Tax cut aside, President Bush and Congress will eventually answer to taxpayers for the $2 trillion federal budget. But who answers for the $860 billion -- 8 percent of GDP -- that federal regulations now cost on top of official federal outlays?
Released July 8, our annual survey "Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State," finds regulatory spending equivalent to more than one-third of the entire federal budget itself -- a larger burden than the entire federal budget back in the 1960s. It's greater than Canada's GDP ($701 billion in 2000) and even greater than pretax corporate profits of $699 billion. But regulatory costs draw less popular furor because, unlike income taxes, they are often hidden in the prices of consumer goods.
In today's economy we badly need a new way of thinking about and getting control of the burgeoning regulatory state.
The Federal Register, where new rules are published daily, hit an all-time record high of 75,606 pages this past year (up from 9,562 in 1950, 20,036 in 1970, and 49,795 in 1990). In the pipeline are now 4,187 rules at various stages of completion. Only five agencies are responsible for more than half of this torrent: the Environmental Protection Agency (surprise!) and the Departments of Transportation, Treasury, Agriculture and Interior.
Recent proposals have included: workplace slip-and-fall hazard and indoor air quality mandates from OSHA; labeling of sausage casings and exported caviar from USDA; acceptable ingredients for bathroom grout from the EPA; smoke alarm location requirements for pre-fabricated homes from HUD; and proposed bans of frowned-upon backyard play sets under consideration by the Consumer Product Safety Commission. The Department of Transportation is busy with rules on daytime running-light glare, door retention and brake-hose reliability standards, side and roof crashworthiness, and radiator safety caps.
Many such rules are well intended. Others are questionable. But voters' connection to those who regulate is severed: Congress takes credit for popular regulatory initiatives, but can then blame agencies for costs. Regulatory reform during the Bush administration has a role to play in economic recovery. Phasing out inefficient rules, making regulatory costs as transparent as direct taxes, and making Congress directly responsible for those costs, are crucial to economic health. Congress delegates sweeping lawmaking power to unelected bureaucrats, and that must end.
Sunsetting: For starters, Congress could ask agencies and the OMB to propose rules to eliminate each year, and phase out new regulations every few years unless review finds cause to continue them. To get at some of the low-hanging fruit, an agency might be asked to offset the cost of a new regulation by ending one or more existing rules of roughly equivalent cost, or by persuading another agency to eliminate a regulation on its behalf. Anything that creates more of a need for a congressional nod would tend to force competition among agencies for the "right" to regulate, a culture absent today despite the fact that not all rules are equally beneficial.
As part of the "sunsetting" review process, an annual "Regulatory Report Card" might include historical tables on such measures as total numbers of rules produced per agency; the top rule-making agencies; the number of rules affecting small businesses, or impacting state and local governments. To the extent a report card exposes where agency cost estimates do and do not exist, it can highlight the best and worst agency efforts at disclosure and help ascertain whether the regulatory enterprise does more good than harm. This already seems to be one of the Bush administration's goals with the existing regulatory oversight function at OMB.
Regulatory Reduction Commission: Given that even tough sunsetting would take several years to reduce the existing $860 billion regulatory burden, Congress should consider a proposal, once made by Sen. Phil Gramm, for a Regulatory Reduction Commission. It could work like the Military Base Closure and Realignment Commission, which for a time helped resolve the politically tough task of closing obsolete military bases one at a time by assembling a bundle of them to vote on all at once. (Because everybody's base stood a good chance of getting "hit," the bundling provided some political cover.) Gramm's idea was for a congressionally appointed, bipartisan commission to hold annual hearings and assemble a broad-based package of cuts to be voted on without amendment, thereby making the package politically more difficult to oppose.
End "regulation without representation": Whatever measures Congress uses to address the regulatory state, dealing with the root of the problem requires ending excessive delegation, or "regulation without representation." Congress should not have bureaucrats to blame for regulatory excess that is Congress' fault.
A bill by Rep. J. D. Hayworth (R-Ariz.), the Congressional Responsibility Act, recognizes that principle and would require that Congress okay significant agency rules via an expedited process before they are binding. Article 1 of the Constitution grants legislative power solely to Congress. In that vein, major agency regulations should be turned into bills requiring congressional passage and a presidential signature -- no more or less than ordinary legislation. Sensible regulatory policy, as well as constitutional government, demands that every elected representative be on record for significantly costly regulations.
Some might complain that voting on agency regulations would bog down the Congress. But do we want Washington making so many laws that the legislature can't even pass them all on its own during waking hours? The proper time to assess the benefits of regulation is while Congress is contemplating legislation that later will become translated into regulations by agencies. Saving benefit appraisals for some distant time when regulations are written is backward. Those benefits were presumably the reason for Congress seeking legislation in the first place. If Congress thinks regulatory benefits are worth the costs, it needs to say so, and be held accountable. From now on.