The Agenda

Florida Sen. Marco Rubio’s Regulatory Reform Initiative

In an address sponsored by the Jack Kemp Foundation, Florida Sen. Marco Rubio outlined a series of new policy initiatives. Michael Memoli of the Los Angeles Times offers an overview

The first track Rubio outlined to drive economic growth was to ensure America remains at the forefront of innovation from the evolution of digital technologies. Access to the Internet was “central to human freedom,” Rubio said, adding that it should be a “national priority” to resist efforts to restrict it. He also called for expanding access to wireless Internet and boosting cooperation between federal research centers and the private sector.

He also called for expanding access to American goods through use of trade promotional authority and boosting energy production. Rubio also said he was working to develop a tax reform plan that would create added incentive for business to invest profits rather than “sitting on uninvested cash.” And he called for the establishment of an independent national board that would enforce a new limit on the economic cost of federal regulations, with the goal of limiting those he said are overly burdensome.

One of Rubio’s proposals, his call for a National Regulatory Budget, stands out as particularly interesting. Avik Roy praises the idea and offers thoughts on how it might be implemented. He also observes that Mitt Romney proposed a “regulatory cap” during his 2012 presidential campaign. Specifically, Romney proposed that agencies would have recognize the costs imposed by their regulations and ”the rate at which agencies could impose new regulations would be capped at zero”; the cost of any new regulation would have to be offset by reforms that would lower the costs associated with the existing regulatory burden, either by streamlining existing regulations or eliminating them. Essentially, the Rubio proposal suggests that this regulatory cap be implemented via a new review board that would have supervisory authority over regulatory agencies. 

Last spring, Michael Mandel of the Progressive Policy Institute called for the establishment of a Regulatory Improvement Commission (RIC), the goal of which would be to address regulatory accumulation, in which new rules are layered on top of old rules, a process that results “in a maze of duplicative and outdated rules companies must comply with.” While new regulations face benefit-cost analysis, old regulations are left on the books despite the fact that their benefits and costs might have changed over time in response to new economic conditions, business models, and institutional practices. Moreover, this regulatory review process tends to focus on new rules in isolation, neglecting the fact that new rules will interact with old rules in ways that could prove problematic. 

Rather than review individual rules, Mandel suggests that a new commission tackle multiple regulations at once and present its final recommendation to Congress for an up-or-down vote, a process modeled after the Defense Base Closure and Realignment Commission (BRAC). Yet Mandel’s RIC wouldn’t require that regulatory costs reach a global target. In 2012, the Mercatus Center offered a proposal closer in spirit to Rubio’s National Regulatory Budget. Drawing on the experience of BRAC and the Dutch Administrative Burden Reduction Programme, Joshua C. Hall and Michael Williams propose a two-step process: in the first phase, Congress would create a new agency devoted to assessing the costs of existing rules in a coherent, standardized fashion; and in the second phase, an independent commission would make recommendations to Congress that would aim to reduce the cost of regulations by 25 percent. And Virginia Sen. Mark Warner, a centrist Democrat, favors an approach almost identical to Romney’s regulatory cap. Mandel writes:

One way to retrospectively review and remove regulations one at a time is through a pay-as-you- go approach. Under this option, agencies would have to eliminate one existing regulation for each new rule it approves. First, agencies would be required to catalog and assign a value for each of its existing regulations. Then for every new rule approved by the agency, one existing rule of equal economic cost deemed outdated or duplicative must be removed.

Championed by Senator Mark Warner, the PayGo approach is seen as a way to correct the missing incentive that agencies encounter under the self- review approach. Because one regulation must be eliminated for each new regulation, agencies would have the incentive to carefully consider the true cost-effectiveness of each new rule, and the incentive to carefully consider the current cost-effectiveness of existing rules. In this sense the PayGo approach to regulatory reform would encourage regulatory balance and discipline going forward.

As Mandel makes clear, the PayGo approach may well prove politically contentious, not least because assessments of regulatory burdens will inevitably be contested. But Regulatory PayGo has potential as a growth-enhancing reform, and as a way to unite pro-growth conservatives and moderates. 


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