Only minutes after federal officials announced this morning that unemployment crept back up to 9.1 percent, a Florida congressman convened a House oversight subcommittee investigating the role of government red tape in the nation’s economic doldrums.
Rep. Cliff Stearns, R-FL, chairman of the subcommittee on oversight and investigations, noted in his opening statement that President Obama recently ordered a government-wide review of regulations, and promised in a Wall Street Journal oped to eliminate those “that stifle job creation and make our economy less competitive.”
As head of the oversight panel of the House Energy and Commerce Committee, Stearns is in a potentially powerful position to shine light on what’s been done in the weeks since Obama’s oped was published.
“This is incredibly important given that the Federal Register stands at an all-time high of over 81,000 pages,” Stearns said in an opening statement. “In 2010 alone, federal agencies added more than 3,500 final rules to the books.”
Stearns noted the 9.1 unemployment figure and pointed out that federal regulations add “$1.75 trillion in annual compliance costs, according to the Small Business Administration. That’s greater than the record federal budget deficit— projected at $1.48 trillion for FY 2011—and greater than annual corporate pretax profits, which totaled $1.46 trillion in 2008.”
The first witness appearing before the panel was Dr. Cass Sunstein, administrator of the Office of Management and Budget’s regulatory oversight shop and the official tasked by the president to oversee the regulatory review.
Sunstein told the panel that 30 agencies recently submitted plans for their reviews, and he predicted substantial savings would result.
“Some of the steps outlined in the plans have already eliminated hundreds of millions of dollars in annual regulatory costs, and over $1 billion in savings can be expected in the near future. Over the coming years, the reforms have the potential to eliminate billions of dollars in regulatory burdens,” he said.
Among the examples Sunstein cited were the U.S. Environmental Protection Agency’s decision to stop treating milk spills on dairy farms as if they are oil spills. Savings of up to $1.4 billion could be expected over the next decade as a result, he said.
After the hearing, Stearns expressed skepticism about the Obama regulatory review, telling The Washington Examiner it is merely “political exercise and rhetoric.”
Stearns said Obama’s executive order does not cover independent federal agencies like “the FCC, FTC, NRC, CPSC, and FERC. All of those agencies put out regulations with no supervision and are not under the Obama executive order. And when you realize that these independent agencies are left on their own, it’s quite alarming.”
He also said there are already several laws on the books requiring executive branch departments and agencies to review all of their regulations and eliminate those that are obsolete or impose unnecessary or excessive burdens.
“The other point is that federal agencies routinely ignore such requirements contained in such laws as the Regulatory Flexibility Act, the Information Quality Act and the Unfunded Mandates Reform Act,” Stearns said.
“All of those specify that all agencies in the government have to review retrospectively and eliminate them. So what the president is doing is already part of Congress and the agencies should have been doing it already but they’re not.”
Also testifying was James Gattuso, senior research fellow at the Heritage Foundation. He commended Obama and Sunstein for recognizing the need to get rid of obsolete regulations, but questioned whether the substance of the review plans submitted by 30 agencies.
“For instance, the rules defining milk as a potentially dangerous oil had been in place since the 1970s, and a request to eliminate dairies from the regulations had been submitted to EPA as early as 2007,” Gattuso said.
“The fact that it took four years to accomplish is less a notable achievement than a sign of our broken regulatory system,” he said.
Many of the promised reviews are to be done at unspecified later dates and very few changes have been implemented as a result of the Obama executive order.
“Many more actions are merely suggestions for change at a later date. For instance, only two rule changes have actually been finalized by the EPA,” Gattuso said.
“Of the 31 other reforms identified in the EPA’s plan, sixteen are ‘early actions’ that may lead to regulatory change in the near future, and 15 are ‘longer-term actions’ that officials have simply marked for a closer look.”
David Goldstein, the Natural Resources Defense Council’s director of government affairs, questioned the motives of regulatory critics, noting that concerns about cost and effectiveness are heard whenever new federal regulations are proposed.
“The same kind of fears that we hear expressed today – about job losses, about high costs, about cures that are worse than the disease – those same fears were raised about all the safeguards that we now take for granted,” Goldstein said.
“And there is no more reason to excessively credit such fears now than there was then. Whenever industry is asked what safeguards pose the greatest threat to their interests, they seem to answer ‘the next one,’” in an apparent swipe at Stearns and other congressional Republicans calling for comprehensive regulatory reforms.
For more information on the hearing, including links to the witnesses prepared testimonies, go here.
