Obama Addresses Economy And ‘The Financial Crisis Five Years Later’

Today and this week, President Obama will address The Financial Crisis: Five Years Later in an effort shift attention back to domestic economic issues.

He will take credit for: reacting to the 2008 crisis “with speed,” “stabiliz[ing] the financial system,” building “confidence in the banking system,” “heal[ing] our housing market,” support[ing] small business,” (they didn’t build that), rebuilding household wealth, restoring credit to families, saving the auto industry. Plus a few other things.

Adoring fans shall be positioned in the background.

Like every other economic address, though, he will not address government regulatory culpability in the financial crisis, nor his own renewed expansion of executive regulatory power.

Republicans point to spending, the unemployment rate and the fact that millions have given up, and Obama’s continued health and energy policies that stunt growth.

Debt-ceiling notwithstanding–expect to hear about it today–regulation like that championed by Obama is the real economic crisis of the day.

Worth noting in that regard is the Office of Management and Budget’s (OMB) 2013 Draft Report to Congress on the Costs and Benefits of Federal Regulations, on which a public comment period recently closed.

OMB wildly understates the cost of regulation, yet it’s all we have officially with respect to measuring the regulatory state.

Regulation and taxes are both means of achieving governmental ends—both impact aggregate output, prices and employment. Both can hurt.

Coherent federal regulatory agency decision-making requires linkage between agency regulatory choices—and consequences for those choices. We don’t have that.

Unlike private entities that face opportunity costs, agencies’ future regulatory actions are not constrained following any particular regulation they issue.

Agencies regulate heedless of what other agencies are doing, with little concern for cost, and with no worry that regulating one aspect of the economy will lessen the ability to regulate another.

The result is over-reach that still will not be addressed by this President, “five years later.”

It cannot be surprising that agencies lack constraints when issuing regulations, since the Congress that delegates power to them itself lacks restraint. And, the president repeated says he will make law even when Congress won’t, that he “won’t wait.”

How has it come to this? It should concern all of us that lawless legislation (there’s a phrase) and regulation encroach upon ever-more aspects of normal daily life.

As Obama’s speech today will underscore, the national government recognizes few constitutional bounds that would otherwise constrain interference.

The national(!) government simply does what it wants in finance, education, retirement, healthcare, communications and Internet, personal privacy and the right to anonymity, cybersecurity, energy access, infrastructure, environmental amenities or markets for safety.

We can improve OMB’s annual Benefits and Costs reviews, but fundamental change, to use a phrase, means congressional accountability and ending “regulation without representation” rather than merely denouncing derivative agencies or scolding OMB’s inadequate audits.

Democratic accountability, and legitimacy itself, requires something like the Regulations from the Executive in Need of Scrutiny (REINS) Act, “to provide that major rules of the executive branch shall have no force or effect unless a joint resolution of approval is enacted into law.”

REINS is sponsored in the House by Todd Young (R-Indiana) and in the Senate by Rand Paul (R-Kentucky). It passed the House, the Senate is still ignoring it.

Variants of what is now REINS emerged since the 1990s (Rep. J.D. Hayworth of Arizona, Rep. Nick Smith of Michigan and Sen. Sam Brownback of Kansas all introduced congressional accountability legislation).

The basic idea provides for limiting regulatory agency discretion with an expedited but mandatory congressional vote on big regulations (usually “economically significant” rules with $100 million in annual impact).

Potentially burdensome new regulation would thus become subject to legislative procedures appropriate to their magnitude, thereby “reining” in the failure to maintain constitutional separation of powers between legislation and execution.

Ours is indeed a separation of powers crisis; but the more fundamental a crisis is that of the elected national government having far much power in the first place.

REINS doesn’t quite address that reality.

That is the real issue at hand; that clashes between free enterprise and a planned economy, between the individual and the state.

In the meantime, though, while the President uses grand anniversaries to call for yet more government intervention that caused the crises he commemorates, OMB must do the best job of reviewing and documenting the regulatory state that it possibly can, and the Draft Report is the current vehicle.

Policy should strive toward tolerating no “off-budget” or unacknowledged government-caused expenses, whether fiscal, regulatory, interventionist, “transfer” or paperwork.

Such boring ol’ facts help make the case for REINS and for liberty.