Mitt Romney's Plan: Streamlined Regulation
Mitt Romney will approach regulation from a completely different angle. He sees the need for basic change. Regulatory costs must be treated like other costs: that is, firm limits must be established for them. An agency may be able to conceive of ten different regulations, each imposing costs of $10 billion while
producing at least as much in social benefit. Moving forward might sound like a great idea to the typical regulator. But imposing those regulations, no matter what the social benefits, has a similar effect to raising taxes by $100 billion.
Regulatory costs need to be treated like the very real costs they are. A Romney administration will act swiftly to tear down the vast edifice of regulations the Obama administration has imposed on the economy. It will also seek to make structural changes to the federal bureaucracy that ensure economic growth remains front and center when regulatory decisions are made.
Mitt Romney has laid out a specific plan for dismantling Obamacare even without the congressional majorities required to strike it formally from the books. On his first day in office, he will issue an executive order paving the way for Obamacare waivers for all 50 states. He will then work with Congress to accomplish
Reform Financial Regulation
As president, Mitt Romney will also seek to repeal Dodd-Frank and replace it with a streamlined regulatory framework. The recent financial crisis exposed serious weaknesses in a regulatory system that was poorly equipped to deal with dynamic and evolving markets. The government's response was to layer on new
regulations and invent new bureaucracies that do not address the underlying causes of a crisis driven by the over-leveraging of our financial institutions and our homeowners. Rather than dealing directly with those issues, the government gave itself an open check book to write ambiguous regulations that have left our
businesses and households uncertain of their obligations and uncompetitive in a global marketplace.
Some of the concepts in Dodd-Frank have a place. Greater transparency for inter-bank relationships, enhanced capital requirements, and provisions to address new forms of complex financial transactions are all necessary elements of effective financial reform. But these concepts must be translated into law in a way that creates a simple, predictable, and efficient regulatory system appropriate for our dynamic economy.
While not an Obama-era invention, the Sarbanes-Oxley law passed in the wake of the accounting scandals of the early 2000s should also be modified as part of any financial reform. Many of its requirements were designed for large companies but impose onerous burdens when applied to mid-size firms. The result is that
smaller companies are penalized for growing larger, and those attempting to make the leap are discouraged from seeking out the investment capital with which to expand. Romney will seek to amend the law to remove unreasonable burdens on mid-size companies. These companies are a crucial component in the economy's job-creation engine, and regulation must not place unnecessary obstacles in their path to growth.
Reform Environmental Regulation
As president, Mitt Romney will eliminate the regulations promulgated in pursuit of the Obama administration's costly and ineffective anti-carbon agenda. Romney will also press Congress to reform our environmental laws and to ensure that they allow for a proper assessment of their costs. Laws that forbid
cost assessment may have had some merit in the era in which they were passed. But that was a time when the environment was severely contaminated and the United States enjoyed full employment and low energy prices. Today, such laws are a costly anachronism and are in urgent need of reform. Romney will seek to amend the Clean Air and Clean Water Acts to ensure that cost is taken properly into account at every stage in the regulatory process.
In addition, Romney will seek amendments that provide a multi-year lead time between the date when a new regulation is issued and the date by which companies must come into compliance. If there are compelling human health reasons to restrict industrial emissions, regulatory bodies must issue standards that can be achieved over a reasonable period of time, affording industries fair notice and a significant window in which to invest in the development and installation of new technology that would bring their facilities into compliance.
Review and Eliminate Obama-Era Regulations
One of the greatest problems with the federal bureaucracy is that each incoming presidential administration leaves in place much of what its predecessor constructed. The result is layer upon layer of often unnecessary or inconsistent regulation. Mitt Romney will not allow that practice to continue.
On his first day in office, Romney will order all federal agencies to initiate repeal of any regulations issued by the Obama administration that unduly burden the economy or job creation.
Impose a Regulatory Cap
To force agencies to limit the costs they are imposing on society, and to provide the certainty that businesses crave, a system of regulatory caps is required. As noted, the federal government has estimated that the existing regulatory burden approaches $1.75 trillion. We cannot afford those costs to go any higher.
Yet because the costs are invisible--government agencies do not go through a budgeting process for their regulatory agendas--they simply continue to grow. As president, Mitt Romney will impose a regulatory cap that forces agencies to recognize and limit these costs. In the first term of a Romney administration,
the rate at which agencies could impose new regulations would be capped at zero. What this means is that if an agency wishes or is required by law to issue a new regulation, it must go through a budget-like process and identify offsetting cost reductions from the existing regulatory burden. While not a panacea for the
problem of over-regulation, implementation of this conservative principle would go some distance toward halting the relentless growth of the regulatory state.
Restore Congressional Oversight
Yet another measure would be to restore a greater degree of congressional control over the agency rulemaking process. Our Constitution calls for our democratically elected Congress to make laws and for the democratically elected president to approve them. Federal agencies are supposed to implement the laws
established by the people's representatives. Unfortunately, all too often Congress has found it easier simply to make broad pronouncements and allow bureaucrats to figure out the actual rules. In some instances, regulatory agencies have gone off the rails of law altogether and veered in unexpected and unproductive directions.
To return the system to proper confines, Mitt Romney supports implementation of a law, similar to the REINS Act now before Congress, that would require all "major" rules (i.e., those with an economic impact greater than $100 million) to be approved by both houses of Congress before taking effect. If Congress declines to enact such a law, a President Romney will issue an executive order instructing all agencies that they must invite Congress to vote up or down on their major regulations and forbidding them from putting those regulations into effect without congressional approval.
Reform Legal Liability
Our legal system, with its framework of litigation and liability, serves as another form of regulation faced by both individuals and businesses. As with all regulation, this framework can play an important role in strengthening our economic system if it is designed and operated effectively. If it is not, however, it
imposes serious burdens on economic actors that raise the cost of doing business, increase uncertainty, and decrease investment. As president, Mitt Romney will pursue reforms that respect the federal-state balance of power in our court system while creating a legal environment conducive to economic growth. Preventing
excessive damage awards, limiting class-action lawsuits to those situations where they are actually warranted, and empowering judges to sanction more effectively trial lawyers and parties who bring frivolous claims are all steps that could protect litigants with legitimate grievances while preventing spurious litigation from inhibiting investment and job creation.
The United States cannot afford to tie itself in more regulatory knots. Our current economic difficulties have multiple roots, but over- and mis-regulation are primary among them. This is an area where an administration led by someone with firm conservative principles, who understands how jobs are created and how they are lost, can make a significant difference to America's economic performance.