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  • President’s Assault on Regulation Rings Hollow

    Red tape chokes economic freedom

    Forget the War on Business. That’s so 2010. Say hello to the War on Regulation.

    At least that’s the message coming from the White House. The administration’s regulatory offensive began Jan. 18 with an opinion piece by the president in the Wall Street Journal. The op-ed coincided with a new executive order which, the president wrote, not only ensures that regulators will consider the economic consequences of new rules, but also launched a 120-day government-wide review of regulations already on the books. The promised review even got a mention in the State of the Union address.

    Sounds like good news for a beleaguered economy. But is this a real war on regulation or just a charm offensive?

    Businesses and individuals certainly could use some regulatory relief. New rules have been coming out of Washington at an unprecedented pace. Based on information from the Government Accountability Office, some 43 major rules imposing new costs on the private sector were adopted during the last fiscal year. These rules imposed a record $28 billion in new annual costs on Americans.

    Contrast that with the total of just $1.5 billion in regulatory relief scored over the same time. In his opinion piece, President Barack Obama acknowledged the problems of overegulation, writing that sometimes “rules have gotten out of balance, placing unreasonable burdens on business — burdens that have had a chilling effect on growth and jobs.”

    Just Plain Dumb
    While stressing that he would not back away from needed regulations, a point emphasized even more strongly in his State of the Union address, he said that “we are also making it our mission to root out regulations that conflict, that are not worth the cost, or that are just plain dumb.” Not quite Ronald Reagan, but pretty strong stuff.

    The executive order that is supposed to do this hardly seems up to the job. In large part, it simply reiterates the guidelines for regulatory review in use since 1981. And in some ways, it even opens the door to more regulation.

    In assessing benefits of proposed rules, for instance, regulators are instructed to consider non-quantifiable factors such as “human dignity.” Oddly, there’s no corresponding language on non-quantifiable costs, such as consumer choice or individual freedom.

    Underwhelming Promise
    Even more underwhelming is the promised “government-wide review” of rules. Such a review, similar to that undertaken by President George H. W. Bush in 1992 and overseen by Vice President Dan Quayle, would be welcome.

    But that’s not what the executive order calls for. Rather than require agencies to eliminate, or even just identify, unwarranted rules during the next 120 days, the order merely requires agencies to submit a “preliminary plan” for reviewing regulations in the future, with the goal of making their regulatory program either less burdensome or “more effective.”

    This is hardly new or groundbreaking. In fact, agencies were required to prepare exactly such plans under a 1993 executive order signed by President Bill Clinton, although there is little evidence they were actually implemented.

    Moreover, the initiative is hardly “government-wide.” It excludes independent agencies such as the Federal Communications Commission, the Securities and Exchange Commission and the new Consumer Financial Protection Bureau. In so doing, the president has excluded many of the largest producers of red tape.

    Phony War
    And arguments that the president has no authority over these agencies ring hollow. Each is headed by an Obama appointee who would, no doubt, gladly participate in the program if asked. In fact, that is what happened in 1992, when independent agencies fully participated in Bush’s review.

    This is a phony war on regulation. And it’s a blown opportunity for progress on a problem that need not be partisan. After all, no president did more to eliminate outdated regulation than Jimmy Carter, a Democrat. Even Clinton, certainly no deregulator, achieved some significant reforms.

    To show that this new initiative is more than talk, Obama must follow up on his rhetoric with action. He should identify specific regulations in need of reform while requiring agencies to identify others. He should ask independent agencies to do the same.

    And he should work with Congress to develop legislative reforms to ensure that the tide of regulation can be controlled effectively in the future.

    Until and unless such specific steps are taken, the president’s words will remain just words.

    This article first appeared at Bloomberg Government.

    Posted in Economics [slideshow_deploy]

    8 Responses to President’s Assault on Regulation Rings Hollow

    1. ejj, fort worth, tex says:

      Yes, there may be some regulations that are burdensome, but ultimately they protect us from people and organizations whose only interest is profit. So the people that howl the most about regulations are people that, absent the regulations, would stand to make the most profit. Regulations are also an additional layer of protection from bad actors in the business world. Do they work 100% No…but they're generally better than no regulations at all.

    2. Jeff says:

      ejj,

      I don't want to do business with people that are not in it for the "profit". If not for the profit motive they won't compete for my business. All too often regulation does nothing to improve the quality of service but serve to reduce competiton in favor of connected businesses.

      Why do you go to work if not for the profit motive ? Why do you think others that are in business to make a profit are wrong of evil ? Are you evil for working for money ?

      Certainly some regulations do protect me from bad actors and dangers that I may not have the resources to properly evaluate (drugs, car safety, food safety) but most regulations are not designed to do those things but to make decisions on my "behalf" that I and perfectly capable of making on my own.

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    5. Ron, Galveston, TX says:

      Phony? Given Obama's complete lack of credibility his statements are actually in line with his on-going methods: Extoll dreams and walk away doing nothing. All of his statements are "shovel-ready".

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    7. Bobbie says:

      ejj, could you please help me understand why profit making businesses is such a bad thing you need government protection from? Why are you influenced to even care about business profit? Aren't you glad to have a job? I am not a business owner but I do know the American dream is what one makes it, in general it is to prosper in freedom. Why don't you want to do what it takes to prosper or be happy you have a job to make your life what you can within your means? I don't understand why you think paying government to do this for you is a good thing? Don't you like freedom?

    8. Bobbie says:

      Oh and ejj, the more frivolous costs to more frivolous regulations is why businesses can't afford to hire and some forced to close. Nobody knows what's going to happen tomorrow as there is more and more government intrusions and contentions business owners struggle to deal with that is taking away from freedom and promoting more government.

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