To create jobs, unwieldy regulations need to be tamed

October 21, 2011

Washington Post

By Tom Collamore

If lawmakers are serious about creating jobs, then reforming the process by which the federal government issues rules and regulations should be at the top of their to-do list.

There are about 180,000 federal regulations on the books costing Americans $1.7 trillion a year in compliance costs. Small businesses, the nation’s primary job creators, bear a disproportionate share of this burden. According to a report issued by the Small Business Administration last year, small businesses face an annual regulatory cost of $10,585 per employee, more than a third higher than costs borne by larger firms.

More burdensome regulations are coming fast and furious. The Dodd-Frank Act brings an onslaught of new regulations—259 are required under the law and another 188 are completely up to the discretion of regulators. The health reform law, if fully implemented, could create 159 new agencies, commissions, panels and other regulatory bodies. The Environmental Protection Agency is working on more than 100 new rulemakings, 30 of which will cost the economy $100 million or more—each. The resulting uncertainty is keeping severely needed capital on the sidelines and out of the markets as anxious businesses wait to see what regulators will do next.

Few disagree that smart and effective regulation is necessary in a healthy, modern economy. However, few oppose the additional need to have a better process for evaluating and promulgating new regulations. This includes more increased transparency, more checks and balances and better analysis of the impact of regulations on jobs and the economy.

Sensible reforms can be done by simply applying the genius of the founding fathers. Just as each branch of government acts as a check and balance on the other when it comes to legislation, the same should hold true for regulations.

Vast, ambiguous laws have been passed and regulators are left without appropriate guidance to fill in crucial details. Congress has yielded too much power to the federal agencies without proper accountability and without taking responsibility for what the agencies are doing in Congress’s name. The Regulatory Accountability Act of 2011, introduced in the House and Senate with bipartisan support, is designed to bring balance back to the regulatory system without undercutting needed public health and safety protections. The legislation would ensure that regulations impose as little burden on the economy as possible and that they are justified. The bill would require regulators to publicly demonstrate the need for rulemakings backed by hard evidence and sound science.

As for the executive branch, many current laws and executive orders already require agencies to conduct cost-benefit estimates and science reviews on major rules. However, these estimates and reviews would likely be more accurate and more credible if conducted by an independent third party and not agency staff—an important check and balance on agency power that would improve regulatory quality.

Finally, we need to ensure that citizens have the judicial access and tools they need to hold federal agencies accountable for limiting regulatory burdens and for using sound evidence to support proposed rules. As Supreme Court Justice Elena Kagan pointed out in 2001 before her appointment to the high court, “Bureaucracy is the ultimate black box of government—the place where exercises of coercive power are most unfathomable and thus most threatening.” She added: “The need for transparency, as an aid to holding governmental decision makers to account, here reaches its apex.”

With appropriate access to the courts, citizens can help enforce transparency, check bureaucratic power and hold governmental decision makers accountable.

Americans of all ideological stripes, Democrat and Republican, recognize the growing regulatory burden. They recognize how a flawed regulatory system is stifling job creation, holding back our economy, and undermining good governance. We can create jobs and go forward by going back to the most tried and true principal of our government—checks and balances.

Tom Collamore is senior vice president of communications and strategy and counselor to the president of the U.S. Chamber of Commerce.

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