by Clyde Wayne Crews
April 9, 2008

This election year, where do we go to vote for less government?

Apparently nowhere. Yet the massive regulatory nanny state that the United Statesshould be a campaign issue. Even as the federal budget scales new heights—Bush’s budget is $3.1-trillion bonanza of entitlements, social, and defense spending—regulations mount alongside.

Economic, social, and environmental regulations now top $1 trillion, according to the Small Business Administration, more than the entire federal budget was back in the 1980s under Reagan.

During months of presidential debates, all questions were about what this or that candidate would do to expand government. Politicians are rarely asked, “What are you doing to roll back the influence of Washington, D.C.?”

Both political parties so exemplify big government that one might be forgiven for barely noticing if they merged. Each party essentially agrees with the other’s platform: Economic conservatives want to regulate the economy; social liberals want to regulate speech and content and personal behavior.

Net neutrality, Sarbanes-Oxley, a higher minimum wage, massive new energy mandates and subsidies, calls for new financial market regulation, political speech regulation, new regulatory incursions into privacy and “critical infrastructure” on “national security” grounds, gargantuan expansions of Medicare—all have garnered generous bipartisan approval in recent years and are by no means exhaustive. The occasional surfacing of Ron Paul’s libertarian army was often the only giveaway that some people actually thought limits should apply to government power.

Indeed, the largest government that has ever existed on planet Earth was recently “stimulated” into something even bigger. But with a jumpy stock market, housing and credit markets faltering, a nervous central bank—and given the increased globalization of markets besides—we can’t afford the ball-and-chain of overregulation.

Economic liberalization, otherwise known as regulatory reform, becomes most salient when downturns occur. That time has come. We can cross our fingers and hope markets rebound, but better be ready. Think of this as a Memo to Candidates of all stripes. Presidential politics is upon us—yet economic liberalization awaits a champion.

The recent $145 billion stimulus package pitifully failed to address the reality that America’s nervous wealth-creating sector—small and large businesses alike—needs assurances that risk-taking will be rewarded.

Deregulatory Stimulus

A Deregulatory Stimulus legislative package would create a more favorable environment for enterprise and wealth creation. A good starting point is repudiating the slate of crippling energy regulations enacted and being proposed this election year.

The nation needs a sweeping regulatory reform program to: (1) freeze new non-essential rules (agencies issue over 3,000 each year); (2) thoroughly review and critique the regulatory state as a whole and implement an immediate package of cuts; and (3) institute a permanent process of ongoing rule reviews, purges, and automatic sunsetting of rules.

Regulatory costs can never be as transparent as taxes, but we should try to make their costs as clear as possible, and keep the regulators in check with tools like these.

End “regulation without representation”

Making Congress accountable for regulatory costs is key. We don’t get to vote for agency bureaucrats.

Congress can reject agency regulations before they become effective, but is loath to use this power. Primacy over bureaucrats needs reaffirmation. No costly regulation should become binding unless approved by Congress and signed by the president—just like normal laws. A perfect example is the looming threat of EPA declaring CO2 as “endangering public health and safety,” which will potentially subject every installation bigger than a Burger King to sweeping new air quality regulations.

A Regulation Budget

The unfunded mandates law of 1995, passed when the nation’s governors finally tired of Washington’s priorities carrying the day, is a distant memory. A version of that law directed at creating enforceable caps on costs of private sector regulation should be explored, along with implementing policies like allowing cost offsets between agencies. Agencies would need congressional approval to breach the cap.

Regulatory Reduction Commission

Even tough sunsetting, accountability, and budgeting for every new rule will take years to make much headway against a $1 trillion regulatory superstate. Congress should implement and maintain a Rule Purging Commission. Like the successful Military Base Closure and Realignment Commission, annual hearings and assembly of an across-the-board package of cuts, voted on without amendment, makes a tough job easier yet harder to shirk.

Wealth transfer schemes like the recent stimulus package are loud and showy, but real economic liberalization is the key to real stimulus. We cannot afford not to do it. To stimulate, deregulate.

Wayne Crews is vice president for policy at the Competitive Enterprise Institute. He is author of the report Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State and the recent report Still Stimulating Like It’s 1999: Time to End Bipartisan Collusion on Economic Stimulus Packages.