Category Archives: Publications

Regulations: The Tax You Don’t See

Over at Human Events, Lawson Bader and I have a piece pointing out that though taxes and budgets dominate the news, regulations are just as important:

One reason [regulation] gets so little attention is that most regulations are the technical, dry stuff that most people don’t care about until it affects them. For example, the business owner who is forced to spend thousands of dollars to move light switches to comply with Occupational Safety and Health Administration rules. Or the land owner who cannot build on his property because there’s a rare species of salamander also living there, lest he fall afoul of the Endangered Species Act.

Another reason is a lack of transparency. Many headline-worthy regulatory stories stay buried in difficult-to-access government documents, or are never disclosed at all. By way of contrast, in Congress, legislation is at least subject to public hearings and open floor debate. Lawmakers’ votes are a matter of public record that voters can take into account. Regulatory agencies face no such scrutiny.

Read the whole thing here.

Regulation without Representation

This is supposed to be a year of action. Unfortunately, there will likely be very little action in the area of regulatory reform. Over at The Hill‘s Congress blog, Wayne Crews and I make the case for reining in the regulatory state as a way to improve the federal government’s fiscal health. Here’s a taste:

Take the much-discussed annual federal deficits under presidents Bush and Obama. In recent years, the government has been spending a little less than a quarter of the nation’s GDP, but its revenues rarely top 20 percent of GDP. Given Congress’s and the president’s continuing unwillingness to reduce spending to match revenues, they could turn instead to regulatory reform as a budget balancer.

A deregulatory “stimulus” would help create the conditions for rapid economic growth. If government’s 20 percent slice comes from a much larger pie, revenue gains could cover most, if not all of the shortfall, eventually erasing deficits. This, of course, would require keeping spending in check, which may be wishful thinking. But it offers a solution, if politicians really want one.

Read the whole thing here.

Two Cheers for Tapered Quantitative Easing

The Federal Reserve made waves when it announced it was rolling back its quantitative easing program. Looking more closely, one finds it’s actually a very minor policy change, moving from $85 billion to $75 billion per month. Over at the Washington Times, I encourage the Fed to taper back the rest of the QE program, and point out that the Fed may be sending a subtle political message about how presumptive incoming Fed Chair Janet Yellen will approach inflation:

Johns Hopkins University economist Steve Hanke argues that Ms. Yellen is more hawkish on inflation than her dovish reputation suggests. The tapering announcement seems to confirm Mr. Hanke’s thesis. As the Fed’s current vice chairman, she already has significant say on Fed policy. She has publicly supported the new Basel III reserve banking standards, which would require banks to hold more of their capital in reserve. That would decrease the amount of money in circulation — the exact opposite effect of quantitative easing — and help keep inflation in check.

There are plenty of problems with the Basel III standards, but this would be one positive effect. Read the whole thing here.

Towards a More Transparent Fed

Iain Murray and I have a piece in today’s American Spectator breaking down the new paper we co-wrote with John Berlau about questions we would like Janet Yellen to answer, whether in her confirmation hearing or elsewhere. The main point is transparency:

Transparency is essential for a public body that takes trillion dollar decisions. We need to know what she feels about the possibility of auditing the Fed. Indeed, Senator Rand Paul has already announced that he will place a hold on her nomination until he sees some progress with his Federal Reserve Transparency Act bill — something that Senate Majority Leader Reid used to support. If and when Professor Yellen does come before a confirmation hearing, Senators need to make her views on these questions transparent to the nation too.

Read the whole thing here. The full paper is here.

Questions for Janet Yellen

janet yellen
The Federal Reserve is arguably the government’s most important agency, even if it is (nominally) independent. It has control over the price system, the most fundamental part of any economy. It also exercises significant power over the banking sector, and in recent years has taken to doing large favors for Wall Street. These are all reasons why Janet Yellen’s nomination for Fed Chair needs to be carefully vetted. To that end, my CEI colleagues John Berlau and Iain Murray and I put together some questions about several facets of the Fed’s mission we would like to Yellen answer, whether during her confirmation hearing or elsewhere. You can read the short WebMemo here. Here is one of our questions about inflation:

Many observers expect you to pursue an inflationary stimulus, and believe this is likely a reason for your nomination. If your actions are already expected, will markets not take these expected price level changes into account in advance? If so, do you believe this would blunt the employment impact of any monetary expansion? Would you respond to these pre-existing expectations with an unexpectedly high inflationary policy?

As John, Iain, and I write, Yellen’s credentials are not in question. But the policies she might pursue as Fed Chair are. Read more here.

Regulatory Transparency Is Decidedly Lacking

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.

The Regulatory Improvement Commission

There are a lot of old and obsolete regulations on the books. This is low-hanging fruit that agencies and Congress could easily pick, but neither has shown much appetite for doing so. The solution: an independent Regulatory Improvement Commission. The idea has been around for at least twenty years, and has garnered bipartisan support.

Senators Angus King (I-Me.) and Roy Blunt (R-Mo.) are introducing a bill that would create just such a commission. Over at The American Spectator, Wayne Crews and I discuss the proposal:

After identifying one area of emphasis — say, technology, or food and drug safety — the Commission would comb the books for outdated, redundant, and inefficient rules in that policy area. Along the way, it would also solicit comments and suggestions from the public and affected industries.

The Commission then works those comments and suggestions into a single legislative package to be sent to the relevant congressional committees. The committees will then have up to 30 days to review the package legislation, but not to scuttle it. After that, it would head to the House and Senate floors for a vote.

The vote would be straight up-or-down, with no amendments allowed. This prevents vote-trading among lawmakers agreeing to save one another’s pet regulations. In other words, no log-rolling allowed. If a member ends up taking political heat for voting in favor of the package, he or she will have plenty of company. All members can rightly say that the total benefits of the package exceed any parochial costs to one’s district.

Read the whole thing here.

REINS Act to Hit House Floor Tomorrow

Tomorrow, the House will likely vote on the REINS Act. The bill would require Congress to hold up-or-down votes on all new regulations costing more than $100 million. It would add some oversight to a regulatory process that has far too little of it. Agencies can, and often do, regulate with impunity under current rules; hence the need for change. Wayne Crews and I make the case for REINS-style reform over at Forbes:

It’s actually shocking how regulators now do most of America’s lawmaking. In 2012, Congress passed 127 bills, while agencies issued 3,708 regulations. This 29-fold difference is par for the course. This “Anti-Democracy Index”—the ratio of agency rules enacted to legislation passed and signed into law—has not dipped below 12 over the past decade.

The REINS Act would restore some balance. Currently, there are 224 regulations sporting $100 million price tags in the federal pipeline—roughly double the amount of legislation on Congress’ annual plate. Congress should have to approve anything this costly.

Read the whole thing here.

Two Decades of Regulatory Growth

Over at The American Spectator, Wayne Crews and I marvel at how much the regulatory state has grown over the last twenty years. We also offer up a few ideas for reform:

One is an independent Regulatory Reduction Commission, modeled after the successful Base Realignment and Closure (BRAC) Commission of the 1990s, which trimmed billions of dollars’ worth of unneeded military spending. Every year, this commission would comb through the books for old, obsolete, harmful, and redundant rules. It would then submit an annual repeal package to Congress for a prompt up-or-down vote with no amendments allowed. This would prevent vote-trading along the lines of “I’ll vote to save your favorite regulation if you vote to save mine.”

The Regulatory Reduction Commission would continue to submit repeal packages every year for as long as necessary.

Read the whole thing here.

Regulatory Opacity

In today’s Investor’s Business Daily, Wayne Crews and I make the case that one of the biggest obstacles to regulatory reform is a lack of agency transparency. It’s hard to fix a problem if you’re unable to even diagnose it properly. Here’s a taste:

Politicians from both parties routinely tout the need to roll back unnecessary regulations. But how much overregulation is there exactly? Most politicians have no idea, and neither does the general public.

Most people have some idea that the government spends nearly $4 trillion annually given the prominence of the recent debates over the “fiscal cliff” and “sequestration.”

But there is no equivalent regulatory metric. This is a problem that needs fixing.

Agencies aren’t exactly forthcoming with data about how much their rules cost, since bureaucrats’ sinecures depend at least in part on avoiding public outrage. The documents they do issue are widely scattered and rarely written in language accessible to the lay reader.

In short, the regulatory state has a major transparency problem.

Read the whole thing here.