Rules, regulations slowing economy

Published on Sunday, 30 March 2014 21:25 - Written by

Doctors often see patients with vague symptoms — a general malaise or lingering pain. In the best cases, the doctor finds specific causes, and the patient is as relieved psychologically as well as physically.

That scenario also applies to our economy. The malaise, the pain felt by middle class families just trying to get by — these are the symptoms. But what’s the cause?

More and more evidence shows that it’s government red tape.

“For the past five years, the Obama Administration has aggressively exploited regulation to get its way,” said James L. Gattuso and Diane Katz of the Heritage Foundation. “Issuing 157 new major rules at a cost to Americans approaching $73 billion annually, the Obama Administration is very likely the most regulatory in history.”

That’s just the overreach by the executive branch.

“Much of the red tape imposed over the past five years has been driven by vast and vaguely worded legislation, such as the misnamed Patient Protection and Affordable Care Act (Obamacare) and the Dodd–Frank financial-regulation law, in which Congress granted broad discretion to regulatory agencies, Gattuso and Katz contend. “Doing so allows lawmakers to claim credit for ‘doing something’ while evading blame for specific regulations. The regulatory burden swelled in 2013 with the imposition of 26 new major rules. Although slightly below President Obama’s first-term annual average, that was still twice the annual average of his predecessor George W. Bush.”

It’s hard to effectively gauge the effect of all these new regulations. There’s the direct cost, which can be staggering.

“The cost of the new mandates and restrictions imposed by the Obama Administration now nears $73 billion annually, based on analyses performed by the regulating agencies,” the authors said. “Regulators reported new annual costs of $2.8 billion for the 2013 rules.”

But there also are indirect costs. Take one example — buying a home.

“Some of the most problematic new rules of 2013 came from the Consumer Financial Protection Bureau (CFPB), including four major rules restricting access to mortgage credit,” Gattuso and Katz explained. “These rules cover every aspect of financing a home — including mortgage options, eligibility standards, and even the structure and schedule of payments — and will limit financing options and thus further expand government control over Americans’ lives. Despite the potentially enormous impact, the CFPB failed to quantify the actual costs of these rules.”

The pace of new rule-making is picking up, and there’s much more red tape on the way.

What can Congress do? First, like the doctor mentioned above, do no harm. Congress must no longer cede its legislative authority to unelected bureaucrats.

“Congress, not regulators, should make the laws and should be accountable to the American people for the results,” Gattuso and Katz said. “To help ensure this, no major regulation should be allowed to take effect until Congress explicitly approves it.”

And Congress should establish a Texas-like Sunset Advisory Commission, tasked with evaluating existing rules and regulations.

Most Americans know something is wrong. A real recovery shouldn’t feel like this.

But now, at least, we know what’s causing some of the malaise.