Sustained Economic Growth Needs Congressional Regulatory Reform
Former President Trump was the first president in 30 years to take a serious interest in regulatory reform. You might have to go back to former President George H.W. Bush’s Council on Competitiveness for some of the passion.
Trump’s innovations included getting rid of two old rules for each new one added, capping total compliance costs at present levels, and making guidance documents, which often have de facto force of law despite rarely going through the standard rulemaking process, accessible to the public.
Many of his positive reforms were undone on Biden’s very first day in office since Trump had enacted them with executive orders instead of working with Congress on legislation to make them permanent. Major regulatory reform legislation last happened in the late 1990s.
Another problem was Trump’s own regulatory impulses that offset deregulation, like increased burdens on trade, ramped up antitrust enforcement, threats to muzzle media outlets, price controls, subsidies and corporate welfare with regulatory effect and even new social programs.
Trump’s failure to engage Congress was a massive missed opportunity, especially since his party held a majority in both chambers of Congress for his first two years. The regulatory “tax” is at least as significant as the fiscal tax reform he emphasized. Had Congress codified “Trumpian” reforms in legislation — and GOP members had introduced several bills to do so (and have even done so again, with greater futility, in the Biden era) — they would still be in place.
Now, as the recovery from COVID and the political reaction to it continues, regulatory relief would be a potent economic stimulus that would not add to the deficit like everything else that was and is being pursued, such as Biden’s costly and interventionist jobs and families plans.
The just-released 2021 edition of the Competitive Enterprise Institute’s annual Ten Thousand Commandments report pegs regulatory costs at least $2 trillion per year — more than twice the total cost of the infrastructure spending bill the House passed last Thursday.
That’s a magnitude equivalent to over $14,000 per household, or more than typically spent yearly on food, clothing, education, or any other expense except housing — itself more expensive thanks to steel and lumber tariffs, zoning and land-use regulations.
Rolling back even a fraction of regulatory burdens would lower consumer prices, make healthcare more accessible, make it easier to start new businesses and help existing businesses adapt to a post-COVID world.
The Biden administration’s focus on COVID has mostly meant pitching high-visibility spending, such as infrastructure projects easy to show on camera. There are two problems with this. One, deficit spending and the debt are already at record levels. Taxpayers may not wish to learn what comes after a trillion. Two, most of the recovery is happening outside of Washington, thanks to private enterprise and initiative.
It’s a big ask given President Biden’s plain preference for expanding Washington’s purview, but Congress and Biden should incorporate regulatory liberalization in the recovery agenda and in policy generally. The Code of Federal Regulations now tops 185,000 pages. Many of its rules are out of date, redundant, or overly burdensome. Biden could press for a commission to go through them, with an eye for rules slowing or impeding sustained recovery. Congress could vote on a reduction package, a process echoing federal Base Realignment and Closure commissions to close post-Cold War military bases back when Biden was a Senator.
In this vein. Sen. Rick Scott (R-Fla.) and Rep. Byron Donalds (R-Fla.) last week introduced the Unnecessary Agency Regulations Act to task the Office of Management and Budget (OMB) with flagging the rules it reviews for redundancy, obsolescence and excess burdens and letting Congress know about them. If Biden would support this idea it would aid and sustain recovery, not merely represent a lonesome nod to bipartisanship. That 1990s regulatory reform noted above happened under former President Bill Clinton, and was overwhelmingly bipartisan.
Regulatory reform would also free up agency resources to focus on their core missions and be more resilient in terms of preparation for tomorrow’s inevitable crises. The Centers for Disease Control and Prevention, for example, was caught flat-footed in the early stages of the COVID outbreak in part because much of its staff was busy spending millions of dollars on anti-vaping campaigns, rather than on controlling diseases.
Read the full article at The Hill.