President Obama's State of the Union? Hyper-Regulated

President Obama's State of the Union? Hyper-Regulated

January 24, 2012
Originally published in Forbes

The 2012 State of the Union Address ought to address the Mistakes of the Union when it comes to over-regulation of competitive free enterprise.

It also ought to forswear divisive attacks on job creators, like the dig at CEO salaries at the very top of the White House State of the Union page.

Speaking of over-regulation, almost exactly a year ago, President Obama issued an executive order to streamline federal regulations by a fraction of a percent.

Then, the President’s much hyped September jobs speech to a joint congressional session somehow failed to propose reining in the National Labor Relations Board’s dictates over manufacturing plant siting; nor did it stress fast-tracking private energy infrastructure building and access to safe, efficient extraction. Nor did it scale down various Environmental Protection Agency “maximum technology” standards for utilities, cement plants and industrial boilers (like those in hospitals and factories).

The president isn’t likely to propose rollbacks of the Dodd-Frank financial regulations, for which the issuing agencies have missed most deadlines.

Basically, the President cannot be expected to pledge to roll back government in any way whatsoever tonight, a stance that helps account for the state of our union. Even the easy targets like the Federal Communications Commission’s Internet “net neutrality” regulations, opposed in bipartisan fashion and never authorized by Congress, are safe.

At least the administration says it won’t regulate farm dust or something.

The January 24, 2012 State of the Union Address will highlight manufacturing—but not in the ways that involve stepping out of manufacturers’ way. There’ll be something about fairness and equality, and about rewarding hard work–but in ways that involve spending and redistribution rather than fostering the conditions of liberty so all may pursue them.

Incredibly, Obama is expected to talk about domestic energy efficiency; words fail me on that one, except “Keystone,” and “Solyndra.”

The titanic federal budget the President will emphasize is only, as my colleague and CEI general counsel Sam Kazman expressed it, the tip of the costberg.

Most costly government activity is “off budget,”  and involves regulation, regulation, and more regulation.  Of everything—health, safety, environment, energy, infrastructure, retirement, finance; virtually all economic affairs.

Regulatory activity remains at the same high level as before last year’s executive order calling for relief.

For starters, the Federal Register just ended 2011 at a record-high 82,351 pages, compared to 2010’s 81,405. That’ll come down a bit due to corrections, but not much.

The new, obscure but important, Unified Agenda of federal regulations was due in October 2011, but alas, only became available January 20.

The Unified Agenda is our snapshot of the federal regulatory pipeline, detailing proposed and final rules on which federal agencies expect to act, plus rules recently completed.

At the end of 2008, the (pre-Obama) total number of regulations in the pipeline stood at 4,004 rules.

Clearly, President George W. Bush liked to regulate too. But Obama’s past two years were 4,225 and 4,128, respectively, as if “modifying,” “streamling,” and “repeal” of regulation mean to add rather than subtract.

The more ominous “economically significant” rules in the pipeline, those expected to cost at least $100 million annually (but sometimes to save that much), are up 18 percent since 2008, from 180 to 212.  At least that’s better than last year’s 224, and the president would likely point to that as a success.

But the problem with that interpretation is that, since I’ve been compiling the annual Ten Thousand Commandments report, until 2008, economically significant rules never exceeded 159.

Of the 212 in play, the ones recently completed or in final-rule phase are at 100, compared to 110 last year. So I suppose that’s somehow a “success,” too.

How about rules impacting small business, the oft-noted engines of job creation?  Those stood at 753 in the pre-Obama, Fall 2008 Unified Agenda; now, they’re at 822, nine percent higher during one of the worst economic environments the country has weathered.

The EPA, already noted as a regulatory funhouse, has 318 rules in the Agenda pipeline. That’s at least down from 330, but some of those rules are extremely costly. Of the 318 rules anticipated by the EPA, 18 are considered “economically significant.” (These regulatory costs, of course, are off-budget amounts that that come on top of the EPA’s annual appropriation from taxpayers of around $9 billion.)

What of EPA’s rules impacting small business? Those have been “reduced” from 86 up to 93 during the three-year period. Rules affecting small business now account for 26 percent of EPA’s Agenda entries. And of these 93 rules impacting small business, 14 are designated as “economically significant.”

I’m not yet able to wrap my head around streamlining regulations by expanding them, but give me time.

Today, roughly 21 percent of all rules impact small business.  As for the thousands of federal rules that don’t qualify as economically significant, no one really knows how much they truly cost, since they’re not measured.

If rules aren’t measured, Congress should at least have to approve them before they’re binding, a variation of what the House-passed REINS Act would do for all economically significant rules (“REINS” stands for Regulations from the Executive in Need of Scrutiny).

Speaking of the State of the Union’s fairness theme, regulatory burdens shouldn’t shift to those least able to bear them, nor should they be hidden from the public as they are now.

The programs and spending to be announced by President Obama this evening have alternatives that involve removing barriers and allowing economic expansion.

Four years after the Bailouts to Nowhere began, the President and Congress must “liberate to stimulate

That done, I believe we at last could say, “The State of the Union is strong,” and mean it.