By Nancy Thorner -
This year's election carries big implications for economic policy well beyond the budget and taxes.
In his first term President Obama presided over a big increase in the number of major new regulations (as measured by their economic impact), from air-cargo screening to fuel efficiency in trucks. On top of these come thousands of pages of new rules implementing financial-regulations and health-care reforms.
The White House has been quick to claim that the benefits of the new regulations will easily exceed the cost, even though economists have contested the way benefits are measured.
In that President Obama's recent budget proposal called for at least $3.8 trillion in spending while failing to seriously address the national debt and the escalating costs of entitlement programs, much uncertainty exists over the increased cost and burden of regulations. As columnist Charles Kadlec wrote in Forbes in regard to regulations and job creation, "the rapid growth in the regulatory burden under President Obama, and the Administration's weak dollar/high oil price monetary policy are on-going impediments to full employment."
Kadlec likewise argued that "the massive increase in federal spending under Obamanomics appears to have sucked the job-creating strength out of the rest of the economy."
During Obama's first three years in office, his administration unleashed 106 new major regulations that increased regulatory burdens by more than $46 billion annually, five times the amount imposed by by the George W. Bush Administration during its first three years.
In recent months, however, there has been a noticeable slowing of the Obama Administration rule making, where a number of major rules have remained under prolonged review by the White House. This is despite a Congressional mandate under the 1980 Regulatory Flexibility Act calling for a release every April and October of a description of all rules likely to have a significant economic impact.
Both the April 2012 and October 2012 agenda deadlines were ignored by President Obama. The last agenda released was in the fall of 2011, which then included a total of 2,676 regulations. By issuing a series of subsequent executive orders, Obama was able to extend agenda requirements of all regulations under development or review by some 60 departments, agencies, and commissions.
According to OIRA data 78% of the 151 regulations awaiting review have been pending at the office for more than 90 days, which exceeds the maximum time allotted under Executive Order 12866.
Obama's disregard of the Regularity Flexibility Act stands in sharp contrast to his promise of an "unprecedented level of openness in government transparency." For without adherence to the regulatory mandate, business planning becomes difficult and Congress is not able to engage in oversight.
The stakes are especially high because of the hundreds of rules related to Obamacare and the Dodd-Frank financial regulation statute that has yet to be finalized.
It is no surprise that the EPA is the largest single source (a total of 29) of the regulations currently pending at OIRA. Twenty-seven are designated as "economically significant, meaning that their costs will exceed $100 million or more annually. The Department of Labor has eleven pending, the Departments of Energy and Transportation ten.
One EPA regulation that the independent, non-partisan Manhattan Institute estimates will cost the U.S. economy $700 billion has to do with greenhouse gas emission standards that would essentially ban all construction of new coal-fired power plants.
Never have so many EPA resources been devoted to a single regulation. If Obama wins, the EPA would have another four full years to implement their anti-fossil fuel agenda. If Romney wins, regulators would have a very narrow window to enact a select few costly regulations that would then be very difficult for a President Romney to undo. Woe to voters of Virginia, Ohio and Pennsylvania to whom Obama is not telling the truth about his plans to shut down the coal industry!
Might a regulatory tsunami be coming if Obama wins re-election? Might we be experiencing a calm before the storm hits? You be the judge.
Among the most costly pending at OIRA are:
1. "A Department of Transportation (DOT) rule to require a rear-view camera and video display for all new cars and trucks at an estimated cost of up to $2.7 billion. The regulation was submitted to OIRA on November 16, 2011.
2. A DOT proposal to require “a means of alerting” blind and other pedestrians of approaching hybrid and electric vehicles. The agency has not developed a cost estimate but has concluded that “only beneficial outcomes will occur.” The proposal was submitted to OIRA on May 10, 2012.
3. Final revisions to the so-called Boiler MACT rules that impose stricter limits on industrial and commercial boilers and incinerators. The cost of the original rules was pegged at $9.5 billion by the EPA and $20 billion by the economic forecasting firm IHS Global Insight (for the Council of Industrial Boiler Owners). The stringency and cost of the original rules provoked an outpouring of protest and some 5,800 comments citing technical and statutory errors. Ultimately, EPA officials were forced to undertake revisions, which were submitted to OIRA on May 17.
4. Proposed limits from the EPA on formaldehyde emissions from hardwood plywood, particleboard, and medium-density fiberboard (replicating standards established by California in 2007). The regulation would also set standards for testing and certification of compliance. Estimates of the regulatory cost exceed $100 million. The proposal was submitted to OIRA on May 5.
5. Proposed energy conservation standards for walk-in coolers and freezers (pending since October 2011) and commercial refrigeration equipment (February 2012), which apply to virtually all refrigerated equipment used in retail food stores—and estimated by the Department of Energy to increase manufacturing costs by $500 million over four years. Likewise, stricter energy standards for manufactured housing (December 2011) would add $1,269 to the cost of a multi-section unit and $889 for a single-section home—increases that would reduce sales of manufactured homes by an estimated 4.8 percent.
6. Proposed regulations from the Food and Drug Administration on the production, harvesting, and packaging of fruits and vegetables, pending since December 9, 2011. The rules would affect more than 300,000 domestic and foreign farmers and packers of fresh produce.
7. Department of Labor restrictions on worker exposure to crystalline silica (fine particles of sand common to mining, manufacturing, and construction). The stricter rules, pending since February 14, 2011, cover methods of compliance, exposure monitoring, training, and medical surveillance. One analysis submitted to OIRA by engineering and economic consultants estimated $5.5 billion in annual compliance costs and the loss of 17,000 “person-years” of employment and $3.1 billion of economic output each year."
Following is an overview of Obama vs. Romney on Government Regulations by Michael Hirsh of National Review, updated on August 23, wherein the General philosophy of each presidential candidate is defined:
"Obama approaches regulation as a pragmatist. He wants “basic rules of the road” to make the economy more fair, based on the painstakingly thought-out views of Cass Sunstein, the University of Chicago scholar who headed his Office of Information and Regulatory Affairs for more than three years. Sunstein propounds a somewhat oxymoronic philosophy he calls “libertarian paternalism,” which seeks to “nudge” people in the direction of rational behavior through rules and regulations that carefully balance costs and benefits. It attempts to reduce regulators’ roles by requiring businesses to disclose, on their own, more information—say, about fees—in an easily accessible way. But it assumes that many people need government help to make informed decisions on such key issues as choosing a health care plan." . . .
"Romney takes a classic conservative approach to regulation, a critique of big government that has been turbocharged by tea party fervor. His criticism of Obama focuses in large part on what he condemns as “excessive regulation” and taxes that he says have made U.S. businesses uncertain about hiring and expanding. According to “Believe in America: Mitt Romney’s Plan for Jobs and Growth,” Obama’s “major initiatives,” including health care, “represent a quantum increase in the scale of the regulatory burden” on the U.S. economy. Romney plans to impose a “regulatory cap” on agencies that would force them to find offsetting cost reductions for any new regulations they want to impose. Even so, as Massachusetts governor, he imposed new regulations for health care and, for a time, the environment."
Unlike Democrats who support their fellow Democrats through thick and thin, when Mitt Romney wins the presidency his fellow Republicans will not be hesitant to hold his feet to the fire if President Romney tries to fudge on his pre-election promises!