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House Judiciary Subcommittee Assesses OMB Review of Federal Regulations

Last week the House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law conducted a hearing on Assessing the Obama Years: OIRA and Regulatory Impacts on Jobs, Wages and Economic Recovery, and I was invited to testify by Chairman Bob Goodlatte (R-VA).

My written testimony is here, and below are my five-minute oral remarks:

Assessing the Obama Years: OIRA and Regulatory Impacts on Jobs, Wages and Economic Recovery

I am Wayne Crews, vice president for Policy at the Competitive Enterprise Institute, a libertarian policy and advocacy group, and I thank the committee for the invitation to address regulatory oversight.

$19 trillion federal debt aside, when policymakers neglect regulation, they ignore arguably government’s primary influence in the economy. Both spending and regulation reorient societal resources and priorities.

Yet, Members may have noticed there’s still no sign of the 2016 OIRA Report to Congress, so what regulatory cost figures we have are nearly two years old. Last year’s report was the latest ever.

Congress confessed to over-delegation in last month’s Article I Task Force report, so code law is here to stay for the moment. Still, OIRA could help lawmakers create a regulatory transparency supernova to spur economic liberalization.

I was struck by a businessman writing in the Financial Times: He said: “When I am 100 percent utterly and completely certain that it is an absolute certainty that it is an absolute necessity that I need to recruit a new employee, I go to bed, sleep well and hope that the feeling has gone away by the morning.” 

While those doing the regulating claim no problem, exasperation is rampant. Home Depot co-founder Bernie Marcus said that company couldn’t succeed if started today. Other polls say businessmen wouldn’t do it again, and startup rates and part-time employment affirm this.

Unemployment, like poverty, doesn’t have causes; both are the default state of mankind. Only wealth and production have causes, and regulatory fanaticism can derail affluence.

Problem is, legislatures rarely control spending, let alone the regulatory enterprise. And OIRA’s central review machinery cannot overcome presidents who deprioritize oversight, or a regulatory system that frontally benefits rent-seeking special interests. 

Over 3,000 rules are finalized annually, but only 13 rules in the 2015 Report sported OIRA-reviewed cost and benefit analysis. The proportion of all rules with OIRA reviewed cost analysis is less than a percent. On the rest, we don’t have cost-benefit analysis, we have agency selfies. And the 800 pound gorilla independent agencies get no OIRA scrutiny, nor do thousands of guidance documents and memoranda that I’ve taken to calling regulatory dark matter.

 Such chasms weaken the OIRA report’s authority as a comprehensive survey of economic impact. Nothing exists to justify claims of net-benefits for the entire regulatory enterprise, especially since unmeasured categories of regulation propel cost as well, such as antitrust, the locking up of western lands, or the reluctance since the 1890s to move spectrum and other commons into market disciplines. When government steers cross-sectorally as it does today, it creates mounting costs even if no future rules are issued, such as Congress’ delivery of the Internet, and, as of two weeks ago, drones, into century old public-utility models. Also new is EPA’s central planning of electric charging and hydrogen fueling stations in the wake of the Volkswagen settlement. Much is beyond OIRA’s scope. 

Businesses want to “create jobs,” but everything has limits. Jobs are a cost, a liability—and policymakers must recognize that. While a Vanguard study blamed hundreds of billions in cost on regulatory uncertainty, sometimes the certainty of regulation is worse.

My optimism stems from knowing there’ll always be an America, even if it won’t be here. But I cannot accept that Members wish to go to the mat maintaining regulatory overreach, and I hope Members think through some North Star goals to enhance OIRA.

Ronald Reagan’s Executive Order 12291 that energized OIRA in the first place showed the so-called pen and phone can also expand liberty, in terms of rule counts and Federal Register pages. Members can work with OIRA to enforce and codify the regulatory review executive orders, address independent agency costs, and agency guidance and regulatory dark matter.    

Other steps noted in my written testimony include boosting OIRA resources and free market law and economics staff at agencies; pausing regulation; and implementing the bipartisan Regulatory Improvement Commission.

I highlight also the former Regulatory Program of the U.S. Government, a model by which OIRA could compile an annual Regulatory Transparency Report to parallel the historical tables in the fiscal budget, optimally reporting separately on Economic, Health & Safety, and Environmental regulations. 

While central review hasn’t worked, just possibly, it could. When it comes to economic expansion, you don’t have to tell the grass to grow, but you do need to move the big rocks off of it. Why not use OIRA as a lever? Thank you very much. 

Also on the last day of June I testified in a Senate Homeland Security Subcommittee on federal agencies overusing “guidance documents.” Oral remarks are here, and longer written remarks here; Also, I testified in the House Budget Committee July 7 on An Introduction to Regulatory Budgeting (oral remarks are here).