The list of regulations in the United States is growing rapidly, writes MLI Senior Fellow Sean Speer in a new column in National Review. That’s why lawmakers should look to Canada for ideas on regulatory budgeting.
By Sean Speer and Kevin R. Kosar, July 15, 2016
One upside of either a Trump or a Clinton presidency, given the historically low popularity ratings of both candidates, could be renewed interest within Congress to serve as a bulwark of the Constitution in the best interests of the American people.
Neither presumptive nominee can plausibly be called a strict constructionist. Our representatives should take this opportunity to turn a sow’s ear into a silk purse by pursuing a reform agenda that restores Congress’s primacy in the U.S. governance system. It would be a positive development in what has otherwise been a disappointing election season.
Senator Mike Lee (R., Utah) already has initiated the effort. His Article I Regulatory Budget Act would reverse the trend of government-by-regulation and restore Congress’s principal role in lawmaking. It’s too early to know whether the senator will secure the backing of his congressional colleagues, but if Canada’s experience with regulatory budgeting is any indication, the bill should have bipartisan support.
Regulatory budgeting is a simple concept. It’s based on the premise that regulatory costs — what it costs the state to enforce a regulation and what it costs individuals and businesses to conform to a regulation — are similar, in concept, to the expenditures governments make through the budget process. Government spending is subject to regular scrutiny. Why not regulations?
Regulatory budgeting thus seeks to apply basic budgetary principles, such as prioritization and trade-offs, to the management of existing regulations and to the development of new regulations. Departments and agencies are given “regulatory budgets” based on the number of regulations, rules, and directives they issue, along with their estimated economic costs, and they are expected to live within them. Any new regulations must be offset by “savings” realized by eliminating existing regulatory requirements. The goal is to bring greater accountability, discipline, and transparency to the regulatory process.
And it is needed. The United States increasingly is a nation of regulations rather than laws. The federal bureaucracy has become the de facto source of lawmaking, using vague and open-ended statutes to give itself seemingly unlimited powers to enact regulations, rules, and directives without congressional oversight. Federal bureaucrats have used the Clean Air Act alone to enact, on average, roughly 350 pages of regulations for every year the act has been in effect.But that is not all. The initiative also seeks to restore limits on executive action and promote Congress’s role in defending the public interest. Regulatory reform is at the heart of the effort to reclaim Article I of the U.S. Constitution.
The result is that, on average, about 4,000 new regulations take effect each year and another 2,700 are proposed. This steady accumulation of rules has caused the Code of Federal Regulations to balloon to more than 175,000 pages. Compliance is estimated to cost individuals and businesses nearly $70 billion annually, along with about 10 billion hours each year. Senator Lee’s regulatory budgeting bill aims to stem this proliferation of bureaucracy that is hindering the American economy and eroding its constitutional system.
The experience from Canada is that regulatory budgeting can be a useful tool to slow the growth of the regulatory state. Both the federal government and the provincial government in British Columbia have experimented with regulatory budgeting in recent years. It’s been a trial-and-error process to establish the proper baseline of regulations, rules, and directives and set credible cost estimates for existing and new regulations. The federal government codified its regulatory-budgeting regime by statute in 2014, making Canada the first country to give a “one-for-one” rule the full weight of legislation.
Neither the federal model nor the British Columbia model is perfect, but both continue to be refined and have shown positive results. Annual reporting and third-party verification (including, in B.C.’s case, by using an equivalent to the U.S. Government Accountability Office) have brought greater accountability and rigor to the regulatory process. They have empowered legislators and citizens to monitor and better contribute to regulatory policy.
Most important, the B.C. government has experienced a net reduction of regulatory requirements of 43 percent over the past 15 years. Ottawa has cut regulatory costs by $32 million and saved businesses 750,000 hours spent dealing with red tape each year. The regulatory leviathan is being wrestled under control.
One of the major takeaways from Canada’s experience with regulatory budgeting is that it should not be a partisan or ideological issue. The federal regime was enacted by a Conservative prime minister, but had all-party support and remains in place, despite the election of a Liberal government in Ottawa. British Columbia’s regulatory budgeting has been led by a Liberal government and has generally not been a source of political contention in the province. Regulatory budgeting can be a policy agenda that transcends party lines.
It is the responsibility of every member of the legislative branch, irrespective of party or ideology, to uphold the Constitution and to hold the executive accountable. Senator Lee’s bill will not reverse decades of executive aggrandizement, but it is a step in the right direction. It ought to receive serious consideration from both sides of the aisle.
Kevin R. Kosar is a senior fellow at the R Street Institute and the editor of LegBranch.com, and Sean Speer is an associate fellow at the R Street Institute and a senior fellow at the Macdonald-Laurier Institute, a Canadian-based think tank.