There has been a lot of attention paid by both campaigns and Hill watchers to the “fiscal cliff” that will appear on December 31, 2012. That’s when the Bush-era tax cuts expire and sequestration will be implemented, resulting in massive cuts to defense and other federal programs.
But, as Senator Rob Portman points out in an op-ed in the Wall Street Journal. the “fiscal cliff” is only half the story. There is also a “regulatory cliff” that is just as steep and damaging to the economy.
After three years of bureaucratic excess, the Obama administration has been quietly postponing several multibillion-dollar regulations until after the November election. Those delayed rules, together with more than 130 unfinished mandates under the 2010 Dodd-Frank financial law, could significantly increase the regulatory drag on our economy in 2013.
The Labor Department, for example, is working on a regulation that would increase the cost of retirement planning for middle-class workers, to “protect” them from investment help. This regulation, known as the Fiduciary Rule, would tighten restrictions and increase litigation risks for businesses that offer investment guidance on a commission basis, rather than the more expensive fee-for-service model.
A study last year by the Oliver Wyman Group found that the Fiduciary Rule could result in higher retirement account minimums and cause 7.2 million individual retirement account (IRA) holders to lose access to investment advice. Even the Labor Department was unable to show that the rule’s illusory benefits outweigh its substantial costs.
After other lawmakers and I urged the White House to step in, this rule-making was delayed temporarily. But the Labor Department has told interested parties to stay tuned for another iteration of this rule.
Then there is the mega-rule on the shelf at the Environment Protection Agency (EPA) that could block business expansion in many areas of the country. Proposed in 2010, the Ozone Rule would impose a limit on ozone (which creates haze from emissions from cars, power plants and factories) so strict that up to 85% of U.S. counties monitored by the EPA would be in violation.
Susan Dudley, a regulatory economist at George Washington University who served in the previous administration, notes that this rule would force many communities “to forego productive investment and hiring decisions in order to spend hundreds of billions of dollars per year in vain attempts to meet unachievable standards.”
The EPA itself says the rule could impose up to $90 billion in yearly costs on manufacturers and other employers. Last September, after months of public outcry, the White House instructed the EPA to put the rule on ice until 2013, when it will be “revisited.”
Also to be “revisited”: the EPA rule on Carbon emissions for existing power plants. An EPA regulation was issued last year covering new power plants that virtually assures there will be no new coal-fired plants built in the US. But existing power plants were exempted under the new rule and the EPA says there are “no plans” to issue new regulations to cover them.
That’s bogus, as the advocacy site The Grist points out:
Here’s the story: Once something is deemed a pollutant under the Clean Air Act (which, in the case of CO2, was settled by the Mass v. EPA Supreme Court case), then it must be regulated under Section 111 of the act, the New Source Performance Standards program.
Section 111b governs new sources. That’s what was issued today. But when EPA regulates under 111b, that triggers a legal obligation for it also to regulate existing sources under 111d.
Which is a nerdy way of saying: EPA is legally obligated to regulate existing power-plant sources of CO2.
As with the regs that Portman highlights above, there’s only one reason all of these rules have been delayed; everyone in Washington knows they will impact the economy in a negative way and could potentially drag us back into a recession.
When fanatics are in charge of regulating business, the chances are they will care less about the impact on the overall economy — much less on the jobs and profitability of individual businesses themselves — and more about advancing their radical agenda. Unrealistic, nonsensical, and anti-reason regulations whose benefits are far outweighed by their deleterious impact on the economy represent as much a danger to the economic health of the country as the “fiscal cliff” the nation is headed for on December 31.