Do more deregulation in debt limit deal

The internal GOP debate this week is over lower-case “d” default if a June 6 deadline for an increase in the debt limit is not met, versus a capital “D” default if deficits exceeding a trillion annually continue to accumulate, as they will under the status quo codified in the Biden/McCarthy 99-page package.

As demonstrated in a House Freedom Caucus press conference Tuesday and Rules Committee meeting, there exists grave disappointment in the magnitude of spending cuts in the debt limit deal between McCarthy and Biden. And there is disbelief in the reality of even those cuts.

If it turns out the deal is a missed opportunity to cut spending, it need not mark a missed opportunity to cut regulations. Those matter just as much as spending in today’s age of federal consolidation.

The REINS Act, or “Regulations from the Executive In Need of Scrutiny,” did not remain in the compromise agreement currently on the table. Its removal was expected. While REINS, which would require congressional approval of major regulations, has passed the House numerous times, it has never passed the Senate.

But there are backups to REINS that ought not be ignored as negotiations proceed, if REINS indeed is a non-starter.

Numerous regulatory reform options have long-standing bipartisan pedigrees, as we reiterated in House Budget Committee testimony last week. Any of them can play a role in the government downsizing or streamlining under discussion today. These include regulatory “pay-go” (one in one out); a regulatory oversight commission; regulatory cost budgeting; small business regulatory relief; and unfunded mandates relief for localities.

Notably with respect to the potential abuse of guidance documents, the Guidance Out of Darkness (GOOD) Act to require a portal for their disclosure has enjoyed bipartisan sponsorship.

All these are in play in the 118^th Congress.

Alongside the debt itself, which some are predicting to rise by $4 trillion even with the new agreement, the regulatory concerns these notions are capable of addressing are only going to grow in importance in the wake of the large-scale spending bills of the past three years.

Many are set against a ceiling deal that raises debt potentially by trillions for little to no real spending cuts in return. The hardliners insist that incoming cash flow is sufficient to prioritize and not default on interest payments, and that the deal is likely to boost green boondoggles rather than normal infrastructure.

They insist there is a case to be made for using these occasions to force a shrinkage in government, given that the debt ceiling is one of the only remaining institutions capable of doing so in today’s fusion of the spending/regulatory state.  

The core of the debt ceiling fight is the battle being waged over whether the government is too large or too small. Whatever the static might be on spending this week, on the regulatory front there’s broad agreement that some elements of it are too large.