American Elephants


There’s a “Regulatory Cliff” Too—A Cold Dead Hand on Small Business. by The Elephant's Child

There’s quite a list of hushed-up things that went unmentioned before the election, but now that it’s over, are appearing.  Business groups and Republicans see an approaching “regulatory cliff” that could be just as damaging to the economy as the “fiscal cliff” of tax increases and spending cuts.

The White House sought before the election to quiet Republican charges that President Obama was an overly extreme regulator who is killing U.S. jobs. The president has long denied that regulations have any effect on the economy, while small businesses protest and lay off workers. Now that the election is over, the regulatory pipeline has been turned back on.

The Environmental Protection Agency  has proposed rules to update water quality guidelines for beaches, and to deal with runoff from logging roads. The National Highway Traffic Safety Administration has proposed long-delayed regulations requiring auto manufacturers to include “event data recorders — “black boxes”— in all cars and light trucks beginning in 2014.

It’s now full-speed ahead, on a slew of new job-killing regulations that will be issued in a second term, said Senator James Inhofe (R-OK). Regulations will limit ‘greenhouse gas emissions,’ require cleaner gasoline, put controls on drilling for oil and natural gas.

The overall regulatory burden is now $1.8 trillion annually, according to the Competitive Enterprise Institute, and this year alone new rules have added $215 billion in compliance costs. Obama regulations cost 20-times estimates.

Current law rules that a regulation should not be at the White House longer than 90 days. The Office of Information and Regulatory Affairs admits that 84% of EPA rules have been delayed and 100% of energy regulation has been under review for more than 90 days. There is a great deal of uncertainty with many of these cost estimates. There is, in spite of promises, no transparency. Under the Regulatory Flexibility Act the White House must publish in the Federal Register a ‘regulatory flexibility agenda’ two times each year. The administration has not done this in 2012, and has not been forthcoming about costs and benefits of recent regulations.  The Administration avoids the regulations that govern their actions, yet want to impose regulations on everybody else. There’s a word for this.

The burden for businesses is staggering. For the regulations that have proposed versions, the paperwork burden is 37.6 million hours. A productive work year is 2,000 hours. The pending proposals could force 18,839 full-time employees into the role of complying with paperwork, at a cost that could top $100 billion. Regulators often fail to understand the burden that their bright ideas impose on business.

For example, the Department of the Interior is requiring private oil companies to hire marine mammal and sea turtle monitors if the companies are granted a lease to drill offshore. A marine mammal observer’s job is to watch for whales, dolphins, and similar sea creatures and to advise on minimizing the underwater noise created by offshore drilling which might affect the sea mammals. They are also required to observe while on vessels, to reduce vessel speed to 10 knots or less and maintain a 90 meter distance, when assemblages of cetaceans and sea turtles are observed.

The World Bank rates countries on “the ease of doing business.” 108 nations have implemented 201 regulatory reforms in 2011-2012, but the U.S. has not. It now ranks behind Singapore, Hong Kong and New Zealand.

During the first three years of the Obama administration 106 new major federal regulations were added, which is almost four times the number and five times the cost on the major regulations issued by the Bush administration during three years.

CEI also keeps track of Washington’s regulatory obsession, and has noted that by the end of 2012 the bureaucracy will have written nearly 3,900 new rules, spread out over almost 79,000 pages of the Federal Register.

This is an indicator of the Big Government philosophy of the Obama Administration, who believe that wise people in government can better tell people how to direct their lives and businesses than can individuals themselves. The Obama Administration favors central planning. Republicans point out that they aren’t very good at central planning, and when they get out of the way, the economy and the jobs will come back.

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