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The Battle Over the Regulatory State

August 14, 2012 5 minute Read by Ike Brannon

Richard Nixon stated in 1946, when he first ran for Congress, that the Congressional elections that year constituted the most important in the nation’s history. It was to be a statement he repeated in some form every two years until his death in 1994. All presidential elections are important, of course, but it is easy to overstate how much a particular election can move the aircraft carrier that is the United States bureaucracy. Given that the House of Representatives will likely remain in Republican hands and that whoever has control of the Senate will have it by the narrowest of margins, our next president will have less ability to maneuver and pass legislation than the last three presidents did, each of whom inherited a congenial Congress. With the promise of continued gridlock, the winner of the 2012 election will inevitably turn to the executive branch and attempt to carry out at least a portion of his agenda via the regulatory state. While the scope of what a president can accomplish in this realm without the help of Congress is relatively small, it is by no means insignificant. For instance, after Congress refused to acquiesce with the president’s desire to impose a cap-and-trade plan to control the emission of greenhouse gases, the Administration pivoted to have the Environmental Protection Agency regulate greenhouse gases instead. What would such a regulatory effort mean for the incumbent? It is difficult to say: In the past year, the Administration has been reticent to issue regulations that could prove costly to businesses, although various agencies continue to fill the regulatory “pipeline” with proposals that could be issued in a lame-duck session. It’s no secret that the overwhelming majority of people who work on regulations in the various agencies consider themselves aligned with the precepts of the Democratic party and see a Romney victory as a disaster, as well as a reason to buckle down and issue new regulations before a President Romney could stop them. With the departure of Cass Sunstein, the administrator of the Office of Information and Regulatory Affairs (which ostensibly serves as the traffic cop for the encroaching regulatory state), at the end of the year, the Administration loses the face of its “kinder and gentler” regulatory state. If the president wins re-election, he might have less of an incentive to cut the business community slack and might be more likely to replace Sustein with someone more attuned to the pro-regulatory paradigm. Given the vitriol directed at Sunstein from the environmental world, it is clear they would not relish a Sunstein acolyte replacing him. What would a President Romney be able to do regarding regulations? Probably less than most people think. The sad fact of the matter is that repealing regulations that have already been issued is often a fruitless task: If businesses have already taken the trouble to conform to a regulation, repealing it provides little benefit. Indeed, the Administration’s ballyhooed initiative to repeal certain costly regulations last year did little or nothing to save businesses any money. Stopping regulations that go out the door in the last hours of the current administration would be a worthwhile task, but that’s not exactly an agenda. One way a President Romney could do some good would be to involve Congress more in setting the agenda for regulatory action. The recently passed Regulatory Flexibility Act requires agencies to more explicitly take the economic costs of new regulations into account, but the vagueness of the rule has made it quite easy to subvert. Attempting to strengthen this law would be a good start, as would closer scrutiny by Congress of particularly egregious regulations that have proven costly to businesses while providing relatively little in terms of quantifiable benefits. The regulatory state has slowly yet inexorably grown through administrations both Democratic and Republican for decades now — since the era of LBJ and, yes, Nixon. The inability of Congress to rein it in has resulted in slower economic growth and fewer jobs than would otherwise be the case. It is too important a battle to be fought under the radar and, regardless of who wins the coming election, the battle over the regulatory state will be elevated in importance, if not notoriety.


Author

Ike Brannon
Ike Brannon

Ike Brannon served as an Economic Growth Fellow of the George W. Bush Institute from 2012 to 2015. He has a Ph.D. in economics from Indiana University and a B.A. in math, Spanish, and economics from Augustana College. View his full bio

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