Trump’s 2-for-1 on regulations is a good start

During the campaign, President Trump set a goal of replacing two federal regulations for ech new one issued. Given the growth in the Code of Federal Regulations, that will be an important contribution to restoring stronger levels of economic growth.

There were a lot of factors that led to Trump’s victory in November, but an important one was the growing feeling that actions by the federal government benefited the few, not the many, and that increasing regulatory burdens were everywhere to be seen.

That is why the president’s “forgotten man” phrase resonated so well and why there is a growing recognition that we are an over-governed society.

The Federal Register, where regulations are published, began in 1936 and was then 11 pages long. By 1960, the Code of Federal Regulations, which is the bulk of the Federal Register, had grown to almost 23,000 pages.

Now, it is almost 175,000.

This growth and data from the Heritage Foundation’s “Red Tape Rising” report show the growing burden imposed by regulation on steroids. As the government has grown, so have the incentives for the bureaucracy to regulate more.

The economic impact of the expansion of the administrative state has been documented extensively by economists. The June 2013 issue of the “Journal of Economic Growth” contained a paper by John Dawson and John Seater estimating that federal regulations have reduced economic growth by about 2 percent per year between 1949 and 2005. They found that if federal regulations were still at levels seen in the year 1949, the current gross domestic product would be $38.8 trillion higher.

{mosads}That number may be unrealistically high, but there is no doubt about the negative impact of regulations on the economy. The Heritage Foundation report found that “More than $22 billion per year in new regulatory costs were imposed on Americans last year (2015), pushing the total burden for the Obama years to exceed $100 billion annually.”

That represents a lot of jobs lost or not created.

Reducing the large number of regulations will be a daunting task given the number that are in effect. But “daunting” isn’t the same as “insurmountable.”

To start, all regulations that have been in effect for 40 or more years should be prime candidates for sun-setting unless they are reaffirmed though a public comment period as still being needed. Major regulations — those with an impact of $100 million or more — issued since 2000 should be given a priority review for possible withdrawal.

That process should begin with the Environmental Protection Agency (EPA), which was on a regulatory rampage during the Obama administration. During this period, the EPA issued over 3,300 new regulations, many of which will have a significant impact unless they are withdrawn or do not withstand judicial challenge and review.

Tax reform is one of the highest priorities for Congress and the new administration. As part of that reform, emphasis should be placed on simplification so that most families and small businesses can file their tax returns without hiring a preparer.

Reducing the Code of Federal Regulations is a necessary but not sufficient course of action. Legislation is needed to make sure that reform actions cannot easily be reversed by a change in Congress or a new administration.

Regulatory reform legislation should set an annual regulatory budget as well as require that every major regulation obtain congressional approval before taking effect. Sunset provisions should be part of all major rules and Office of Information and Regulatory Affairs (OIRA) review should be extended to independent agencies. Legislation that was passed to improve the regulatory process — the Paperwork Reduction Act, the Data Quality Act and the Congressional Review Act — should be reviewed for changes that would make them more effective.

Just as a good crisis should not go to waste, neither should the current alignment between Congress and White House. The next 12 months may be a fleeting opportunity to reverse the growth and power of the administrative state and reestablish the guiding principles of federalism.

William O’Keefe is the founder and president of Solutions Consulting. He formerly served as CEO of the George C. Marshall Institute, a nonprofit that conducted technical assessments of scientific issues with an impact on public policy.

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