Gorging on Regulations
Congress is now debating the $1.8 trillion federal budget. While federal spending consumes an awesome 18 percent of nation’s economic product, the official budget at least assures that taxpayers can know what Washington is up to. That places some measure of voter accountability on Congress.
But focusing on annual spending alone leaves out much of government’s reach in the economy. The public’s costs of complying with the federal government’s health, safety, environmental and economic regulations do not appear anywhere in the federal budget.
New regulations cover everything from slip and fall hazard rulings from the Occupational Safety and Health Administration, to rules on imported reptiles and amphibians from the Interior Department, to new clean air requirements from the Environmental Protection Agency
Agencies publish such regulations daily in the Federal Register. In 1999, the Register finished the year at 71,161 pages. That was the highest page count since the Carter presidency, and a 4 percent increase over 1998. Within those pages agencies issued 4,684 final rules.
Think about it: Congress passed and the president signed just. 170 bills into law in 1999, while agencies issued 4,684 rules. No one elected the agency lawmakers though. The result has been more than 40,000 agency rules during the 1990s.
Today, the 60-plus federal departments, agencies and commissions are at work on 4,538 more rules. Of the 4,538 rules now under consideration, agencies report 137 will have costs of at least $100 million, while 963 are expected to affect small businesses.
The Transportation Department and the Environmental Protection Agency, with 539 and 456 rules, respectively, lead the pack for most new rules. The five most active agencies alone account for 46 percent of all rules under consideration.
What does accumulated regulation cost? The Rochester Institute of Thchnology’s Thomas Hopkins projected 1999 regulatory compliance costs to be about $758 billion. For perspective, that’s 44 percent the level of federal spending of $1.7 trillion, 8 percent of U.S. GDP, greater than all 1998 U.S. corporate pretax profits ($718 billion), and higher than Canada’s 1997 gross national product ($595 billion).
Bringing it home, the Tax Foundation calculated the median two-earner family of four’s after-tax income to be $41,846 in 1998. As estimated by Hopkins, the household regulatory burden at that time broke out to about $7,400. If one thinks of these regulatory costs as being embedded within a family’s after-tax budget, regulations take an 18 percent bite out of after-tax income.
Expecting unelected agency personnel to better police themselves won’t rein in regulatory growth. If regulation is to be reformed, policing requires:
(a) Making regulation as transparent as possible through greater official disclosure of regulatory costs and trends at agencies.
(b) And holding Congress directly accountable for the good and bad that agency rules do.
Summarizing available regulatory data in the federal budget each year would be the best start. Information might include:
• Federal Register analysis: Number of pages, and numbers of proposed and final rules, by department, agency and commission. Numerical cost estimates of major ($100 million-plus) rules and minor rules should be included where possible.
• Tallies of cost estimates where possible, with subtotals by agencies and grand total.
• Identifying the most active rule-making agencies.
• Numbers and percentages of rules impacting small businesses and lower-level governments.
Note that if costs and benefits have not been assessed for a rule, that in itself is important information, helping reveal exactly what we know and do not know about a regulation’s impact.
New proposals could further improve disclosure: The Regulatory Right-to-Know Act would -require annual reporting on regulatory costs and benefits, while the Mandates Information Act would place a point of order on legislation imposing $100 million in new costs, thereby requiring Congress to explicitly affirm its intent to impose new costs.
Along with annual regulatory reporting, these tools would make regulations more above-board, enabling comparisons of agencies that could help make them more accountable.
Beyond better disclosure, Congress must be made answerable to the voters for agency costs and burdens. Agencies will always face incentives to expand their turf. But Congress itself, rather than agencies, is the prime mover behind regulatory growth.
Rep. J.D. Hayworth, Arizona Republican, and Sen. Sam Brown-back, Kansas Republican, who have introduced the Congressional Responsibility Act, recognize Congress delegates too much lawmaking power to unelected agencies. Rather than blame agencies for emphasizing the very regulating that Congress appointed them to do, they would require that agencies’ final rules be approved by Congress and signed by the president before they are binding. Elected representatives would be forced to make the tough calls.
More than 4,000 new rules every year is a lot of regulation without representation. The public shouldn’t be bogged down with this regulatory torrent if Congress can’t even take the time to assess it as it passes by. Congress’ duties can be made easier if it approves new regulations by voice vote rather than by tabulated roll call, or if it approves several regulations at once. The mechanism doesn’t matter so much as the principle of explicit accountability to voters.