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:
The Republican Party’s new platform, which contains planks on such pressing issues as “Protection Against an Electromagnetic Pulse (p. 54),” also has a lot to say about regulation. But will a GOP-controlled Congress act on them? That remains to be seen.
It is not enough to reform this or that financial or environmental regulation. The rulemaking process itself must be geared towards limiting the damage new rules can do, while regularly getting rid of obsolete, redundant, or ineffective regulations. After all, if you want better results, you need better rules. Here’s what the GOP platform proposes on that front:
- A “bipartisan presidential commission to purge the [U.S.] Code and the [Code of Federal Regulations] of old ‘crimes,’” which is similar to the SCRUB Act that recently passed the House.
- Occupational licensing reform—an issue where the GOP and President Obama agree. Maybe they can pass something before the next administration takes power.
- Limit the executive branch’s power to issue regulations through executive order and other “dark matter” methods. CEI’s Wayne Crews wrote about this problem in a recent paper.
- The REINS Act (though without mentioning it by name). REINS would require Congress to vote on all new major regulations before they can take effect. This would help to ensure agencies don’t go rogue, as the EPA did with cap-and-trade and the FCC did with net neutrality.
- The Regulation Freedom Amendment, under which two thirds of states could vote to repeal federal regulations.
- A regulatory budget, similar to the government’s annual spending budget. Wayne has also written on this reform.
- A “one-in, one out” rule, under new agency regulations must be offset by repealing an equivalent dollar amount of old regulations.
All in all, not a bad list. And several of the planks have already passed the House. The trouble is that the Senate is unlikely to act on them, and the administration has issued veto threats on the REINS and SCRUB Acts. The Senate should pass them anyway to force the White House to publicly explain why they oppose regulatory reform. So in the short term, pessimism reigns.
After the election, the main task is keeping these reform ideas alive. It is important for each new Congress to keep reintroducing reform bills, and to vote on them, even in the face of veto threats. That way, when voters finally elect a president interested in regulatory reform, the legislation will already be right there for him or her to sign. So despite short-term pessimism for the next administration, the long-run future is bright for regulatory reform—so long as Congress is committed to keeping these bills alive.
Separation of powers is one of the United States government’s most basic principles. But for several decades, presidents from both parties have gradually concentrated more and more power in the executive branch, at the expense of Congress and the judiciary. A new bill from Rep. Cathy McMorris Rodgers (R-Wash.), the Unauthorized Spending Accountability (USA) Act of 2016, seeks to rebalance a tilted scale.
Only Congress has the power of the purse, yet a long list of unauthorized executive branch programs continue to operate—256 in all, at a cost of more than $310 billion. The USA Act would automatically cut a program’s budget to 90 percent of its previously authorized level in its first unauthorized year, and to 85 percent in the second year. Programs would sunset altogether after a third unauthorized year.
As the executive branch becomes more overbearing with each successive administration, Congress becomes more and more of a wallflower. Congress has not seen fit to authorize entire cabinet-level departments, such as the State Department, since 2003. The Justice Department was last authorized by Congress in 2009. Other departments, such as the Bureau of Land Management, have now operated for twenty years without congressional authorization. The USA Act would require Congress to own up to its budgeting responsibilities, while simultaneously making the executive branch more accountable.
There is more. The USA Act’s automatic budget cuts and sunsets apply only to programs classified as discretionary spending. But two thirds of federal spending is classified as mandatory, including major programs such as Social Security and Medicare. While Congress has the power to change these programs at any time, they do not require congressional reauthorization, and can continue indefinitely on autopilot.
The USA Act would create a Spending Accountability Commission to examine mandatory spending programs and make them more accountable to Congress, which apparently prefers to avoid making them more efficient or fairer—a clear abdication of responsibility, given the coming entitlement crunch. The Commission would also assist Congress in creating a schedule for sun-setting unauthorized discretionary programs.
Restoring a proper separation of powers is a tall order. The USA Act is no panacea for all of government’s ills, but it would mark an important step in a crucial area of reform.
The House is voting on two pieces of regulatory reform legislation today, the Sunshine Act and the SCRUB Act. Both will likely pass, then it’s on to the Senate, though veto threats to both bills complicate matters. Over at RealClearPolicy, I break down both bills. The Sunshine Act would reform a regulatory practice called sue-and-settle:
In a typical sue-and-settle situation, an environmental-activist group sues the Environmental Protection Agency for not meeting deadlines or not enforcing certain regulations thoroughly enough. EPA officials, who may have been working with the plaintiffs behind the scenes, happily admit guilt and agree to a settlement that expands the agency’s power and scope.
See also my colleague William Yeatman’s work on sue-and-settle reform. Meanwhile, the SCRUB Act would:
[E]stablish an independent commission to comb through the 175,000-page Code of Federal Regulations for old, obsolete, redundant, and harmful rules. Its goal is to “achieve a reduction of at least 15 percent” in cumulative regulatory costs. With that goal in mind, and given that federal regulations now cost nearly $1.9 trillion per year, a successful commission could save the American people around $285 billion per year.
Read the whole thing here.
OPIC is the Overseas Private Investment Corporation. It is a federal agency that offers financing for international projects by U.S. companies. Intended mainly as an economic development tool for developing countries, OPIC is also a way to give assistance to U.S. companies, and serves as a foreign policy tool for the federal government. In recent years, OPIC has also been captured by renewable energy interests, who now receive roughly 40 percent of its business.
OPIC’s charter expires on September 30, unless Congress renews it—in this way, its business model is similar to the now-expired Export Import Bank, which also has charters of finite length. In a new CEI paper, released today, I outline the case for closing OPIC in more detail:
Only about 5 percent of OPIC’s business goes to countries deemed as among the least developed by the United Nations. OPIC overwhelmingly works with big businesses, with a literal top 10 list of its beneficiaries capturing nearly 90 percent of its business in some years. The jobs OPIC supports come at a cost of nearly $329,000 each. The agency’s political risk insurance program encourages bad behavior by predatory governments around the globe. More than 40 percent of OPIC’s business goes to a single industry—renewable energy—known more for its political acumen than creating consumer value.
Read the whole paper here. If you prefer a one-page version, see the press release.
Before it departed for its August recess, the House passed the Regulations from the Executive In Need of Scrutiny (REINS) Act. It would require Congress to hold votes on all new agency regulations costing at least $100 million per year, and would limit agency’s ability to regulate unilaterally.
In a piece over at The Hill’s Congress Blog, Wayne Crews and I make the case for the reconvening Senate to pick up the baton and also pass REINS:
There is an urgent need to free consumers, entrepreneurs and small businesses from the costs and hurdles associated with federal red tape. The REINS Act would be an excellent anchor for reform, allowing Congress to clean out obsolete rules and strengthen rulemaking disclosure and oversight. REINS deserves both a vote in the Senate and to reach President Obama’s desk. If the president vetoes it, it’ll be up to him to explain why Americans should be controlled by agency bureaucrats rather than the people they elected to represent them in Congress.
Read the whole thing here.
President Obama is right that Congress doesn’t do much. That’s not necessarily a bad thing, of course. But the pen and phone strategy Obama proposed can be used for a lot of things. The president seems inclined to use it mostly to expand government. But the pen and phone can also shrink government and make it more accountable, as Wayne Crews and I explain over at RealClearMarkets:
Congress passed 72 laws in 2013, while agencies issued 3,659 rules and regulations—a 51 to one ratio. This disparity suggests two areas where a pen-and-phone strategy might do some good. First, increased government transparency about the nature of all these rules. Second, establishing something akin to a federal “Department of No” to reduce the bureaucracy’s output relative to Congress.
In short, we propose the Executive require already-required transparency documents such as the Unified Agenda to at least come out on time. And we propose at least an informal check on agency rulemaking that asks agencies to look before they leap. Read the whole thing here.