Obama Seeks Review of Regulatory Burdens on Business

January 21, 2011 - 7:00 AM

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President Barack Obama. (AP Photo/Pablo Martinez Monsivais)

(CNSNews.com) – In a possible move to the political center after signing legislation that broadens the federal government’s purview over Wall Street and the health care industry, President Barack Obama signed an executive order and two memos this week ordering the Executive Branch to review and possibly roll back regulations on the nation’s job creators.

The order does not roll back any specific regulation, but only puts a review system in place.

Obama administration officials said the new policies seek a balance of economic growth while still providing government protection to Americans by requiring Cabinet agencies to ensure regulations on the books are needed and that forthcoming regulations are not too burdensome.

“We will take stock of existing regulations and take a formal look back at the number of regulations that make sense today,” said Cass Sunstein, administrator of the White House Office of Information and Regulatory Affairs, during a conference call with reporters on Tuesday. “We want to make sure these regulations aren’t obsolete, ill-considered or cause more harm than good. There should be a way to reduce burdens and help job creation as well.”

The administration also wants to increase the transparency of regulations with a new Web site, Regulation.gov, to allow the public to review enforcement, compliance, and effectiveness of regulations, Sunstein said.

“Regulations must be guided by objective scientific evidence,” he said.

The executive order says agencies must consider the cost and benefits of regulations and choose the least burdensome path. The regulatory process will also have to include public participation from stakeholders and allow for public comment. The order further states that federal agencies must review existing regulations to determine if they are still necessary. If the administration concludes that the rules are outdated, they will be changed or repealed.

Compliance with federal regulations currently costs businesses and consumers $1.187 trillion and takes 157,000 pages to list, according to the Competitive Enterprise Institute (CEI). According to the free-market CEI, the number of regulations in the pipeline at agencies has gone from 4,041 at the end of 2009 to 4,225 now.

In December, Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, sent a letter to 150 different business trade associations to seek input on reducing burdensome regulations. Issa cited the administration’s estimate that in fiscal year 2010, federal agencies promulgated 43 new regulations, costing American business $28 billion in compliance costs. That’s on top of the $1.75 trillion estimated burden of existing regulations, Issa said.

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Rep. Darrell Issa (R-Calif.)

“I applaud President Obama for joining what must be an effort that stretches beyond ideological entrenchments to identify the regulatory impediments that have prevented real and sustained job growth in the private sector,” Issa said in a statement on Tuesday. “The anti-business policies of the past have hurt job creators, small and large. It’s in the interest of every American that we create a modern, regulatory environment that fosters economic growth and makes U.S. companies globally competitive.”

Jack Lew, director of the White House Office of Management and Budget, told reporters during the Tuesday conference call that this was not in response to anything recent. “This is a result of months of work.”

Obama broke the news with an op-ed in the editorial pages of The Wall Street Journal.

“The FDA has long considered saccharin, the artificial sweetener, safe for people to consume,” he wrote. “Yet for years, the EPA made companies treat saccharin like other dangerous chemicals. Well, if it goes in your coffee, it is not hazardous waste. The EPA wisely eliminated this rule last month.”

“But creating a 21st-century regulatory system is about more than which rules to add and which rules to subtract,” said Obama.  “As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends -- giving careful consideration to benefits and costs.”

Questions came up about whether this was a sign Obama was moving to the political center after the 2010 Republican victories, similar to what Democratic President Bill Clinton did after Republican victories in 1994.

“The notion that this is left, right or center is irrelevant to whether it’s best for the American people,” said Jack Lew.

Interestingly, the executive order came on the same day that 200 economists signed a letter to members of Congress saying the regulations in the $1-trillion health care overhaul enacted last year harm job growth.

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President Barack Obama and Vice President Joe Biden react to cheers as they arrive in the East Room of the White House in Washington, Tuesday, March 23, 2010, for the signing ceremony for the health care bill. (AP Photo/J. Scott Applewhite)

“The Patient Protection and Affordable Care Act contains expensive mandates and penalties that create major barriers to stronger job growth,” the letter says. “The mandates will compete for the scarce business resources used for hiring and firm expansion. The law also levies roughly $500 billion in new taxes that will enter the supply chain for medical services, raising the cost of medical services. At the same time that businesses juggle the potential for higher interest rates or higher taxes, these medical costs will translate to higher insurance premiums, further increasing the cost of operating a business in the United States.”

One presidential memorandum, released on Tuesday, requires federal enforcement agencies to make publicly available compliance information easily accessible, downloadable and searchable online.

The second presidential memorandum, also released on Tuesday, recognizes that regulations can be disproportionately burdensome on small business, and calls for extending compliance dates for small businesses, simplifying reporting as a way to streamline paperwork and partial exemption.

“Not only will agencies be required to consider these rules for small businesses, but they will be required to give a written response as to why they don’t apply these rules,” Sunstein said.