected to announce the creation of a government infrastucture bank as part of his plan to reduce unemployment. Vice President for Policy Wayne Crews explains why it won’t work as planned, and offers an alternative idea: liberalization.
Posted in regulation
Tagged amazon tax, Antitrust, at&t t-mobile merger, bb gun regulations, charlotte, copyright law, donut arrest, economic freedom in states, lip-synching ban, los angeles, mercatus, pruning regulations, pruning trees, wayne crews, women arrested for eating donuts
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.
Politico headline from today: “Qualcomm exec calls for small-business research funding.”
Alternative headline: “Businessman asks government to give money to businesses.”
Government should not give money to private businesses, period. Businesses should compete in the marketplace, not Washington. There is a lot of money to be made by selling people things they want. Companies that do a good job of that deserve every cent they earn.
Subsidies are not earned. Nor are they given to companies make things people want. Companies already doing that don’t need handouts. In short, corporate welfare is allocated by politics instead of economics.
What Mr. Jacobs is asking for would be a boon for lobbyists and politically favored businesses. But it would be a drag on everyone else. And not only because they would be paying for the handouts. Lost innovations are part of the price. The money spent on corporate welfare is money not spent on more worthy projects.
See also Wayne Crews and I on corporate welfare in the new edition of CEI’s Agenda for Congress.
Posted in Economics, Public Choice, Spending
Tagged cei agenda for congress, corporate welfare, dueling headlines, headlines, irwin mark jacobs, politico, qualcomm, Ryan Young, subsidies, wayne crews
Congress never actually votes on most regulations. Over 3,500 regulations hit the books most years. But Congress usually passes fewer than 200 bills per year. 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.
Posted in Publications, regulation
Tagged deregulate to stimulate, geoff davis, ibd, investor's business daily, rand paul, regulation, regulation without representation, REINS Act, Ryan Young, wayne crews
President Obama signed an Executive Order this week that will initiate a “government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive.”
Over at AOL News, Wayne Crews and I explain why this will hardly change a thing. We also offer 6 suggestions for reducing regulatory burdens with a minimum of political pain. Here are three of them:
- Appoint an annual bipartisan commission to comb through the books and suggest rules that deserve repeal. Congress would then vote up-or-down on the repeal package without amendment, to avoid behind-the-scenes deal-making.
- Require all new regulations to have built-in five-year sunset provisions. If Congress decides a rule is worth keeping, it can vote to extend it for another five years.
- Consider Sen. Mark Warner’s, D-Va., “one in, one out” proposal, which holds that for every new rule that hits the books, an old one must be repealed.
Read the rest here.
Posted in Publications, regulation
Tagged aol news, bipartisan commission, executive order, obama, regulation, regulatory burdens, regulatory reform, regulatory reform commission, Ryan Young, sunsets, wayne crews