Regulatory Reform and Reining in the Federal Bureaucracy
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. The Federal Register, which contains all new and proposed regulations, spanned more than 81,000 pages in 2010, a 30 percent increase over the 35-year average of 62,810 pages. The Code of Federal Regulations (CFR) -- the warehouse of permanent rules published in the Federal Register -- contained 165,494 pages in 2010. The document's index alone is more than 1,100 pages.
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." Small businesses and entrepreneurs are faced with an impossible challenge, and waste time and capital navigating a challenging and overwrought regulatory system.
Instead of implementing 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. 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. 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."
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 percent were reviewed by the Office of Management and Budget. Americans 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. Unaccountable agency bureaucrats cannot continue to 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 our national security.
Full Audit of Every Regulation Promulgated 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 percent 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.
Automatic Sunset of Federal Regulations without Congressional Renewal:
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. We will require that all federal regulations automatically sunset after seven years, unless explicitly renewed by Congress. This requirement will ensure continuous review of every new federal regulation, and will empower the country's elected lawmakers to hold federal agencies accountable for costly regulations that destroy jobs and reduce economic growth.
Require all Federal Agencies to Justify Expenditures:
When lawmakers draft the federal budget, it should not be built on the assumption that the federal government somehow deserves the right to grow every year. Instead of setting the general expectation that spending should be reduced, federal bureaucrats call press conferences to praise themselves for any reductions in spending. The norm of federal spending should be spending reduction -- not growth. With this in mind, each federal department, agency, and program must present a complete and thorough cost-benefit analysis to Congress, justifying the benefit to the American people from every dollar spent. Budget reductions can and must become reality, not pipedreams.
Annual Regulatory Budget:
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 that maximize benefits while minimizing costs, instead of defining benefits so broadly that they outweigh the total cost to businesses and taxpayers. In cases where an agency required authority beyond its annual budget, formal waiver requests could be submitted for Congressional approval on a case-by-case basis.
Create a Searchable Public Database with All Current Regulations:
The federal government cannot continue to force 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. Job creators should not need to employ an army of lobbyists and lawyers in order to follow the law, and should be able to easily find descriptions, public comments, and cost estimates for all relevant regulations. A simple and searchable online database of all current federal regulations -- including succinct summaries, 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 how they affect economic growth and job creation.