Obama Budget Fails On Regulatory Reform

Obama Budget Fails On Regulatory Reform

CEI Experts Comment on Obama Budget
February 14, 2011

Washington, D.C., February 14, 2011 — President Barack Obama has submitted a $3.73 trillion spending budget blueprint for fiscal 2012, blowing well past President George Bush’s first-ever $3 trillion budget. It’s a plan that spends too much and undermines the President’s recently stated goal of pulling back this country’s huge regulatory burden. In fact, the budgets of some regulatory agencies are actually getting bumped up, at a time when many average Americans certainly aren’t enjoying a personal budget increase. CEI experts offered comments on the budget:

Statement by Wayne Crews, CEI Vice President for Policy

Obama forgot the “Regulatory Budget” today. President Barack Obama’s federal budget for fiscal year (FY) 2012 proposes $3.73 trillion in discretionary, entitlement, and interest spending and a deficit of $1.65 trillion. For reference, George W. Bush had proposed the first-ever $3 trillion U.S. budget. In fact, President Bush was also the first to propose a $2 trillion federal budget — in 2002, only nine years ago. To be sure, many other countries’ governments consume more of their national output than the U.S. government does. However, in absolute terms, the U.S. government is the largest on planet Earth, whether one looks at revenues or expenditures or deficit spending. This record spending is increasing pressure to regulate instead; and sure enough, the costs of regulatory compliance, according to the Small Business Administration, now exceed $1.7 trillion — almost the level of the entire federal budget of just over a decade ago. Note that the cost of regulation now is equivalent to the deficit, and nearly half today’s level of federal spending. The ensuing fight between Democrats and Republicans over spending had best not leave out this looming threat. >> See also, Feb. 13 letter from House Speaker John Boehner to President Obama, also signed by a coalition of economists, on out-of-control federal spending.

Statement by Iain Murray, Director of CEI’s Center for Economic Freedom

The President is pulling a fast one on the public when he claims he is cutting his budget. Most of the so-called cuts are from last year’s projected budget for 2012, but still represent an increase in spending. Take the Commerce Department, for instance. Once you discount the once-a-decade Census, the Department’s discretionary budget actually increases by a billion dollars, compared with the advertised $5 billion decrease. Similarly, the State Department budget decreases compared with the projected budget from last year, but increases compared with the actual spend in 2010. What we see in this budget is a government where spending is out of control, rather than a responsible government cutting back to stay within its means. The President claims to be sponsoring innovation in this budget, yet he ignores research from the OECD among other bodies that suggests that government spending on innovation simply crowds out private investment. When the UK cut academic funding for basic science in the 1980s, industrial and charitable support for basic science doubled. The Federal government should not be in the game of picking winners and losers in technology. We would still have the Internet without DARPA and we would still have Velcro without the space program.

Statement by John Berlau, Director of CEI’s Center for Investors and Entrepreneurs

The whopping budget increase for the Securities and Exchange Commission is totally unjustified. The SEC is already diverting resources away from it core mission of fighting investor fraud into frivolous issues like "proxy access," in which it inserts itself in the middle of corporate director elections -- which are governed effectively by the states -- on behalf of special interests such as union pension funds. Before appropriating any increase, Congress should scrutinize not just the cost of running the SEC, but the costs and effectiveness of its rules on investors and entrepreneurs.

Statement by Ivan Osorio, CEI Labor Policy Expert

President Barack Obama presented his new budget as a signal that his administration is getting serious about bringing down the federal government’s gaping budget deficit. One way to close a budget gap is by increasing government revenues without raising taxes. The way to accomplish that is to allow businesses and entrepreneurs to grow and thereby increase the tax base. Unfortunately, the actions of several of his appointees at various regulatory agencies point in the opposite direction. Particularly troubling are efforts by the National Labor Relations Board (NLRB) and National Mediation Board (NMB) to impose unionization through regulation on employers, by changing longstanding regulations to favor unionization. Such efforts would not only circumvent Congress’ lawmaking authority, it would place a drag on the nation’s still-struggling economy by burdening employers with higher labor costs – further discouraging investment and its resulting economic growth.

Statement by Ryan Young, Fellow in Regulatory Studies

$400 billion of President Obama’s proposed budget cuts would come from freezing non-security discretionary spending, which means it would stay the same. A cut is when spending goes down. While this proposal is better than nothing, at least a third of it is based on false advertising.

Statement by Marc Scribner, Land-use and Transportation Policy Analyst at CEI’s Center for Economic Freedom

President Obama’s proposed FY 2012 budget includes $30 billion over six years to finance a National Infrastructure Bank (I-Bank). The current I-Bank proposal is essentially the same as the ones previously offered by President Obama and Congress in years past. It shuns the user-pays-user-benefits principle that has long guided the Highway Trust Fund in favor of a system that relies on more general revenue support in the form of grants, loan guarantees, bonds, and tax credits. This is exactly the opposite approach that should be taken if the administration is truly committed to efficient transportation infrastructure deployment and management. The administration should seek real reform by proposing the elimination of the Highway Trust Fund’s absurd Mass Transit Account, which robs Peter the driver to pay for Paul’s train ticket; and greatly expanding existing innovative programs such as the Federal Highway Administration’s SEP-15 program, which would allow for more private sector investment opportunities in our nation’s surface transportation infrastructure. It is time for the Obama administration to get serious about enhancing American mobility, rather than supporting wasteful ideology-driven ‘green technology’ and high-speed passenger rail boondoggles. They must recognize that their current missteps will condemn future generations to greater times stuck in traffic and increasing costs of travel, which will harm the economy, environment, and overall quality of life.