Geoff Davis RSS Articles

John Stossel and Senator Mike Lee Discuss Regulations, REINS Act

Fri, 04 May 2012 04:00:00 GMT

John Stossel: Now, in terms of the regulatory burden where, as you say, they are on automatic pilot, 1,000 a week added, you have a sunset proposal that would stop that?

Senator Mike Lee: Yes. The best proposal up there right now to deal with the mission creep associated with the modern federal regulatory state is a proposal called the Reins Act, R-E-I-N-S.

(This interview was from the May 3, 2012 edition of the Fox Business Network show Stossel.)

Master of Distraction: White House Regulatory Op-Ed Today Yet Another Diversion

Tue, 01 May 2012 04:00:00 GMT

Cass Sunstein’s WSJ op-ed this morning heralded yet another Administration plan to provide regulatory relief to the nation’s businesses, this time via a “harmonization” of certain domestic regulations with our trading partners. We suspect this news will prompt no small number of them to plead for no more favors.

This administration has issued an incredible array of regulations during the past three years, the sum of which has boosted the cost of doing business in the United States by more than $251 billion. And the cost estimates undoubtedly underestimate the actual increase in the burden borne by U.S. businesses, since in many cases the cost-benefit analysis that is required for any major regulation bears only a passing resemblance to reality. For instance, we recently pointed out that the Administration’s new rule requiring banks to report interest paid to non-resident aliens will result in an estimated $100-$200 billion reduction in bank deposits and almost assuredly result in the failure of a multitude of banks located in communities with an international nexus, but the Administration’s estimated costs to businesses to comply with the regulation is minimal—fifteen minutes per bank per year to fill out the necessary forms.

In fact, another costly regulation came under the guise of just such a “harmonization” mandate. In March the Administration published a final rule on hazard communication standards, the purpose of which is to align U.S. chemical safety standards with the U.N. approved globally harmonized system of classification and labeling. This “harmonization” imposes additional costs of over $4 billion on businesses as well as an estimated 11 million hours of compliance costs, the latter of which essentially forces the equivalent of 5,500 workers into the red tape compliance business.

This Administration is a master of distraction: a year ago they announced a new program to roll back unnecessary and superfluous regulations in order to provide some sort of regulatory relief, and a few months later Cass Sunstein duly took to the pages of the Wall Street Journal to announce that the effort had been an unqualified success. We found that the savings they trumpeted were overstated and largely illusory and were dwarfed, by several orders of magnitude, by the flurry of new regulations imposed during that time.

The Administration may talk a good game to the Wall Street Journal, but the reality is that it has been incredibly successful in pushing their top-down, bureaucratic agenda through their regulatory actions to the detriment of the American economy, with slower growth, lower wages, and fewer jobs as a result.

Ike Brannon is director of Economic Policy and Sam Batkins is director of Regulatory Policy at the American Action Forum.

This piece was originally published on the American Action Forum, accessible here.

Coal mining and coal-fired power generation

Tue, 10 Apr 2012 04:00:00 GMT

April 7, 2012
LoganBanner.com

Four years ago, when he was running for president, Barack Obama told the San Francisco Chronicle what he had in mind for coal: Electricity costs would “skyrocket,” he said.

And people could build coal-fired power plants, he added. “It’s just that it will bankrupt them.”

With the help of a compliant Democratic majority in the U.S. Senate, the president has succeeded.

Obama’s Environmental Protection Agency has made electricity rates skyrocket, and he is killing coal mining and coal-fired power generation through regulation.

His EPA recently proposed new limits on carbon dioxide emissions that would effectively prohibit construction of new coal-fired plants.

That will have consequences for household users, job-seekers, industry and reliability.

It should have political consequences as well.

Four years ago, West Virginia Democrats and organized labor were all in for Obama. Sen. Jay Rockefeller still is.

He advised his constituents to work together “to drive clean coal technology forward.”

But President Cecil Roberts of the United Mine Workers of America, who stumped for Obama four years ago, said EPA “knows very well that CCS technology has not been commercially demonstrated … .

“In practice, it would not be possible to finance a new coal plant to meet the proposed EPA standards.”

U.S. Sen. Joe Manchin also expressed alarm.

“This EPA is fully engaging in a war on coal,” he said.

Gov. Earl Ray Tomblin, who, like Manchin is also on the November ballot, said the administration is trying to “end the use of coal as we know it.”

“I will not stand for it,” he declared. “This latest announcement is yet another example of the EPA’s inappropriate use of its regulatory authority to set policy for our country. Those decisions reside within the Congress, not an unelected bureaucracy.”

The Republican-controlled House of Representatives could not agree more and did something about it.

Last year the House passed the REINS act, which would require prior approval from Congress for major new regulations.

The Democratic-controlled Senate has refused to act on the legislation.

Phil Kerpen, vice president of Americans for Prosperity, said Sen. Jim Imhofe, R-Okla., plans to introduce a resolution of disapproval that would put every senator on record with regard to the EPA’s action.

West Virginians will watch with interest. It’s an election year, and they have decisions to make.

What are West Virginia’s Democratic senators doing to stop the EPA?

— Distributed by The Associated Press

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(This article originally appeared April 7, 2012 at LoganBanner.com.)

Rep. Jason Chaffetz cites REINS Act on CNBC's Kudlow Report

Wed, 04 Apr 2012 04:00:00 GMT

Monday evening (04/02), Rep. Jason Chaffetz [UT-3] appeared on CNBC's The Kudlow Report to discuss government overregulation. During the interview, Rep. Chaffetz mentioned the REINS Act as a solution to regulatory overreach (transcript below the video).

Transcript:

Kudlow: All this week we're gonna be exploring my ten commandments for economic growth. the first one, thou shalt not overregulate. right. overregulation a sure fire job killer. it's like a tax to businesses and the economy. get a load of some of these regs. nine years to come up with regulations on which times of manure can be used for growing organic foods. endless medical coding regs. there are 36 different colds for snake bites, four for alligator bites, even a code for walking into a wall. my goodness. but one more, the obama administration now mandating that so-called service Horses be allowed into stores and restaurants nationwide to help the blind. well, okay, i want to talk about that one. my question is whether are we going to stop this overregulation, which damages the economy? let's bring in an expert. utah republican congressman jason chaffetz. the one thing that bothered me here, this service Horse in the malls and the restaurants, is there a better way to help blind people? are the dogs the better way to go? what's the objection against the service Horse?

Chaffetz: well, we want to be as sympathetic as we can for people who need service animals, but there doesn't need to be a rule and regulation for everything. so as of march 15th, the obama administration said in order to comply with the american with disabilities act, now whether you're a restaurant, hotel, a pool, you have to allow service Horses. and, look, i feel for somebody who is allergic to a dog and they need an alternative but there doesn't need to be a rule and regulation for everything in life.

Kudlow: so the issue is the allergy to the seeing eye dog means you got to go to some kind of small Horse. that's a tough one.

Chaffetz: now you have somebody in california who is being sued because the restaurant said we're not going to allow Horses into the restaurant and now they're being sued and so it's just a little bit much. i feel for those people but, come on, we don't need a rule and regulation lace for any possible scenario.

Kudlow: what about all this other stuff? manure for organic foods, medical coding regulations for snake bites, people walking into walls? this kind of regulatory crap, jason, i'm gonna call it, i thought had been ruled out. i thought the republicans had gotten that through.

Chaffetz: we're trying to. scott tipton out of colorado has done some good work on this. the reins act says any new rule that has an $100 million impact need approval by congress. I'd actually like to see that be zero. under obamacare, the new coding rules, 36 different types of codes just for snake bites.

Kudlow: is this one of those ones nobody knew what was in obamacare until they passed it?

Chaffetz: the famous nancy pelosi line. there's four different types of hang gliding accident. look the idiot had an accident. we're trying to simplify things not make things more complicated.

Kudlow do you think finally, jason, from your work and the work of others, that there is some kind of consensus in congress that overregulation is a huge tax on the economy and on jobs temperature does anyone get that?

Chaffetz: from the time barack obama took office until now there are more than 140,000 additional federal workers on the federal payroll. these are regulators. these are people who wake up every day in order to justify their lives and existence regulate. regulate things. that's the problem.

Kudlow: alright jason chaffetz, great American as you are. anti-regulation talking good economic growth sense. thanks for coming on again, we appreciate it.

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[Permalink to video: http://www.youtube.com/watch?v=1h7K2C16TAg]

Electric rates will soar now that Obama's EPA has crushed coal-fired power plants

Thu, 29 Mar 2012 04:00:00 GMT

By Phil Kerpen | FoxNews.com

With the country focused on this week’s high drama at the Supreme Court, President Obama’s EPA quietly released long-delayed regulations to apply global warming rules never authorized by Congress to new coal-fired power plants.

That Obama’s EPA would release a rule to destroy coal-fired electricity while the president gives stump speeches about an “all of the above” energy policy is an insult to the American people.

This rule will effectively block any new coal-fired power plants from being built in America, and a second round of related rules – expected after the election, of course – will shut down existing coal-fired power plants.

The result will be steeply higher electricity prices, lost jobs, and lower standards of living. Remarkably, this is all done in the name of global warming, but even EPA Administrator Lisa Jackson admits it will have no discernible impact on global temperatures. Obama’s EPA is crippling the U.S. economy not to accomplish anything, but just to enjoy a nice, warm, green feeling of self-satisfaction.

Four years ago, then-candidate Barack Obama explained his anti-coal energy policy in an editorial board meeting with the San Francisco Chronicle. Obama said: “Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket. Even regardless of what I say about whether coal is good or bad.” He went on to explain: “So, if somebody wants to build a coal plant, they can — it’s just that it will bankrupt them.”

Indeed Obama attempted to make good on his campaign promise to bankrupt the coal industry and make electricity prices skyrocket the legitimate way – by proposing cap-and-trade legislation in Congress. It was jammed through the House but crashed and burned in the Senate, where many Democrats understood such an energy rationing plan to be political suicide.

They were right.

The American people decisively rejected energy taxes and rationing in the 2010 election, with dozens of Democrats losing because of their support for cap-and-trade. West Virginia Democrat Joe Manchin survived and won his Senate seat by literally shooting a bullet through in the bill in a television ad.

But the day after the 2010 election President Obama said: “Cap-and-trade was just one way of skinning the cat; it was not the only way. It was a means, not an end. And I’m going to be looking for other means to address this problem.”

With Tuesday’s EPA action to bankrupt coal, he found his “other means” to address the “problem” of affordable electricity.

As I demonstrated in my book “Democracy Denied”, under Article I, Section 1 of the U.S. Constitution, the power to make these decisions resides in Congress, not the EPA.

The House has already acted to fix the structural problem that allows bureaucrats to implement economy-changing rules without congressional approval when they passed the REINS Act last year, a bill that would require prior-approval from Congress for major new regulations.

The Senate has refused to act on the legislation.

Fortunately, Senator Jim Inhofe (R-Okla.) has already promised to introduce a resolution of disapproval that will put every senator on the record on this global warming power grab. Because the resolution is privileged under the Congressional Review Act, Harry Reid cannot prevent it from coming to the floor and it cannot be filibustered.

Whatever the result of that Senate vote is, it will ultimately be up to the American people to hold Congress and the president accountable for the actions taken by rogue EPA bureaucrats this week.

Nothing less than America's economic future is at stake.

Phil Kerpen is vice president for policy at Americans for Prosperity and the author of “Democracy Denied: How Obama is Ignoring You and Bypassing Congress to Radically Transform America - and How to Stop Him."

This article originally appeared March 29, 2012, on FoxNews.com.

Why Regulations Aren't Good -- Again

Wed, 21 Mar 2012 04:00:00 GMT

by Wayne Crews
Forbes.com

The first week of Spring is also “hooray, regulation” week at the White House.
Regulatory policy chief Cass Sunstein, one of the most accomplished and cited legal scholars of all time, has been busy. He penned a Chicago Tribune oped called “Why Regulations are Good — Again“; issued guidance to Federal agencies on “Cumulative Effects of Regulations; appeared on an hour-long Politico breakfast-time panel with Mike Allen, and testified as lead witness in a House Judiciary Committee hearing on regulatory policy.

An explicit cumulative or redundancy burden assessment of regulation is welcome. We do, as Sunstein argues “need to ensure that regulations are based not on intuitions and anecdotes, but on careful analysis of the likely consequences.”

Net Benefits?

Sunstein invoked Reagan on “maximizing net benefits” (benefits minus costs). But twice in the Tribune oped, Sunstein’s phrasing noted that regulatory benefits must “justify costs.” That’s different from exceed, and derives from former president Clinton’s Executive Order 12866.

It was President Reagan’s prior Executive Order 12291 that emphasized strict OMB-overseen net benefits, while the newer order returned rulemaking primacy to the agencies and reduced OMB’s oversight authority.

Still, the over-emphasis on potentially self-serving, agency-assessed net benefits rather than costs underscores yet again the reality that improving regulatory outcomes (minimal costs, maximum benefits) fundamentally requires Congress to answer for rule impacts via expedited approval of “economically significant” or “major” ($100-million-plus) rulemakings, such as the REINS Act.

As I noted yesterday upon learning of Sunstein’s directive, there’s a clash of visions that undermines the net-benefit premise:

What would actual net-beneficial cybersecurity regulation entail? A sweeping liberalization of infrastructure industries that’s not even on the table; What would net-beneficial Internet access “regulation” have been? It would have banned net neutrality rather than mandate it; What might a Transportation Safety Administration have done to secure air travel? Perhaps use biometric identification on pilots rather than grope the public at large; What would expanded health access have entailed? Increasing market supply of services, relaxed licensing, and a spanking for the FDA’s drug delays; What will net-beneficial privacy regulation entail? Ensuring that privacy and anonymity remain competitive, not dictated, features; What does sound environmental “regulation” require? Bringing environmental amenities into the wealth-enhancing voluntary sector rather than government mis-management of contrived scarcity.

Agencies should focus on minimizing costs within some defensible “regulatory budget” constraint bounded by potential benefits, as determined by Congress within the scope of the Entire Regulatory Enterprise, not just an agency alone.

I can write a rule requiring NASCAR-style safety features in automobiles and make benefits “justify” costs. I can show the benefits of requiring elevators in multi-story homes.

Also, entire classes of costs are ignored by agencies’ focus on isolated rules’ net benefits, such as job impacts of rules at large, the damage of restricting access to energy, and antitrust regulatory adventurism. Sunstein pointed to “lives saved” from fuel economy standards; but statistical lives lost by automobile downsizing doesn’t rate as a cost.

Such omissions are why claims like this one are dubious: “Over the Obama administration’s first three years, the net benefits of regulations reviewed by OIRA and issued by executive agencies exceeded $91 billion — 25 times the corresponding number in the Bush administration and more than eight times the corresponding number in the Clinton administration.”

The actual number of rules reviewed is a few hundred out of thousands, and note the use of the phrase “executive agencies.” Independent agencies like the Federal Trade Commission, the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Federal Communications commission don’t get reviewed. Sunstein’s figures also include only rules for which both costs and benefits were available, further narrowing the universe of clarity. OMB’s annual Report to Congress on the Benefits and Costs of Federal Regulations presents quantitative data on at most a few dozen rules.

Costs:

Costs rarely get the measurement they need, so making sweeping net-benefit assessments has always been somewhat illusory anyway; of 4,128 completed, active and long-term rules in the recent Unified Agenda pipeline, 212 were “economically significant” and theoretically subject to analysis, and 418 were subject to small-business Regulatory Impact Analyses of varying quality.

Yet Sunstein claimed, “In the last 10 fiscal years, the highest costs were imposed in 2007. The last three years of the Bush administration saw higher regulatory costs than the first three years of the Obama administration.”

I agree that President Bush was happy to regulate. But the high costs of 2007 primarily were due to a Clean Air particulate matter rule that this administration surely favors. In any event, according to the OMB data I compiled in this chart, Obama’s first two years alone cost more than Bush’s first four years. Again, these comparisons are only the few rules for which both benefits and costs exist, omit independent agency rules, and cannot serve as the basis for claims made in the Tribune oped. The truth is nobody knows anything about the overall benefits and costs of the regulatory enterprise.

Cost estimates also require, but do not, account for how regulation undermines emergence of superior non-governmental institutions and disciplines (insurance, liability) that serve the public better. If the market is muscled out, that is a cost and a dilution of real regulatory discipline.

Counts:

Sunstein claimed “there has been a decrease, not an increase, in federal rulemaking during this administration. During the first three years of the Obama administration, the number of final rules reviewed by OIRA and issued by executive agencies was actually lower than during the first three years of the Bush administration.” President Obama made this same claim during the State of the Union Address.

As for total rules finalized during their first three years, including independent agencies, Obama did indeed finalize fewer by my count (see Historical Tables: Part B here in Ten Thousand Commandments)— an average of 3,603 yearly (2009-11) compared with Bush’s 4,196 three-year (2001-03) average.

On the other hand, Bush started from Clinton-era heights of an average of 4,671 during that president’s eight years, and Bush reduced that to 3,830 during 2008. His overall trend was down in that regard — but Obama’s trend is up — from 3,503 in 2009 to 3,807 in 2011.

Also, Obama had the most rules during his first three years when it comes to “economically significant” rules in the Unified Agenda Pipeline: Bush had fewer: 149, 136 and 127 compared to Obama’s 184, 224 and 212.

Obama’s economically significant rules in the “active” and “completed” categories shown here are significantly above Bush’s. As for the “Long-term” rules of both presidents, they are about the same; but guess what? Sunstein told agencies on March 12: ”In recent years, a large number of Unified Agenda entries have been for regulatory actions for which no real activity is expected within the coming year. Many of these entries are listed as ‘Long-Term.’ Please consider terminating the listing of such entries until some action is likely to occur.”

That doesn’t bode well for advance warning to anticipate “cumulative effect of regulation.”

Finally, Obama’s rules impacting small business, those requiring a Regulatory Flexibility Analysis, are becoming more numerous. For Bush’s first three years the counts were 388, 362 and 370. For Obama, 372, 428 and 418.

Sunstein advocated “using low-cost ‘nudges’” to get the government’s bidding done. I prefer to nudge, maybe even shove, the bureaucracies instead. I don’t say any of these measures are perfect; I employ them instead to cite the need for an official regulatory report card on transparency.

Something big has to happen to make this new OMB guidance more tractable.

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(This article originally appeared March 21, 2012 on Forbes.com)

Americans for Limited Government Endorses the REINS Act

Mon, 19 Mar 2012 04:00:00 GMT

On March 16, 2012, the president of Americans for Limited Government (ALG), Bill Wilson, addressed a letter to Congressman Geoff Davis in support of the REINS Act. According to the organization's website, ALG "is a non-partisan, nationwide network committed to advancing free-market reforms, private property rights and core American liberties."

You can read the entirety of the letter below and view the original copy by clicking here.

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March 16, 2012

Representative Geoff Davis
1119 LHOB
Washington, DC 20515

Dear Congressman Davis,

On behalf of Americans for Limited Government (ALG), a leading proponent of small government and liberty, I would like to thank you for introducing the Regulations from the Executive in Need of Scrutiny (REINS) Act.

This legislation is extremely important in maintaining the integrity and efficacy of our system of government. One way that the Constitution protects our freedom is through a system of separation of powers that puts the responsibility for overseeing the executive branch firmly within the purview of the legislative branch. If the executive branch is allowed to make economy-shaping decisions simply by creating regulations that far exceed the law’s intent or scope without review by Congress, our system of government will begin to fall apart.

Passage of this bill would only further the proposed ideals of limited government and protection from autocracy and will allow Americans the freedom and security of knowing that their interests are represented in determining these important decisions on how government will impact their lives.

Congressman Davis, you are to be commended for tackling this fundamental issue and attempting to re- establish the constitutionally mandated separation of powers between the executive and legislative branches of our government. We are pleased to support the REINS Act and will work toward promoting its passage.

Sincerely,

Bill Wilson
President
Americans for Limited Government

Putting the reins on overzealous bureaucrats

Tue, 13 Mar 2012 04:00:00 GMT

A fundamental principle of our system of government is that the power ultimately rests with the people. Most of the time, “people” refers to the American citizenry as a whole—the voters who speak with their ballots. But when it comes to regulations, it seems the people with the power are members of a much smaller group. They are bureaucrats we will never know, never see, and never be able to vote for or against in any election. So, who really has the reins in that scenario?

The REINS Act (Regulations from the Executive In Need of Scrutiny), sponsored by Rep. Geoff Davis (R-KY), is legislation that attempts to hand the reins back to the American people. With more than 200 cosponsors (including Representatives Sullivan, Boren, Cole, and Lankford from Oklahoma), it has passed the U.S. House of Representatives. Companion legislation in the U.S. Senate has more than 30 cosponsors (including Senators Inhofe and Coburn).

REINS would require any federal regulation with a cumulative economic impact of $100 million or more to be approved by a vote of both the House and Senate and to obtain the signature of the president.

Congress currently has the power to override proposed regulations, but their override must also signed by the president, and presidents are unlikely to override their own administrations’ regulations. The current system places the power with the regulatory agencies. REINS would shift the burden to the agencies to prove a regulation’s worth or necessity before it can be enacted.

What would this change mean for Oklahoma’s economy, specifically the energy industry?

The Environmental Protection Agency (EPA) recently issued a draft report that claims a connection between “fracking” (a drilling method that involves hydraulic fracturing) and contaminated drinking water in Wyoming. The Wall Street Journal points out that the EPA report fails to mention contaminants have been found in those water wells for decades and that the chemicals found are not even used in oil and gas production. In fact, the chemicals found are actually common fire retardants used in plastics and drinking well components.

Hydraulic fracturing is being employed by many of Oklahoma’s energy leaders, and it is increasing productivity, creating jobs, and increasing America’s energy security. Yet the EPA seems determined to find a way to regulate the practice heavily, even if it must do so by redefining what constitutes diesel, a chemical sometimes used in the process. Senator Jim Inhofe (R-OK) recently joined with a bipartisan group of legislators to ask the EPA to proceed carefully and openly in an effort to keep the agency from acting without first considering all the repercussions.

Remember that under the current system, agencies like the EPA have the power to pass regulations as they see fit, and Congress can only stop them with a majority vote in both houses and the signature of the president. The drinking water supply must certainly be protected, but we must also avoid unnecessarily shackling our nation’s producers and putting our economy and security at risk.

These are just a few of the examples of the mandates and regulations costing Oklahoma companies millions of dollars each year. The REINS Act would at least allow the people to have a voice in the process.

Opponents of the REINS Act say the measure fails to stimulate the economy and that it does nothing to address low demand facing many of our businesses. This highlights a critically important fact: REINS does not improve demand because it cannot and should not. The free market is what should determine demand. Free enterprise is a nonpartisan, fundamental American principle that ensures freedom and creates competition. The result is that our entrepreneurs and business owners are then free to pursue the best practices. The point of legislation like REINS is to get government out of the way and let the market work the way it is supposed to work.

Opponents also say REINS will seriously hinder the policymaking process, which includes needed safeguards. They say Congress is “seizing” power and disrupting the regulatory process—that our children would no longer be safe from harmful toys, that our air would no longer be breathable, and that it would create unnecessary confusion.

The reality is that Congress is not seizing power but merely exercising power it already has. The U.S. Constitution grants Congress (not some federal agency) the authority to regulate commerce. The founders knew it was important to keep the power in the hands of the people, and this bill represents a move back to their original intent and away from the system favored by the Washington bureaucrats who have been seizing power over the last few decades.

The truth is that necessary regulations would be just as likely to pass under this plan. The only change would be in certain cases where a proposed regulation’s economic impact is high enough (over $100 million), and in those cases an agency would have to get approval from elected officials before they can act. Those elected officials would then have to face the voters on Election Day. Whether those officials approve costly, unnecessary rules that strangle our economy or whether they fail to approve needed oversight that provides for the health and safety of our citizens, the people should have a say in the outcome.

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(This article first appeared on the Oklahoma Council of Public Affairs blog "InterAlia" on March 9, 2012.)

How REINS Would Improve Environmental Protection

Mon, 12 Mar 2012 04:00:00 GMT

(David Schoenbrod, a former attorney for the Natural Resources Defense Council (NRDC) and currently a law professor at New York Law School, wrote the following in the Duke Environmental Law & Policy Forum.)

"REINS would shift final authority on regulations from the offices of agencies to the floor of Congress where legislators would have to stand up and be counted in plain view of their constituents.

…

"REINS would also improve environmental regulation by giving legislators, at long last, a personal stake in updating their obsolete environmental statutes. The basic structure of most key environmental statutes dates back thirty or forty years. Experience has shown that the statutes force the EPA to regulate in ways that are often ineffective and inefficient. The inefficacy and inefficiency forced by obsolete statutes are a problem for the environment and the economy, but not for the legislators who can now blame the shortcomings on the EPA and other agencies. The upshot is a logjam in updating our obsolete environmental laws."

Read more ...

Over-regulated America

Sat, 18 Feb 2012 05:00:00 GMT

From the Economist

Feb 18th 2012 | from the print edition

AMERICANS love to laugh at ridiculous regulations. A Florida law requires vending-machine labels to urge the public to file a report if the label is not there. The Federal Railroad Administration insists that all trains must be painted with an “F” at the front, so you can tell which end is which. Bureaucratic busybodies in Bethesda, Maryland, have shut down children’s lemonade stands because the enterprising young moppets did not have trading licences. The list goes hilariously on.

But red tape in America is no laughing matter. The problem is not the rules that are self-evidently absurd. It is the ones that sound reasonable on their own but impose a huge burden collectively. America is meant to be the home of laissez-faire. Unlike Europeans, whose lives have long been circumscribed by meddling governments and diktats from Brussels, Americans are supposed to be free to choose, for better or for worse. Yet for some time America has been straying from this ideal.

Consider the Dodd-Frank law of 2010. Its aim was noble: to prevent another financial crisis. Its strategy was sensible, too: improve transparency, stop banks from taking excessive risks, prevent abusive financial practices and end “too big to fail” by authorising regulators to seize any big, tottering financial firm and wind it down. This newspaper supported these goals at the time, and we still do. But Dodd-Frank is far too complex, and becoming more so. At 848 pages, it is 23 times longer than Glass-Steagall, the reform that followed the Wall Street crash of 1929. Worse, every other page demands that regulators fill in further detail. Some of these clarifications are hundreds of pages long. Just one bit, the “Volcker rule”, which aims to curb risky proprietary trading by banks, includes 383 questions that break down into 1,420 subquestions.

Hardly anyone has actually read Dodd-Frank, besides the Chinese government and our correspondent in New York (see article). Those who have struggle to make sense of it, not least because so much detail has yet to be filled in: of the 400 rules it mandates, only 93 have been finalised. So financial firms in America must prepare to comply with a law that is partly unintelligible and partly unknowable.

Flaming water-skis

Dodd-Frank is part of a wider trend. Governments of both parties keep adding stacks of rules, few of which are ever rescinded. Republicans write rules to thwart terrorists, which make flying in America an ordeal and prompt legions of brainy migrants to move to Canada instead. Democrats write rules to expand the welfare state. Barack Obama’s health-care reform of 2010 had many virtues, especially its attempt to make health insurance universal. But it does little to reduce the system’s staggering and increasing complexity. Every hour spent treating a patient in America creates at least 30 minutes of paperwork, and often a whole hour. Next year the number of federally mandated categories of illness and injury for which hospitals may claim reimbursement will rise from 18,000 to 140,000. There are nine codes relating to injuries caused by parrots, and three relating to burns from flaming water-skis.

Two forces make American laws too complex. One is hubris. Many lawmakers seem to believe that they can lay down rules to govern every eventuality. Examples range from the merely annoying (eg, a proposed code for nurseries in Colorado that specifies how many crayons each box must contain) to the delusional (eg, the conceit of Dodd-Frank that you can anticipate and ban every nasty trick financiers will dream up in the future). Far from preventing abuses, complexity creates loopholes that the shrewd can abuse with impunity.

The other force that makes American laws complex is lobbying. The government’s drive to micromanage so many activities creates a huge incentive for interest groups to push for special favours. When a bill is hundreds of pages long, it is not hard for congressmen to slip in clauses that benefit their chums and campaign donors. The health-care bill included tons of favours for the pushy. Congress’s last, failed attempt to regulate greenhouse gases was even worse.

Complexity costs money. Sarbanes-Oxley, a law aimed at preventing Enron-style frauds, has made it so difficult to list shares on an American stockmarket that firms increasingly look elsewhere or stay private. America’s share of initial public offerings fell from 67% in 2002 (when Sarbox passed) to 16% last year, despite some benign tweaks to the law. A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee. It’s a wonder the jobless rate isn’t even higher than it is.

A plea for simplicity

Democrats pay lip service to the need to slim the rulebook—Mr Obama’s regulations tsar is supposed to ensure that new rules are cost-effective. But the administration has a bias towards overstating benefits and underestimating costs (see article). Republicans bluster that they will repeal Obamacare and Dodd-Frank and abolish whole government agencies, but give only a sketchy idea of what should replace them.

America needs a smarter approach to regulation. First, all important rules should be subjected to cost-benefit analysis by an independent watchdog. The results should be made public before the rule is enacted. All big regulations should also come with sunset clauses, so that they expire after, say, ten years unless Congress explicitly re-authorises them.

More important, rules need to be much simpler. When regulators try to write an all-purpose instruction manual, the truly important dos and don’ts are lost in an ocean of verbiage. Far better to lay down broad goals and prescribe only what is strictly necessary to achieve them. Legislators should pass simple rules, and leave regulators to enforce them.

Would this hand too much power to unelected bureaucrats? Not if they are made more accountable. Unreasonable judgments should be subject to swift appeal. Regulators who make bad decisions should be easily sackable. None of this will resolve the inevitable difficulties of regulating a complex modern society. But it would mitigate a real danger: that regulation may crush the life out of America’s economy.

http://www.economist.com/node/21547789?fsrc=scn/tw/te/ar/overregulatedamerica