May 02, 2014
“You can look at the federal budget and see what we spend. There is nothing like that with respect to regulations. I tabulate the annual cost of regulation to be about $1.8 Trillion. Any regulation that is expected to cost over $100 million is supposed to get a cost-benefit analysis. Obama added $20 billion in new regulatory costs just last year. Every year there are over 3,500 new rules that come out of the federal government. Do you know how many rules got a cost-benefit analysis last year? Fourteen!”
Thus spoke Wayne Crews, Vice President for Policy at the Competitive Enterprise Institute and author of Ten Thousand Commandments, CEI’s annual snapshot of the federal regulatory state. Wayne, my first guest this week on RealClear Radio Hour, can quote facts and figures the way a baseball aficionado spits out batting statistics. The mind reels under the weight of the huge numbers, so how do we make them digestible?
“Try this,” Wayne suggests. “Regulatory costs amount to an average of $14,974 per household—23 percent of the average household income of $65,596. This exceeds every item in the household budget except housing—more than health care, food, transportation, entertainment, apparel, services, and savings.”
Yes, but aren’t we getting our money’s worth? Our air and water are incomparably cleaner than when I was a kid. And traffic deaths are down, as modern automobiles have become engineering marvels designed to protect passengers caught in crashes.
That is all to the good, but there are points where regulatory benefits start to bring diminishing returns, become counterproductive, and then metastasize into dead-weight loss. And when rules become so entrenched, they’re usually a source of never-ending partisan conflict. Even when there is bipartisan agreement, reform becomes extremely difficult once a regulatory agency takes on a life of its own, as lobbyists seek favors from the regulators and the regulators seek to expand their turf.
It’s well past time to end this symbiotic power dance. So what to do?
“The cost benefit approach to fixing the regulatory problem is not going to work,” says Michael Mandel, Chief economic strategist at the Progressive Policy Institute, my second guest on this week’s RealClear Radio Hour. He is especially concerned about the way regulatory accumulation impedes innovation. “History tells us that innovation will allow us to deal with a lot of our concerns about the future of the earth in a different way. They are real concerns, but the path forward is more innovation rather than less.”
A big problem is that, “Regulations accumulate over time.” While they are passed with good intentions “the problems may change, the technology may change, the economy my change, and regulations become obsolete. They become overlapping, or maybe didn’t work the way that you expected. Right now, we don’t have a mechanism for undoing regulatory accumulation. Can we come up with a process even in the nasty, hostile, politically divided climate in Washington to undo regulations that everyone can agree are problems?”
Michael wants to start small, trying to break the partisan gridlock in incremental steps that build trust. “The big cosmic proposals to redo the whole regulatory system are never going to pass in today’s political climate. We need to construct a process that not only make technical sense but would be politically viable.”
He suggests a Regulatory Improvement Commission, modeled along the lines of the successful Base Closure and Realignment Commissions, which enabled Congress to bypass the logrolling that made it possible for a determined Congressman to protect an obsolete base in his district from being shut down. “The idea would be for a group of experts to suggest a list of 15 or 20 regulations that can be eliminated or reformed and send them to Congress as a package for an up-or-down vote, and then on to the president to be signed.” Another benefit of this approach is that it would pass constitutional muster, unlike President Obama’s “I’ve got a pen and a phone” solution.
A Regulatory Improvement Commission bill has been introduced in the senate by Sens. Angus King (I-Me.) and Roy Blunt (R-Mo.), and related legislation may appear in the House. But with the 2014 election season coming up we’re not likely to see much happen until the next Congress takes up the cause. And so we wait.
Meanwhile, when you head for the voting booth, think about what else your family might do with some of the nearly $15,000 a year that regulations cost you.