Stran­gled by red tape

The Washington Times Weekly - - Editorials -

The left has de­ployed ev­ery eco­nomic trick it knows. Even a tril­lion dol­lars blown on FDRstyle “shovel ready” pro­grams did noth­ing to budge un­em­ploy­ment, which re­mains at 9.1 per­cent. The rea­son this didn’t work is hardly mys­te­ri­ous. The pri­vate sec­tor isn’t go­ing to in­vest or hire as long as new reg­u­la­tions con­tinue to pour out of Wash­ing­ton. Each new rule makes it harder to set a long-term busi­ness plan with any de­gree of cer­tainty.

En­trepreneurs who can’t make a rea­son­able es­ti­mate of fu­ture costs won’t risk their cap­i­tal on new op­por­tu­ni­ties. That means less eco­nomic ac­tiv­ity, fewer jobs and an econ­omy that stays in the dol­drums.

Ac­cord­ing to the Gov­ern­ment Accountability Of­fice (GAO), 195 ma­jor rules were re­ported to Congress by fed­eral reg­u­la­tory agen­cies in the first two years of the Obama ad­min­is­tra­tion. These are rules that have an ex­pected im­pact on the econ­omy of $100 mil­lion or more, or a ma­jor in­crease in costs for con­sumers or pro­duc­ers, or a sig­nif­i­cant ad­verse im­pact on the com­pet­i­tive­ness of an in­dus­try, among other fac­tors. This com­pares with 178 such rules in the last two years of the Ge­orge W. Bush ad­min­is­tra­tion.

The raw num­bers mask the scale of the lat­est wave of reg­u­la­tions, the worst of which has yet to hit. The Dodd-Frank fi­nan­cial reg­u­la­tion bill will cre­ate an ac­count­ing night­mare. Oba­macare rules will play a crit­i­cal role in de­ter­min­ing the cost of each em­ployee to an em­ployer. There also are a se­ries of up­com­ing en­vi­ron­men­tal reg­u­la­tions that will sub­stan­tially in­crease the cost of do­ing busi­ness.

The Her­itage Foun­da­tion tal­lied the im­pact of com­ply­ing with the 43 ma­jor rules im­posed in fis­cal 2010. Based on es­ti­mates from reg­u­la­tors them­selves, this cost is at least $26.5 bil­lion. This does not in­clude the cost of reg­u­la­tions that in­di­vid­u­ally have an es­ti­mated im­pact of less than $100 mil­lion. Be­cause there is no end to such rules from hun­dreds of fed­eral en­ti­ties, they add up to a sub­stan­tial bur­den. New rules also force the pri­vate sec­tor to buy new equip­ment, im­ple­ment new pro­ce­dures and un­der­take new re­port­ing meth­ods — a con­sid­er­able in­vest­ment of phys­i­cal cap­i­tal and hu­man skills. Her­itage es­ti­mates the first-year cost for the 2010 rules at $3.1 bil­lion.

That’s why the White House reg­u­la­tory czar Cass R. Sun­stein’s claim that the ad­min­is­tra­tion has trimmed $1 bil­lion in reg­u­la­tory costs isn’t progress — net costs are on the rise. The elim­i­na­tion of 1.9 mil­lion hours of re­dun­dant re­port­ing to the Oc­cu­pa­tional Safety and Health Ad­min­is­tra­tion is a step in the right direc­tion, but it isn’t go­ing to help if busi­nesses are sad­dled with twice as much red tape from other agen­cies. As a 2007 GAO re­port stated, “[E]very pres­i­dent since Pres­i­dent Carter has di­rected agen­cies to eval­u­ate or re­con­sider ex­ist­ing reg­u­la­tions.” Even Pres­i­dent Clin­ton suc­ceeded in elim­i­nat­ing about 16,000 pages of the Fed­eral Reg­is­ter.

Oba­macare, Dodd-Frank and the En­vi­ron­men­tal Pro­tec­tion Agency’s lat­est rules will slam ev­ery cor­ner of the econ­omy, and no­body will re­ally know what dam­age will be done for years. En­trepreneurs are nei­ther ir­ra­tional nor fool­ish. See­ing the dark clouds on the hori­zon, they hold on to their funds un­til the skies clear. If Pres­i­dent Obama wants to get the econ­omy back on a growth path, he needs to di­rect his bu­reau­cracy to stop the job-killing reg­u­la­tions al­ready in the works.

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