Uncertainty and New Regulatory Burdens Hinder Recovery

Since 2011, the Obama administration’s Office of Information and Regulatory Affairs (OIRA) has been reviewing significantly fewer rules than in prior years and taking longer to do so. Meanwhile, the growth of compliance costs and a great deal of uncertainty are hobbling businesses both large and small.

From 2011 to 2012 the average review time for all new regulations jumped from 58 to 79 days. Yet, that pales in comparison to the first five months of 2013, when average review time skyrocketed from 79 to 141 days.

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This is the longest average time on record since 1994 and the 62-day or 78-percent increase from 2012 is the greatest jump during that period.

Some liberals have accused Obama of flouting his promise to combat climate change and poverty. Others have suggested that the Obama administration is making a concerted effort to slow down the creation of new regulatory burdens to help the economy recover. Indeed, the current holdup includes several regulations from the Environmental Protection Agency and Department of Health and Human Services. The total amount of reviews coming from OIRA did slow dramatically from 2011 to 2012, a trend which appears to be continuing in 2013.

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However, this has not translated into a decrease in the amount of new regulatory burdens imposed on businesses. Susan E. Dudley of the Regulatory Studies Center at George Washington University has shown, using Office of Management and Budget estimates, that in 2012 alone, the Obama administration imposed more regulatory costs on businesses than did Bill Clinton and George W. Bush’s in their first terms combined.

That figure is troubling on its own. And it does not even take into account the cost of uncertainty created by several of the looming regulations under review. Some of these new rules, dealing with everything from safety measures for silicon miners to efficiency standards in light bulbs and refrigerators have been under review for two years.

While these regulations will be costly themselves, the fact that many businesses have been unable to account for when and how these new burdens will be implemented makes it nearly impossible to plan for the future.

This leaves many businesses feeling vulnerable and unable to expand. In a survey conducted by the U.S. Chamber of Commerce, 88 percent of small business owners said they are looking for more certainty from Washington while 52 percent cited economic uncertainty as the most important challenge facing business today.

Preferably, OIRA, under Obama’s leadership, should withdraw these pending regulations. At the very least, the president has a legal responsibility, under Executive Order 12866, to implement them in a swift and orderly manner in order to remove some of the uncertainty that prevents businesses from being able to effectively plan for the future. The fickle nature of the review process, coupled with the continual expansion of regulatory costs helps account for the still sluggish economy and high unemployment rate.