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Con: Obama’s proposed reforms are too few and too flimsy

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Evan Bayh & Andy Card
June 25, 2011
EDITOR’S NOTE: The writers are addressing the question, Will the Obama administration’s regulatory reform proposals boost private-sector job growth?

As the country emerges from one of the most serious economic downturns in recent history, the last thing we need are more regulations that impose heavy burdens on job creators. One way to get Americans back to work is by removing excessive and costly regulations that make it harder for businesses to grow.


It appears in the early going that the Obama administration’s executive order requiring a review of existing regulations “that are out-of-date, unnecessary, excessively burdensome, or in conflict with other rules” has encouraged some regulatory agencies to make recommendations that will save businesses time, money, headaches, and resources. But more must be done.


That’s because the order exempts from review the huge flow of regulations in the pipeline generated by the health care and financial reform laws, as well as the large number of major rules generated by the Environmental Protection Agency over the past two years.


This enormous onslaught of new regulations could well cost hundreds of billions of dollars, hamper our recovery, undermine our competitiveness, and cost jobs. The regulations are being promulgated under the same system that generated the ones the administration found necessary to review. And the “look back” plans do not appear to fix this problem.


If we don’t take the necessary steps now, our competitiveness and the success of America’s small businesses—the job engines of our economy—are at risk. Businesses with fewer than 20 employees incur regulatory costs 42 percent higher than companies with up to 500 employees. The average regulatory cost for each employee of a small business exceeds $10,000 per year. The Small Business Administration priced the total cost of federal regulation compliance at $1.75 trillion in 2008—amounting to $15,000 for each U.S. household.


Consider the case of Ronald Myers, the former owner of Hot Shot Equipment in Prescott, Ariz. Meyers was forced to shut down his iron gate manufacturing shop because overly burdensome workplace safety and health regulations prevented metalworking from being done by hand. Unable to compete against foreign suppliers, he had no other choice than to let his workers go and close his business.


Make no mistake—we need some regulations. Businesses require certainty and “rules of the road,” and we need adequate protections for health and public safety. But when regulations suck the vitality out of our economy, it’s time we take a hard look at restoring balance and accountability to the process.


First, Congress should wrestle back the unprecedented power that it has yielded to bureaucratic agencies over the past few decades.


Today, nearly all major regulations go into effect without the people’s representatives in Congress ever voting on them. Congress needs to play a larger role by exercising more vigorous oversight regarding the implementation of the sweeping laws that it passes.


A good place to start would be to pass legislation pending in Congress to guarantee an up-or-down vote, with no Senate filibuster, on regulations with an economic impact of more than $100 million.


Second, we need more rigorous cost-benefit analysis. Major rule proposals should require independent verification and public disclosure of economic and employment impact studies. Existing rules should be periodically reviewed by independent parties and those deemed ineffective or unnecessary should be phased out.


Finally, citizens should have the judicial access and tools they need to hold federal agencies accountable for limiting regulatory burdens and for using sound science to support proposed rules. With appropriate access to courts, citizens help enforce transparency, check bureaucratic power, and hold government decision makers accountable.


We need to restore balance, restraint, and common sense to the regulatory process. It’s time to open America for business again.


Evan Bayh is a former two-term Democratic senator from Indiana, and Andrew Card served as U.S. secretary of transportation under President George H.W. Bush and was White House chief of staff under President George W. Bush. Readers may write to them at: 2001 K Street NW, Suite 400, Washington D.C. 20006.

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