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Any provision of law or regulation of the United States may be repealed by the several states, and such repeal shall be effective when the legislatures of two-thirds of the several states approve resolutions for this purpose that particularly describe the same provision or provisions of law or regulation to be repealed.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.
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