INSIGHTS: Pen, Phone, and Eraser?
Guest Columnists: Wayne Cruz, Vice President, Policy and Senior Fellow at the Competitive Enterprise Institute. Printed with permisson. Full text with notes can be found online.
There have now been several layers of congressional rescue-and-stimulus response to the coronavirus crisis, and there will be more “phases” to come. Given partisan discord, we have to be realistic and recognize that the sweeping “deregulatory stimulus” that is needed now as an alternative to unlimited-spending stimulus will not be fully adopted by Congress. That means there need to be more unilateral moves by President Trump to streamline regulation.
If Congress can spend to stimulate, Washington can also deregulate to stimulate. We have seen a newfound willingness by states and federal agencies to roll back hundreds of regulations impeding access to and provision of health care. It became apparent quickly that the accumulation of generations of regulations can hurt rather than help people. As my colleague Ryan Young outlined it, “Never Needed” regulations are those that:
Slow distribution of proven medical diagnostic tests and devices.
Block patients’ remote access to medical providers.
Increase the cost of energy at a time when Americans can least afford it.
Make it more difficult to hire employees.
Add another layer of bureaucracy or complexity to legal compliance.
Block access to capital for consumers or businesses. Such red tape enjoys some deserved bipartisan disdain. Such never needed rules encompass those that have undermined resilience, worsened the crisis, impeded effective response and stand in the way of reboot.
Congress can take steps to streamline regulation, such as via a regulatory reduction commission to get rid of never needed rules, bipartisan legislation like that that proposed by Sens. James Lankford (R-OK) and Kyrsten Sinema (D-AZ) to give business more advance notice of upcoming rulemaking and set metrics for review of success for new rules, and the Guidance Out of Darkness Act to require one-stop access to the “guidance documents” agencies sometimes deploy instead of regulations.
But given the political reality of broader partisan gridlock, it will be very difficult to push through major, resilience-building regulatory reforms. If Congress will not act on regulatory streamlining in the next “Phases” of recovery legislation, Trump has options for unilateral action. President Obama’s “pen and phone” expanded the federal government reach unilaterally in times of relative calm. That implies that an administration to deregulate can roll government back as the economic crisis mounts alongside the COVID-19 outbreak. A brief list of relief and rescue follows.
Remove and Suspend Existing Rules. Given moves like Trump’s executive order directing agencies to repeal two regulations for each new one enacted, his streamlining of permitting for major infrastructure projects, and its deregulatory responses to the crisis so far, it is likely that the administration will seek to prioritize certain deregulatory responses to COVID-19. In that regard, the administration should seek to:
Boost the two-for-one campaign;
Increase agency flexibility to remove and suspend regulations rapidly such as by using “good cause” and interim final rules to pare down rules without going through the notice and comment process as required under the Administrative Procedure Act; and
Relax regulatory enforcement or prosecutorial discretion in cases where there is good faith on the part of the “violator,” especially for small businesses.
The takeaway here is that rules that were never needed—not just those aggravating the health crisis but also those exacerbating the mounting economic one—should have been gone long before COVID-19 rolled around. They should not have been there in the first place, and they consume energy and effort by being removed now.
Freeze New Rule Issuance and Require Congress to Approve Thawed Ones. Past presidents, such as George H.W. Bush, issued temporary moratoria on new agency regulations. White House officials should review the history of these and implement a new one to temporarily stall what the limited provisions of one-in, two-out do not restrain now.
In some respects, stalling agency rules now would not technically be a new freeze, but mere adherence to law. As it stands, the Congressional Review Act requires all agency rules and guidance documents to be submitted to both houses of Congress and to the Government Accountability Office before they can take effect. This has not been happening.
Given that fact, Trump should reaffirm, in a new executive order, an obscure but important April 2019 memorandum to agencies by Office of Management and Budget (OMB) Director Russell Vought on “Compliance with the Congressional Review Act.” As it stands, there is little evidence of compliance with the memorandum. That means much regulation purportedly in effect is technically invalid.
The president can even take this step further. As aggressive as Trump has been on regulation, Mitt Romney, during the 2012 campaign, released a position paper with a provision even more hardcore than anything Trump has done with respect to reaffirming Article I and restoring Congress’s accountability for lawmaking. Romney wanted legislation to:[R]equire all “major” rules (i.e., those with an economic impact greater than $100 million) to be approved by both houses of Congress before taking effect. If Congress declines to enact such a law, a President Romney will issue an executive order instructing all agencies that they must invite Congress to vote up or down on their major regulations and forbidding them from putting those regulations into effect without congressional approval.
Trump should issue precisely such an order. This would constitute a more limited version of the Regulations from the Executive in Need of Scrutiny Act, better known by its acronym REINS Act, which would require Congress to approve major rules before they can take effect. The current crisis justifies the move, but so did the Constitution before today.
Trump can make even this command stronger. President Ronald Reagan’s E.O. 12291 allowed the OMB director to order a rule to be treated as a major rule even when agencies did not, which would activate a requirement for a greater regulatory impact analysis. As we emerge from the economic crisis, reaffirming that element of the original Reagan order should ensure more rules meet more significant scrutiny.
These steps for new rulemaking— which should include bringing heretofore-exempt independent agencies into the process—would help efforts to both restore lawmaking authority to Congress, where it belongs, and address the economic crisis in a fundamental way.
Sunset Laws, Agencies, and Regulations. Rule suspensions and eliminations, plus control of the new rule outflow, are important. In addition, laws, agencies and rules in general ought to justify their existence to taxpayers (and affirm their constitutionality) periodically and disappear if they fall short. Rep. Kevin Brady (R-TX) has done the most recently to advance this foundational “sunsetting” idea.
Rules and regulations live on, even if the unelected agency personnel that created them are in some cases long deceased. Yet, every regulation should have an expiration date and disappear unless consciously, soberly renewed—not just the troublesome ones that catch our eye in in pandemic-stricken 2020. Putting legacy rules and those created between now and the next crisis on the expiration review schedule would bank resilience for the next emergency.
Even when tried, setting expiration dates has not always worked, but previous efforts can be improved upon. Further, the process will leave a paper trail for posterity to aid future efforts to rein in the administrative state. Sunsetting would mean that in the next crisis, we already will be out in front of the situation. It can help us to create the necessary backdrop to ensure that nothing artificial and bureaucratic stands in the way of recovery.
We need to know how many regulations come up for review that do not get reviewed or eliminated to be capable of reporting that number and which agencies are responsible for the lapse
Ideally, when major rules get revived in a sunset regime, their continuation ought to hinge on congressional approval. Agencies exist to regulate; the objectivity of their reviews should be consistently met with a stalactite of salt. Agencies urging for rules under their purview to be sunsetted would be self-annihilating.
Conclusion. An effectively deployed regulatory reduction commission could seriously help pare down the regulatory state long before distant sunsetting deadlines force the issue.
Freezing of new rules and suspension of harmful existing ones can also help curb the growth of the administrative state.
Sunsetting of rules can relax the abuses stemming from Congress’ over-delegation of power to unaccountable federal agencies, which is a major reason for today’s proliferation of rules.
The administration should also be working with Congress on a “liberate to stimulate” campaign to not only facilitate economic recovery now, but also build resiliency for the future.
In a constitutional republic, presidential powers are rightly limited, but, as Obama noted, the executive does haves a pen and phone. As a corollary to that, he wields an eraser too, where appropriate.
ON THE ECONOMY: BURNING DOWN THE HOUSE
John Dunham, Managing Partner, John Dunham & Associates
Hold tight wait till the party’s over. Hold tight We’re in for nasty weather. There has got to be a way. Burning down the house. Here’s your ticket pack your bag, time for jumpin’ overboard, the transportation is here. Close enough but not too far, maybe you know where you are. Fightin’ fire with fire. The lyrics to the Talking Heads song are actually just strung together phrases, but they do reflect the current situation in a world where the house seems to be on fire. Written by the band, David Byrne, Chris Frantz, Jerry Harrison and Tina Weymouth, the 1983 song was the Talking Heads’ only top ten single on the US Billboard Hot 100 charts.
Its hard not to be negative as the COVID-19 government-imposed lockdowns go into their third month. This is particularly true when one considers that none of the dire predictions made by the epidemiologists have panned out. This is not a dig on the biostatisticians, but complex models require complex assumptions, and have a lot of statistical variability. This means that making important policy decisions based on recommendations from epidemiologists is risky. No doubt, quarantines for two or three weeks would be prudent insurance against disaster, but quarantines lasting for three months do not seem to be based on factual information.
The media is reporting that 100,000 people in the United States have died from COVID-19, which is half of what Dr. Fauci was suggesting when the nationwide shutdowns were implemented. And the 100,000 number could be an overestimate.
COVID-19 is a lung disease like influenza or pneumonia. These diseases account for about 7 percent of deaths every year. Last year, lung diseases accounted for about 8 percent of all deaths. Looking at the data, so far this year, there have been 1,814,000 deaths reported to the CDC. Lung ailments and COVID have been reported as causing roughly 262,900 of these or 14.5 percent. Since lung diseases lead to about 126,990 deaths in a normal year, COVID would seem to be responsible for 135,890 deaths so far, well above even Dr. Fauci’s estimate. This suggests that something might be wrong in the reporting.
According to data gathered by the Freedom Foundation, Washington State is likely inflating its COVID-19 death total by 13 percent. In addition, the Colorado Department of Health and Environment revised that state’s total deaths from COVID-19 downward from 1,150 to 878 (23.6 percent). According to the Washington Post, Dr. Deborah Brix, the face of the coronavirus panic, has suggested that the CDC is over reporting deaths by up to 25 percent. If this is the case, then the number of coronavirus deaths would likely be somewhere near the 100,000-figure stated by Dr. Fauci.
Data on the number of deaths reported in the US is available from the CDC for the first 17 weeks of the year. The COVID-19 outbreak began to impact the statistics from about the 9th week but did not really start to show until the 13th week when 3,946 “excess” deaths were reported. Over 10,000 excess deaths were reported in each of the following 3 weeks. As the chart shows, there were about 38,500 “excess” deaths over this 9-week period. On week 17 the figure fell dramatically, and there were fewer deaths reported than on average.
If COVID-19 has led to 100,000 deaths, then about 60,000 of those may have been offset by reduced economic activity resulting from the government-imposed shutdown orders. For example these have likely been auto accident. But there may be more deaths over time due to the effects of being locked down.
Deaths from COVID-19 are concentrated in people over 65 years of age, with over 80 percent of all deaths from lung ailments, including coronavirus, occurring in this demographic. They are particularly impacting people living in long term care facilities who account for about 53 percent of reported COVID-19 deaths. Roughly 19.7 percent of deaths occurred in the working age population, compared with 23.6 percent of deaths overall. In other words, working age people are much more likely to die from something other than lung ailments including COVID-19, while older folks are much more likely to succumb to both. This means that younger folks under index for risk from coronavirus, while older people (particularly those between 75 and 85 years of age) over index.
The data so far show that the risk of death from COVID-19, while not zero, is negligible for anyone under the age of 65, and only one risk factor for the older population (considering that they are afflicted by a wide range of ailments) that could lead to their demise. Deaths as reported by the CDC are likely overestimated and include influenza, pneumonia and other deaths that would have occurred even without the impact of the new virus. Even so, governments worldwide have put the livelihood of their populations at risk. Last month on net 527,000 businesses failed in the US alone. This means that it is very likely that more businesses will die from COVID-19 than people.
Putting this into context, to date, COVID-19 has reportedly killed 352,000 people worldwide. This is a large number, but it does not compare to past pandemics. The AIDS pandemic killed an estimated 30 million people, while the Spanish Flu outbreak in 1918 killed at least 45 million. Even this does not compare to the Black Death (200 million people) or the Plague of Justinian (40 million) when the overall world population was much, much smaller. The smallpox epidemic that occurred in the Americas following contact with European exploders killed as much as 90 percent of the entire population.
While it is the responsibility of public health officials and government leaders to ensure the safety of their populations, acting as if COVID-19 is on par with historical pandemics is dangerous. It would also be dangerous to ignore the virus like President Wilson did in 1918, focusing instead on the war effort. But overreacting through panic policymaking, that will surely devastate much of the world’s economy for years to come, is one of the worst cases of un-justified panic that has struck the world since witches were being burned in the Middle Ages. The COVID-19 epidemic is highly concentrated in a single population group, and efforts should be directed to minimize infections in Long Term Care Facilities, and in other places where the elderly congregate.
More and more, it looks as if the gibberish lyrics of the Talking Heads were prophetic. Coronavirus statistics seem to be close enough but not too far, but it is unlikely that political leaders know where you are. For sure they are fightin’ fire with fire and they will likely be burning down the house.