Key Words for Growth: Regulatory Reform; Jobs Speech Won't Do the Job Key Words for Growth: Regulatory Reform

Article excerpt


Presidential candidate Mitt Romney released his own jobs agenda this week in anticipation of President Obama's Thursday address to Congress.

The most important idea is a skeletal regulatory budget.

I will pare back regulation. .. I will direct every government agency to limit annual increases in regulatory costs to zero The impact of any proposed new regulation must be offset, Mr. Romney said.

Our fiscal budgetary process fails to streamline spending in any direction but up. Nonetheless, we need a budget for off-the-books regulation. After all, we have to start somewhere.

Many have noted with increasing alarm that regulations cost more than $1 trillion annually, with more financial, health and environmental regulations spewing forth as you read these words. Compliance costs are equivalent to the entire fiscal budget of the 1990s - and rising. The president was forced to delay implementation of Environmental Protection Agency ozone rules just last week.

Regulations are a desperate drag on jobs now and have to be tracked and reduced, even if a regulatory-cost budget presents only ballpark figures. Today's fiscal budget itself only originated with the Budget and Accounting Act of 1921.

Limited regulatory-cost budgeting can make agencies more responsible for the quality of their decision-making relative to other agencies and adhere better to congressional intent. Today, they rarely pare anything back.

Depending on the kind of rule, a regulatory budget would induce health and safety agencies to compete to ensure that their least-effective mandates save more lives per dollar or correct some alleged market imperfection better than another agency's rules do.

A budget would help show that government probably ought not worry about regulating risks that are far more remote than those we undertake daily, while recognizing that some significant risks are undertaken willingly (kite-boarding, neglecting the smoke detector, juggling chain saws).

In a limited regulatory budget proposed back in the 1990s by Rep. Lamar Smith, Texas Republican, Congress would set a regulatory budget for each newly enacted law - such as today's health care and financial reform laws, for example. Any agency exceeding that budget at the rule-making stage would need congressional approval. That puts a brake on overdelegation to agencies in the first place. In combination with the REINS Act effort by Sen. Rand Paul, Kentucky Republican, and Rep. Geoff Davis, Kentucky Republican, which would require Congress to approve final rules, it could be powerful.

In probably the most thorough regulatory budget, agency tallies would add up to a total regulatory budget paralleling the fiscal budget. …