How the shutdown is impacting regulation

For the seventeenth time since current budgeting rules were adopted in 1976, the federal government is shut down. Seventeen years of relative peace have devolved to business as usual. Roughly 800,000 federal workers are sitting idle. Despite the reduced workforce, the shutdown began with a bang on the regulatory front. During the shutdown’s first week, the Federal Register, the government’s daily journal where all new rules are published, contained 113 new regulations, more than any other week so far this year.

In fact, the first two days of the shutdown were among the year’s busiest. The Register’s weekly page count topped 2,000 pages for just the third time all year. Agencies were likely trying to jam in as many rules as they could before shutting their doors. There is a lag time of a few days for Federal Register publication, which is why the numbers were so high even while doors were closed.

But since then… crickets. Only 6 new regulations appeared during the shutdown’s first full week.

So what will happen going forward? The two Gingrich-Clinton shutdowns of 1995 and 1996 offer a possible guide. If the current shutdown follows its 1990s predecessors, regulations will stay at a slow trickle for the duration of the shutdown, followed by a deluge when the government resumes full operations.

The result is that the shutdown, as with most other areas, will have almost no net effect on the actual amount of regulation. Some rules were likely rushed ahead of the shutdown, and others will be issued a little later than planned.

This is not entirely a bad thing. As the late Nobel-winning economist Ronald Coase wrote, “An economist who, by his efforts, is able to postpone by a week a government program which wastes $100 million a year (what I would consider a modest success) has, by his action, earned his salary for the whole of his life.” By that measure, and no other, President Obama and his Republican opponents are turning out to be fine economists. Let’s look at the results.

Things began to slow down last Friday, the third day of the shutdown. There were 133 additional pages and six new regulations; an average day sees roughly 300 new pages and 15 new regulations. Things have been even slower this week. Monday’s edition added only 12 pages and two final regulations. Tuesday’s 33 pages did not include a single new regulation. Wednesday’s edition was 6 pages total, the shortest this analyst has ever seen. All in all, just 6 new regulations appeared this week. The normal range is 70-80.

The first Gingrich-Clinton shutdown, which lasted from November 14 through 19, 1995, began much like the current one, with a definite uptick in rules as agencies got in as many rules as they could before they closed their doors. The first two days were fairly busy, with 37 new regulations, or about double the usual pace. After that, regulations slowed down to single digits per day. Again accounting for a couple days of lag time, regulations went to roughly double their average number for a few days when operations resumed, then back down to normal levels.

The Gingrich vs. Clinton showdown wasn’t over, though, and the government shut down again on December 16. This time it stayed closed for three weeks, reopening on January 6, 1996. The pattern roughly repeated itself. After the dust settled for good, 82 new regulations were issued in a single day, January 10 — more than quadruple the average during normal times. This suggests that the longer this year’s shutdown goes, the higher the post-shutdown spike in regulations will be.

No one knows when the current shutdown will end. While the current reprieve from new regulations will likely last as long as the shutdown does, it won’t so much reduce regulatory burdens as delay new ones. As Coase pointed out, though, there is value even in that.