Tag Archives: regulation

Regulation Roundup

Some of the zanier happenings in the world of regulation:

The Texas legislature was poised to pass a bill classifying the TSA’s pat-downs as misdemeanor sexual harassment – until the TSA threatened to ground all flights out of the state. The agency claimed it would be unable to guarantee passenger safety without the pat-downs. The legislature promptly backed down.

Denmark has banned Marmite, a paste-like substance made from brewer’s yeast that is popular in Britain. The reason for the ban is that the paste has added vitamins and minerals. In Denmark, that’s a no-no.

Don’t sell rabbits without a license. The Dollarhite family of Nixa, Missouri, found that out the hard way. The federal government has fined them over $90,000 for breeding rabbits and selling them to pet stores.

Members of Congress have unusual investment acumen. A new paper finds that “A portfolio that mimics the purchases of House Members beats the market by 55 basis points per month (approximately 6% annually).” The study covers the period from 1985 to 2001. The subsidies, tax breaks, and other forms of corporate welfare that Congress indulges in couldn’t possibly have anything to do with their personal investment decisions, could it?

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CEI Podcast for May 26, 2011: President Obama Proposes Deregulation

Have a listen here.

Cass Sunstein, President Obama’s regulatory czar, announced today that the administration intends to repeal regulations from 30 different agencies. CEI Vice President for Strategy Iain Murray thinks this is a good step, though a small one. He estimates today’s proposal would save about $1.5 billion, which is one-tenth of one percent of the $1.75 trillion total burden of federal regulation.

Sunstein and Obama, Deregulators?

Winston Churchill observed that “Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.” We may finally be seeing a small step in that direction. The Bush and Obama administrations have tried fiscal stimulus to speed up economic recovery. It didn’t work. The Federal Reserve tried increasing the money supply, which they called “quantitative easing” because it sounds much more pleasant than “printing money.” That didn’t work. Then they tried it again. That didn’t work, either. What to do?

We at CEI have been pushing a deregulatory stimulus for years. Now that all other possibilities are exhausted, the administration appears to be taking small steps in that direction. Regular readers are aware that federal regulation costs about $1.75 trillion, and that the Code of Federal Regulations is over 157,000 pages long. Both of those numbers grow every year, as over 3,500 new rules hit the books annually. This morning, OIRA chief Cass Sunstein is announcing a 30-point plan that would “save American companies billions of dollars in unnecessary costs,” according to The Washington Post.

This new initiative stems from Obama’s Executive Order from earlier this year that ordered agencies to comb their books and recommend obsolete or harmful rules for elimination. Agencies hardly have an incentive to reduce their size or scope, which is why an independent commission would be a better vehicle for getting rid of old rules. The rules Sunstein is proposing to eliminate are very modest. But it’s better than nothing.

The real savings would actually go to consumers. Because companies pass on their costs, consumers are the ones who ultimately pay regulatory costs. They will also ultimately reap the savings in the form of lower prices and more choices.

The bad news is that the regulatory savings will comprise only a tiny fraction of the $1.75 trillion cost of federal regulation. Many will hail these reforms as landmark, revolutionary, or some other hyperbole. They are nothing of the sort. It is only a first step on the road to a saner regulatory approach. But if people believe that we’ve already reached the destination, they will lose the desire to press for further reform.

The worse news is that almost all of the new rules in the pipeline – 4,225 at last count – will still hit the books. Costly new regulations from the health care bill and the Dodd-Frank financial regulation bill may well outweigh the savings that Sunstein is proposing today.

Not all the details are out yet, but there is reason for deregulators to be cautiously optimistic. For more regulatory reform ideas, see this article that Wayne Crews and I wrote for AOL News.

Substantive Reform Must Include Cutting Regulatory Burdens

Spending, deficits, and taxes are getting all the attention from reformers in both parties. In today’s Investor’s Business Daily, Wayne Crews and I argue that regulation is not to be forgotten:

Regulations cost the average business $8,086 per employee per year. Small businesses are especially hard-hit. Firms with fewer than 20 employees pay $10,585 per employee per year for regulatory compliance, according to the Crains’ report. When hiring employees becomes more expensive, fewer get hired. No wonder unemployment is so persistent.

We also offer up some reform ideas:

One reform is to purge the books of obsolete and clearly harmful rules. There is no need for Washington to have rules still on the books for a Y2K crisis that never even materialized. Nor is there any need for it to regulate the size of holes in Swiss cheese, which it does in great detail.

President Obama should appoint an annual bipartisan commission to comb through the Code of Federal Regulations and recommend rules for elimination. Congress would then be required to vote up-or-down on the package without amendment.

Read the article here; for more intellectual ammunition, see the just-released 2011 edition of Wayne’s “Ten Thousand Commandments” study.

Regulation: The Hidden Tax

Wayne Crews and I have a piece in today’s Sacramento Bee summarizing the main findings of Wayne’s “Ten Thousand Commandments” study. We also point out that regulatory costs are not limited to the $1.75 trillion it takes to comply with them:

The total cost of federal regulation is $1.75 trillion. That’s true in terms of money. But money isn’t everything. Regulation also has opportunity costs. Workers spend millions of man-hours every year filling out forms and following procedures. That time could be spent on other things instead, such as finding ways to lower costs, improve quality and increase worker productivity. When there’s too much regulation, progress and innovation slow down.

There is a second opportunity cost that is often overlooked. Companies don’t sit idly by when regulators propose new rules. They try to influence the process. Most companies, especially larger ones, often favor new regulations in their industries. They will pay lobbyists a lot of money to influence the rules in a favorable way – say, by handicapping a competitor.

Ten Thousand Commandments

The 2011 edition of Wayne Crews’ “Ten Thousand Commandments” was released today. The annual study gives a big-picture view of the regulatory state. You can read it here. Some of the main findings:

-Federal regulations cost $1.75 trillion per year. That’s equivalent to about half of federal spending. Government’s cost is actually about 50 percent bigger than most people think.

-Agencies issued 3,752 final rules in 2010. At that pace, a new rule comes into effect every two hours or so.

-Another 4,225 rules are in the pipeline right now.

-The Federal Register hit an all-time high 81,405 pages in 2010.

-Economically significant regulations are way up. These are defined as rules that have over $100 million of economic impact. There were 224 in 2010. That’s a 22 percent increase over 2009’s 184.

6 Pages of Legislation, 1,000 Pages of Regulation

HHS is about to issue over 1,000 pages of new regulations stemming from last year’s health care bill. That’s not a huge surprise, considering the bill is about 2,000 pages long.

But these regulations all come from a 6-page section covering accountable care organizations, or ACOs.

According to Politico, John Gorman, who runs a health care consulting firm, “expects a 1,000-page rule to come out on Thursday, March 31—because he doesn’t think HHS will want to deal with releasing the regulations on April Fool’s Day.”