Late last month, the Supreme Court made it harder for regulators to tie up businesses with burdensome red tape by subjecting new regulations to closer court scrutiny in Loper Bright Enterprises v. Raimondo. Overall, however, Americans are all too familiar with the regulatory burden.
Regulatory Strings
American businesses, workers, and consumers can relate to writer Jonathan Swift’s heroic sea captain Gulliver, who was captured by tiny beings that tied him down in his sleep. Every day, new regulatory strings are added to those already tying down our lives while we aren’t paying attention. Whether that giant is a massive economy or a family-owned business, as the burdens pile up, the future begins to look bleak. But at the federal level, those strings just got a little less strong.
The United States has historically added regulatory “strings” at an alarming pace without ever removing them. Congress should require those regulations to automatically expire via regulatory sunsetting to ensure the regulatory trash is taken out regularly, allowing society to run as smoothly and efficiently as possible.
3,000 Regulations a Year
According to the Competitive Enterprise Institute (CEI), 2019 was the only year on record in which the federal government adopted fewer than 3,000 new regulations. That year was close, with 2,964 new regulations, bringing the grand total to more than 1 million federal regulatory restrictions. On top of these federal regulations, the average state has some 135,000 regulatory restrictions on the books.
Just as no one string bound Gulliver, otherwise useful rules can thwart productive economic activity when added to already-mammoth regulatory burdens. Regulations can serve a legitimate public interest, but in the most highly regulated market environment in American history, an otherwise legitimate regulation can be the straw that breaks the camel’s back. Just ask the former Stellantis auto workers about the pain of regulation.
Cost of Overregulation
Overregulation is immensely costly to society. Some costs are visible — such as the rising price of goods and services in highly regulated sectors and lost jobs — but there is also the cost of reduced productivity.
Studies have found that absent the 1949 to 2005 regulatory buildup, our 2011 GDP would have been more than three times higher. The missing GDP from 1980 to 2011 due to excessive regulation would be the fourth-largest economy on earth. Mere compliance costs for regulations reached $3.079 trillion in 2022, 12 percent of U.S. GDP.
The pace of new regulation in the last 50 years is also unprecedented. Regulators have incentives to write new regulations, not eliminate old ones; lawmakers write vague laws that leave bureaucrats too much discretion; and incumbent businesses and powerful nonprofits tacitly support costly regulations because they reduce competition.
A Regulatory Garbage Collector
Something needs to be done. Cutting regulation is the answer; we’ve seen it work in states such as Virginia, Colorado, and Idaho. But deregulators are the exception. As regulatory burdens grow, merely waiting for a deregulator-in-chief whose actions withstand future executives is a dubious strategy.
Merely slowing the growth isn’t enough. We also need to remove unnecessary and overly complicated burdens. To do this, we can and should borrow the garbage collection concept from technologists.
Garbage collectors automatically search for discarded memory to free it up. In regulatory terms, this would mean regularly getting rid of outdated, unnecessary, and overly burdensome rules to keep only the most valuable and essential restrictions on the books.
A regulatory garbage collector requires mandatory sunsetting and transparent regulatory creation and repromulgation.
Mandatory Sunsetting
The legislature can make rules permanent by codifying them. Otherwise, rules should be subject to regular review with automatic expiration if agencies do not justify the continued need.
Agencies should be forced to scrutinize and re-vet regulations to ensure they are still necessary, the least burdensome on regulated entities, and the most beneficial to the state’s citizens. A fully transparent and accessible process, buttressed with technology, would make sunset review easier, faster, and more accountable to the public.
Transparency
Every rule worth having, whether brand new or renewed after a sunset, should go through a robust notice and comment process to ensure the public has an opportunity to highlight burdens the regulators may have ignored or overlooked in their review. To improve this process, government should harness technology to enforce transparency and accountability at every step. Our goal should be to make comprehensive review and careful repromulgation not just mandatory but inescapable.
Right now, agencies lack the incentive to review regulations on a regular basis — or at all. But if those regulations automatically expire without review, agencies will prioritize that review for regulations that truly matter.
Lawmakers can begin working on laws today to take out the regulatory garbage and cut the red tape holding us back from reaching our full potential. And the Supreme Court’s new ruling makes now the perfect time to get started.
Jonathan Wolfson is the chief legal officer and policy director at the Cicero Institute, where he focuses on health care, regulatory reform, and employment policies. Before joining Cicero, Jonathan led the policy office at the U.S. Department of Labor. Jonathan received an A.B. in economics from Washington University in St. Louis and a J.D. from the University of Virginia School of Law.
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