This Week in Ridiculous Regulations

Members of Congress introduced five antitrust bills last week. Antitrust activist Lina Khan was confirmed to a seat on the Federal Trade Commission (FTC), and in a surprise move, was immediately afterward made FTC chair. There was no Federal Register on Friday in observance of Juneteenth. Meanwhile, agencies issued new rules ranging from chinch weed to educational loans.

On to the data:

  • Agencies issued 53 final regulations last week, after 65 the previous week.
  • That’s the equivalent of a new regulation every three hours and 10 minutes.
  • With 1,454 final regulations so far in 2021, agencies are on pace to issue 3,161 final regulations this year. 2020’s total was 3,149 final regulations.
  • Agencies issued 24 proposed regulations in the Federal Register last week, after 27 the previous week.
  • With 965 proposed regulations so far in 2021, agencies are on pace to issue 2,098 proposed regulations this year. 2020’s total was 2,021 proposed regulations.
  • Agencies published 413 notices last week, after 328 notices the previous week.
  • With 10,137 notices so far in 2021, agencies are on pace to issue 22,037 notices this year. 2020’s total was 22,480.
  • Last week, 931 new pages were added to the Federal Register, after 1,050 pages the previous week.
  • The average Federal Register issue this year contains 281 pages.
  • With 32,360 pages so far, the 2021 Federal Register is on pace for 70,348 pages in 2021. The 2020 total was 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are two such rules so far in 2021, none from the last week. Agencies published five economically significant rules in 2020, and four in 2019.
  • The running cost tally for 2021’s economically significant rules ranges from net savings of $100.7 million to net costs of $362.5 million. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • Agencies have published 20 final rules meeting the broader definition of “significant” in 2021, with two in the last week. This is on pace for 43 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 301 new rules affect small businesses. Seven are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

A Better Approach to Tariff Diplomacy

In diplomacy, carrots tend to be more effective than sticks. Yet, two consecutive administrations have used tariff threats to try to achieve their objectives. Former President Trump did four rounds of back-and-forth tariffs against China, and President Biden is trying it now to counter proposed digital taxes from six mostly European countries. The strategy has yet to work. Over at National Review, I take a look at a better way: Rather than threaten new tariffs, promise to remove old ones as a sweetener.

Why not scrap Trump’s steel and aluminum tariffs in exchange for scrapping proposed digital taxes? Carrots are often more effective than sticks.

The metal tariffs will also likely be an issue at this week’s United States–European Union summit. European leaders want a December 1 deadline for ending them. In return, they would end the retaliatory tariffs they immposed in response. A digital tax moratorium should also be part of the deal.

Here at home, the metal tariffs are slowing the COVID recovery by raising auto and housing prices, which were already at record highs. They are also causing needless diplomatic frictions with allies. Removing them is a win-win.

Even if the diplomatic goal fails—there are no guarantees in foreign policy—the lower tariff would still help the U.S. economy. Read the whole thing here.

Boeing-Airbus Dispute Remains Unsolved: Tariffs Gone, Subsidies Stay

The European Union and the United States eagerly announced today that they had resolved their 17-year dispute over aerospace subsidies. They exaggerate their claims. It is good news that both sides are standing down on tariffs for at least five years. But the reason for the dispute in the first place was over subsidies to Boeing and Airbus. Those will remain in place.

The tariffs that each side levied on the other had the explicit goal of stopping the subsidies. The World Trade Organization even allowed tariffs on each side to go through, on the theory that these wrongs were intended to make a right. But as usually happens with tariff-based diplomacy, it didn’t work. As a result, industries from cheese and wine to motorcycles had to deal with tariffs for years over a dispute they had nothing to do with. And now that the tariffs are going away, they didn’t accomplish their actual goal.

Why are the U.S. and EU suddenly OK with each other’s aerospace subsidies? China. China’s aerospace sector is heavily subsidized. Both Europe and the U.S. feel it is better to work together to counter China than to squabble with each other.

Their fears may be exaggerated, though. Industries that rely on subsidies and are essentially government enterprises tend not to be very competitive in the long run. Yes, China’s aerospace market share is increasing, but subsidized and protected industries grow soft. Their corporate cultures are closer to the Post Office than to Silicon Valley startups. So are their rates of innovation.

Still, for the sake of argument, assume that China’s model of government subsidies and control does work in the long run, and Boeing and Airbus become also-rans. Relatively poor Chinese taxpayers would essentially foot the bill for relatively wealthy American and European airlines and travelers. This is income redistribution in reverse. Even this unlikely best-case scenario is unwise policy from China’s perspective.

Most of the 20th century’s economic history showed that state planning doesn’t work. Even if Boeing, Airbus, and their captured politicians think the short term looks scary, there is no reason for this current instance of state capitalism to be any different in the long run.

This week’s decision to remove the Boeing-Airbus dispute tariffs was a wise one. But if the goal is to make the aerospace industry more competitive, President Biden and European leaders did not do that. They need to end subsidies that make companies soft and dependent. The best way to counter China’s state-run enterprises is not with our version of the same thing. It is with actual enterprises.

Some of my earlier commentary on the Boeing-Airbus dispute is here. My papers on the Export-Import Bank, whose billions of dollars in annual assistance to Boeing played a starring role in the dispute, are here and here.

This Week in Ridiculous Regulations

The economic recovery continues, but Congress is still intent on passing unneeded stimulus and infrastructure spending. Inflation is also up, and five antitrust bills are being introduced. Meanwhile, agencies issued new rules ranging from madtoms to low-fat yogurt.

On to the data:

  • Agencies issued 65 final regulations last week, after 54 the previous week.
  • That’s the equivalent of a new regulation every two hours and 35 minutes.
  • With 1,401 final regulations so far in 2021, agencies are on pace to issue 3,155 final regulations this year. 2020’s total was 3,149 final regulations.
  • Agencies issued 27 proposed regulations in the Federal Register last week, after 32 the previous week.
  • With 931 proposed regulations so far in 2021, agencies are on pace to issue 2,119 proposed regulations this year. 2020’s total was 2,021 proposed regulations.
  • Agencies published 328 notices last week, after 299 notices the previous week.
  • With 9,724 notices so far in 2021, agencies are on pace to issue 21,901 notices this year. 2020’s total was 22,480.
  • Last week, 1,050 new pages were added to the Federal Register, after 956 pages the previous week.
  • The average Federal Register issue this year contains 284 pages.
  • With 31,426 pages so far, the 2021 Federal Register is on pace for 70,779 pages in 2021. The 2020 total was 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are two such rules so far in 2021, none from the last week. Agencies published five economically significant rules in 2020, and four in 2019.
  • The running cost tally for 2021’s economically significant rules ranges from net savings of $100.7 million to net costs of $362.5 million. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • Agencies have published 19 final rules meeting the broader definition of “significant” in 2021, with two in the last week. This is on pace for 40 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 293 new rules affect small businesses. Six are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Different Attitudes Towards Life

In today’s polarized discourse, there is a stark difference between thinkers who spend most of their time being for something, and those who spend most of their time being against something. One attitude is healthier than the other, and is more likely to lead towards truth, and is likelier to succeed in persuading others and getting its policies enacted.

Think of it as the difference between between favoring liberalism, openness, and dynamism on one hand; and owning the libs or the cons, depending on one’s tribal affiliation, on the other.

Which makes this passage from near the end of Evelyn Waugh’s 1943 novel Brideshead Revisited especially poignant (p. 383 of the Back Bay Books edition):

I said to the doctor, who was with us daily: “He’s got a wonderful will to live, hasn’t he?”

“Would you put it like that? I should say a great fear of death.”

“Is there a difference?”

“Oh dear, yes. He doesn’t derive any strength from his fear, you know. It’s wearing him out.”

CPI Inflation Indicator Hits 5 Percent: Not Stagflation, But a Useful Warning

The Consumer Price Index (CPI) for May came out this morning. At 5 percent, it was higher than expected. CPI has its flaws as an indicator, but the fact that it is now the highest it has been since the 2008 financial crisis still says something useful. We’re not going back to 1970s stagflation, so nobody needs to freak out, but today’s numbers are a warning. Policy makers should listen.

Trillions of dollars of proposed new deficit spending would further increase inflation, and would mostly stimulate the politically connected. The Federal Reserve should resist political pressure to further flood the money supply in hopes of stimulating a faster COVID recovery.

The timing is also off. Most projects would not kick in until the economy is already mostly recovered anyway. While there is still a way to go, unemployment is already below 6 percent, GDP is working its way back to trend, and the return of in-person schooling this fall will allow more parents to reenter the workforce. Continued progress depends on vaccination rates, not new political projects.

Rather than producing more cash, Congress should enable more production of actual goods and services with a deregulatory stimulus, lowering of trade barriers, and incentives for more vaccinations. Almost a third of occupations now require some sort of license. These keep thousands of would-be small entrepreneurs out of the market, and make it harder for workers to find or change jobs. Financial regulations make it hard for startups and struggling businesses to find capital to grow or stay open—and higher inflation would worsen the problem. Endless permits and years-long environmental reviews are blocking infrastructure projects that could already be underway.

Tariffs left over from the Trump administration, along with new ones the Biden administration is proposing, are making cars and houses more expensive at a lousy time, and could hit billions of dollars of other goods this holiday shopping season.

Vaccination rates are the single most important factor for reopening the economy. People are itching to get back to normal, but first they need to feel safe. Remember, people didn’t wait for governors’ orders to lock down in the first place. Opening back up is also a decision people are making for themselves. Lifting government restrictions might have some impact at the margin. Politicians are not in the driver’s seat here, but there are still things they can do. Some states have tried incentive programs, like lottery drawings and free goods. These are already having a positive impact in communities, saving lives and letting people open back up. More of these would speed the process more than inflation would.

An inflationary boost is tempting for politicians because it is easy. It takes hard work to make substantive reforms to regulation and trade policy and to reach out to vaccine-hesitant people and ask them to do the right thing. But what is worthwhile is rarely easy. While today’s inflation news is not doom-and-gloom, it is cause for concern. We are at an inflection point. Will Congress and President Biden do the right thing?

For more, see my recent explainer on how inflation works, and my recent op-ed on how to stimulate the economy without new spending.

Stimulating the COVID Recovery without Trillions in Spending

Over at Inside Sources, I make the case that deregulation, freer trade, and continued vaccinations will do more to open up the economy than the trillions of dollars of politicized spending Congress is lining up:

Federal, state, and local regulators eased more than 800 regulations last year that were blocking access to telemedicine, medical supplies, and food and grocery deliveries, along with unneeded occupational licenses that were keeping people out of work. We’ve already seen the benefits. Now policymakers need to continue this important work as entrepreneurs look for ways to adapt to the new normal but find themselves blocked because they don’t have the right permit.

Steel and aluminum tariffs left over from the Trump administration are adding hundreds of dollars to car prices and thousands of dollars to construction costs, at a time when housing prices are becoming unaffordable for many buyers. Congress could get rid of them today if it wanted to. Congress should also stop Biden’s proposed doubling of Canadian lumber tariffs, which would further increase housing prices while alienating an ally with whom we just signed the USMCA trade agreement. He has also proposed an additional $2 billion in tariffs against six mostly allied countries with whom we will be negotiating trade agreements in the near future. These would come into effect in the middle of the holiday shopping season.

My colleague Wayne Crews has a good term for this type of proposal: a deregulatory stimulus. Read the whole thing here.

This Week in Ridiculous Regulations

Unemployment is back under 6 percent, and it’s looking more and more like the economy is reverting back to trend. We’re not there yet, but the trajectory is good. The good news is that a lot of planned stimulus and infrastructure spending is now clearly unnecessary. The bad news is that Congress will likely spend the money anyway. President Biden’s proposed $6 trillion budget will not become law, but it will serve as a starting point. The 2021 Federal Register also topped 30,000 pages on Friday. Meanwhile, agencies issued new rules ranging from water testing to authenticating calls.

On to the data:

  • Agencies issued 54 final regulations last week, after 62 the previous week.
  • That’s the equivalent of a new regulation every three hours and 7 minutes.
  • With 1,314 final regulations so far in 2021, agencies are on pace to issue 3,099 final regulations this year. 2020’s total was 3,149 final regulations.
  • Agencies issued 32 proposed regulations in the Federal Register last week, after 36 the previous week.
  • With 904 proposed regulations so far in 2021, agencies are on pace to issue 2,132 proposed regulations this year. 2020’s total was 2,021 proposed regulations.
  • Agencies published 297 notices last week, after 467 notices the previous week.
  • With 9,318 notices so far in 2021, agencies are on pace to issue 21,976 notices this year. 2020’s total was 22,480.
  • Last week, 956 new pages were added to the Federal Register, after 1,373 pages the previous week.
  • The average Federal Register issue this year contains 284 pages.
  • With 30,065 pages so far, the 2021 Federal Register is on pace for 70,908 pages in 2021. The 2020 total was 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are two such rules so far in 2021, none from the last week. Agencies published five economically significant rules in 2020 and four in 2019.
  • The running cost tally for 2021’s economically significant rules ranges from net savings of $100.7 million to net costs of $362.5 million. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • Agencies have published 17 final rules meeting the broader definition of “significant” in 2020, with none in the last week. This is on pace for 40 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 257 new rules affect small businesses. Five are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Facebook’s Content Moderation Decisions Preferable to One-Size-Fits-All Government Regulation

This news release was originally posted on cei.org.

Facebook announced today it suspended former President Donald Trump from the platform for two years retroactive to January 7, 2021. Responding to a ruling against the former president’s indefinite suspension from its own Oversight Board, the social network also laid out policies for how it would treat content moderation of posts by public officials.

Director of CEI’s Center for Technology and Innovation Jessica Melugin said:

“People who value freedom of speech should be encouraged a private entity like Facebook is attempting to deal with thorny issues about what is and is not permissible speech on their own, without heavy-handed and rigid government regulation. Facebook is under pressure from both sides of the ideological spectrum to enact very different policies toward content moderation and are faced with novel challenges presented by the billions of user-generated post shared on their platform daily. No decision will make everyone happy.

“While it is curious Facebook chose to respond to the Oversight Board’s decision five months early, dealing with these issues without government coercion will allow Facebook to institute policies in line with its own values while not imposing their own content moderation standards on other platforms, as would happen with a one-size-fits-all federal regulatory approach.

“The former president might be suspended from Facebook for two years, but that is not the same as being ‘censored’ or ‘silenced.’ He is still free to make public statements, appear on television and radio, hold rallies, or join other social networks. The government compelling Facebook to carry speech with which it disagrees would be the real threat to free speech.

“Facebook has every right to curate their product as they choose, just as consumers have every right to use a different social media platform with content moderation and community standards more in line with their own.”

CEI senior fellow Ryan Young said:

“What is the right way to deal with malicious, incendiary, or fake content? Nobody knows—and that’s the point. Facebook doesn’t know. President Trump doesn’t know. Nor do Republicans and Democrats in Congress. We are in the middle of a discovery process right now. Maybe Facebook made the right call to ban President Trump from its platforms for two years after his remarks about the January 6 Capitol riots. Maybe they didn’t. Not only does nobody have the correct answer, there likely isn’t a single correct answer.

“What we need is an ongoing process of trial and error, where individuals and companies discover which norms, institutions, and policies will help to slow the spread of misinformation on social media while giving people space to express themselves. Washington is not the place to look to for leadership here. People are already coming up with multiple competing approaches to content moderation. As people try them out, tinker with them, discard them, or improve them, the results will be far better than whatever uniform, politically motivated policy Congress would write down in stone.”

Next week, CEI is holding a book forum for Jonathan Rauch’s “The Constitution of Knowledge: A Defense of Truth.” Join us on Wednesday, June 9 at 12:00pm ET. RSVP here.

Jobs Numbers Show Rolling Back Covid-19 Restrictions Would Restore Resilience in U.S. Economy

This press statement was originally published on cei.org.

The Biden Administration’s Labor Department reported today that the United States added 559,000 jobs in May and the unemployment rate dropped to 5.8%.

CEI Senior Fellow Sean Higgins said:

“The Labor Department’s report Friday makes clear that rolling back the restrictions imposed by the Covid-19 outbreak remains the surest way to restore resilience in the economy. The nation added 559,000 jobs in May, bringing the unemployment rate to 5.8% with increases in the leisure and hospitality sector (292,000 jobs) and public and private education (141,000) leading the growth thanks to loosened restrictions. The DOL said that 7.9 million people, down from 1.5 million in the previous month, reported that they were unable to work because their employer had closed or lost business due to the pandemic. That shift dwarfs the May’s job gains, suggesting the nation would be in significant trouble if it hadn’t eased the restrictions.”

CEI Senior Fellow Ryan Young said:

“It turns out the key to the COVID economic recovery isn’t stimulus payments. It isn’t a $6 trillion proposed budget, and it isn’t $2 trillion in infrastructure spending. The key to a quick recovery is people getting vaccinated so they can resume normal activities. There is still a ways to go, since 5.8 percent unemployment is still well above pre-COVID levels. But this week’s news that 63 percent of adults are vaccinated in the U.S. is a sign of continuing progress.

“As the economy continues to trend back to normal, there are still things policy makers can do to help. They should get more never-needed regulations off the books, and they should get rid of Trump-era trade barriers that raise consumer prices on everything from cars to housing. Not only would these provide an additional economic boost, they would do it without any new deficit spending.”