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Public Statements

Issue Position: Fix the Federal Regulatory System

Issue Position

By:
Date:
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The federal regulatory system is out of control. Between 2001 and 2010, the federal government implemented 38,710 new regulations and proposed an additional 23,987.28 The Federal Register, which contains all new and proposed regulations, expanded more than 81,000 pages in 2010, a 30% increase over the 35-year average of 62,810 pages.29 The Code of Federal Regulations (CFR) -- the warehouse of permanent rules published in the Federal Register -- contained 165,494 pages in 2010.30 The document's index alone is more than 1,100 pages.31

It has become impossible for even the most conscientious individuals and small businesses to keep track of the ever-growing morass of federal rules imposed upon the public ever year. When asked by a congressional office for a list of all federal regulations that contain criminal penalties, the Congressional Research Service responded that "the task is inordinately time-consuming and defies a precise count under any standard."32 Imagine how the small businesses and entrepreneurs who are forced to navigate the labyrinth must feel.

Rather than operate as a system meant solely to implement constitutional legislation passed by Congress and signed into law by the president, the federal regulatory system has become a bureaucratic tool for intimidation and a shadow system of taxation on American job creators.

Red Tape RisingInstead of adequately protecting the U.S. border, the current administration used its limited resources to conduct sting operations against Amish farmers.33 Instead of using every tool available to combat rampant theft of U.S. intellectual property by Chinese companies, the current administration sent a SWAT team to harass an American guitar manufacturer for having the audacity to still build things in the U.S.34

Research from the Small Business Administration (SBA) estimated that the cost of federal regulations totals more than $1.1 trillion with a cost to small businesses of $7,647 per employee.35 For the manufacturing industry, the cost of federal regulations per employee is more than $10,000. According to SBA, "The manufacturing sector in particular bears the highest total regulatory burden in terms of cost per firm."36

The U.S. federal regulatory system is in desperate need of overhaul. Of the more than 38,000 new regulations were issued between 2001 and 2010, less than 10% were reviewed by the Office of Management and Budget.37

A Mountain of Red TapeAmericans need to be confident that every new rule issued by the federal government has been thoroughly analyzed and reviewed for its impact on individual liberty, economic growth, and job creation. And they need to be confident that unaccountable agency bureaucrats will not have free rein to strangle entrepreneurs and small businesses with onerous regulations meant to appease special-interest groups.
Immediate Moratorium on All Pending Regulations

The current regulatory regime cannot be effectively audited and improved while agencies still have the ability to issue thousands of new regulations. An immediate freeze on all pending and new regulations is necessary to ensure a full audit of existing regulations. Common-sense exceptions will be available for regulations deemed by the president to be routine or essential to American security.
Full Audit of Every Regulation Passed Since 2008

Before any new regulations are implemented, every regulation promulgated since the beginning of 2008 must be audited and judged according to the following criteria: is it affordable, is it effective, and does it do more harm than its purported good? The "affordability" test will analyze the effect of regulations on job creation and economic growth. The "effective" test will determine if the regulations have been successful or if less burdensome rules could be used to get similar results. The "harm" test will judge whether the responsible agency has created more harm to the economy than its perceived benefits.

Regulations that fail all three tests will be repealed, those that fail any single test will be rewritten, and those that pass every test will be left in place. While some opponents of rigorous regulatory oversight may assert that it is just too difficult to examine that many regulations, it is even more difficult to increase economic growth and create jobs when more than 90% of all federal regulations are never reviewed for their effect on the economy. If federal bureaucrats can issue an average of 3,500 new regulations and propose another 2,400 each year, then they can certainly review previously issued regulations during a moratorium on new regulations.

Federal Regulations Automatically Sunset Unless Congress Renews Them

Just as working families must regularly re-evaluate their spending priorities, federal policy makers should also be required to assess whether decades-old regulations still make sense. A requirement that all new federal regulations will automatically sunset after seven years unless explicitly renewed by Congress will ensure continuous review of every new federal regulation. It will also empower the country's elected lawmakers to hold federal agencies accountable for costly regulations that destroy jobs and reduce economic growth.

Institute Annual Regulatory Budget for Each Agency

When designing regulations, agency officials should be required to prioritize based on total cost, just like small business owners must prioritize demands on the time of their employees. Under current law there is no limit to the potential cost that can be embedded into a new regulation or mandate. By instituting an annual regulatory budget for each agency, bureaucrats will be incentivized to design proposals in a way that maximizes benefits while minimizing costs, as opposed to defining the benefits so broadly that they always outweigh the total cost to businesses and taxpayers. In cases where an agency needed authority beyond its annual budget, formal waiver requests would be subject to Congressional approval on a case-by-case basis.
Create a Searchable Public Database with All Regulations Currently in Force

Forcing entrepreneurs and small business owners to wade through the more than 165,000 pages of the Code of Federal Regulations to determine what arcane federal regulations might apply to their operations is not right. Nor should job creators need to employ an army of lobbyists and lawyers to help them stay on the right side of the law. They should be able to easily find descriptions, public comments, and cost estimates of all relevant regulations. A simple and searchable online database of all federal regulations currently in force -- including succinct summaries, all public comments, and all related cost-benefit analyses -- would allow employers and taxpayers to better understand the rules that apply to them, why they exist, how much they cost, and their effects on economic growth and job creation.

If federal bureaucrats can issue an average of 3,500 new regulations and propose another 2,400 each year, then they can certainly review previously issued regulations during a moratorium on new regulations.


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