Economic Cost of Excessive Regulations Discussed

July 8, 2011

With the terrible jobs report that came out today (7/8/11) it is only fitting that there have been recent articles discussing the crippling effects of government regulations on the economy. Yesterday (7/7) the Washington Times editorialized on this subject pointing out that regulations create great uncertainty as to future business costs for entrepreneurs who will then not risk their capital. The Times reports that 195 major rules were reported to Congress by federal regulatory agencies in the first two years of the Obama administration. A major rule is one expected to have an expected impact on the economy of $100 million or more, or a major increase in costs for consumers or producers, or a significant adverse impact on the competitiveness of an industry, among other factors. (This is a bipartisan problem: there were 178 major rules in the last two years of the George W. Bush Administration.)

The destructive impact of these regulations especially in the environmental and energy sectors are becoming obvious to any objective observer.

That is probably why former Democrat U.S. Senator Evan Bayh co-write a Washington Times commentary piece with Andrew Card, former GOP White House chief of staff, with this title: Regulatory Reform Restart: Congress Needs to Dial Back Obamas Rule-Making Machine. I like one of their suggestions about passing the Reins Act: A good place to start would be to pass legislation pending in Congress to guarantee an up-or-down vote, with no Senate filibuster, on regulations with an economic impact of more than $100 million.

For more on the Reins Act, see Jonathan H. Adlers article in Regulation (Summer 2011). It strikes me that the Reins Act's greatest impact would be to make members of Congress take some ownership and accountability for regulations. Imagine the campaign ads that could come straight from monstrous verbiage presented in the Federal Register.