Published for The Hill Congress Blog, April 16, 2013
This Thursday, when the Senate holds its hearing on President Obama’s nomination of Gina McCarthy for EPA administrator, attention is likely to be focused on the many costly rules that EPA has issued during the last four years, and the additional ones now planned. During the president’s first term, the administration issued more than 200 economically significant new rules each involving more than $100 million in new annual costs — a record high for any president’s first term — and EPA alone accounted for more than 25 new economically significant final rules, with annual costs in the billions of dollars by EPA’s own estimates.
The administration has argued that these regulatory costs are justified, by asserting high “benefits” that exceed their costs. It is to the president’s credit that he has continued to require cost-benefit analysis of major rules to ensure they do more good than harm, as presidents of both parties have required in the past. But with regard to EPA, what has been less noticed than the high cost of the agency’s rules is that there is considerable reason to be skeptical about how EPA is assessing the benefits that it claims. Though environmental goals often deservedly command wide support, careful analysts have noted that EPA has overstated benefits and included things that ought not count at all. (See Dudley, 47 Business Economics 165, July 2012.) As one example, an ongoing action by EPA illustrates just how far agencies may go to find supposed “benefits” to justify new red tape.
In 2011, EPA proposed a new regulation governing the equipment that power plants and manufacturing facilities use to draw in water to prevent overheating. These water intake systems generally are not harmful to health or water quality, but EPA’s staff expressed concerns primarily about their effect on larvae and forage fish — commonly known as “bait”. To reduce losses of such fish, EPA wants to require installation of advanced screens at 1,200 facilities and dramatically more expensive technologies to be decided later on a site-by-site basis.
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Published for The Hill, December 20, 2012
With the media reporting various offers and counteroffers regarding the so-called “fiscal cliff,” one question that no one seems to be asking is what will happen to overall federal spending during the president’s second term. During President Obama’s first term, federal spending increased an extraordinary 20 percent, rising from just under $3 trillion during President Bush’s last year to $3.6 trillion this year. In the budget that President Obama submitted to Congress last February, he proposed to further increase spending for 2013 to $3.8 trillion. The House promptly rejected the president’s proposal by 414-0. Even the Democrat-controlled Senate then rejected that by 99-0 last May. With President Obama now reelected and demanding large tax increases, it is time to ask whether the president is prepared to roll back any of the spending hikes of his first term, to a level below $3.6 trillion.
So far the administration and Congress both seem focused only on the annual deficits for the next 10 years, and guesses about various future scenarios about what might happen by 2023. But the most meaningful thing for this president and this Congress are the next four years — because those are the only budgets they can actually control.
For the next four years, will federal spending decrease at all from the president’s first-term level of $3.6 trillion? That is the right question that members of Congress, the media and the public should be asking. Responsible public officials and the press should give the president the opportunity to say whether he will reduce spending below the total level of his first term, and how. If his plan won’t reduce spending from $3.6 trillion, then it isn’t a cut at all. Indeed, if he doesn’t reduce spending below $3.6 trillion, then the massive spending hike and government expansion of his first term will become effectively permanent.
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Published for the Des Moines Register, August 29, 2012,
As President Obama enters the stretch in his re-election campaign, and with Mitt Romney’s selection of House Budget Committee Chairman Paul Ryan as his running mate, it is useful to flash back to 2008 and the points the president made about the growing federal debt on his way to defeating Sen. John McCain in 2008.
The first key concern that candidate Obama raised in 2008 is the overall level of debt caused by federal deficit spending. When he was running for president in 2008, Obama complained that federal debt had increased under President Bush by $4 trillion, about which he said, “That’s irresponsible. It’s unpatriotic.”
Fast forward to 2012, where the total U.S. debt has increased from $10.6 trillion when Obama took office, to more than $15.9 trillion today, an even bigger debt increase, of $5.4 trillion in much less time.
The Ryan budget proposal would directly address the debt that has been exploding because of the record annual federal deficits since 2009. When candidate Obama was campaigning in 2008, the federal deficit for the prior year had been $160 billion. About a month after his inauguration in 2009, President Obama pledged to “cut the deficit we inherited in half by the end of my first term in office,” as the fiscal year 2008 deficit had swelled to $460 billion during the recession, and was growing, particularly after passage of the president’s near-trillion dollar “stimulus” plan.
But he did not cut the deficit in half. Under President Obama, annual federal deficits have reached a record, eclipsing more than $1 trillion in each of the last three years and will do so again this year.
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Published for The Corner at The National Review, December 14, 2011
As the nation’s federal budget problem comes back into the spotlight, it has unfortunately been forgotten that as recently as 2008, the White House Office of Management and Budget and the Congressional Budget Office both issued spending forecasts that determined that the federal government would have a budget surplus in 2012 and continuing thereafter. Although OMB and CBO used quite different policy assumptions, both foresaw surpluses starting in 2012 — CBO projected a surplus of $87 billion for 2012; OMB projected a surplus of $48 billion for 2012.
Instead, while a recession and some temporary tax relief reduced the government’s revenues, federal spending soared, the surplus disappeared, and the federal debt increased by trillions of dollars.
During the Obama administration, instead of moving towards the projected surpluses, the federal deficit exploded to a record $1.4 trillion in 2009, $1.3 trillion in 2010, and $1.3 trillion in 2011 — a level nearly triple the highest deficit ever recorded previously. The key role of the Obama administration’s ongoing spending increases demands more attention, even though the economic assumptions of the 2008 forecasts proved mistaken and tax revenues declined. Tax revenues will increase when economic growth is restored — indeed, CBO currently projects that revenues for 2012 will rebound to 2008 levels even with no change to the Bush tax rates. But the level of spending that has generated record deficits can only be fixed by a president and Congress. So, in light of both the OMB and CBO 2008 forecasts of a surplus in 2012, it is reasonable to ask how close spending is to the 2008 path to a balanced budget.
In 2008, with the economy in recession, federal spending was just under $3 trillion. The Obama administration and the 2009–2010 Congress chose to enact extraordinary spending increases, starting with the 2009 “stimulus” bill, but then extending to various appropriations bills and new entitlement spending (such as health care spending). As a result, federal spending in 2011 alone was increased to $3.6 trillion — nearly $400 billion more than the Bush administration had contemplated, and more than $600 billion above the 2008 level.
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Published for The Hill, September 30, 2011
President Obama recently proposed roughly $200 billion in new spending, along with some temporary tax relief.
President Obama recently proposed roughly $200 billion in new spending, along with some temporary tax relief. As Congress assesses this, it will have to face some inescapable facts.
Already under Obama, federal government spending has exploded by more than $600 billion per year. In President George W. Bush’s last full year in office, federal spending was just under $3 trillion; under Obama, it increased to approximately $3.6 trillion. That’s an increase of more than 20 percent, and it is set to rise even further.
On Obama’s watch so far, the size of the cumulative federal debt has increased from $10.6 trillion to $14.8 trillion — about 40 percent — and it continues to climb.
The president’s ideas for more new spending will need to be assessed in light of his earlier spending plans. Many people recall Obama’s $800 billion stimulus bill and the trillion-dollar spending increases in his healthcare legislation, but less public attention was focused on how spending increased across virtually all agencies and government programs.
For example, the State Department and other international assistance went from $47 billion in 2008 to $58 billion in 2010. The Labor’s Department’s budget authority went from $57 billion in 2008 to $179 billion in 2010. Medicare and Medicaid rightly get a lot of attention, but even they only accounted for increases of approximately $150 billion per year, or one-fourth of the spending explosion (some of which came from increases in federal Medicaid matching provided by the president’s stimulus bill).
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Published for The Corner at National Review Online, September 16, 2011
Friday’s Washington Post ran a “Fact Checker” column that awarded “three Pinocchios” to Speaker John Boehner for saying that “the Executive Branch has 219 new rules in the works that will cost our economy at least $100 million.” Perhaps it is testimony to what a confusing behemoth the federal bureaucracy has become, but the Post column appears not to understand how the federal government’s rulemaking system actually works: Whatever the complaints about nuance, the Speaker’s comments were fundamentally right.
For more than 15 years, an executive order issued by President Clinton has required that, twice each year, federal agencies and OMB prepare a “unified regulatory agenda” that lists “all regulations under development or review” (Executive Order 12866, paragraph 4(b)). That agenda is publicly available at Reginfo.gov. It is a standard reference used by agencies, academics, regulated parties, and others in the public who are interested in regulation. It currently lists 4,257 rules.
The regulatory agenda categorizes the various rules in a number of ways, one of which is whether the planned rule is “major” or not. In general, the major rules tend to be the most costly ones. The statutory definition of a “major rule” is:
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Published for The Baltimore Sun, August 9th, 2010:
By Jeff Rosen and Susan Dudley
Regulations costing millions of dollars are created without congressional approval.
Every year, more than 60 federal agencies issue thousands of new regulations covering every sector of the American economy. The Small Business Administration estimates the cumulative costs of these regulations at more than $1 trillion annually, or more than $10,000 per household per year. These regulations are legally binding, yet they emerge from unelected officials in regulatory agencies; Congress never has to vote to approve them.
Over the last few decades, on average, between 30 and 40 of the new final regulations issued each year have been considered “major,” with impacts of more than $100 million. In the past year-and-a-half, federal agencies have issued 94 major final rules (59 in 2009, and another 35 already this year). The costs of many of these are measured in the billions and even tens of billions of dollars.
For example, last year the Department of Energy issued costly regulations restricting certain kinds of light bulbs, as well as standards for clothes washers, while the Department of Interior issued rules on alternate energy uses of the Outer Continental Shelf. The Department of Transportation issued a $10 billion rule requiring railroads to use “positive train controls,” and another $1 billion rule requiring stronger car roofs (despite the DOT’s analysis indicating the benefits would not justify the increase in consumer prices). This year, the DOE added another rule setting standards for pool heaters and water heaters, while DOT and the Environmental Protection Agency issued a $60 billion regulation increasing auto fuel economy, and the Federal Aviation Administration issued a $7 billion rule to change aircraft equipage requirements. And the EPA issued rules to begin to regulate most of the economy to try to limit global warming.
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As published for the Washington Post on August 6, 2009:
By Jeff Rosen and Jay Lefkowitz
With his “stimulus” bill, “cap and trade” solution to global warming, and proposed government takeover of health care, President Obama has made no secret of his desire to expand the size, role and budgets of federal health and safety regulators. Yet this summer, in a largely unreported action, the president took a radical step toward weakening the authority of federal health and safety regulators throughout the government.
The president issued a memorandum to all federal agencies May 20, telling them, in effect, to avoid having their health and safety rules become authoritative over state tort laws, and to consider revoking any rules from the Clinton and Bush years that made federal laws nationally uniform instead of leaving authority with state court juries.
The issue involved is federal “preemption,” created in 1789 in Article VI of the Constitution. It says that when the federal government has validly chosen to regulate an area, federal law “shall be the supreme law of the land . . . anything in the constitution or laws of any state to the contrary notwithstanding.”
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As published for The Boston Globe on June 12, 2009:
By Jeff Rosen and Susan Dudley
THE OBAMA administration’s macroeconomic policies to “stimulate” the economy have been unprecedented and visible, costing Americans in the trillions, including $787 billion for the “stimulus,” a $410 billion “omnibus” spending package (on top of last September’s $800 billion “minibus” spending), and another $600 billion or more for the financial bailout, over and above all the automatic federal entitlement spending. In addition, even ignoring this year of “stimulus” spending, the president’s proposed budget for fiscal year 2010 would increase annual spending from $3 trillion last year to $3.6 trillion next year, while adding more to the federal debt in the president’s first two years than the prior eight years combined.
While economists disagree on whether these macroeconomic policies will actually help the economy in the short or long run, no one disagrees with their goal – a robust, growing economy that continues to offer Americans fulfilling opportunities to pursue their dreams.
Unfortunately, there are less visible microeconomic government actions that are likely to counteract these policies, hindering our economic recovery and preventing us from realizing that goal. Many of these are included in the administration’s Spring 2009 regulatory agenda, with hundreds of planned regulations spread across many agencies.
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