GOP “Pledge to America” Includes Constructive Reg Reform

The House Republican “Pledge to America” unveiled today has been criticized by RedState’s Erick Erickson and other center-right pundits  for a  lack of specifics. This is true in some areas, as is true for most campaign documents.

But the pledge does contain one specific step that would go a long way toward reining in the regulatory state and restoring constitutional, accountable government. It is along the lines of recommendations CEI has made in our publications such as biannual the “Agenda for Congress” and annual “Ten Thousand Commandments” by CEI Vice President Wayne Crews.

On page 8 of the 21-page document, in the section entitled “Our plan to end the uncertainty and create incentives for job growth,” there is an important sub-pledge to “rein in the red tape factory in Washington.” It makes the important point — one that CEI has long been stressing — that “excessive federal regulation is a de facto tax on employers and consumers.”

More importantly, this section contains a substantive idea that would be a positive first step toward regulating the regulatory state and returning to accountable, constitutional government. The document states:  “We will require congressional approval of any new federal regulation that has an annual cost to our economy of $100 million or more. This is the threshold at which the government deems a regulation ‘economically significant.’ If a regulation is so ‘significant’ and costly that it may harm job creation, Congress should vote on it first.”

The principle of “no regulation without representation” is something Crews and others at CEI have been shouting from the hilltops for years, usually to deaf ears in Congress, even among Republicans. But it looks like with both this pledge, and the REINS Act of Sen. Jim DeMint  (R-S.C.) that was introduced yesterday in the Senate with an identical provision, lawmakers are at least hearing part of the message that the legislative branch needs a mechanism of accountability for costly and counterproductive regulations that stem from the laws Congress itself passes.

Article 1, Section 1 of the Constitution vests “all legislative powers” in the U.S. Congress. Yet what most often happens in today’s administrative state is that that regulators in the executive branch, technically charged with enforcing provisions of laws, actually write much of the law as applied.

Sometimes this takes place due to very creative interpretations of laws on the books, such as defining a farmer’s wetland the size of a mud puddle as a  “navigable waterway” under the Clean Water Act. But more often than not, Congress under the control of both parties has been deliberately vague in the laws it passes so as to pass the buck to regulators and escape accountability.

The recently passed Dodd-Frank Act, for instance, gives the Bureau of Consumer Financial Protection the power to ban an “abusive” financial product without defining what “abusive” means. You can bet when the agency defines as “abusive” a product or service that many constituents like, Congress will wash its hands of the matter and blame the agency. Yet most likely, the regulation will still go through.

Similarly, the Sarbanes-Oxley Act of 2002, passed after Enron by a GOP-controlled House and signed by President George W. Bush, required companies to maintain and accountants to sign off on “internal controls” without defining what these were. The SEC and Public Company Accounting Oversight Board broadly interpreted the term to include trivial items such as the number of letters in an employees password. This broad interpretation of “internal controls” has cost companies a bundle and made it prohibitively expensive for smaller companies to raise capital by going public, while serving little purpose for shareholders.

Not just Republicans, but Democrats from Speaker Pelosi to Sen. John Kerry have called these rules excessive. But in eight years under both parties, Congress did nothing to provide relief from these rules until this year when it passed a partial exemption in the one liberalizing feature of Dodd-Frank for the very smallest public companies.

“No regulation without representation” is a simple, good-government rule that should be embraced by both parties. The GOP pledge should be commended for recognizing the principle, although time will only tell if words will be followed through with actions.