We Need a Deregulation President
PRESIDENT George Bush has said that he wants to be many things - the education president and the environmental president, to name just two. Unfortunately, he is wrong to think that more federal intervention is the solution; to the contrary, costly and inefficient regulation is much of the problem. What President Bush should really seek to become is the deregulation president.Skip to next paragraph
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Of course, he's been posing as one. Earlier this year, with the economy floundering and his poll ratings dipping, Bush suddenly evinced an interest in the impact of regulation. In his State of the Union speech he declared a 90-day moratorium on new regulation, during which time "major departments and agencies will carry out a top-to-bottom review of all regulations, old and new." In effect, Bush declared war on his own administration.
But it is turning out to be a sitzkrieg, or phony war, like that between France and Germany in 1939. For the Bush moratorium doesn't apply to emergency rules, or to the dictates of independent agencies, such as the Federal Communications Commission, or to the requirements of statutes, which can be changed only by the passage of another law.
In fact, a three-month moratorium won't even reverse the damage done over the last three years by Bush's own appointees. As of last fall, 59 different agencies employing 122,000 people were working on 4,900 different regulations; 1991 saw a 26 percent increase in the number of pages in the Federal Register, to nearly 68,000, the most since 1980.
But even this figure understates the breadth of reregulation under the Bush administration. It is not just length of rules that suffocates the economy, but also who and what they affect. All told, observes the National Journal's Jonathan Rauch, "there is little doubt Bush's first term has witnessed the broadest expansions of government's regulatory reach since the early 1970s."
And the president's record is only going to grow more onerous as he implements several new laws, which collectively could hike what is already an annual, economy-wide regulatory burden of $400 billion to $500 billion - or $4,000 to $5,000 a household - by an additional $40 billion to $50 billion. If the president is serious about restoring American economic leadership, he will go to Congress with a deregulatory package, proposing to reform several statutes that he shouldn't have signed in the first place .
There is, for instance, the Nutrition Labeling and Education Act, a 700-page measure that is expected to force changes in 257,000 different labels and could cost firms an estimated $3 billion or more. Also approved in 1990 was the Pollution Prevention Act, which requires manufacturers using one or more of 300 specified chemicals to prepare a detailed annual report.
The Civil Rights Act of 1991, passed after two years of nasty debate, explicitly shifts the burden of proof from plaintiffs alleging discrimination to defendant firms. The inevitable result will be to encourage companies to use quotas in order to avoid lawsuits. Several other provisions of the law will also worsen the nation's litigation lottery.
The Americans with Disabilities Act will prove to be even more expensive, probably $2 billion or more a year, because it combines two different regulatory approaches: redesign for physical plant and quasi-affirmative action for disabled applicants and employees. The critical factor is that it disallows equal treatment of the disabled, instead forcing companies to underwrite potentially expensive "accommodation" efforts. The statutory exceptions are limited and vary by firm, ensuring that virtually every dispute will end up in court.
Finally, there's the nearly 800-page Clean Air Act of 1990. The law calls for the development of 400 sets of new regulations, which are expected to fill at least 7,000 pages in the Federal Register. The incomprehensibly complex and inefficient law is expected to cost upwards of $40 billion a year while providing less than half as much in benefits.
Unfortunately, the statute relies primarily on command-and-control regulations, which dictate the means of cleanup, rather than performance standards, which allow companies to adopt the most efficient cleanup method - the strategy preferred by the Europeans and Japanese.
To convince Congress to revise these and other unnecessarily burdensome laws would not be easy, of course. But if the president is serious about spurring American economic growth, he needs to lighten the federal regulatory burden.