Category Archives: #NeverNeeded

September Brought Uptick in Jobs – Will Next Government Steps Help or Hurt?

This is a press release originally posted at cei.org.

Employers added 661,000 jobs in September, and the unemployment rate declined to 7.9 percent from 8.4 percent, the U.S. Bureau of Labor Statistics said today in its monthly report. CEI experts expressed encouragement that deregulatory policies and re-openings are helping people recover financially from pandemic lockdowns and shutdowns this year but warned that more government action is needed – to deregulate and to reject a return to lockdowns.

Statement by Sean Higgins, CEI research fellow:

“Friday’s Labor Department report that the economy added 661,000 jobs, dropping the official unemployment rate to 7.9 percent, is welcome news but also a reminder the economy has a long way to go to fully recover. The good news is the data suggest people are eager to go back work and shop, eat in restaurants, and go to theaters. But they cannot and that’s holding the recovery back.

“If we want the economy to recover, we cannot revert to locking everything down in reaction to a recent surge in coronavirus cases. We must find better ways to allow people to safely interact, instead. Doling out more stimulus funds to businesses or extending unemployment relief is placing duct tape over the problems, while piling on more debt that taxpayers will eventually have to pay off.

“The department’s report found the sector with the largest growth was leisure and hospitality, which added 318,000 jobs in September. That accounted for about half of the overall employment gains in the last month. Bars and restaurants accounted for the largest part of that, adding 200,000 jobs, with the rest in gambling, amusements, and hotels. These gains are dramatic because hospitality was the sector hardest by the outbreak. Since February, that sector of the economy has recovered 3.8 million jobs but remains down more than 2.3 million from where it was at the beginning of the year. That’s about a third of the total 6.8 million jobs lost since February.

“Retail trade grew by 142,000 jobs over the last month, the largest part of it (40,000 jobs) coming from clothing outlets, indicating more people are out shopping. Retail is still down 483,000 jobs overall from February.

“The good news is these sectors can rebound quickly when given the chance. Doing that means allowing people to get out of their homes to re-engage safely with the outside world. That has to be the focus if we want the economy to recover.

Statement by Ryan Young, CEI senior fellow:

“The economy continues to create jobs, but the pace is slowing. It will be some time before the economy is back to normal, let alone everyday life. Unfortunately, there are still thousands of government-created barriers that keep people out of work. These include licenses, permits, entry barriers, excessive paperwork, and tariffs—not to mention looming antitrust threats against the very tech companies that help make remote work possible. Over-regulation is hindering virus response and economic recovery.

“President Trump and Congress should continue to eliminate never-needed regulations. Depending on how the election goes, further regulatory reform will a positive addition to the Trump legacy or the springboard for a second-term agenda. Either way, regulatory reform is the right thing to do to get people back to work.”

Senators Introduce Regulatory Commission Bill

CEI’s approach to regulatory reform has an overarching theme: It is not enough to get rid of this or that harmful regulation. For the benefits to last, there must be system-level reform to the rulemaking process that keeps generating those rules. Institutions matter. One of the best of those institution-level reform ideas now has COVID-19-focused legislation at the ready: the independent regulatory reduction commission.

Senators James Lankford (R-OK), Ron Johnson (R-WI), and Rob Portman (R-OH) have introduced the Pandemic Preparedness, Response, and Recovery Act (PPRRA). The House version was previously introduced by Rep. Virginia Foxx (R-NC). The bill would establish an independent commission to identify regulations harming the COVID-19 response, and compile a package for Congress to vote on.

Wayne Crews and I have a statement supporting the idea here.

The idea is not new. Former Sen. Phil Gramm introduced a version of the idea back in the 1980s. The Base Realignment and Closure (BRAC) commissions that closed unneeded military bases had four rounds in the 1990s, and saved billions of dollars. CEI has been promoting the idea for more than a decade, most recently in a Washington Examiner op-ed and  #NeverNeeded paper. Several other legislative versions of the regulatory BRAC commission have been introduced by lawmakers from both parties.

The time to act is now. If House and Senate leadership, not wanting to make any waves before the election, do not act, then the PPRRA should be reintroduced in the next Congress, and on and on until it passes. Regulatory reform is a long game, but with people hurting from COVID-19 and a tough recovery ahead, this is an idea that Congress should act on now.

CEI Experts Applaud Sens. Lankford, Johnson, and Portman for Independent Regulatory Commission Legislation

This is a press statement originally posted at cei.org.

On Thursday, Senators James Lankford (R-OK), Ron Johnson (R-WI), and Rob Portman (R-OH) introduced the Pandemic Preparedness, Response, and Recovery Act. The House version was previously introduced by Rep. Virginia Foxx (R-NC). The bill would establish an independent commission to identify regulations harming the COVID-19 response, and compile a package for Congress to vote on.

Competitive Enterprise Institute senior fellow Ryan Young thinks the commission is a good idea:

“If a regulation isn’t helping now during a pandemic, it was probably never needed in the first place. Agencies have already loosened rules for telemedicine, fast-tracked COVID treatment approval, and remote education. But the Code of Federal Regulations is still 185,000 pages long. How many of those rules are still harming the COVID-19 response? How many might make the country less resilient against the next crisis? A dedicated commission like the one in the Pandemic Preparedness, Response, and Recovery Act is a good way to find out.

“If leadership doesn’t see fit to hold a vote on the PPRRA this session, COVID-19 will still be around when the next Congress convenes in January. If necessary, the bill should be reintroduced and voted on then.”

CEI Vice President for Policy Wayne Crews said:

“The Congress has passed several Covid-19 relief packages and is contemplating more spending stimulus at this very moment. Missing from that body’s concrete actions in the coronavirus crisis has been powerful deregulatory stimulus, that is, easing or removing unnecessary rules and regulations that can both impede response to the pandemic and restrict smooth and energetic economic recovery from it.

“Federal agencies and the administration have implemented numerous waivers and suspensions with respect to the crisis as well as some explicit moves to streamline regulation and treat those subject to rules more fairly, an example of that being Trump’s executive order on Regulatory Relief to Support Economic Recover. But the executive branch is not America’s lawmaking body, and many of the steps taken need to be permanent rather than transitory. That is just the beginning; there remains a great deal more relief-oriented foundational streamlining of the Code of Federal Regulations’ content possible that utterly depends upon the intense attention of Congress to come to fruition.

“It is up to Congress has to reassert its primary legislative role and act to reduce regulation, as this juncture ideally can do that via a bipartisan ‘regulatory improvement commission,’ an idea is rooted in bipartisan discussions stretching back over several Congresses.

“The new Pandemic Preparedness, Response, and Recovery Act is a logical, sensible, fair and humane approach to dealing with crisis. Under the Act, a bipartisan commission would prepare recommendations for regulatory streamlining, and those would be improved upon by public notice and comment. The resultant report would be issued to Congress, which would have the ability to say yes or no to this new vehicle uniquely expressing an aspect of the will of the people that too often gets neglected. While the regulatory code grows with little relief, the Pandemic Preparedness, Response, and Recovery Act provides a way of disciplining it for the public good, and health.”

Read more:

New Paper: Antitrust Regulation is #NeverNeeded

My colleague Jessica Melugin and I, along with our former colleague Patrick Hedger, have a new paper out today, “Repeal #NeverNeeded Antitrust Laws that Hinder COVID-19 Response: Smokestack-Era Laws Favor Established Interests and Do Not Encourage Competition.” The tech companies that regulators are targeting have made a difficult pandemic easier to endure. Antitrust lawsuits would not help the COVID-19 response. Since the real cost of antitrust policy is its chilling effect on new innovations, ramping up antitrust enforcement would leave the country less resilient against the next crisis.

Amazon has made it easy for people to get no-contact deliveries of household supplies and groceries—and spurred competitive responses from Walmart, Target, and other retailers. Facebook makes it easy for people to stay in touch while staying socially distant. Google makes it easy to find information about the virus and stay up to date. As the paper concludes:

Antitrust investigations at the federal and state level should be suspended during the COVID-19 crisis and, ideally, abandoned permanently. The unintended consequences of market distortion and chilled innovation are the last thing consumers and businesses need right now—or ever. This is no time for politicians and government lawyers to promote their own careers through the posturing of antitrust enforcement. Consumer benefit and business resiliency must be preserved and antitrust enforcement must not be prioritized or expanded.

Read the whole thing here. For more on antitrust, see Wayne Crews’s and my paper “The Case against Antitrust Law” and CEI’s dedicated antitrust site, antitrust.cei.org.

New CEI Video: Eliminating Never Needed Regulations to Help with Recovery

In a new CEI video, Kent Lassman talks about three things agencies can do rein in regulations that are hindering the COVID-19 response and making economic recovery even harder. Congress should establish an independent regulatory reduction commission. Agencies should go over their own rules and policies and prune them. And new rules should have automatic sunsets

On their own, members of Congress have neither the incentive nor the ability to thoroughly trim regulations. So, they should do what they did the last time they hit an impasse like this—establish an independent commission. When the Cold War ended and the military needed fewer bases, no one representative would vote to close the one in his or her district, even if the base’s resources would do more good if used differently, because they didn’t want to face the political backlash.

The Base Realignment and Closure (BRAC) commission solved the problem. It studied the situation and sent Congress a plan for which bases to keep and which to shrink or close. This was then put to an up-or-down vote, without possibility for amendment. The streamlining of the military worked. Individual members of Congress could avoid blame for specific base closures. And voters understood that if their base was affected by BRAC, it was a fair decision made for a good reason. Four rounds of BRAC saved billions of dollars.

We should do something similar for regulation. In fact, the idea has been around since the early 1980s, when Sen. Phil Gramm proposed a version of it. After other occasional proposals from both parties, Rep. Virginia Foxx (R-NC) has just proposed her version of a regulatory BRAC. It’s a good idea, and it’s being taken seriously. With regulations harming the coronavirus response and the economy, now is the time to act on it.

Agencies should also so their own housework. Executive orders from President Trump have required agencies to get rid of two old rules for each new rule they enact; publish guidance documents in a single, searchable place in order to fight against the problem of regulatory “dark matter;” and most recently, to encourage agencies to use their emergency powers to wave rules that are getting in the way of an effective COVID response.

Finally, new regulations should have automatic sunsets. Just as cartons of milk have an expiration date, so should regulations. Times change; regulations often don’t. This rule would give agencies an incentive to periodically revisit and modernize their rules. Letting obsolete or harmful ones go is as simple as doing nothing; this is a fitting setup for a Congress that is rarely brave enough to take a stand on anything.

Please share the video on social media. For more on these proposals, see my recent paper “How to Make Sure Reformed #NeverNeeded Regulations Stay That Way.” More ideas are at neverneeded.cei.org.

On the Radio – COVID-19 and Economic Recovery

Tomorrow morning (August 9), I’ll be on the Bab Zadek show from 8:00-9:00 PT (that’s 10-12 CT and 11-12 ET) for the whole hour. It airs on most of the West Coast, and live online here.

Aluminum Tariff Increase is #NeverNeeded, Should Be Repealed Instead

This is a press statement originally posted at cei.org.

President Trump’s decision to re-impose 10 percent aluminum tariffs against Canada is misguided policy for four reasons, according to CEI senior fellow Ryan Young:

“One, other countries nearly always retaliate against tariffs. A Canadian official has already said Ottawa ‘will react very similarly to the last (time they imposed) tariffs,’ which was in 2018. Trump’s reinstated tariffs will cause double harm to consumers and businesses in both countries.

“Two, the timing is awful. The U.S. economy has just experienced its worst decline in recorded history, including the Great Depression. Unemployment is in double digits. President Trump should not make matters worse by increasing taxes on U.S. consumers and businesses, and raising tensions with America’s largest trading partner.

“Three, aluminum-using industries from beverages to autos to electronics will have higher costs. That means higher prices for consumers, who will then have less money to spend on other goods. Moreover, much of the aluminum industry itself does not want the tariffs, saying so less than two months ago in an open letter to U.S. Trade Representative Robert Lighthizer.

“Four, the point of the new USMCA trade agreement, which came into effect on July 1, was to reduce trade barriers. It succeeded for barely a month. CEI’s decision to oppose the agreement is so far being vindicated, though we would rather be proven wrong.

“It is time for Congress to reclaim the tariff-making authority it delegated to the President. He is clearly incapable of using them responsibly—even during the COVID-19 pandemic. Rather than raising taxes and tensions at the worst possible time, the administration should lower trade barriers and continue to pursue regulatory relief.”

Resources

CEI’s #NeverNeeded website, neverneeded.cei.org.

Ryan Young, “Repeal #NeverNeeded Trade Barriers: Tariff Relief Would Aid Virus Response, Economic Recovery, and Long-Term Resiliency

Iain Murray and Ryan Young, “Traders of the Lost Ark: Rediscovering a Moral and Economic Case for Free Trade

2020 Second Quarter GDP Decline Is Worst in U.S. History—But Not 32.9 Percent

The good news is that the second quarter’s GDP numbers aren’t nearly as scary as the more dramatic headlines are saying. The economy has not shrunk by a third. The bad news is that yes, we really have just experienced the worst crash in U.S. history. And it’s not over yet. This post gives some context, and some ideas for how to aid the recovery for both the virus and the economy.

Several newspapers are reporting a 32.9 percent decline in GDP. This is a projection. It is not what has actually happened. If the economy were to continue shrinking for an entire year at the rate it did last quarter, GDP will have shrunk by 32.9 percent.

While normalcy might be years away, that steep of a decline is unlikely to happen. 9.5 percent and 7 percent are more accurate numbers for what has happened to the economy. Here is why.

GDP numbers are often seasonally adjusted. For example, an outsized amount of spending happens during the holidays, while other parts of the year are slower. So, GDP figures are often compared to what they looked like at the same time the previous year. That is what seasonal adjustment is, a way to compare apples to apples. For example, 2020’s second quarter GDP is 9.5 smaller than 2019’s second quarter. It is the worst decline in U.S. history, and barely begins to explain the pain that people all over the world are experiencing due to COVID-19. But it is not a 32.9 percent decline.

The non-seasonally adjusted number is a 7 percent decline. That is the change from one quarter to the next. That number also provides useful context. Lockdowns began late in the first quarter, so while the economy took a 5 percent dent then, it makes sense that the second quarter would be even worse, since the full three months were under lockdown. But since the dip had already started, it makes sense that the quarter-to-quarter number is a couple of percentage points gentler than the seasonally adjusted number.

For a fuller explanation, I refer readers to an excellent article by University of Central Arkansas economist (and my former grad school classmate) Jeremy Horpedahl, who has a gift for understanding and explaining statistics.

It will be another three months before we know for sure, but there is a chance the worst of the economic shock has already happened. People are finding ways to adapt. Today’s hardships will be with us for a while longer, and we need to help each other out. If you can, please do. But our troubles are 9.5 percent bad or 7 percent bad, not 32.9 percent bad.

What should we do to fight the virus and help the economy? Two things come to mind.

The first has nothing to do with public policy. It is simply to be prudent. COVID-19 is on pace to be America’s third-leading cause of death this year. Almost everyone who reads this has someone they care about who is high-risk, whether due to age, occupation, or a health condition. Think of them. Do right by them. The more people do to keep the virus under control, the more it will be under control. Some form of masks and social distancing might be necessary until a vaccine or other proven treatment is widely available. That could take a year or more. But it will happen, and the virus will lose. Until then, people need to be prudent. Not living in a hermetic seal, but prudent.

The second thing has everything to do with public policy. It is regulatory reform. CEI’s #NeverNeeded campaign has spent the last several months crafting as many COVID-related policy reforms as we can and explaining them to policy makers, media, coalition members, and the public.

Regulations against telemedicine should never have been on the books in the first place. A more realistic approval process would get new and proven COVID treatments to the public as quickly as possible. Factories wanting to retool to make personal protective equipment for health care workers should not have to wait 45 to 90 days for permits to come through. If a restaurant wants to deliver food to willing customers, regulations should never have forbidden it. The Centers for Disease Control and Preventions should focus on controlling diseases instead of spending $125 million on an anti-vaping campaign.

Nearly a third of occupations now require some kind of government license. In many states, this includes fields such as barbers and decorators. During normal times, these regulations protect incumbents by keeping competitors out. During times of double-digit unemployment, keeping people out of work on purpose is immoral.

President Trump has roughly doubled tariffs. They now cost the average household more than $2,000 per year. For families where someone just lost a job, that tariff money could help to keep them afloat instead.

Just this week, Congress held a hearing regarding potential antitrust cases against large tech companies. These are the companies that are making contactless deliveries and grocery shopping possible. They keep people informed and in touch with friends and family. They are improving video conferencing and other technologies that make remote work and education possible. And they provide on-demand entertainment to help keep people’s spirits up during a difficult time.

To this point, Congress and the president have mostly dealt with the virus and the economic crash with hasty “flash policy” such as stimulus bills. The next one is being drafted right now. Policy makers at all levels of government have already removed more than 800 #NeverNeeded regulations. President Trump issued an order directing agencies to remove more unneeded rules. But the Code of Federal Regulations alone contains 1.1 million regulatory restrictions and 185,000 pages. There is much more to do. For lots of ideas, see neverneeded.cei.org.

New #NeverNeeded Paper: Price Gouging

Massive shortages happened almost instantly when it became clear that the coronavirus would require a nationwide lockdown. Grocery stores almost instantly cleared out of frozen foods, non-perishables, hand sanitizer, and, bizarrely, toilet paper. Stores dealt with the shortages in different ways. But one of those ways, raising prices, is almost universally unpopular. In fact, 36 states have anti-price gouging legislation on the books. Both Commerce Secretary Wilbur Ross and an Amazon vice president have called for federal price gouging legislation.

In a new paper, I explain that price gouging legislation is a bad idea, regardless of one’s feelings about price gouging. The main reasons are:

  • Private companies have their own anti-price gouging responses. Moreover, they can evolve in ways regulation cannot, and more quickly. For example, Amazon’s artificial intelligence (AI) algorithms for policing price gouging among its third-party sellers turned out to have unintended consequences. But unlike Congress, they don’t have to wait until the political winds blow just right before doing something about it. Part of trial is error, and that’s okay. Without mistakes, there is no learning.
  • Price controls make shortages worse.
  • Rent-seeking. Big companies such as Amazon have already invested in AI algorithms and other anti-price gouging measures to prevent their third-party sellers from price gouging. Their smaller competitors have not. Amazon’s call for federal legislation likely has a bit more than good PR behind it.
  • Anti-price gouging measures don’t actually reduce prices. They reduce money prices at a tradeoff: non-money prices go up even more. These non-money price increases include worse shortages, longer searches, waiting lines, longer shipping times, lower quality, and in some cases, more black market activity.
  • There is no objectively correct mix of money- and non-money prices during a crisis. Different people have different needs and different preferences. Legislation, by imposing one single standard, does no favors to people’s diverse situations.

The whole paper is here. I touched on a few other price gouging tradeoffs here. CEI’s #NeverNeeded website is here.

How to Spot a #NeverNeeded Regulation

Regulatory reform is one of the most important weapons there is for fighting COVID-19 and for aiding the economic recovery after the worst passes. But with 1.1 million regulatory restrictions and 185,000 pages of rules at the federal level alone, where should policy makers start? This handy infographic shows policy makers and regulators what to look for. If a rule meets one or more of these guidelines, it is probably a #NeverNeeded regulation.

  • It slows distribution of proved medical diagnostic tests and services.
  • It blocks patients’ remote access to medical providers.
  • It increases the cost of energy at a time when people can least afford it.
  • It makes it more difficult to hire employees.
  • It adds another layer of bureaucracy or complexity to legal compliance.
  • It blocks access to capital for both consumers and businesses.

A good rule of thumb is that if a regulation isn’t needed now, during a pandemic, then it probably was never needed in the first place.

Getting rid of #NeverNeeded regulations should be a top priority for lawmakers and regulators. But it is also not enough. Regulatory sludge has been building up for decades. Federal agencies issue more than 3,000 new regulations in most years, and usually remove old or outdated rules only when forced to. Reforming the rulemaking process itself, so that it generates fewer #NeverNeeded rules going forward, will be essential to resilience against the next crisis. If net neutrality rules hadn’t been repealed, for example, people in the U.S. would have had to deal with congested, throttled networks, such as many Europeans have been dealing with. The transition to new technologies, such as telemedicine and Zoom meetings for students and workers, would have been more difficult, or even impossible.,

For more resources on identifying and reforming #NeverNeeded regulations, see neverneeded.cei.org.