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Regulatory Budget Check

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Regulatory Budget Check

However controversial the $1.7 trillion federal budget may be, taxpayers know what Washington officially spends in the congressionally approved budget. That places some measure of voter accountability on Congress for the level of taxation. But the money the public spends on Washington’s environmental, safety and economic regulations appears nowhere in any official budget.

Regulations are flourishing: Federal agencies, which publish their regulations in the Federal Register, don’t mind the free rein. In 1999, the Register contained 71,161 pages, the highest count since the Carter presidency, and a four percent increase over 1998. Within those pages, agencies issued 4,684 final rules in 1999.

Having issued over 40,000 rules during the 1990s, the 60-plus federal departments, agencies, and commissions are now at work on 4,538 more this year. Among them, 137 will have economic impacts of at least $100 million.

The Department of Transportation and the Environmental Protection Agency, with 539 and 456 rules respectively, lead the pack for most new rules under consideration. The five most active agencies alone account for 46 percent of all rules under consideration. Of the 4,538 rules under consideration, 963 are expected to affect small businesses, a 35 percent increase over five years ago.

What does accumulated regulation cost? The Rochester Institute of Technology’s Thomas Hopkins has projected overall regulatory compliance costs at about $758 billion for 1999 (that figure is adjusted by the change in CPI from 1995 to 1998). For perspective, that’s 44 percent of the level of federal spending of $1.7 trillion, eight percent of US GDP, greater than all US corporate pretax profits ($718 billion in 1998), and higher than Canada’s 1997 gross national product of $595 billion. Bringing it home, the Tax Foundation calculated the median two-earner family of four’s after-tax income to be $41,846 in 1998. The household regulatory burden as estimated by Hopkins breaks out to about $7,400. If one thinks of regulatory costs as being embedded within a family’s after-tax budget, regulations take an 18 percent bite.

Accountability must be brought to this off-budget regulatory activity, but relying solely on regulatory reforms that compel unelected agency personnel to police themselves won’t be enough. Policing the regulatory state requires (a) greater official disclosure of regulatory costs and trends by agency, and (b) holding Congress directly accountable for the good and bad that agency rules inflict.

Make regulation more transparent by publishing scorecards in the federal budget: Regulations must be made as transparent as possible, but elegant cost-benefit data aren’t necessary to get started. Today, interested citizens must comb through such publications as the Unified Agenda of Federal Regulations’ 1,000-plus pages of small, multi-column print to accumulate information on major rules (those expected to impose costs of $100 million on the public) and minor rules being considered by agencies, and rules impacting small business. Needed and easily accomplished would be the publication of a summary of already available but scattered current and historical data in a Regulatory Report Card.

Two new proposals in Congress take important steps toward greater regulatory disclosure: The Regulatory Right-to-Know Act would require annual reporting on regulatory costs and benefits, and the Mandates Information Act would require Congress to acknowledge its intent to impose legislation costing over $100 million when any member raises a point of order. Presenting the components of the Report Card each year in the Federal Budget would enhance these efforts by making it harder for legislators and regulators to hide what they are up to. For example, if cost-benefit analyses have not been performed for a rule, that in itself is important information that will be disclosed in a Report Card, helping reveal exactly what we do and do not know about regulation’s impact. That will aid cross-agency comparisons of effectiveness, thereby enhancing public accountability. Trends in reported data would prove vital to scholars, third-party researchers and to Congress itself.

Hold Congress to a standard of "No Regulation without Representation!" A Regulatory Report Card could quickly reveal that Congress itself, rather than agencies, is the prime mover behind regulatory growth. The next step is to make Congress directly answerable to the voters for the costs and burdens agencies impose on the public. Far more than any scheme to merely require agency-driven cost-benefit analysis, this reform points the way toward responsibility in regulation. Agencies will always face overwhelming incentives to expand their turf.

Rep. JD Hayworth (R-AZ) and Sen. Sam Brownback (R-KS), in their Congressional Responsibility Act, have recognized that Congress simply delegates too much lawmaking power to unelected agencies in the first place. By requiring that agencies’ final rules be approved by Congress and signed by the President before they are binding on the public, Hayworth and Brownback don’t squander effort blaming agencies for emphasizing the very regulating that Congress appointed them to do in the first place. They point the finger at Congress, refusing to permit our elected representatives to shirk the duty to make the tough calls.

Critics will object that Congress mustn’t be bogged down with approving regulations. Actually, it is the public that mustn’t be bogged down with a regulatory torrent if Congress can’t even take the time to nod at it as it passes by. Congress’s approval responsibilities can be made easier if congressional approval of new regulations is given by voice vote rather than by tabulated roll call, or by voting on several regulations at once. The mechanism doesn’t matter, but the accountability does. Accountability, along with annual disclosure of regulatory trends, points the way to "No regulation without representation."

Wayne Crews (cwcrews@cei.org) is director of competition and regulation policy at CEI, and author of 10,000 Commandments.