Time for a Red Tape Rescue
August 5, 2011 | 1485 views | 1 comment
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By Ed Feulner
“The economy isn’t growing as fast as it needs to.”
That’s Commerce Secretary Gary Locke addressing the latest report on the country’s economic output. His comment is a model of understatement: gross domestic product grew less than 1 percent in the first half of this year. As Reuters news agency put it, the U.S. economy came “perilously close to flat-lining in the first quarter.”
Coming on the heels of the last monthly job figures, though, this isn’t surprising. Unemployment is at 9.2 percent.
The numbers are even worse for younger male workers. “In 1954, about 96 percent of American men between the ages of 25 and 54 worked,” writes New York Times columnist David Brooks. “Today that number is around 80 percent. One-fifth of all men in their prime working ages are not getting up and going to work.”
One of the biggest factors behind whether companies hire or not is regulation. It’s expensive to run a business, and if government agencies are saddling you with more and more expensive rules, you’re simply not going to have as much money left over to hire additional employees -- or to pay the ones you already have as high a wage as you might like.
We have fresh evidence, in fact, of just how costly those myriad rules coming out of Washington can be. Regulatory experts James Gattuso and Diane Katz have a new report out on this “hidden tax” -- so-named because, unlike taxes, they don’t have their price tags out in the open. Yet, as with conventional taxes, regulations raise the price of everything for Americans, from consumer goods to health care.
In the first six months of fiscal year 2011, 15 major new regulations were issued. The annual bill? $5.8 billion. And that’s after one-time implementation costs of $6.5 billion. That’s par, however: So far, the Obama administration has imposed 75 major new regulations, with an annual price tag of $38 billion.
“Major” here, by the way, is a specific term used by the government to refer to regulations that are expected to cost at least $100 million. There are, of course, other rules in effect that fail to meet this threshold. But they’re out there, too, and they add up. Major or otherwise, they’re sitting on the chest of an economy that’s gasping for breath.
Unfortunately, this burden is about to get even heavier. As Gattuso and Katz write:
“This flood of red tape will undoubtedly persist, as hundreds of new regulations stemming from the vast Dodd-Frank financial regulation law, Obamacare, and the EPA’s global warming crusade advance through the regulatory pipeline -- all of which further weakens an anemic economy and job creation.”
Not everyone is sorry to see the regulatory load get heavier, however. After all, more rules mean a bigger federal workforce. One recent study found that the regulatory staff at federal agencies went up about 3 percent between 2009 and 2010. It’s estimated to go up another 4 percent in 2011.
That’s right -- the employment situation isn’t bad for all groups. The ones making it difficult for the rest of us to hire new people and conduct business are doing fine.
This can’t continue. Congress can help free us from this red tape by taking some important steps: 1) Require congressional approval of every major new rule. Right now, they can veto, but it rarely happens. 2) Create a Congressional Office of Regulatory Analysis -- a necessary check on the executive branch’s regulatory powers. 3) Establish a sunset date for each federal regulation, to keep outdated rules from outliving their usefulness.
We can keep the economy from flat-lining. But we need to realize that costly, unnecessary regulations are part of what’s making it so critically ill.
Ed Feulner is president of The Heritage Foundation http://www.heritage.org
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