Tuesday, December 02, 2014

November surprise: Happy Thanksgiving from the Regulator-in-Chief

Fridays. That’s when the federal government finds it most advantageous to release ugly surprises. You’ve heard of the Friday document dump? The weekend is coming, most people are winding down from the work week, getting ready to relax for a couple of days, and they aren’t really paying attention to the news, and even the news folks are getting ready for the weekend, and are unprepared to respond to the release of a bunch of government documents.

This practice offers added value right before a holiday, when millions of people are not only readying for the weekend, but are preparing to travel to visit relatives or to host family and friends for the holiday, and therefore even fewer are paying attention to the news. So the Friday before Thanksgiving is when the Obama White House informed the nation, without fanfare, of 3,400 new regulations ready to go into effect next year.

Sam Batkins, the American Action Forum’s director of regulatory policy, told The Daily Signal, “The administration has been really aggressive on the regulatory front.” He added, “They drop [the Unified Agenda] on a Friday right before a holiday, and no one critical of their regulatory policies will have a chance to criticize it.”

The Unified Agenda is a document that serves as the administration’s roadmap for regulations it intends to finalize in coming months, and is usually released in the spring and fall.

The Regulatory Information Service Center of the U.S. General Services Administration, describes this document: “The Unified Agenda provides uniform reporting of data on regulatory and deregulatory activities under development throughout the Federal Government, covering approximately 60 departments, agencies, and commissions. Each edition of the Unified Agenda includes regulatory agendas from all Federal entities that currently have regulations under development or review.”

In 2012 the Obama administration issued 4,000 rules, so it’s good news that this year’s total is lower, although it is 100 rules larger than the 2013 Agenda.

Mr. Batkins notes that under the administrations of Bill Clinton and George W. Bush the Unified Agenda was “a normal, boring list of regulations,” but he warns that the Obama administration’s release of the Agenda near a holiday portends a group of regulations that have strong political implications. This year’s edition contains 23 “economically significant” rules, which are those with an economic impact of at least $100 million, two more than last year.

The Obama administration has introduced rules costing the economy $16 billion a year, on average, according to James Gattuso, senior research fellow in regulatory policy at the Heritage Foundation.

The American Action Forum states that the $16 billion annual average costs imposed on the country by the Obama administration is “tantamount to having a $160 billion tax increase over 10 years.” The Daily Signal quotes Mr. Batkins as saying that $18 billion to $20 billion in new regulatory costs equals an approximate increase in the payroll tax of 1 percent. “Payroll tax going up 1 percent — that would get everyone interested. But $20 billion in regulatory costs is the equivalent of that,” he said.

An increase in the payroll tax affects only employers and employees, but regulatory costs affect nearly everyone. Mr. Batkins analyzed 36 economically significant regulations issued by the Obama administration and shows price increases for the individual consumer in the following categories:

  •        Vehicles: $9,150
  •        Household consumer products: $1,639
  •        Mortgage: $362 annually
  •        Energy: $135 annually
  •        Health Care: $108 annually
  •        Food: $14 annually

That $11,000 effect is the result of just 36 rules of the thousands put into effect each year, and that estimate of costs comes from the government. Other estimates suggest costs are actually even higher.

New regulations push costs higher, and when things cost more people buy less of them. When sales drop, fewer workers are needed to produce, transport and sell those items, and people lose their jobs.

A Heritage study shows that the Obama administration issued 157 major regulations during its first five years, while for the same period under President George W. Bush, only 62 major regulations were released. Those 157 new rules cost Americans nearly $73 billion. No doubt these additional heavy regulatory costs are responsible for some of the dire employment problems the nation suffers more than five years after the recession ended.

Attempting to recover from a recession by issuing punishing regulations has to have a slowing effect on the recovery from the recession, and that is exactly what we have witnessed since the recession ended in 2009.

Consequently, unemployment is still far too high. The most common measure places unemployment at 5.8 percent, which is above the normal 4-5 percent full employment figure. But the more accurate number counting those who can’t find work and have quit looking is 11.5 percent.

The October labor force participation rate is 62.8 percent, the lowest since about 1980, and lower than the 65.7 percent level when the recession ended in June of 2009.

Perhaps it’s that people don’t understand the negative effects rampant regulation has on them, and that enables them to believe a higher minimum wage for the least skilled and least experienced workers is a more critical problem than the costs of regulation.

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