Finally Free from Government Servitude

All that business last month about July 4 being In- dependence Day was a temporary indulgence by those Founding Father guys. Hope you enjoyed the hot dogs.

That’s because today is the day you finish paying for government. Surprised? What’s the matter with you, were you born naked or something?

According to the Americans for Tax Reform Foundation (ATR), today, Aug. 12, is the big day – the day the average American earned enough gross income to finish paying the costs of taxation and regulation at the state and federal government levels.

In 2011, those costs hit more than a hundred bucks. No, just kidding, they’re in the trillions. This year, ATR says the average American worked 224 days to pay for government.

Wow, we work for government into the eighth month of the year.

Clearly, things have changed since Henry David Thoreau said, “That government is best which governs least.” Earning the first dollar for self and family more than a month after Independence Day is some irony. It’s nothing to shoot fireworks about, although I’ll probably keep doing that anyhow.

Consolation prize: a set of steak knives. Nah. The only consolation might be the hope that we don’t get all the government we pay for.

While we budget federal spending and thus “control” it (no snickering), the 77-day regulatory component of Cost of Government Day is wholly off the books. When the new supercommittee implements some spending cuts in the wake of the recent debt-ceiling vote, the “hidden taxes” of regulation should get the ax, too.

President Obama’s Office of Management and Budget is at war with his Small Business Administration over actual federal regulatory costs. But federal regulatory costs of all stripes – environmental, safety, homeland security, economic and paperwork costs – top $1 trillion annually.

The Dodd-Frank financial legislation and Obamacare costs likely will kick Cost of Government Day into the following year, and I don’t know what ATR is going to do then.

Expensive and often harmful, regulation is often exploited to further private interests rather than protect the public interest, too. Taxes transfer wealth, but so do regulations. Some firms more able than others to absorb compliance costs actively seek regulation to erect artificial barriers that hobble competitors or shut out new ones. Green energy mandates, Internet neutrality and antitrust intervention are examples. This is regulatory pork. Running to Washington rather than running one’s business.

Given the costliness of the regulatory state (it totals perhaps half the level of federal spending itself) the potential for abuse and unintended harmful effects, reform belongs on policymakers’ agendas.

The first step in regaining control must be far better documentation of regulation; the second is to hold the regulatory state to at least the imperfect standards of representative government we demand of taxing and spending. That means eliminating “regulation without representation.”

Rampant delegation of legislative power to unelected bureaucrats violates the fundamental constitutional principle of representative government. Instead, Congress and the president should be required to positively affirm agency regulations on an expedited basis.

In today’s grim jobs environment, halting excessive delegation presents an opportunity to turn regulatory reform into a populist term-limits-style issue. There’s no need to engage in dry debates over cost-benefit analysis anymore.

The new REINS Act (Regulations From the Executive In Need of Scrutiny) is one means of limiting the tendency of Congress to overdelegate rule-making to unelected agencies. It would require Congress to actually vote on agencies’ most onerous rules before they are binding.

Implementing a small-scale regulatory budget by requiring data now scattered across agencies to be summarized in “report card” fashion in the federal budget is needed, too. Such truth in packaging can promote reforms to limit delegation and make agencies compete in terms of the number of lives they save (or other appropriate metric) rather than think within their own square, heedless of what the rest of government is doing.

While accountability and budgeting harness future regulatory growth, the existing trillion-plus regulatory state should be targeted with a “regulatory reduction commission” based on the military base-closure commission model – a format now re-energized by the debt supercommittee structure. Our lucky Congress would get to vote on an annual package of regulatory reductions, without amendment.

Speed matters. Because government acts either by spending or by regulating, pressure to cut the fiscal budget will heighten incentives to impose unfunded and unbudgeted regulatory mandates if no offsetting controls, like those noted above, exist.

One would hope that modern deliberations by the supercommittee lead to reductions in base-line spending and eliminations of future entitlements – particularly for those not anticipating the cash anyway – and substantially roll back Cost of Government Day.

But the rise of the regulatory state, unfortunately, means spending cuts aren’t enough to kick-start the economy anymore. Congress needs to move the regulatory rocks so the entrepreneurial grass can grow.