The Public Policy
Yes, Virginia Foxx
To control government’s cost, we first need to know what it is.
Jaws dropped when the government announced recently that the national debt would increase by $14,000,000,000,000 over the next decade. Right now, roughly every third dollar the government spends is one it does not have.
Even more worrying is how politicians are reacting to the news. Few are talking about cutting spending, which would be politically difficult. Instead, Congress and the administration could resort to spending off-budget through a neat trick known as the unfunded mandate.
For example, rather than fund a new federal job training program through a Department of Labor appropriation, Congress could mandate that all Fortune 500 firms provide, and pay for, such training. The first appears on the federal budget, the second does not. For politicians, it’s the perfect scheme. The government can spend — or, rather, force other people to spend — as much as it wants without adding to the deficit.
The economic consequences are severe. The federal budget contains $40 billion to enforce regulations-but compliance with those regulations actually costs about 29 times that, or $1.17 trillion. For the government, that hidden trillion is entirely off-budget. Instead, businesses, consumers, and state and local governments have to pay for it.
Few people outside of Washington appreciate the beauty of off-budget spending. Governors and other state and local officials will occasionally revolt, weary of the federal government’s habit of passing regulatory costs on to state and local jurisdictions. Conceding the point, Congress passed the Unfunded Mandates Reform Act in 1995. But it didn’t do much good, as last year’s 3,830 new regulations can attest.
That’s why a proposal from Rep. Virginia Foxx (R-N.C.) is a breath of fresh air. The proposed Unfunded Mandates Information and Transparency Act seeks to make the federal government provide better information about what the regulatory state actually costs. That would hopefully redirect public ire back to overregulation’s real source: Congress itself.
Mandates that impose higher wages, increase unemployment, or increase consumer prices should not slip through Congress unacknowledged. Congress should have to tally up its mandates’ indirect costs. Knowing those impacts is crucial. Mandates can cost workers their jobs, and even prevent jobs from being created in the first place.
Mandates mount quickly as a small firm grows. Mandatory compliance with the Americans with Disabilities Act kicks in at 15 employees, the Health Maintenance Organization Act at 25, the Family and Medical Leave Act at 50, and so on. It is not a good sign when it becomes routine for firms to stick to 49 employees and hire temps to stay under the FMLA threshold.
Rep. Foxx’s proposed reform would not curtail Congress’ power to regulate, per se. Hers is a disclosure bill. Congress would still be free to pass any unfunded mandate it pleases-as long as it accounts for the costs involved.
Unfunded mandate cost disclosure is a simple, yet needed, wake-up call. As the deficit and federal spending grow-and public anger with them-unfunded mandate reform may just have a chance. If Congress refuses to approve this modest reform it might as well take a roll-call vote on a resolution stating: “The public has no business knowing the costs of the regulations that we impose upon them.”
About the Author
Ryan Young is Fellow in Regulatory Studies at the Competitive Enterprise Institute.
Robert Rosencrans| 11.5.09 @ 7:04AM
As the author notes, unfunded mandates are job killers. This is precisely why unemployment is rising and the fools on Capital Hill are ready to send more jobs overseas with more laws that small firms can't afford.
Richard Baker| 11.5.09 @ 8:01AM
Time for the States to say NO! 10th Amendment, anyone?
Peter| 11.5.09 @ 10:18AM
Was not the 10th Amendment vitiated with the passage of the 17th Amendment taking the power to appoint Senators away from the legislature and vesting it in the hands of the electorate?
It seems to me that in changing the way Senators are chosen we the people moved the focus of power away from the states and toward Washington D.C.
If you are suggesting the fight-back must begin in the statehouses of America and not the halls of Congress, I agree but I would suggest that populist, democratic inclinations down through the years has robbed the states of the needed tools, hobbling them and, unfortunately, limiting what they can accomplish.
Pingback| 11.5.09 @ 10:07AM
Twitter Trackbacks for The American Spectator : Yes, Virginia Foxx [spectator.org] o links to this page. Here’s an excerpt:
Pingback| 11.5.09 @ 10:13AM
Unfunded Mandates | OpenMarket.org links to this page. Here’s an excerpt:
Richard Baker| 11.5.09 @ 7:28PM
Peter:
The many States passing sovereignty resolutions and starting to work together says that there's more than one way to skin a cat. Regardless of the lawyers arguing, Liberty and Freedom are part of our DNA. Maybe the old way of selecting Senators was the correct way to keep them involved in the business at home. On that, you may be right. Regardless, the situation at the Federal level particularly has long since reached the intolerable stage. If we don't get a handle on this soon there WILL be a shooting Revolution. Keep your powder dry.
Roy| 11.6.09 @ 12:10AM
I think 1.03 trillion is way low. Maybe that is the direct cost of the endless regulo-blather but the indirect cost, in business not built, salaries(not jobs) not created, etc, has to be at least 10 times that. I especially think of the sheer hopelessness that the presence of envirodoom regulations place on anybody who wants to provide cheap, reliable energy.
American in Hong Kong| 11.6.09 @ 3:23AM
I regret to say that it is very dispiriting to read the many undoubtedly earnest but nevertheless unthinking claims of America's unsurpassed "liberty" and "freedom" espoused by AmSpec readers when, in fact, the reach of pettifogging and, indeed, coercive bureaucrats and law enforcement officials in the US make it increasingly clear to those who live outside the US that many other sovereign jurisdictions, including the one I live in, offer demonstrably greater freedom and liberty in one's personal and commercial life than is afforded in America today. Although one can be justly proud of the power and pageantry of the US' democratic system and institutions, in virtually all other respects, Americans are much more enslaved by Government and its intrusions into one's life than any but the most backward Asian nations.
Pingback| 11.6.09 @ 8:07AM
The American Spectator : Yes, Virginia Foxx | Work4Real | Blogs search links to this page. Here’s an excerpt:
Pingback| 11.6.09 @ 4:42PM
The American Spectator : Yes, Virginia Foxx | americantoday links to this page. Here’s an excerpt:
Richard Baker| 11.7.09 @ 5:40PM
American in Hong Kong:
Really? I hadn't heard that, as an example, Vietnam and Myanmar (Burma) were havens of Freedom and Liberty. Who'd a thunk it?
American in Hong Kong| 11.9.09 @ 7:48PM
Dear Mr. Baker,
I wrote, "Americans are much more enslaved by Government and its intrusions into one's life than any but the most backward Asian nations. " Vietnam and Myanmar fall into the latterly-mentioned category, as you well know.
Denial is not a river in Egypt.
Pingback| 11.10.09 @ 8:03AM
Piedmont Publius » Blog Archive » Newsflash: Media don’t like Foxx links to this page. Here’s an excerpt:
Dario| 1.15.10 @ 2:50AM
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maxglow| 3.3.10 @ 7:21PM
Great ideas that I hope someone with some power read and take notice of. That's one heck of a number to think about and pretty scary. I'd hate to be the politicians who are going to be to blame when it rises that much... it can't be easy preventing or fixing it. tungsten wedding bands
lysteve| 3.7.10 @ 11:58PM
This is why I would never want to be a politician. I mean, how are you going to correct that much deficit when there's so little to do to bring in more money? I feel sorry for politicians who step into position and have to try to clean up the aftermath of prior poor decisions. san francisco web design
dbtrade| 3.9.10 @ 11:29AM
I think that we have a long time to wait before congress will ever be accountable for the indirect costs their mandates cause. That is, if they ever are. Thwy have their nice homes and cars so it doesn't really matter to them. trade schools
ab belt | 3.10.10 @ 10:43PM
There are just too many road-blocks and too much red tape in most states to get on a clear path to recovery. We'll be in debt forever at the rate we're crippling our government and the people that we keep putting into office.
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ella| 4.26.10 @ 1:01PM
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dbtrade| 4.28.10 @ 6:47PM
I think your idea on Fortune 500 companies paying for that training is a good idea, but you know they would probably never do anything like that. It would make too much sens and save the government too much money. ~sigh~ BSN Programs
Turning Roll | 7.16.10 @ 1:11PM
Unfunded mandates are scummy, and an abuse of American capitalism. Why should successful businesses be forced to pay for stuff Congress wants just in order to 'bring home the bacon'? It's a scam, and the politicians in Congress are playing us all.
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American in Hng Kng:
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