By Wayne Crews & Ryan Young on 11.5.09 @ 6:07AM
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."
topics:
Government Spending, Mandates, Rep. Virginia Foxx
