Regulation is a hidden tax on Americans. According to one estimate, the total burden is as much as $843 billion, almost as heavy as the burden of income taxes. The harm, however, is not just economic: Unnecessary regulations can hinder innovation and even harm health and safety.
How has President George W. Bush done in addressing this problem? Based on the measures that are available, his record is mixed. So far, he has done much better than his recent predecessors at limiting the growth of regulations. However, he has a much weaker record on eliminating existing rules. As a result, according to most measures, the total amount of regulation has continued to rise under the current Administration.
There is no magic bullet that will reverse this trend. Nevertheless, the Administration and Congress can take a number of steps to ensure that the full costs and consequences of regulation are weighed as rules are considered. Specifically, they should:
- Continue to strengthen the Office of Information and Regulatory Affairs (OIRA) within the Office Management and Budget,
- Establish a congressional office of regulatory analysis,
- Establish regulatory review offices in each regulatory agency,
- Designate "regulatory reform czars" at each agency to identify unneeded regulations, and
- Require independent agencies to submit cost-benefit analyses to OIRA.
However, none of the above steps will turn the tide of regulation unless President Bush clearly states that reducing regulatory burdens is a key priority in his agenda. He should emphasize, especially to his own agency heads, that reducing the regulatory burden is a key goal, not just another bit of Washington rhetoric that can be disregarded when politically convenient.
The President must set the underlying tone for the many regulatory debates within his Administration, making clear that actions to reduce regulation will be viewed favorably. He has begun to do so, with strong statements on overregulation in several recent speeches, and he should continue this. Otherwise, reform efforts will surely fail in the face of bureaucratic and political opposition.
James L. Gattuso is Research Fellow in Regulatory Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. Margaret Hamlin of the Heritage Center for Data Analysis assisted in preparing this report.