An agenda for regulatory reform: Think big (and small)
If they want to get serious about doing away with job-killing government regulations, congressional Republicans need to get practical about the battles they choose. Last session, Congress’ deregulatory agenda consisted mostly of incessant failed efforts to repeal President Barack Obama’s health-care law (33 of them in all). Whatever political dividends this may have delivered, the health-care law remains in force.
Efforts to compel regulatory approval for the Keystone XL Pipeline and repeal regulations allowing the Environmental Protection Agency to regulate carbon pollution seem equally unlikely to succeed. In fact, if Republicans actually want to move the deregulatory ball, they should both think bigger and think smaller.
Thinking big — reworking the entire regulatory apparatus — should come first. Outside of the financial sector, most of the United States’ big-time regulatory laws went into force between the 1960s and early 1980s. Whether they’ve made significant progress toward their intended purpose (like the Clean Water Act) or mostly failed (like the Superfund toxic-waste cleanup bill), these laws put almost all regulatory power in the hands of Washington bureaucrats. Even when they “work,” these regulations are heavy-handed, insensitive to smaller business and end up placing a significant drag on the economy.
Since they often accomplish worthwhile (or at least popular) goals, however, doing away with them wholesale isn’t practical. Instead, it’s better to think about different, market-oriented ways to accomplish these same ends. For example, large parts of the Clean Air Act — including the Obama administration’s recent high-handed efforts to regulate carbon pollution — might be replaced with taxes on pollution. The revenue collected from these same taxes could offset current too-high taxes on beneficial, productive activity, like earning income and making investments.
At the same time, people looking for market-freeing regulatory reform should also think small and look for specific opportunities where regulatory reform is both achievable and capable of doing immediate good. While it may rile up the Republican base to complain about the Endangered Species Act, the cute critters that law protects remain a lot more popular than development and timber interests. And while the Sarbanes-Oxley law, which ties public companies in all sorts of knots, may be overly burdensome, there would almost certainly be a populist outcry against efforts that would be painted as “letting big corporations off the hook.”
On the other hand, doing away with the enormous amount of bureaucratic paperwork required by smallish companies on the verge of going public, is a somewhat easier regulatory hurdle to nix. There are also times when getting rid of specific regulations will not simply reduce burden, but can actually do tremendous good.
For example, current laws enacted in 1998 as a pure political play by banks place strict limits on how much credit unions can lend to small businesses. Getting rid of them would free up somewhere around $13 billion in credit, primarily for small businesses, and create about 140,000 jobs. But while some Republican members of Congress like Sen. Rand Paul, R-Ky., and Rep. Ed Royce, R-Calif., have come out in support of raising the cap, the proposal has attracted far more Senate Democrats than Republicans to its lists of co-sponsors. (Sponsorship in the House is more even, but leans Democratic too.) It’s pure deregulatory common sense but, because it would hurt some Republican-leaning groups, Republicans don’t support it as strongly as they might.
Poorly thought-out government regulations can do tremendous harm. To date, the Republican Party’s efforts against them have been heavy on bluster and light on action. By thinking bigger and thinking smaller, however, there’s a good chance that the GOP could move forward with real regulatory reform.
