- About CEI
- Support CEI
Flat Tax This: Regulations Are the Boot On Hiring's Neck
Flat Tax This: Regulations Are the Boot On Hiring's Neck
October 26, 2011
Originally published in Forbes
It’s almost 2012, and President Obama still wants a half trillion more from you for jobs spendulus. I’m waiting for Rod Serling to explain this one. The president’s own party famously lacks enthusiasm for the effort.
The roots of today’s economic troubles are hinted at in a new Gallup Poll of small business owners, which finds compliance with government regulations tops their “problem list.”
Bigger businesses say the same. No one’s forgotten that Vegas resorts mogul Steve Wynn called Washington “the greatest wet blanket to business, and progress and job creation in my lifetime”; or that Bernie Marcus claims he could not have built Home Depot in the regulatory environment of today.
Consumer Electronics Association President Gary Shapiro this month called today’s White House the “most anti-business administration in my lifetime.” Even Apple’s Steve Jobs reportedly gave President Obama an earful on regulation, invoking impediments to manufacturing in the U.S and more.
Continental Energy CEO Harold Hamm, rebuffed by the president when describing the sheer torrent of domestic energy available and accessible, told the Wall Street Journal that Washington keeps “a regulatory boot at our necks and then turns around and asks: ‘Why aren’t you creating more jobs.’”
Everyone’s talking about spending and flat taxes; but for healthy recovery, the hidden tax of regulation needs flattening too.
But the sky is a different color above Pennsylvania Avenue, and this week’s southern auroras can’t explain it. While Obama seeks more money, Assistant Secretary for Economic Policy Dr. Jan Eberly officially blogged that no evidence supports the idea that uncertainty over regulation hinders job growth. Business leaders like the above don’t count as evidence, you see.
And Cass Sunstein, the Office of Information and Regulatory Affairs chief tasked with taming regulation (otherwise why have the office), calls the frequently cited regulatory cost figure of over $1.5 trillion an “urban legend.” Future analysis is likely to find that’s a healthy underestimate; Sarbanes-Oxley financial regulations alone can probably get you close to that figure.
Even the Office of Management and Budget notes that government paperwork consumes 8.8 billion hours. If you assume $40 an hour (good luck paying only that), you’re talking over $350 billion in paper-shuffling costs alone, let alone compliance.
It seems otherworldly to stick to “regulations-aren’t-a-problem” story when the Federal Register has just hit a record 66,599 pages.
While the 3,500 regulations annually erupting from federal agencies may not concern the White House much, they suddenly matter to others.
So many regulatory reform and relief bills are in play in Congress now that it’s difficult to keep them straight. But the profusion exemplifies what my dad always called a “good problem.”
Uniting the new proposals are appeals to liberalization, the theme of job creation and “flattening” the regulatory state’s hidden tax on competitive enterprise. They’re also united by an implied sentiment that a politician’s job is not merely to come to Washington to get things done, but to carry out the far tougher job of getting things undone. Spending other people’s resources Obama-style is the easiest thing in the world to do, but not honestly generous, nor particularly admirable when you stop and think about it.
Anyway, take that, Civics 101.
The House “Plan for America’s Job Creators” contains an extensive plank of budgetary and regulatory reforms.
Meanwhile, the Senate’s Jobs Through Growth Act (from John McCain (R-AZ), Rand Paul (R-KY) and Rob Portman (R-OH)) solved the proliferation issue by compiling an array of economic liberalization proposals, 15 by my count. It gives numerous members credit on efforts like moratoria and freezes; codifying the past two decades worth of actually-pretty-good-but-unenforcable executive orders requiring cost-benefit analysis; enhanced flexibility for small businesses; paperwork reduction; and boosted unfunded mandates relief, which Rep. Virginia Foxx (R- NC) has long sought.
The package also includes the REINS Act (Regulations from the Executive in Need of Scrutiny) that would resurrect our exiled Constitution when it comes to lawmaking—by saying only Congress should do it when rules are particularly costly. (CEI’s president Fred L. Smith Jr. always likes to say, “The Constitution isn’t perfect, but it’s better than what we have now!”)
Separately on tap is Rep. Lamar Smith’s (R-TX) and others’ Regulatory Accountability Act, which would reform some of the ways regulations are created and sued over. It’s a big deal. Sen. Mark Warner’s (D-VA) “one-in, one out” for regulations also needs frontal placement.
With apologies to Newton, for most spending initiatives like Obama’s latest jobs plan, there’s a more-than-equal and opposite liberalization action capable of doing more good. For example, instead of an infrastructure bank, prohibit net neutrality in telecommunications and liberalize the nation’s hyper-regulated power grids (for starters); Instead of “venture socialism” in energy projects like Solyndra, permit the energy projects investors actually desire to undertake. And so on.
Anti-free enterprise regulatory policy undermines national economic resurgence. The urgency of regulatory relief simply hasn’t registered at the level of the presidency, where Cabinet staff think regulations create jobs and deny their costs altogether.
Republican presidential candidates these days emphasize versions of a flat tax. Fine; but the pertinent question now is will any president make a vision of personal liberty and limited government comprehensive? If not, the federal bureaucracy’s insatiable regulatory agenda, as well as the political predation and crony capitalism that it inspires, will weigh us down for good.