In 1787, there were four federal crimes. Now there are over
4,000. The Code of Federal Regulations runs over 157,000 pages.
America is overlawyered and overregulated, and the economy is
suffering for it.
Congressmen from both parties recognize this. But reform eludes
them. It isn’t necessarily their fault. Congress’s institutional
structure is geared towards passing laws and regulations, not
repealing them. True reform needs to happen at the institutional
level.
Economics has just the tool for identifying such reforms: price
theory. It’s a lot simpler than it sounds. When something is cheap,
it tends to be abundant. But when that something becomes expensive,
demand goes down.
Right now, the “price” of passing a law or regulation is
relatively cheap. Just look how many there are! But the “price” of
repealing a law is steep. It caused a national uproar when a
January executive order from President Obama led to the repeal of
30 regulations.
In an average year, Congress will pass about 200 bills and
agencies will enact over 3,500 regulations. Each one is viewed as
an accomplishment to be touted in front of cameras and microphones.
It’s good for business. Voters like it when politicians “do
something.” Agencies gauge their success by how much they spend and
how many rules they pass, as opposed to actual accomplishments.
Repeal is much more politically expensive. Almost every program
and regulation has its vocal defenders. Many regulations give some
companies an unfair advantage over their competitors. They will
fight tooth and nail to keep government’s thumb on the scales. Rare
indeed is the lobbyist who asks to get rid of special treatment. In
short, the rules of the game are stacked in favor of regulation,
and against repeal.
The rules of the game, then, need to be changed. One way to do
this: give states a veto power over federal rulemaking. William
Howell, Speaker of the Virginia House of Delegates, and Randy
Barnett, a Georgetown University law professor, have proposed
adding a repeal amendment to the Constitution that would read:
Any provision of law or regulation of the United States may be
repealed by the several states, and such repeal shall be effective
when the legislatures of two-thirds of the several states approve
resolutions for this purpose that particularly describe the same
provision or provisions of law or regulation to be repealed.
This, Howell and Barnett argue, would give the states a recourse
without having to go though federal court. It will also make
Congress more reluctant to pass rules in the first place that are
burdensome at the state level.
Short of that, the House and Senate could establish repeal
committees. These committees would be unable to pass laws and
regulations, only to repeal them. Its members would be ineligible
to sit on other committees. The only accomplishments they would be
able to tout to voters would be how much they lighten Washington’s
heavy hand.
Another option is to add an automatic sunset provision to all
new regulations — meaning that they would expire after, say, five
years unless specifically reauthorized by Congress. This kind of
regulatory expiration date would ensure that only the truly
necessary ones stay in the books.
Sen. Mark Warner (D-VA) recently suggested in a Washington
Post
op-ed that we import a successful idea from Britain. According
to Warner, the British “one in, one out” strategy for regulations
has “posted some impressive results” in streamlining the regulatory
burden upon their economy. This plan is similar to pay-as-you-go
budget rules. Each new regulation must be offset by repealing the
same dollar amount-worth of old rules.
Warner points out that “Our current regulatory framework
actually favors those federal agencies that consistently churn out
new red tape.” He’s right. And that needs to change.
If Congress and agencies want to pass more sweeping new
regulations, the political price they pay should be in line with
the economic price that we all pay for them. Lightening the $1.7
trillion annual burden of federal regulations should be politically
beneficial, not politically costly. The reforms listed above would
make a great start.
