In an effort to protect citizens from fraud and danger, the federal government imposes an enormous number of regulations that affect everything from the purity of the water we drink to how much of the radio spectrum is allocated for broadcast licenses.
In theory, the public health and welfare benefits from federal regulations should outweigh the associated costs. Indeed, for nearly 30 years, proposed federal regulations have included cost-benefit analysis as a part of review and implementation.
But anyone who has wrestled with the red tape of complying with a federal regulation has to wonder if the concern addressed by an aging regulation is still a problem, or whether there might simply be a better way to accomplish the same goal.
Thankfully, President Barack Obama has had the same concerns, and last January the White House ordered a government-wide review of existing federal regulations with an eye toward eliminating obsolescent regulations an removing red tape.
Yesterday the White House announced results from this review. According to former Harvard law professor Cass Sunstein, who now advises President Barack Obama on regulatory policy, it is yielding hundreds of proposals to reduce costs, eliminate redundancy and simplify processes.
Sunstein reports that initiatives at the Environmental Protection Agency, the Department of Labor and the Department of Transportation alone will help save $4 billion over the next five years.
This executive branch effort to systematically review existing regulations for their need, effectiveness, flexibility and efficiency is welcome news to affected businesses that often must reallocate resources from production to compliance. So is the stated commitment from the administration to continue this effort.
We are, however, tepid in our optimism about this effort. A report from the Small Business Administration's Office of Advocacy, for example, estimated the total annual cost of regulation at $1.75 trillion. [archive.sba.gov/advo/research/rs371.pdf] If true, savings of a few billion in regulatory costs, while welcome, wouldn't even show as a rounding error in the macro economy of regulatory costs.35 comments on this story
And the regulatory efforts being heralded as improvements, such as electronic filing of reports to the EPA or consolidation and streamlining of some forms at the IRS, strike us as marginal at best, especially considering the gargantuan increase in regulations imposed by this administration through passage of the misnamed Affordable Care Act and the Dodd-Frank financial overhaul.
When asked directly about this regulatory review during her visit to Salt Lake earlier this month, Secretary of Labor Hilda L. Solis couldn't identify a single labor regulation slated for elimination. We didn't sense in Solis any cabinet-level fervor for regulatory reform.
Instead of leaving regulators to regulate themselves, the spur for regulatory review must move to Congress. Congressional oversight committees must take seriously their role under the Government Performance and Results Modernization Act of 2010 to require agencies to undertake a meaningful periodic, retrospective review of regulations. Most importantly, Congress must attach clear budgetary consequences when agencies fail to comply.
The White House has taken one very small step toward regulatory sanity, but, contrary to the rhetoric in the White House's press release, there is no giant leap to celebrate.