Free to Prosper: Regulatory Reform

Read the full chapter on regulatory reform here

The COVID-19 pandemic changed a lot of things. One of those things is regulation. People quickly realized that regulations were making life under lockdown more difficult than it needed to be. Policy makers at all levels of government responded by waiving more than 800 regulations that were hindering the virus response and the economic recovery. These regulations included bans on telemedicine, licensing and permit regulations that made it difficult for workers and businesses to adapt to the new conditions, and rules that made remote education more difficult. As of this writing, the Food and Drug Administration is allowing more reasonable approval times for potential COVID-19 treatments, and fast-tracked approval of recently developed vaccines.

A good policy-making rule of thumb is that if a regulation is not needed during a crisis, then it was probably never needed in the first place. The worry is that those harmful rules will simply return, with reinforcements, once the worst of the crisis passes.

Throughout 2020, the Competitive Enterprise Institute pursued a #NeverNeeded campaign to give policy makers ideas for reining in never-needed regulations that were harming the virus response and the economic recovery. The policy recommendations cover a wide variety of areas, from technology, health care, and energy to the regulatory process itself—just like this document does. But while the virus response and economic recovery will last far beyond 2020, so must the push for needed regulatory reforms. The new Congress has a lot of work to do.

Suspending never-needed rules at all levels of government during the COVID-19 crisis was the most substantial regulatory reform push in America since the Carter and Reagan years. But 800 regulations are not very much when one considers that the Code of Federal Regulations contains more than 185,000 pages and features more than 1.1 million individual regulations. This chapter lays out some general principles for sound COVID-relevant regulatory reform, and gives a brief overview of the extent of the federal regulatory state. It then applies those principles to a broad range of system- level regulatory reforms. The rest of this volume contains issue-specific reforms that also follow from these principles.

Principles of Sound Regulatory Reform

  • If a rule was not needed during the COVID-19 crisis, it was probably never needed in the first place.
  • Getting rid of specific regulations is not Congress must also reform the systems that create those regulations.
  • Congress—not just the executive—needs to be involved in reform.
  • Congress should require agencies to be more transparent about the regulations they issue and their cost.
  • Remember that regulations are made and enforced by the real-world government we have, not the ideal government we want.

Each of these principles deserves attention. During good times, a growing economy can take on more regulatory burdens in the same way that a larger dog can host more fleas. That changes when the dog becomes sick—almost literally, in the case of the COVID-19 crisis. When unemployment spikes into double digits and people fall behind on the rent, there is no case for keeping regulations that prevent people from entering a new line of work or working from home. Moreover, the harms those regulations are causing during COVID-19 should never have come into being. If a regulation does not help during a crisis, it was probably never needed.

The Constitution states, “All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.” Unfortunately, Congress has done little to date to lift never-needed regulations. The White House issued several executive orders encouraging agencies to waive regulations harmful to the virus response and economic recovery, using emergency powers, if necessary. This action is in addition to pre-COVID-19 executive orders requiring agencies to eliminate two regulations for each new one they enact and to improve disclosure of “regulatory dark matter”—guidance documents and other agency issuances that do not go through the rulemaking process yet carry regulatory weight.

In this chapter:

  • Plan Regulatory Reform for the Long Term
  • Reform the Rulemaking Process
  • Account for and Curb Regulatory Dark Matter
  • Improve Disclosure by Requiring Agencies to Publish Regulatory Report Cards
  • Establish a Regulatory Reduction Commission to Repeal Outdated and Obsolete Rules
  • Impose Automatic Sunsets for All New Regulations
  • Require Congress to Vote on Significant New Regulations
  • Publish a Federal Regulatory Budget
  • Abolish Counterproductive Antitrust Laws

Read the full chapter on regulatory reform here.