Republicans Vow War on Government Red Tape
Business + Economy

Republicans Vow War on Government Red Tape

Iva Hruzikova / The Fiscal Times

Sen. Jim DeMint, R-S.C., has a message for federal regulators the next time they’re inclined to write a new rule: Be prepared to defend it before a congressional committee.

“One of the things I’ve found about federal bureaucrats is [that] a lot of them are very smart . . . but they don’t like working in the spotlight,” DeMint, a leading conservative and Tea Party champion, said recently. “If they thought they were going to have to come over to testify in front of a bunch of congressmen and senators, they’d be a lot more careful about what they’re writing.”

With the Republicans poised to take control of the House and exert more influence in the Democratic-controlled Senate beginning next week, DeMint and other GOP players plan to wage war on government rule-making and attempt to roll back or block implementation of key elements of the major health care and financial reform measures.

The last time congressional Republicans swept to power in the mid-1990s, they swiftly enacted the Congressional Review Act that gave lawmakers the right to overturn new rules that added $100 million or more to the annual cost of the economy. Then-House Speaker Newt Gingrich, R-Ga., and other Republican revolutionaries said the 1996 law would protect businesses from costly and unwarranted government intrusion that would discourage economic growth. But in practice the law was rarely invoked and did little more than force the nullification of a Clinton-era workplace ergonomic regulation in 2001.

This time, GOP leaders have made the downsizing of government and tight restrictions on new regulations a central tenet of its agenda. The House Republicans’ “Pledge to America” campaign agenda vows to “rein in the red tape factory” in Washington, asserting that “Excessive federal regulation is a de facto tax on employers and consumers that stifles job creation, hampers innovation and postpones investment in the economy.” Republicans say they will wage their campaign on many fronts:

  • Incoming Financial Services Committee Chairman Spencer Bachus of Alabama says he will review the Dodd-Frank financial reform legislation with an eye to relieving banks and Wall Street financial institutions of undue regulatory burdens.
  • Republicans want to challenge numerous “job-killing” Environmental Protection Agency rules and initiatives including efforts to regulate greenhouse gas emissions and impose national air quality standards for ozone and toxic industrial boiler emissions.
  • GOP lawmakers are exploring ways to block the implementation of President Obama’s health care reform law by denying the Department of Health and Human Services and other agencies the funding necessary to phase in key programs.
  • Finally, they will attempt to put more teeth into the Congressional Review Act — with the changes marketed as the REINS Act, short for “Regulations from the Executive In Need of Scrutiny.

The Congressional Review Act allows Congress to rescind a rule by passing a “resolution of disapproval,” which cannot be filibustered. The resolution also requires presidential approval and can be invoked only for a few months after a rule is issued.

“If we’re going to have an $800 million fee
imposed upon us, we should have somebody
to whom to complain.”

Rather than Congress waiting for federal regulations that add $100 million a year or more to the cost of doing business to take effect and then trying to overturn them, the REINS proposal would require that such “economically significant” regulations be approved by the House and Senate and signed by the president before they could be put in force — enhancing congressional leverage over the bureaucracy.

The REINS Act is sponsored by Rep. Geoff Davis, R-Ky., who said he first became interested in the issue about five years ago — when a consent decree involving Clean Water Act compliance was imposed by a federal district court on three counties in his northern Kentucky district. The court order is expected to cost in excess of $800 million and eventually double local sewer rates. “I know some of my colleagues [in Congress] who like the idea of being able to blame an agency and avoid having to be in the spotlight,” said Davis, a former manufacturing technology consultant. “I’m not advocating anything more than restoring the balance of legislative controls that will allow somebody to be held accountable. My citizens should be able to say, ‘If we’re going to have an $800 million fee imposed upon us, we should have somebody to whom to complain.’”

“In stark contrast to the [Bush] administration,
the Obama administration has taken its role
of protecting the public seriously…”

Government red tape is a hearty political perennial that has been used effectively by both parties for decades. Republicans traditionally have derided rule-making as a drag on the economy and an infringement on individual liberties. Democrats, for their part, have heralded government regulations as essential to providing safety in the work place, imposing tough food safety standards, helping to reduce water and air pollution, and protecting consumers against unscrupulous business tactics by banks, credit card companies and mortgage lenders.

Democrats and environmental groups frequently vilified the Bush administration for its efforts to roll back environmental and clean water standards and for withdrawing from the Kyoto Protocols for controlling greenhouse gas emissions.

“In stark contrast to the [Bush] administration, the Obama administration has taken its role of protecting the public seriously, and has been far more active in pursuing its rulemaking responsibilities,” OMB Watch, a liberal-leaning research and advocacy group, concluded in a recent report.

A study published this fall by the Small Business
Administration estimated that federal regulations
add $1.75 trillion a year in costs to the economy…

Over the past three decades, federal agencies published 133,000 regulations, according to the Office of Management and Budget — with 1,268 considered “major” and having substantial economic impact. A study published this fall by the Small Business Administration estimated that federal regulations add $1.75 trillion a year in costs to the economy, while defining this figure as “an accounting of the non-budgeted costs imposed on individuals and businesses to comply with the regulations.” The latter costs are “over and above those that show up in the federal budget and agency personnel charts,” according to the study.

But the Office of Management and Budget, in its latest version of an annual report to Congress on the benefits and costs of federal regulation, puts the figure at a small fraction of the SBA estimates. OMB pegs the annual cost of regulations between $43 billion and $55 billion, which it contends are outweighed by economic benefits in the range of $128 billion to $616 billion.

W. Mark Crain, a Lafayette College professor who prepared the SBA regulatory estimate, notes that OMB’s much lower cost estimates don’t include “non-major rules” or rules that were adopted more than 10 years ago. At the same time, Crain conceded that his report “does not address the benefits of regulation, an important challenge that would be a logical next step toward achieving a rational regulatory system.”

While Republicans contend that federal rulemaking has accelerated since President Obama took office two years ago, the conservative Heritage Foundation concluded that both parties share the responsibility. A Heritage report notes that the Code of Federal Regulations hit 163,333 pages in 2009 — a 22,000 page increase since the beginning of the decade, with nearly 16,700 pages of this increase occurring during the eight years of Republican George W. Bush’s presidency.

The Heritage Foundation recommends a “sunset date” by which federal regulations would expire unless specifically renewed by Congress, and establishment of a “Congressional Regulation Office” to provide lawmakers with an “independent source of information on regulatory programs” — while serving as a counterbalance to the executive branch.

‘If within an agency structure you add a new regulation,
you have to eliminate one of basically
equal size and effect.’

Sen. Mark Warner of Virginia, a moderate Democrat who is working on an alternative to the REINS Act, says that Congress and the public need access to better data in trying to evaluate the impact of government regulations. “We’ve got to do a better cost/benefit analysis on the cost of regulations,” he said during a recent appearance at the Washington-based American Enterprise Institute. Warner is working out the details for what he terms a “regulatory pay/go” plan, while seeking to attract bipartisan support. “It’s a proposal that says, ‘If within an agency structure you add a new regulation, you have to eliminate one of basically equal size and effect,’” Warner explained. “We can’t regulate everything, and we need some kind of escape valve, particularly during times of tremendous economic duress,” Warner added.

While the REINS Act has a good chance of passage in the new Republican-controlled House, its prospects are far less certain in the Senate, which remains in the hands of the Democrats. Senate Majority Leader Harry Reid, D-Nev., hasn’t tipped his hand on what regulatory reform measure he might embrace, although he appears ready to move on the issue.

“We believe we need to streamline regulatory policies that unnecessarily put the U.S. at a competitive disadvantage and will work with our caucus, the administration and the Republicans on the best way to do that,” a Reid spokeswoman said.