Regulating Obama’s Regulators — And Those of Future Presidents

This month, President Obama released a new Executive Order building upon and making permanent the quest for regulatory savings in his January 2011 order called “Improving Regulation and Regulatory Review.”

The idea is to ensure that benefits “justify” (alas, not as strong as “exceed”) costs, and to emphasize the “least burdensome” means for achieving regulatory ends.

A problem though, is the paltry $10 billion or so in savings so far, touted as a significant achievement by Cass Sunstein, the head of President Obama’s Office of Information and Regulatory Affairs at OMB.

Regulations cost more than a trillion dollars annually, according to the Small Business Administration, although Mr. Sunstein’s OMB and others object to the claim.

Moreover, OMB owns up to some $5 billion in new annual costs in its yearly reports. So the Obama order at best might kind of freeze things, generously interpreted, but not shave over-regulation aggressively. This administration sees regulation as a funamental good, and has no real agenda for pruning it.

Furthermore, as Richard Belzer noted in a letter in The Wall Street Journal (see his Regulatory Policy Facebook page here) before this order appeared, many costly rules don’t get designated that way at the outset.

Thus, such rules can skate past initial intense review, and the kind of future lookback that might apply to them via the new Obama order.

As we show in the new “Ten Thousand Commandments,” the number of rules in the pipeline at agencies is mounting. Major rules, those expected to cost over $100 million annually (and acknowledged; we just noted many are not), have experienced a particularly strong surge. Indeed, just to get where we were a year ago, many rules would have to be cut.

These new executive orders are welcome, no doubt about that; but they are hardly a a war on red tape, and no affected businesses or consumers are going to be able to sue anybody to force compliance–it’s just an “order” to agencies to behave.

Confronting regulation, the extent of which remains unappreciated by both parties, requires going far beyond the modern controlling executive orders. Options outlined in Ten Thousand Commandments and elsewhere include:

  • Implement a bipartisan Regulatory Reduction Commission to vote up or down annually on a package of rules to eliminate, in one sweep eliminating more than the orders can.
  • Institute a moratorium or freeze on rulemaking in order to re-discover federalism, that is, how to circumscribe the federal regulatory role regarding health and safety matters best left to states.
  • Hold hearings on Sen. Mark Warner’s (D-Va.) “one-in, one-out” requirement for any new rule, which for some reason he isn’t talking about much lately, but should.
  • Improve the requirements for quantifying regulatory costs, including for independent agency rules that escape executive orders’ reach altogether, a big fact not pointed to in the rollout and ceremony of the executive order.
  • Enlarge regulatory flexibility and exemptions for small business, and declare mere Federal Register notices as insufficient alert to small business.
  • Hold hearings to boost the scope of the Small Business Administration’s “r3” regulatory review program to allow affected businesspeople to recommend rules to reduce.
  • Lower the threshold for what counts as an “economically significant” or “major” rule, and improve explicit cost analysis.
  • Explore, hold hearings on, and devise a limited regulatory budget.
  • Sunset regulations after fixed period unless explicit reauthorization is made.
  • Reject excessive delegation of legislative authority from Congress to agencies; That is, congressional fast-track approval is needed before major or non-quantifiable agency-promulgated regulations can take effect. (The REINS Act from Rep. Geoff Davis (R-Ky.) passed the House but not the Senate.)

President Obama’s instructions to agencies to review regulations is welcome if serious, and all future presidents need to make similar (stronger) commitments.

To stay abreast of the situation, all the above recommendations, and these and future executive orders, should be supplemented by annual regulatory transparency report summaries covering what agencies are really up to in terms of numbers of rules, their costs, and even cross examination on why they’re regulating at all.

But actually reducing regulations’ excesses will require working with Congress to qualify as serious.