Last week John Dunham and Citizens Against Government Waste held a press conference at the National Press Club to release a new report: Public Servants or Privileged Class: How State Government Employees are Paid Better then Their Privatep-Sector Counterparts.
INSIGHTS: 2012 Ten Thousand Commandments? Time to Rein in the $1.8 Trillion Regulatory State
By Guest Columnist Wayne Crews:
Vice President for Policy, Competitive Enterprise Institute
Less known is that federal regulations — environmental, energy, financial, labor and other mandates — cost the economy nearly a couple trillion dollars more. A controversial Small Business Administration report puts the figure at $1.75 trillion. My own bottom-up survey of regulations called Tip of the Costberg, finds that federal regulations cost consumers and businesses around $1.8 trillion annually (Costberg and its updates appear at www.tenthousandcommandments.com).
You could call regulation a hidden tax. After growth under the Bush and Obama administrations, the trajectory remains upward. Rules flowing from energy efficiency mandates, the Dodd-Frank financial law, and the Affordable Care Act are widely recognized looming burdens.
Yet there have been notable rollbacks. From transportation to trade, from communications to banking and technology policy, policy makers of both parties have at times challenged the moral legitimacy, intellectual underpinnings, and economic rationality of federal regulatory intervention. For example, economic regulations like antitrust, may be exploited by competitors to rein in a better rival. Democrats helped spearhead transportation deregulation. Lawmakers from both parties rolled back unfunded mandates in the 1990s.
In other words, sometimes both parties recognize that regulations can be anti-competitive and anti-consumer. That sensitivity is needed more now than it was in earlier reform eras.
There are many avenues for rethinking over-regulation. Cost-benefit analysis, while informative, may invite agencies to inflate benefits; and it does not actually bring the largely unaccountable regulatory state under congressional control. Greater congressional accountability and cost disclosure matter most for regulatory reform.
Why accountability? Last year, Congress passed and the president signed just over 80 laws; but agencies enacted over 3,000 regulations.
So we have a severe accountability-to-voters gap. Over- delegation of power is rampant. Real control would require that Congress vote on every major or controversial agency rule before it takes effect. Reining in excessive delegation of power to federal agency bureaucrats would help close the breach between lawmaking and accountability, while forcing Congress to internalize the need to demonstrate regulatory benefits rather than expect agencies to calculate them somewhere down the road.
Regulatory cost transparency, through such tools as improved annual cost and trend reporting (a “Regulatory Transparency Report Card,” say), would help voters to better hold Congress responsible for the regulatory state.
So we have a path forward. Congress should, first, as we’ve just noted:
- Explicitly approve major agency regulations with an up-or-down vote.
- Publish an annual Regulatory Report Card to accompany the federal budget.
Further, Congess should also:
- Establish a bipartisan, independent, and annually recurring Regulatory Reduction Commission to survey and purge existing rules.
- Develop a review and sunsetting schedule for new regulations and agencies.
- Require that agencies report costs for all rules (Congress itself must assess relative benefits and compare agency effectiveness).
- Have agencies and the Office of Management and Budget rank rules’ effectiveness, and recommend rules for elimination.
In short, measure regulation and control it. Make the hidden tax of the Costberg explicit.
ON THE ECONOMY: ABC-123
By John Dunham:
Managing Partner, John Dunham & Associates
“Sit yourself down, take a seat. All you gotta do is repeat after me. ABC, easy as 123 or simple as do re mi.”
I’m not sure if the Jackson 5 ever dealt with any of America’s myriad statistical agencies, but it really is an alphabet soup of bureaus, departments and services.
As we report in this month’s Manifesto, we just had the pleasure of working on a project for the Citizens Against Government Waste (CAGW). This project examined the differences in wages and benefits between state workers and people in similar occupations in the private sector. While this seems simple enough, we could not obtain the relevant data from the federal agency responsible for collecting data on employment, wages and benefits. This is not because the Bureau of Labor Statistics (BLS) did not have the data, but because they would not release it. The agency did have a lot of more limited aggregated data, but the details that we wanted, about how much a building maintenance worker, or a welder or a secretary working for state governments was paid relative to the same type of worker in the private sector was restricted for internal use. This is not the fault of the economists, analysts and data experts at the BLS, but was due to restrictions placed on them.
As a professional economist, I am actually a huge fan of the government statistical agencies at all levels; Federal, state and local. Many of the people working for these organizations do yeoman’s work collecting and maintaining a wide range of data mostly through surveys of businesses and individuals. The decennial Census, which is required by the Constitution, is just one of these surveys. In fact, the US Department of Commerce’s Bureau of the Census performs surveys of business, government agencies, and annual smaller surveys of Americans. It is a great place to go for data on housing, business, government spending, demographics, even commuting modes.
In addition to the Census Bureau, there is an alphabet soup of data agencies throughout the federal government including the BLS which collects data on wages, employment, unemployment wages and prices; the Bureau of Economic Analysis (BEA) which gathers data on production, spending, investment and international trade; the Bureau of Transportation Statistics (BTS); the Bureau of Justice Statistics (BJS); the Department of Agriculture’s Economic Research Service (ERS); the Energy Information Administration (EIA), the list goes on and on.
While one cannot suggest that this is an efficient way to run the government’s data collection efforts, these data people are important – because good legislation and good decisions cannot be made without good data. Last year, Congress came close to passing legislation defunding large parts of work done by statistical agencies. The House of Representatives voted to kill the Economic Census and eliminate the American Community Survey. The American Community Survey is a key resource on a host of statistics, facts and figures critical to making policy decisions, business decisions and getting a clearer picture on the state of America.
These data collection efforts are an essential part of the economic and research profession and; hopefully, Congress now sees that good data is a valuable national resource.
Now, if we can get the agencies to release more of the data that they collect to researchers and the public in a timely and efficient manner……
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