The Corner

Economy & Business

Would Jeb’s Plan to Tackle Overregulation Succeed?

In a new paper titled “Red Tape Rising: Six Years of Escalating Regulation Under Obama,” the Heritage Foundation’s Diane Katz and James Gattuso write that in 2014, the government issued 2,400 new regulations, including 27 major rules that may cost $80 billion or more annually. These rules range from forcing restaurants to list calorie counts — even though past experiments have revealed that such measures fail to change consumers’ behavior — to reducing consumer choices and increasing energy prices by imposing tighter energy-efficiency mandates on the plugs that we use to charge cell phones, laptops, and even electric toothbrushes.

Washington regulatory bureaucrats’ control over the economy and Americans’ lives is intensifying. According to Katz and Gattuso, during the first six years of the Obama administration, the number of new major rules reached 184, including 13 regulations of the financial system that saw the light of day in 2014. Another 126 are in the pipeline. That’s more than twice the number imposed by President George W. Bush, who himself wasn’t shy about regulating the economy.

And that’s only the tip of the iceberg. Official regulatory costs are vastly underestimated because of the large number of rules for which costs have not been fully quantified. More importantly, official costs never appropriately account for the businesses, innovations, and economic growth that will never exist because of the continued accumulation of regulations. Needless to say, the need for reform of the regulatory system has never been greater.

It’s a welcome development, then, that on Tuesday, Jeb Bush released a plan to tackle precisely this problem. 

Bush’s plan is a good start. Like his tax reform plan, it has a clear goal: to reinvigorate growth.  The consistency in goals speaks highly of the governor. He also deserves credit for tackling an issue that bores most people to tears: When was the last time a presidential candidate put out a plan to address overregulation?

Bush explained the gist of his plan in the Wall Street Journal.  He leads with his objective of growth:

Think what the U.S. could be and the prosperity we could have if we rolled back the overregulation that keeps us from ranking in the top 10. It wouldn’t just be easier to start a business. It would also be easier to find a job, get lifesaving medicine, get a loan, and see a doctor or health professional. Costs and prices would go down. The U.S. economy, stalled in the worst economic expansion since World War II, would be unleashed. Regulatory reform alone could add more than three percentage points to U.S. GDP by 2025.

Among the actual plan’s policy solutions you find a regulatory freeze until an independent agency can review the final rules in the pipeline and decide to implement or kill them, a retrospective review of new regulations, and the creation of a presidential task force that will signal to government agencies they aren’t the ones driving the regulatory agenda anymore.

Bush would also require that his nominees to regulatory agencies take a “Regulatory Hippocratic Oath.” All well and good, but he doesn’t say what would happen if a nominee violated said oath. Would he be fired? 

In addition, Bush would issue an executive order “to compel agencies — including independent agencies — to strictly adhere to principles of smart regulation,” which he goes on to list. Principles include to ”prefer state-based solution to federal solutions” and to ”select the least costly regulatory alternative” unless there is a real good reason not to​. Sadly, he would only ask agencies to “abstain from regulation where there is not identifiable market failure​,” rather than forbid them. [The framing of this principle is also a problem considering that market failure in the regulatory context is always about externalities resulting from government intervention] 

In general, I am not crazy about commissions unless they resemble the Base Realignment and Closure (BRAC) commission (tasked with increasing Defense Department efficiency) and are designed specifically to reduce the size and scope of government. So I was happy to read this part of the plan:

Spring Cleaning of Existing Regulations: Governor Bush will create an independent commission to conduct a regulatory spring cleaning.  The current process for reviewing existing regulations works poorly. Those who create the rules review them, and they often ignore regulations’ cumulative and interactive effects. An independent commission—modeled along the lines of the military base closing commission or Australia’s regulatory review commission—will review regulations from the perspective of regulated entities. Governor Bush will encourage Congress to codify the commission’s mission and establish procedures for approving or rejecting its recommendations through a simple up-or-down vote. In its work, the commission will identify regulatory laws that need to be modified or repealed and areas of regulation that Congress should relinquish, in whole or in part, to state control. The commission will publish its recommendations within the first year of Governor Bush’s administration.

The devil will be in the details and in the way this is implemented, but that may be the strongest part of the plan so far.

Bush also promises to make regulators accountable to the American people rather than to interest groups, stopping collusion between the two by ending the practice of ”sue and settle,” reforming the court, and embracing the REINS Act.

While it’s encouraging that the governor cares about the issue, I fear the plan would only nibble at the edges of the regulatory monster by not going far enough to rein in the arrogance of regulatory agencies and their bureaucrats. There are so many agencies ruling over so many parts of our lives that there is no way to provide effective oversight without shutting down at least half of them. And these agencies haven’t had to worry about being held accountable to anyone for years. Bush appears to understand this, but while I commend him for his attempt to give power back to the people, I don’t think his plan will ultimately achieve that goal.​

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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