Wave of Regulations Will Follow Tsunami of Federal Spending
On top of the $2 trillion in tax revenues the government now collects, agencies issue more than 4,000 yearly regulations. Costing some $800 billion annually, regulations exceed pretax corporate profits and Canada's GDP.
If Washington can't raise taxes to pay for its ends, it regulates. Indeed, according to Americans for Tax Reform's new Costof Government Day report, we all worked until July 7 — more than half the year — to pay the costs of taxes and regulations.
This is one day earlier than last year, and good news of sorts in that respect — but what of the future? Is it a promising trend, as ATR hopes?
Unfortunately, heavy recent government spending anticipates a regulatory boom. President Bush's education bill heralds greater entrenchment of public over private education and state mandates galore; the Medicare prescription drug benefit means new medical mandates and constraints on doctors and insurers.
And the pork-loaded $270 billion highway bill will usher in numerous car-design safety regulations over the next few years.
Not surprisingly, Homeland Security concerns generate much of the new spending and regulation, such as bag screening and matching. New FDA regulation of food manufacturer and processor shipments promises real headaches.
But at least these have a security rationale: Contrast those with the new multibillion National Nanotechnology Initiative, which will needlessly invite vast government regulation of this frontier industry for no reason other than to send government dollars to the home district.
Recent health and safety rules encompass an endless procession of risks from which we presumably can't safeguard ourselves; workplace slip-and-fall hazards; sausage casing labeling; bathroom grout manufacture; smoke alarm location in prefab houses; and bans on certain backyard play sets.
Some of this is well-intended. But we probably don't need the Agriculture Department dictating the size of holes in Swiss cheese.
Other times, Washington regulates on headlines and impulse. The rapid Ephedra ban — an expansion of the FDA's scope into the banning of herbal supplements — was something not authorized by Congress, deserving of more debate.
We're now implementing a vast livestock tracking system, even though The Washington Post jokingly compared the chance of getting mad cow disease to your chances of starring in the next Paris Hilton video (on second thought, maybe that's a bad example), or being struck by both a bolt of lightning and a meteor while holding the winning Powerball ticke t. The answer to every societal ill cannot be to repudiate the competitive marketplace's disciplinary role in consumer protection, but that's where we're headed. Misguided safety regulation is an unworthy substitute.
In technology, regulatory proposals to ban or mandate now appear routinely: online marketing to children (ban it); porn filtering (mandate it); Internet gambling (ban it); digital copy protection (some say ban, some say mandate); cybersecurity (mandate it, even though we can't define it). The regulation of emerging Internet phone calls is seriously being proposed too.
Not that long ago, the FTC wanted to regulate Internet privacy, but programs like, the Terrorism Information Awareness and airline Computer Assisted Passenger Protection that require the handing over to the gov- ernment of personal information make it impossible for firms to offer the very privacy guarantees that commerce needs.
Government intervention entails false short-cut solutions to problems that have no easy answer. Consider costly and ineffective seam regulation: Spam was outlawed as of Jam but still pours in. The real issues of authentication and pricing remain to be solved — by the marketplace.. And there is no alternative to that FCC's high-penalty Do-Not-Call registry was quickly embraced by Congress and the president Granted, none of us like getting dinner-time telemarketing calls. But telecommunications is a vibrant industry: If this is a legitimate area for government to regulate — in ay age in which we'd best phase out the FCC — then it's hard to argue against regulation elsewhere.
If the market can't handle mere phone-call screening then how are policy-makers making the case that markets can handle, say, retirement and health care? This is why the lack of consistency by policy-makers, who allegedly understand markets, is so damaging.
Free speech has suffered regulatory incursions as well — consider campaign finance restrictions, as well as a disappointing showing by Republicans who failed to endorse the FCC's rollback of media ownership rules. Policy-makers proved incapable of grasping that media and information cannot be monopolized in a free society whose government does not practice censorship, Misbehaving media face the wrath not just of consumers, but of advertisers, venture capitalists and Wall Street. Yet media ownership regulations remain.
Antitrust regulation is also on the move. Microsoft endured years of hounding; AOL-Time Warner's merger required pointless kowtowing to regulators. The EchoStar-DirecTV merger was blocked entirely. But Washington even stopped mergers in the baby food and "intense mints" businesses. The FTC actually regards 'Premium Ice Cream," and "!Jarred Pickles" as potential monopoly markets.
Acquiescence to such ridiculous intervention in commonplace markets leaves policy-makers unable to advance major, urgent reforms, such as electricityderegulation, that will likely require industry consolidation. Policy-makers are incapable of defending aggressive industry restructuring against "antitrust" attack.
Along with cutting spending, we need to hold the regulatory state to at least the standards of disclosure and accountability that apply to the budget. In fact, no major regulation should take effect until Congress approves it. Granted, that's far off, but intermediate steps should include publishing an annual "Regulatory Report Card" on numbers of rules and their costs, and exploring regulatory cost budgets.
Meanwhile, the existing $800 billion regulatory state could be targeted with a bipartisan regulatory reduction commission modeled on the military base closure commission. Rep. Kevin Brady, R-Texas, even proposes sunsetting obsolete federal agencies and putting an "expiration date" on the rules they issue.
If we're going to push Cost of Government Day back earlier in the year where it belongs, we need regulatory reformers such as 'Brady whose motto seems to be "Good Government; Good Government, Sit! Stay!"