Monthly Archives: June 2018

This Week in Ridiculous Regulations

Summer officially began last week, and federal regulators celebrated with new regulations ranging from almond kernel computing to rough diamonds.

On to the data:

  • Last week, 77 new final regulations were published in the Federal Register, after 57 the previous week.
  • That’s the equivalent of a new regulation every two hours and 11 minutes.
  • Federal agencies have issued 1,571 final regulations in 2018. At that pace, there will be 3,246 new final regulations. Last year’s total was 3,236 regulations.
  • Last week, 1,283 new pages were added to the Federal Register, after 1,317 pages the previous week.
  • The 2018 Federal Register totals 29,715 pages. It is on pace for 61,395 pages. The all-time record adjusted page count (which subtracts 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. Three such rules have been published this year, one in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations is $319.1 million.
  • Agencies have published 53 final rules meeting the broader definition of “significant” so far this year.
  • In 2018, 267 new rules affect small businesses; 15 of them are classified as significant.

Highlights from selected final rules published last week:

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

Last Chance for the 115th: Options for Regulatory Reform

Note: this is my contribution to a series at CEI’s blog. Links to other posts by my colleagues below.

This June here at OpenMarket we’ll be looking at what the 115th Congress, which began January 3, 2017 and runs through January 3, 2019, has accomplished so far and what might still be achieved for limited government and free markets before it’s over. Read more about the Competitive Enterprise Institute’s recommendations for legislative reform here

With a possible party change in play this November in one or both chambers of Congress, the time might be now or never to pass substantive regulatory reform. President Trump is amenable to reform legislation, and both chambers of Congress have GOP majorities. A number of bills are already in play, and some have even passed the House.

While Trump’s early executive orders have helped to slow the growth of new regulations, the next president can undo them as easily as Trump enacted them, with the stroke of a pen. Permanent reform requires Congress to act, and the current favorable political winds might be changing direction as we speak.

I recently compiled a short list of active regulatory reform legislation; nothing has changed since then. I reprint the list below, and encourage Congress to act on them while they still can. And if the GOP retains congressional control past November, there is much more they can do then. For now, this may have to do:

  • REINS Act: This bill, which has passed the House four times now, would require Congress to vote on all new regulations costing more than $100 million per year. The goal is to increase elected officials’ oversight over unelected agency officials’ rulemaking. See also my paper on REINS here.
  • Regulatory Accountability Act: This bill, which has passed the House, packages six reform bills in one. Reforms include stricter disclosure requirements for agencies regarding new rules; making judicial review of regulations easier; stricter disclosure for rules affecting small businesses and nonprofits; require benefit-cost analysis for more regulations; monthly agency reports on upcoming regulations and other activities; and require a plain-language 100-word summary for proposed new regulations.
  • Regulatory Improvement Act: This bill would establish an independent commission to comb through select parts of the 178,000-page Code of Federal Regulations. The Commission would send Congress an omnibus package of redundant, obsolete, or harmful rules to eliminate. The RIA’s lead sponsor is a Democrat, which might make Republicans squeamish about giving the other team a victory. But they should pass the bill anyway. Not only would this be a positive political gesture, it’s a needed housekeeping chore that deserves to be expanded upon in future sessions of Congress.
  • GOOD Act: Neither chamber has passed this bill yet. It would alleviate the problem of regulatory “dark matter” by improving access to guidance documents that agencies issue. Agencies sometimes circumvent the legally required notice-and-comment rulemaking process by simply inserting regulations into these guidance documents.

With the Senate staying in session for most of its usual summer recess, it has no excuse for not at least putting these bills to a vote. They will boost the economy in the short and long run, which sits well with voters. And with a willing executive happy to sign them, they are easy political victories.

Read previous posts in the “Last Chance for the 115th” series:

Minimum Wage Proposal Divides D.C. Workers, Voters

Washington, D.C. has a $12.50 per hour minimum wage, increasing to $13.25 on July 1. But for tip-earning workers, such as servers and bartenders, the minimum is $3.33 per hour ($3.89 as of July 1)—tips are supposed to make up the difference. And if they don’t, then employers make up the shortfall. Ballot initiative 77, due for a vote on Tuesday, would raise tipped workers’ minimum wage to match non-tipped workers’ minimum wage in steps through 2026. It would also index D.C.’s minimum wage to the Consumer Price Index so it would automatically annually increase after it reaches $15.00 in 2020. The proposal has divided the restaurant community.

Both sides have good points. Some restaurant owners favor a set wage because it gives them more stability in planning their costs. Some workers prefer that arrangement, too. They know, coming into work, roughly how much they’ll make on a given shift.

But some restaurant owners would rather pay the low wage, even if they sometimes have to randomly supplement it if business is slow or customers are stingy tippers. It lets them print lower prices on their menus, and there can be tax advantages in reporting lower wages. And some servers also prefer lower wages with higher tips because they walk out of work every night with cash in their pocket. They don’t have to wait two weeks for a paycheck. And if they go the extra mile for a good customer, tips can be very lucrative.

So who’s right? They all are. And that’s why ballot initiative 77 is a bad idea. It’s anti-choice.

Restaurateurs and their employees should be allowed to agree on any working arrangement they both see fit. Nothing is stopping restaurants from having a policy of paying its servers a higher wage and discouraging tipping. If that’s what some people prefer, they should be free to choose it, and are. And if some restaurants and workers prefer the low wage/high tip model, they should be free to pursue that, too. The choice should be made by people, not by legislation.

Customers are just as divided. Some prefer walking into a restaurant knowing that what’s printed on the menu is what they’ll pay. Others prefer being able to reward good service with a high tip, or repay bad service with a small tip. Everyone’s different. And they shouldn’t all be shoehorned into one model.

As for the other part of ballot initiative 77, indexing the minimum wage to inflation so it automatically goes up every year—voters should tread carefully. Some workers will benefit, but at a cost to others. Hour cuts, firings, workers never hired at all, non-wage benefit cuts, cuts to on-the-job perks like free parking and meals, and more are all unintended consequences that follow minimum wage hikes. Iain Murray and I have written about those tradeoffs here and here.

This Week in Ridiculous Regulations

Angry allies, North Korea, and Chinese tariffs dominated the news last week. Under the radar, regulatory agencies closed in on their 1,500th new regulation of the year. The newest batch of rules range from air cargo to dietary fiber.

On to the data:

  • Last week, 57 new final regulations were published in the Federal Register, after 80 the previous week.
  • That’s the equivalent of a new regulation every two hours and 57 minutes.
  • Federal agencies have issued 1,494 final regulations in 2018. At that pace, there will be 3,220 new final regulations. Last year’s total was 3,236 regulations.
  • Last week, 1,317 new pages were added to the Federal Register, after 1,286 pages the previous week.
  • The 2018 Federal Register totals 28,432 pages. It is on pace for 61,276 pages. The all-time record adjusted page count (which subtracts 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. Three such rules have been published this year, one in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations is $319.1 million.
  • Agencies have published 52 final rules meeting the broader definition of “significant” so far this year.
  • In 2018, 256 new rules affect small businesses; 14 of them are classified as significant.

Highlights from selected final rules published last week:

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

An Honest Politician

From page 427 of Douglas Irwin’s Clashing Over Commerce: A History of U.S. Trade Policy:

When asked why he had supported President Hoover’s bid for a flexible tariff provision but now opposed Roosevelt’s similar request, Harold Knutson (R-MN) replied: “Frankly, I know the purpose of this legislation is to lower rates. If I thought for a minute that it was proposed to raise rates to meet the present conditions, I would vote for this legislation and be glad of the opportunity to do so.”

Both sides have good points in the strategic debate over achieving short-term results vs. the long-term sanctity of process and procedure. I personally lean towards preserving process, even when it leads to defeats on policy issues. Never give yourself powers you wouldn’t want the other side to have, and all that. Kudos to Knutson for being the rare man in Washington who made plain where he stood, even if it’s opposite me.

Last Chance for the 115th: Stop the President from Unilaterally Raising Tariffs

Note: this is my contribution to a series at CEI’s blog. Links to other posts by my colleagues below.

This June here at Open Market we’ll be looking at what the 115th Congress, which began January 3, 2017 and runs through January 3, 2019, has accomplished so far and what might still be achieved for limited government and free markets before it’s over. Read more about the Competitive Enterprise Institute’s recommendations for legislative reform here

Article I, section 8 of the U.S. Constitution gives Congress the exclusive power of the purse. Under no circumstances may the president unilaterally raise taxes. And yet, President Trump has done just that with new tariffs. So far, Trump has enacted 25 percent levies on steel and 10 percent levies on aluminum. He is also threatening to raise tariffs on foreign cars, among other measures. How is he getting away with it?

Our existing trade laws have loopholes. These are mostly related to national  security. Section 232 of the Trade Expansion Act of 1962 contains one such loophole; Sections 201 and 301 of the Trade Act of 1974 contain similar loopholes. The White House is exploiting them as best it can, causing both economic and diplomatic harm to the United States.

Even with an active imagination, it is difficult to imagine a German-made BMW 5 Series as a threat to national security. And even if the rest of the world were to completely cut us off from importing steel, the U.S. military uses less than a twentieth of existing domestic output. Every trade action Trump has taken or is considering is security-unrelated.

When Canadian Prime Minister Justin Trudeau confronted Trump about just what national security threat Canada posed that would justify the steel and aluminum tariffs, Trump was reduced to mumbling something about the War of 1812.

Congress’ job, then, is to prevent such abuses of executive power and reclaim the power of the purse. Two bills in the Senate would work in that direction; at least one of them deserves to pass.

Sen. Mike Lee (R-UT)’s Global Trade Accountability Act of 2017 would require congressional review of any attempted unilateral tariff increases. The president would still be able to lower tariffs unilaterally, which is both good economics and good foreign policy.

Sen. Bob Corker (R-TN), along with a slew of cosponsors in both parties including Sen. Lee, also introduced a bill to require congressional review of any unilateral tariff increase from the president invoking Section 232.

Right now, the Corker bill seems to have more momentum behind it, though the administration has already announced its opposition to the bill. We don’t know yet if the President would veto the bill or not, but the Senate should force his hand and make him explain himself if he does. The time to act is now, before President Trump commits another unforced economic and diplomatic error.

Read previous posts in the “Last Chance for the 115th” series:

On the Radio

On Monday, June 11, I was on Paul Molloy’s Freedom Works show to discuss tariffs.

I was also on the Alan Nathan Show to discuss tariffs. My segment starts at about three minutes in.

On Tuesday, June 12, I was on the David Webb show on Sirius/XM, with Kerry Picket guest-hosting. I couldn’t find audio, but maybe they’ll put it up here.

Good News for Young Lemonade Stand Entrepreneurs

Every summer there are news stories about local authorities shutting down children’s lemonade stands over lack of licenses, permits, a lack of restaurant-grade kitchen or cleaning facilities, a zoning violation…the list is long. I wrote about this outrage back in 2011 here, and Iain Murray and I wrote a Townhall column here. Regulators are still at it, though. But now, junior entrepreneurs have gained a powerful ally.

Country Time Lemonade has offered to help pay fines and permits for young lemonade stand entrepreneurs who incur regulators’ wrath. Its Legal-Ade program will pay up to $300 to help families fight back against absurd regulations. In fact, each time this tweet is retweeted, Country Time will donate a dollar to the Legal-Aide program, up to $500,000.

Is this is a cynical, profit-driven marketing ploy? Absolutely. But so what? It will do some real good, and that’s what counts. Results are what matter, not intentions. This is not a new idea. As Bernard Mandeville pointed out in “The Fable of the Bees” way back in 1732, selfish intentions can generate altruistic results. As with bees, so with lemons.

When regulators bust children for learning work and business skills while having fun outdoors, they teach children the wrong lesson. By helping to set matters right, Country Time is helping children learn that it’s okay to show initiative, and that it’s okay to stand up to authority when you’re right and they’re wrong. Even the most hardened anti-capitalist can get behind that.

Also deserving kudos: Domino’s Pizza, for filling in potholes on its delivery routes that lazy local governments let linger. Who will build the roads? Now we know.

Will Trump’s Tariffs Spell the End of Free Markets?

The short answer: no. But the new and upcoming tariffs certainly don’t help matters, here or abroad. I tackle that question in a piece for Inside Sources:

The president’s threats must be fought, but the good news is America’s fundamental institutions will withstand Trumpian bluster. For one thing, our economy remains a powerhouse. America’s $19 trillion economy already withstands an annual $1.9 trillion in annual regulatory costs from Washington. On top of that, Trump’s tariffs will cost “only” a few billion dollars. In short, the economy is dragging along a big, deadweight burden, but it can still get the job done…

Even in trade, where the Trump administration poses the greatest threat to free enterprise, America has been liberalizing for more than 75 years. The Smoot-Hawley tariff bill of 1930 raised America’s average tariff to more than 60 percent and worsened the Great Depression. But today tariffs are closer to 5 percent (source: Douglas Irwin, “Clashing Over Commerce: A History of U.S. Trade Policy,” p. 8), and Trump’s targeted tariffs likely won’t raise that figure more than a decimal point. Trump is reversing a long history of openness, but so far it’s small potatoes. If economists, Congress, and the World Trade Organization all do their jobs, it will stay that way.

In the meantime, defenders of the classical liberal enlightenment traditions of international openness and free trade will be very busy standing up to the administration’s latest populist outburst. Read the whole thing here.

For more CEI tariff coverage, see here by Iain Murray and here by me. For more on Trump’s threat to the values that made America great, see Steven Pinker’s book “Enlightenment Now: The Case for Reason, Science, Humanism, and Progress.”

This Week in Ridiculous Regulations

The week’s big headlines were about the G7 meeting and our allies’ efforts to avoid a trade war, and the meeting with North Korea in Singapore. But behind the scenes, agencies issued 46 proposed regulations and 80 final regulations, ranging from milk handling to microneedles.

On to the data:

  • Last week, 80 new final regulations were published in the Federal Register, after 58 the previous week.
  • That’s the equivalent of a new regulation every two hours and 6 minutes.
  • Federal agencies have issued 1,437 final regulations in 2018. At that pace, there will be 3,201 new final regulations. Last year’s total was 3,236 regulations.
  • Last week, 1,286 new pages were added to the Federal Register, after 1,144 pages the previous week.
  • The 2018 Federal Register totals 27,115 pages. It is on pace for 61,070 pages. The all-time record adjusted page count (which subtracts 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. Two such rules have been published this year, none in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations is $215 million.
  • Agencies have published 48 final rules meeting the broader definition of “significant” so far this year.
  • In 2018, 248 new rules affect small businesses; 13 of them are classified as significant.

Highlights from selected final rules published last week:

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