The Burden of Federal Rules: Our Other Trillion Dollar Debt

The Burden of Federal Rules: Our Other Trillion Dollar Debt

February 07, 2012
Originally published in Investor's Business Daily

During the State of the Union address, President Barack Obama ridiculed regulations like one designating spilled milk an "oil," and exclaimed, "In fact, I've approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his."

Well, we'll get to that; but with regulations purported to cost well in excess of a trillion dollars, and with the Congressional Budget Office's brand-new 2012 deficit projection of $1.1 trillion, recognizing the virtue of restraint is a good thing.

With Obama's delayed 2013 spending budget likely to approach $4 trillion in outlays, it seems apparent that for both spending and regulation, politicians do need to take the federal government's rocks off the lawn of enterprise and job creation.

As evidence of the centrality of regulation, Congress passed and the president signed 217 bills in 2010, and "just" 81 by my count in 2011; but meanwhile, agencies finalized 3,780 rules of varying impact and consequence in 2011 alone. They do the bulk of the lawmaking now, it would seem.

So let's compare the past two presidents' first three years, as the president invited. I do this without chauvinism as a libertarian who also criticized Bush rulemaking, particularly his all-time record Federal Register of 79,435 pages upon leaving office in 2008.

Said Federal Register just ended 2011 at a record-high 82,351; that'll come down a tad bit due to corrections, but it compares unfavorably to Bush, State of the Union notwithstanding.

But as for total rules finalized during their first three years, Obama did indeed finalize fewer — 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 did manage to reduce annual totals to 3,830 during 2008. His overall trend was a downward slope in that sense — but Obama's trend is from 3,467 in 2009 to 3,780 in 2011 — that's not downward.

Regardless, more important may be the component of rules officially designated as "economically significant," which generally means $100 million-plus in annual economic impact. These get reported in the annual Unified Agenda, the year-end 2011 edition of which just appeared.

Here, Bush's rules are far lower than Obama's in the "completed" and "active" (pre-rule-, proposed- and final-stage regulations) categories. (See the accompanying chart.)

These rules are the ones that get the attention, like costly Environmental Protection Agency and Department of Transportation mandates.

On a lighter note, one may observe that both gentlemen's numbers of "long-term," wish-list regulations are similar. There's always time to "just say no" to more regulating.

How to deal with thousands of annual rules? Since Congress can't cut spending, it at least ought to liberalize, and avoid regulating frontier sectors like Internet, biotech, nanotech, and modern manufacturing and energy.

The low-hanging-fruit solution is annual "regulatory report card"-style disclosure of regulatory facts and figures, which should accompany the federal budget every year without fail. A bipartisan "regulatory reduction commission" to root out what's unneeded or counterproductive is also important.

Legislation to require Congress to approve costly or controversial agency rules before they bind anybody is also needed. The House did pass the Regulations from the Executive in Need of Scrutiny Act (Reins Act) to do this, in late 2011; now, the Senate should do so.

Whomever is the next president needs to control the American "regulatory budget" at least as well as the fiscal one. Sadly, that's a low hurdle, upon a mere moment's reflection.