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  • Deteriorating White House Regulatory Disclosure Needs Active Congressional Review

    December 11, 2014 1:19 PM

    Recently we’ve spent time reviewing Washington’s “Unified Agenda” of federal regulations, which came out just before Thanksgiving. It purports to tell what the alphabet soup of federal agencies has in store for you and yours.  

    The full name of the bi-annual publication is a mouthful: The Regulatory Plan and the Unified Agenda of Federal Regulatory and Deregulatory Actions.

    The report appears twice a year, and has since 1983. Well, theoretically, that is; the Obama administration “opted out,” one might say, in Spring 2012, and otherwise maintains an odd schedule.

    You can learn anything you want about federal taxation and spending. On the other hand, very little is concretely known about the regulatory state’s impacts apart from this report, and the White House’s annual reports to Congress on regulatory costs and benefits (which are also inadequate).

    Unfortunately, what little reporting we get may be deteriorating further, driven by several factors. We have noted recent political considerations that restrained reporting, as well as internal reporting changes at the Office of Management and Budget that cause fewer long-term rules to be reported. (Yet even so, a higher number of “economically significant” and of small business-relevant rules are evident.)

    In any event, the Fall 2014 Agenda contains a total of 3,415 rules and regulations in the pipeline.

  • Rep. Leutkemeyer Moves to Choke off Operation Choke Point

    December 10, 2014 3:38 PM

    The release this week of a new House Oversight and Government Reform Committee staff report into Operation Choke Point provides another opportunity to underline just how egregious the behavior of executive agencies has been in this matter. As I outline in my in-depth report from earlier this year, Operation Choke Point has been a freelance operation by rogue members of staff at the Justice Department and the Federal Deposit Insurance Corporation (FDIC) in particular aimed at killing off industries they suspect might have high levels of fraud, on the grounds that they present “reputational risk” to financial institutions they do business with. It represents an end-run around all established legislative and judicial processes required by the constitution. As such it should be terminated immediately.

    The new report focuses particularly on the actions of FDIC officials, as revealed in their own words through e-mails obtained by the committee. For instance, the report found that, “Personal animus towards payday lending is apparent throughout the documents produced to the Committee. Emails reveal that FDIC’s senior-most bank examiners “literally cannot stand payday,” and effectively ordered banks to terminate all relationships with the industry.”

    The actions of FDIC officials also violated basic ethical standards. As the report found, “In a particularly egregious example, a senior official in the Division of Depositor and Consumer Protection insisted that FDIC Chairman Martin Gruenberg’s letters to Congress and talking points always mention pornography when discussing payday lenders and other industries, in an effort to convey a ‘good picture regarding the unsavory nature of the businesses at issue.’”

  • New Minimum Wage Study: Tradeoffs Exist

    December 10, 2014 11:22 AM

    Many progressives strongly support minimum wage increases. This is troubling, because the effects those increases actually have on many poor people are regressive. Signaling your concern for the poor is different from actually helping the poor; feeling good about yourself is often different from actually doing good for others. At the very least, minimum wage supporters should acknowledge that the minimum wage has tradeoffs. It is not a free lunch.

    new study by UC-San Diego economists Jeffrey Clemens and Michael Wither on the minimum wage reaffirms the obvious. Some workers benefit from minimum wage increases, and this is a good thing. But it comes at a cost. Other workers lose their jobs:

    Over the late 2000s, the average effective minimum wage rose by nearly 30 percent across the United States. Our best estimate is that this period’s minimum wage increases reduced working-age adults’ employment-to-population ratio by 0.7 percentage point. This accounts for 14 percent of the total decline over the relevant time period.  [p.5]

    This finding is in line with what I’ve pointed out before, that the minimum wage has a reverse-Robin Hood effect. Some workers lose their entire income, which gets transferred instead to other workers fortunate enough to keep their jobs, and get raises besides. Income redistribution programs are supposed to flow from better-off people to worse-off people—not the other way around.

    If the goal is to lift as many people as possible out of poverty, minimum wage increases are simply not up to the task. The tradeoffs are too severe.

  • The Future and the Regulated

    December 10, 2014 8:53 AM

    Lawrence Summers, the enfant terrible of the economics profession, has written a thoughtful column on “Our Loss of Faith in the Future,” noting that today almost nothing seems to get done. He notes broken escalators at LaGuardia, bridges not repaired for years in Cambridge, and argues that our accounting systems fail to measure the costs of such downtime. Still a liberal, Summers suggests changes in accounting rules to measure such downtime losses. This might help a bit but many agencies already keep track of deferred maintenance and, yet, delays continue to increase.

    Summers doesn’t mention the massive array of regulatory approvals needed now for almost all governmental and most private ventures. That point was raised in my recent column on the experience of a British businessman, Ernest Benn, writing in 1925 that when he began his business in 1900 he simply did things. By 1925, half his time was spent on the paperwork demanded by regulations. From building a room on one’s home to repairing bridges or sending people to Mars, the major barrier is no longer technology or financing per se but rather the thicket of regulations that slow everything. The result is akin to filling swimming pools with molasses and being surprised that speeds decline. Perhaps Summers’ next columns will attack this problem? 

  • TTIP: Another Step in the (Lack of) Evolution in EU Trade Agreements

    December 9, 2014 11:59 AM

    As the Transatlantic Trade and Investment Partnership (TTIP) approaches an eighth round of negotiations between the United States and the European Union, the debate regarding genetically modified organisms (GMOs, or crop plants bred with genetic engineering methods) continues to raise important stumbling blocks. Despite a large and growing body of scientific evidence showing that GMOs are no more risky for consumers or the environment than conventionally bred crops—much of it paid for by the EU and conducted by public sector scientists in Europe, public sentiment in Europe remains worried about them (although there is evidence that this concern is exaggerated).

    Consequently, many European governments harbor official concerns about the effects of GM crops on human and environmental health. The EU has imposed arguably the strictest GMO regulations in the world, which it rationalizes on the basis of the precautionary principle, the view that any possible risk, however unlikely, provides grounds for bans or severe restrictions. Because the EU has approved only two GMO crop varieties for planting and has approved only a third of the 100 or so GMO crops grown in the US for import as food or animal feed, the precautionary principle could very well halt what would be the world’s wealthiest trade agreement. 

    As Pierre Desrochers of the University of Toronto points out in an analysis (written for the new European Policy Information Center) of the Comprehensive Economic and Trade Agreement (CETA)—an agreement similar to the TTIP between Canada and the European Union—the EU’s use of the precautionary principle to obstruct the import of GMOs is nothing more than a non-tariff barrier to trade, conveniently protecting “otherwise uncompetitive locally produced foods.” Although the ban on GMOs is aimed at protecting the environment as well as the European consumer, GMOs actually cut down on environmental degradation that would otherwise occur with pesticides and herbicides. According to one study by the consulting firm PG Economics, between 1996 and 2012 GMO crops reduced pesticide spraying by 8.8 percent in the countries that planted them, while increasing yields and letting farmers produce more food on less land. And because farmers had to spend less time ploughing, weeding, and spraying their fields, carbon dioxide emissions from tractors and other farm machinery were reduced by 23.1 billion kg in 2011 alone. 

  • Gruber Testifies Before Congress on Obamacare Transparency Issues

    December 9, 2014 11:12 AM

    Today, the Centers for Medicare and Medicaid Services Administrator Marilyn Tavenner and MIT economist Jonathan Gruber are testifying before the House Oversight and Government Reform Committee on repeated transparency failures and enrollment issues surrounding the Affordable Care Act. CEI General Counsel Sam Kazman explains what this hearing could mean for ongoing Obamacare litigation efforts.

    Sam Kazman, CEI general counsel:

    “Regardless of what happens at the hearing, Jonathan Gruber has already had a major impact on the ongoing Obamacare litigation, as in CEI’s King v. Burwell and Halbig v. Burwell cases. This is due to both the content of his 2012 video, where Gruber refers to the subsidy issue saying if states don’t set up exchanges then citizens won’t get tax credits, and to how the government dropped nearly all mention of Gruber and his three-legged stool analogy from the court briefs following the video’s rise in popularity.

    “And according to a recent CEI report by Scot Vorse, we see that Gruber isn’t the only thing the administration flip-flopped on. Based on a trail of government documents, we find that actions taken by the HHS, Treasury, and IRS to implement the law, especially when it comes to developing a tax-credit calculator, show the administration was only focused on providing subsidies on the state exchanges, not the federal exchange.”

    >> View CEI report by Scot Vorse: “Beyond Gruber: How HHS Flip-Flopped on Federal Exchange Subsidies

  • Small Business Regulations: Obama Red Tape Exceeds Bush Level

    December 8, 2014 4:30 PM

    As we noted last week, President Obama has issued nearly half again as many “major,” $100-million regulations during his six years as President as George Bush did in his final six. (Obama had 407 over the period, Bush had 277).  

    However, when it comes to regulations impacting small business, Obama also comes out as the bigger regulator.

    We learn a little bit about the impact of individual federal regulations on small business thanks to the so-called Regulatory Flexibility Act, which requires agencies to scrutinize such burdens more closely. As the Federal Register notes

    The Regulatory Flexibility Act requires that agencies publish semiannual regulatory agendas in the Federal Register describing regulatory actions they are developing that may have a significant economic impact on a substantial number of small entities.

    The nearby table shows the number of rules annually requiring a Regulatory Flexibility Analysis (RFA) since 2003. The six years 2003-08 belown to Bush, while 2009-14 obviously belong to Obama.

    Despite President Obama’s claim to have issued fewer rules than his predecessor, rules impacting small business have actually grown.

    Bush vs. Obama: Rules Requiring a Reg Flex Analysis


    Bush (03-08)

    Obama (09-14)

























  • CEI's Battered Business Bureau: The Week in Regulation

    December 8, 2014 6:40 AM

    While the number of new regulations last week was normal, their cost was abnormal, totaling well over half a billion dollars just for the four rules meeting the “economically significant” threshold.

    On to the data:

    • Last week, 71 new final regulations were published in the Federal Register. There were 58 new final rules the previous week.
    • That’s the equivalent of a new regulation every two hours and 22 minutes.
    • So far in 2014, 3,325 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,552 new regulations this year.
    • Last week, 1,541 new pages were added to the Federal Register.
    • Currently at 72,535 pages, the 2014 Federal Register is on pace for 77,495 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
    • Rules are called “economically significant” if they have costs of $100 million or more in a given year; 43 such rules have been published so far this year, four in the past week.
    • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $8.18 billion to $11.65 billion. They also affect several billion dollars of government spending.
    • 270 final rules meeting the broader definition of “significant” have been published so far this year.
    • So far in 2014, 632 new rules affect small businesses; 96 of them are classified as significant. 
  • 7 Quotes about Communism: Take 2

    December 8, 2014 6:38 AM

    A few years ago I assembled several quotes about Communism that I thought would make good epitaphs for it.  Unfortunately, the ideology has turned out to be far from dead.  But the quotes I collected were pretty good, and I figure there’s no better time to dust them off again than today, the 23d anniversary of the dissolution of the Soviet Union.

  • Obama's Major Regulations 50 Percent Higher than Bush

    December 5, 2014 1:57 PM

    Back in 2012, President Obama emphasized that he had issued fewer rules in his first three years as president than his predecessor President George W. Bush. And it was true, as far total number of final rules in the annual Federal Register went.

    In fact it’s still true, after six years: President Bush issued 23,367 rules over his last six years. President Obama, according to today’s Federal Register, has issued 21,564 rules, and won’t “catch up” by year-end.  

    Bush averaged 3,894 rules annually, compared to Obama’s 3,594 (so far).

    But there’s more. As I described over at Forbes this week, Obama’s major regulations—the big ones whose impact on the economy is expected to $100 million annually, were and are considerably higher that during the Bush era.

    Such disclosures may be found in the federal Regulatory Plan and Unified Agenda of Regulatory and Deregulatory Actions. It normally appears twice a year, and the new one was published just before Thanksgiving.

    The chart nearby shows “economically significant” rules completed over the past 12 years, showing Bush’s final six years in front of Obama’s six.


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