American Jobs and Growth Agenda, Part 3: Regulatory Reform
Let’s start with an anecdote from Hurricane Sandy’s aftermath. Writer Roger Kimball wanted to repair his Connecticut home after it flooded. But, as he writes in the Wall Street Journal, he was dropped into a Kafkaesque world of bureaucratic runarounds because the local zoning authority—citing FEMA rules—demanded additional repairs. Months after the storm, he and his family still live in a rented house while their home remains empty.
Confusing and conflicting regulations aren’t just local issues. They’re also prevalent at the federal level, and costly. Very costly. According to the American Action Forum, $518 billion in new regulatory costs have been dropped on the economy in the last four years, nearly $216 billion in 2012 alone.
Three big culprits are EPA, the Dodd-Frank financial reform law, and the health care law, and in 2013, expect more costly rules from each of them.
In 2012, EPA pushed through Utility MACT that has caused coal-fired power plants to close all over the country. This year, the agency is working on a proposed ozone regulation that could cost $90 billion, duplicative federal rules on hydraulic fracturing that would slow the shale energy boom, and proposed greenhouse gas rules that could wrap regulatory red tape around 6 million facilities.
On Dodd-Frank, its continued implementation—only one-third of the rules have been finalized—threatens diverse sources of capital like money market mutual funds. Yet, as Donohue wrote in a column last December, even when all the rules are in place, Dodd-Frank will still “fall short of the reform we need.”
As for the health care law, businesses are struggling to keep up (let alone comply) with the new regulations stemming from the law. Late last month, the federal government issued guidance for businesses to rely on in assessing which employees are full-time. Under the law, all but the smallest of employers must either offer “affordable and sufficient” health insurance to their full-time employees (and their dependants) or pay a penalty. "[B]usiness owners have the choice to calculate their [full-time employees] …by averaging the [hours worked during the] full 12 months of 2013 or a consecutive six-month period during the year," the Wall Street Journal reports. Another example is mandated menu labeling for chain restaurants and "similar retail food establishments," including pizza franchises and grocery stores, that will cost $757 million.“The new rules and mandates in the health care law—not to mention the extraordinary confusion businesses are facing as they try to comply—could drive costs through the roof and cause many Americans to lose the health coverage they are accustomed to,” Donohue said in his State of American Business address.
These three areas show us why the regulatory system must be modernized. To hold regulatory agencies more accountable, Congress must take back the constitutional lawmaking authority it has handed to bureaucrats and ensure that agencies develop regulations that implement the will of Congress. In his speech, Donohue mentioned the Regulatory Accountability Act, as a way to reform the system. Bill Kovacs, the U.S. Chamber’s Senior Vice President Environment, Technology and Regulatory Affairs explained why the bill is necessary, writing, "By compelling agencies to do their homework and show the public the data that supports their action early in the process, the Act will result in better rules."
Right now, burdensome costs, confusion, and uncertainty reign. A modern economy needs a well-ordered set of regulations that are understandable and effective. Because excess regulations hurt the economy and job creation, Washington needs to reform the system.
Posts in this series: