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Deregulation



All Reason.com articles with the "Deregulation" tag.



Published: Sun, 28 May 2017 00:00:00 -0400

Last Build Date: Sun, 28 May 2017 19:43:01 -0400

 



Trump’s Repeal of a Welfare Drug-Testing Regulation Backfires (Thankfully)

Fri, 26 May 2017 16:13:00 -0400

The 1996 Congressional Review Act, which gives Congress a limited time window after a regulation is implemented to repeal it, was successfully used just once in its first two decades in existence. That all changed in the first half of 2017, as a GOP-led Congress took advantage of a new, actively deregulatory Republican president to roll back a total of 14 late Obama-era rules. Eyeballing the list (and also consulting Reason's work on the specific bills; on which see more below), only one of the CRA repeals stuck out at me as facially unfortunate: the rollback of a 2016 Labor Department rule defining which occupations that states can drug-test for (as authorized by the Middle Class Tax Relief and Job Creation Act of 2012) when disbursing federal unemployment insurance. The qualifying jobs, according to Bloomberg, were mostly "limited to the transportation and pipeline industries, as well as jobs that require carrying a gun or were already legally mandated to have drug tests, such as nuclear plant staff." Republicans like Sen. Ted Cruz (R-Texas) found the list too limiting, and therefore "yet another instance of executive overreach by the Obama administration." Republicans do love their drug-testing of welfare cases (individual welfare, mind you, never the corporate variety), regardless of the constitutionality or efficiency. Why, just look at how much fun it is! Another one heads to President Trump's desk. This legislation allows states to have drug testing to receive federal unemployment benefits. pic.twitter.com/cFnvdeQqX1 — Paul Ryan (@SpeakerRyan) March 19, 2017 Or maybe not. According to a perceptive and somewhat complicated piece by Bloomberg's Josh Eidelson, the CRA repeal actually "takes away some limited [drug-testing] authority states already had." How? Because the 2012 law let states test people suited for jobs specified by federal regulations, now that those regulations have been scrapped, there are no jobs for which states are able to test for drugs. Before Congress revoked Obama's rules, states could have tested aspiring pipeline operators and commercial drivers; now they can't. In other words, congressional Republicans went after the enacting interpretation, while kinda-sorta forgetting the underlying legislation that they themselves wrote. If you don't want the Labor Department making rules, don't pass in your laws language like "an individual for whom suitable work (as defined under the State law) is only available in an occupation that regularly conducts drug testing (as determined under regulations issued by the Secretary of Labor)." There's a lesson here, one that's shot through my June cover story on Trump's deregulatory efforts. The executive branch can do (and already has done) quite a bit of regulatory rollback on its own, but the whole reason you have not just regulations but the agencies writing and enforcing them is that Congress has made laws instructing the federal bureaucracy to do stuff. You can eliminate the Department of Education, but that won't stop the federal government from sloshing money toward public schools in the absence of rewriting legislation from the 1960s. It's easy for a legislator to throw stones at an out-of-control bureaucracy (or more fruitful yet, nobly guide his or her constituents through all the red tape); much harder to undo what Congress has already done. So what's next on drug-testing unemployment recipients? Unless Congress gets off its duff, "States will get to impose broader testing requirements only if the Labor Department goes through its own formal rule-making process to issue stricter regulations," Bloomberg concludes. That process takes roughly one to three years. But even then, there's a catch that likely few people in the Trump administration had thought through: [T]he 1996 review act bans an agency whose regulation has been voided from enacting any new regulation that's "substantially the same." Before Trump took office, the law had been used only once, to undo ergonomics rules issued under President Bill Clinton, and no president tried to regulat[...]



Report: Regulation ‘Has Essentially Ground to a Halt’ Under Trump

Mon, 22 May 2017 17:31:00 -0400

Is Donald Trump really turning out to be a deregulatory president? And is his gimmicky kill-two-regs-for-each-new-one executive order (which, I've come to find out, is known as the "Stossel Rule") actually making a dent in the administrative? Yes to both, argues an article today in Bloomberg BNA. The evidentiary nut: Since President Donald Trump was sworn into office Jan. 20, just 39 rules have been submitted for review to the Office of Information and Regulatory Affairs (OIRA), the agency that reviews all significant federal regulations. There are currently 16 pending agency actions. By comparison, the administration of fomer President Barack Obama had submitted 118 rules by the same point in the president's first year, according to the RegInfo.gov database. When I was interviewing libertarian regulation types for the June cover story, not a single one treated the two-for-one guidance as a serious deregulatory tool. "It is a fake solution to a very real problem," Ike Brannon, a Bush-era official at the Office of Information and Regulatory Affairs, told me. "It's so easy to conceive of how the EPA could game 'two rules out for one rule in': You pass a whole bunch of half-million-dollar rules, and those are the rules you take off." Even the anti-deregulation hysterics in the media weren't getting too worked up about that particular rule. But that judgment may have been premature. According to the Bloomberg BNA piece, the requirement throws up a significant obstacle because it seeks not just a numerical swap but an offset on regulatory costs going forward. Since environmental regs in particular tend to front-load the compliance burden on companies, it'll be hard to find enough existing rules (whose main costs have already been swallowed) to zero out the front-end costs of whatever new regulation is being proposed. "And that's why, in my view, the two-for-one executive order really is not meant as a two-for-one trade at all, but instead just as putting the brakes on new regulations," former Department of Interior deputy assistant secretary Amanda Leiter said at an American Bar Association administrative law roundtable last week. More in that vein: Andrew Grossman, partner at Baker & Hostetler LLP and adjunct scholar at the Cato Institute, agreed that the executive order raises an expressly deregulatory agenda and is a "stunningly blunt" tool. "But that's the point," Grossman said. "Genteel regulatory review hasn't really gotten us anywhere. So let's just be clear about what it is that we're trying to achieve. Less regulation." Score one for the Stossel Rule! Another leading indicator that deregulatory types told me to look out for was Trump's pick to head up the Office of Information and Regulatory Affairs (OIRA), which applies (at least in theory) cost-benefit analyses to new regulations. So who did he end up choosing? Neomi Rao, a former law clerk for Clarence Thomas and founder of the Center for the Study of the Administrative State at George Mason University's Antonin Scalia Law School. Can't deconstruct the damn thing if you don't study it first. Here's the Denver Post sounding the alarm: In articles and congressional testimony, Rao also has advocated limiting the authority of federal agencies to draw up rules in areas left ambiguous by legislation. She has said that Congress must spell out clearly what it wants agencies to do. Critics, however, say that when it comes to technical regulations, lawmakers lack the expertise to write detailed regulations the agencies are better equipped to draw up. Rao has called on the courts to review the judicial principle known as Chevron deference, which leaves it up to agencies to interpret ambiguously worded statutes to fulfill legal mandates. "Deference is one consequence of Congress leaving a significant interpretive space for administrative agencies," she said in March 17, 2016, testimony to the Senate Homeland Security Committee's governmental affairs subcommittee. That error has been compounded by the courts, she said, which also have deferred [...]



Rand Paul's REINS Act Finally Makes It to Senate Floor

Wed, 17 May 2017 17:32:00 -0400

A Senate committee vote on Wednesday is a new high water mark for a long-sought-after regulatory reform proposal. Further progress, though, might be unlikely. The U.S. Senate Homeland Security and Governmental Affairs Committee approved the REINS Act (the acronym stands for "Regulations from the Executive in Need of Scrutiny"), sending the bill to the Senate floor for the first time. While the REINS Act has cleared the House several times in recent years—most recently in January—this is the first time the proposal has been approved by a vote of any kind in the Senate. Sponsored by Sen. Ran Paul (R-Kentucky), the REINS Act would require every new regulation that costs more than $100 million to be approved by Congress. As it is now, executive branch agencies can pass those rules unilaterally, and even though those major rules account for only 3 percent of annual regulations, they are the ones that cause the most headaches for individuals and businesses. Passage of the REINS Act would also require Congress to review all existing regulations that surpass the $100 million threshold. Since there's no clear accounting of how many such rules exist, assessing the landscape would be a necessary step before reforms could be enacted. "For too long, an ever-growing federal bureaucracy has piled regulations and red tape on the backs of the American people without any approval by Americans' elected representatives," Paul said in a statement Wednesday. "The REINS Act reasserts Congress' legislative authority and would continue the historic progress we have made this year to curb the damaging effects of overreaching regulations." While the committee vote is a win for the legislation, another bill also approved by the same committee on Wednesday is a more likely vehicle for regulatory reforms this year. Clyde Wayne Crews, the vice president for policy at the Competitive Enterprise Institute, a free market think tank that favors regulatory reform, tells Reason that he doesn't expect a floor vote on Paul's bill this year—though he admits it's difficult to predict anything in Washington. Still, regulatory reformers have hope in the form of the Regulatory Accountability Act, which would codify several executive branch mandates requiring cost/benefit analyses on new rules. It would also require executive agencies to do more after-the-fact reviews of the consequences of their regulations and would apply the same cost/benefit measures to things that aren't technically regulations but do much of the same thing, like when the FAA issues "guidance" on drone rules, for example. The Regulatory Accountability Act does not go as far as the REINS Act, but "it helps pave the way for more substantial reforms in the future," says Crews. What of President Donald Trump's promise to reshape the federal regulatory state—to bring about the "deconstruction of the regulatory state," as White House adviser Steve Bannon promised in March? "It's not that," says Crews. "The administrative state will be just fine. It won't solve every problem, but it might allow our descendants to do so." With Congress likely to spend the next several months on hearings concerned with the firing of James Comey and other hearings seeking to find his replacement as director of the FBI, the entire legislative agenda for 2017 has been disrupted. Health care and tax reform will likely be pushed off until the fall, and the federal budget still has to be passed too. In that environment, getting the REINS Act to the floor of the Senate might be a bigger accomplishment than it initially seems, even if it moves no farther.[...]



Will Donald Trump Be the Most Deregulatory President Ever? New at Reason

Tue, 16 May 2017 09:53:00 -0400

(image) If it is a day ending with the letter "y," there is probably some all-consuming media controversy involving President Donald Trump. But underneath the headlines and tweetstorms, the Trump administration, and even a normally reluctant Congress (at least to some degree), has already teamed up make the biggest dent in the federal regulatory state we've seen during the 21st century. And if the GOP manages to follow through with other planned reforms, Trump may challenge the deregulatory records of even Ronald Reagan and Jimmy Carter

This threatened deconstruction of the administrative state has put many libertarian think tankers in the dissonant position of rooting hard for one aspect of a presidency they otherwise root against, and dusting off their knowledge of how much the executive branch can do on its own to peel back agencies that Congress willed into existence. As Matt Welch writes in Reason's June cover story, "Washington's regulatory reformers, largely sidelined for the past quarter-century, are infiltrating the halls of federal power and attempting to engineer the most ambitious executive-branch overhaul in at least three decades."

On the day of Trump's [address to a joint session of Congress], I paid a visit to the Competitive Enterprise Institute (CEI), a libertarian nonprofit focusing on regulatory issues, to speak with Myron Ebell, director of the institute's Center for Energy and Environment. Ebell had been the Trump transition team's point man at the EPA, a personnel selection witheringly characterized by former League of Conservation Voters official Daniel Weiss as "like picking Colonel Sanders to protect your chickens." So what can libertarians expect from the Trump administration? "I think," Ebell says, "he could be the most serious deregulatory president ever."




The Deregulator?

Tue, 16 May 2017 06:00:00 -0400

On December 6, 2016, the Cato Institute, Washington, D.C.'s venerable libertarian think tank, held its first staff meeting since the election of Donald Trump. Normally such office gabfests tend to be "boring" and "routine," says Peter Van Doren, longtime editor of the Cato-published magazine Regulation. But after a presidential campaign that was anything but standard, featuring an improbable victor whom Cato Executive Vice President David Boaz had called "an American Mussolini" in National Review, emotions were running a bit high. Peter Goettler, the cheery investment banker who became president and CEO of Cato in April 2015, took the temperature of the room. Any advocate for limited government can rattle off a list of Trump's demerits—his "know-nothing protectionism" (in Boaz's phrasing), his restrictionist/alarmist views on immigration, his unwillingness to confront the long-term drivers of government spending growth, his occasionally hostile approach to individual rights, his Great Man theories of governance, his carelessness with the truth, and so on. But professional libertarians are accustomed to feeling alienated by mainstream politics, and still manage to get up in the morning. So Goettler wanted to know: Who here can imagine themselves working in the same direction as Trump on those issues he has a chance to get right? A clear majority of the room indicated not me, after which came what Van Doren described as an "intense debate." In the end, Goettler reminded the Catoites to avoid succumbing to the political passions of the moment. "One of the things I said in that meeting," he recalls, "is that your personal Twitter feed is unlikely to change the course of the republic, but your policy work might. So be focused on what counts." Few things have mattered more to libertarian policy activists over the past half-century than deregulation. Rolling back government restrictions on individual and corporate behavior, breaking up state-backed cartels, getting bureaucrats out of the price-setting business, and allowing private entities to compete for services routinely monopolized by government—these have long been fundamental goals of libertarian organizations including Reason Foundation, the 501(c)(3) nonprofit that publishes this magazine and engages in public policy research that promotes choice and competition. The reasons for eliminating federal regulations can be many: Well-intended rules frequently result in harmful unintended consequences, time and money directed to compliance or workarounds could often be better spent elsewhere, and one-size-fits-all decrees from Washington rarely incorporate the kind of local knowledge that individuals and companies possess about how their own business works best. Libertarians have made these arguments early and often to every new president, but since the deregulatory salad days of Jimmy Carter and Ronald Reagan, few administrations have applied these insights into their policy making. But as the initial shock of the 2016 election results gave way to the normal D.C. stuff of transition teams, Cabinet nominees, and policy rollouts, the city's libertarian policy wonks began to rub their eyes and adjust to a surprising new vision: a Trump administration that was stocking up on faces who have long worked to expand freedom by contracting the regulatory state. "I don't think that we ever envisioned that we would be supplying staffers to this semi-free market, semi-populist president," Frayda Levin, board chair of Americans for Prosperity and a Reason Foundation donor, told Politico in December. "But we're happy that he's picking people who have that free market background, particularly because on many issues, he is a blank slate, so anybody with expertise is in an amazing position to shape his agenda." Trump's agenda-shapers in the Cabinet include Betsy DeVos at Education, Elaine Chao at Transportation, Rick Perry at Energy, and Tom Price at Health and Human Services. All [...]



The Left Is Rebranding Environmental Regulations As Environmental Protections

Fri, 12 May 2017 13:30:00 -0400

"Trump signs order at the EPA to dismantle environmental protections," declares a March 28 headline in The Washington Post. An April 27 article in the Post described an "effort to remove environmental protections." Two days later, another Post article stated that Trump's term in office has "already seen multiple rollbacks of environmental protections." The Post isn't the only publication pushing such language. Here's The New York Times: "President Trump's unfortunate and misguided rollback of environmental protections has led to a depressing and widespread belief that the United States can no longer meet its commitment under the Paris climate change agreement." Here's The Huffington Post: "Environmental Protections Save Lives, Create Jobs And Strengthen The Economy." Here's The New Yorker: "It's clear that we're about to witness the steady demolition, or attempted demolition, of the environmental protections that have been put in place over the past five decades." In each of those instances, the words "environmental protections" could easily have been replaced by "environmental regulations." I'm speaking anecdotally here, but in recent months both mainstream and activist media have seemed to use "environmental protections" more often and "environmental regulations" less. Aristotle defined rhetoric as "the faculty of observing in any given case the available means of persuasion." And one of the chief paths of persuasion, he argued, comes "when the speech stirs their emotions." So which word has more emotional appeal, regulation or protection? Regulation denotes "a law, rule, or other order prescribed by authority, especially to regulate conduct." Protection is defined as "the act of protecting or the state of being protected; preservation from injury or harm." Regulation is coercive, perhaps punitive; protection is warm and fuzzy. As I puzzled over this apparent shift in terminology, my mind naturally turned to the retired Berkeley linguist and cognitive scientist George Lakoff. Lakoff has spent years thinking about how political progressives could become more persuasive with the public. To achieve that, he wants progressives to engage in what he calls "honest reframing." "Reframing is telling the truth as we see it—telling it forcefully, straightforwardly, articulately, with moral conviction and without hesitation," he writes. Lakoff believes that conservatives have been masterful at rhetoric, ah, framing. He cites the phrase "tax relief," which implies that taxes are an affliction and the politicians who favor it are heroes. People on the left, he argues, need to reframe progressive taxation as requiring "those who benefit most should pay their fair share." So I was not surprised to discover that in January Lakoff wrote a short essay titled "The Public's Viewpoint: Regulations Are Protections." He begins by citing Trump's assertion that he intends to "cut regulations by 75 percent, maybe more." Then Lakoff asks, "What is a 'regulation'?" He goes on to assert that from the viewpoint of corporations, "'regulations' are limitations on their freedom to do whatever they want no matter who it harms." (Never mind that killing customers is usually not a good business strategy.) On the other hand, Lakoff claims that the public views a regulation as being "a protection against harm done by unscrupulous corporations seeking to maximize profit at the cost of harm to the public." Lakoff's solution? "Imagine the NY Times, or even the USA Today headline: Trump to Eliminate 75% of Public Protections," writes Lakoff. "Imagine reporters finding out and reporting all over America exactly what protections would be removed." One of his three key takeaways is: "Shift the frame: always say 'protections' instead of 'regulations.' "Protections" is a more simple and accurate description." From simply inspecting recent coverage, I don't have to imagine that. I can just open the paper and read it. Interestingly[...]



Congressional Deregulation Effort Stalls at Methane Rule Repeal

Wed, 10 May 2017 14:30:00 -0400

Under the Congressional Review Act that enables Congress to roll back any regulations hastily enacted in the waning days of the previous administration, the Republican majority in the House of Representatives and the Senate have repealed 14 regulations, including three major rules. According to American Action Forum, savings from these Congressional resolutions will amount to $3.7 billion in total regulatory costs using federal agency estimates and up to $36.2 billion in possible savings based on outside and industry calculations. Today the Senate failed by a vote of 51 to 49 to repeal a Bureau of Land Management rule issued last November that requires the producers of oil and natural gas on federal lands to reduce the emissions of methane associated with flaring and leaks at their wells and other equipment. Three Republicans - Susan Collins (Maine), John McCain (Ariz.), and Lindsey Graham (S.C.) - voted with all of the Senate's Democrats to reject the repeal legislation. The BLM's rationale for the rule is that by wasting a valuable resource producers are denying taxpayers royalties that would otherwise be collected and that released methane is a potent climate warming greenhouse gas. The BLM estimated that the rule will result in benefits ranging from $209 – 403 million per year and reduce emissions by 180,000 tons per year. The agency predicted that the rule will reduce methane emissions by 35 percent from the 2014 estimates and reduce the flaring of associated gas by 49 percent. Even better, the agency found that the oil and gas industry would actually save between $20 to $157 million per year. In other words, thanks to the wisdom of the bureacrats at the BLM, the oil and gas industry would actually be making more money. However, the churlish hydrocarbon producers didn't appreciate the efforts of the BLM to boost their profits. Instead, the ingrates countered that industry was already acting to reduce methane emissions including a 38 percent decline between 2005 and 2015 for natural gas producers even as production rose by 33 percent, and a 21 percent decline from oil production since 1991. They also pointed out that boosting natural gas production had resulted in lower overall U.S. greenhouse gas emissions as electricity generators switched from coal to methane. In addition, they blamed the BLM's dilatory approval of pipelines for much of the flaring since that blocked companies from capturing and transporting lots of the gas their wells produced. Finally, several states sued the BLM arguing that the agency had overreached its authority by adopting what are essentially air quality regulations. The litigants assert that the Environmental Protection Agency, not the BLM, is statutorily invested with the power to regulate air quality. In a statement after the Senate vote, the Western Energy Alliance expressed disappointment calling the BLM rule, "a vast overreach of Executive Branch authority, as BLM usurped EPA and state authority granted by Congress in the Clean Air Act." The group vows to continue to challenge the rule in the courts and to ask newly appointed Secretary of the Interior Ryan Zinke to order a review of the rule with the goal of rescinding it.[...]



Scott Gottlieb Confirmed as New FDA Commissioner

Tue, 09 May 2017 18:05:00 -0400

(image) Physician, venture investor, and drug industry consultant Scott Gottlieb has been confirmed by the Senate as the new Commissioner of the Food and Drug Administration. Gottlieb takes the helm of the agency that regulates products accounting for about 20 cents of every dollar of annual spending by U.S. consumers, that is, about $2.4 trillion in annual consumption that includes medical products, food and tobacco. The agency regulates medicines, diagnostic tests, medical devices, food safety including those made from modern biotech crops and livestock, food labeling, and tobacco and nicotine products. What the agency's bureaucrats decide has signifcant impact on U.S. economic growth and the livelihoods of Americans.

Gottlieb has long been a critic of the FDA's slow and protracted drug and medical device approval processes. Researchers at the Tufts University Center for the Study of Drug Development have estimated that in 1991 it cost $412 million (2013 dollars) to develop and obtain approval for a new pharmaceutical. Last year, they calculated that it now takes more than $2.5 billion, a six-fold increase.

In an email, Union of Concerned Scientists spokesperson Seth Michaels warned that Gottlieb's confirmation is "yet another example of an appointee whose record raises questions about whether they'll respect science and the public interest." On the other hand, Paul Howard, Senior Fellow and Director, Health Policy at the market-friendly Manhattan Institute issued a statement applauding the appointment. "At a time of both unprecedented scientific opportunity and rapidly evolving public health challenges, Dr. Gottlieb provides the FDA with principled and pragmatic leadership," declared Howard. "His experience as a regulator, practicing physician, cancer survivor, and innovator will help the agency navigate the scientific challenges surrounding drug and medical device development and approval without losing sight of the real-world implications of the agency's decisions for patients struggling with potentially life threatening conditions."

I earlier noted, "While not a radical reformer, Gottlieb clearly has a good understanding of how over-regulation has been slowing down innovation in medicines and foods." Good luck to him as he tries to reform the agency's excessively cautious regulatory culture.




Could Trump’s Deregulation Be a Lifeline for Struggling Entrepreneurs?

Tue, 09 May 2017 00:01:00 -0400

For every new regulation federal agencies propose, they have to "identify at least two existing regulations to be repealed," President Trump ordered just 10 days after taking office. In April, he doubled down, boasting that "we are absolutely destroying these horrible regulations that have been placed on your heads over not eight years, over the last 20 and 25 years," with an emphasis on clearing red tape that discourages banks from lending to businesses and drags out large construction projects. Tax rule complexity that has "effectively increased tax burdens, impeded economic growth, and saddled American businesses with onerous fines, complicated forms, and frustration" was targeted in another executive order weeks later. The president's "deregulation scheme is yuge for big banks" Salon dutifully sniffed, while a Business Insider columnist snarked that the administration's response to everything is "regulation bad, deregulation good." Maybe our vocabulary-challenged chief executive has boiled it down that simply, but if so, he's not far from the truth. And if big banks and large businesses benefit, it'll be almost incidental to the relief felt by small businesses and entrepreneurs just trying to get launched and make a buck in an environment that kneecaps their efforts. "The nation's underground sector has grown to as much as $2 trillion of the nearly $19 trillion economy," a Sage BusinessResearcher report estimated last month. That doesn't include drugs or other criminal activity—it's all off-the-books work that would be legal if licensed and taxed. Many economists believe "working off the books may be the only way many cash-strapped entrepreneurs and home-based businesses get their ideas off the ground." Why would people feel compelled to work off the books and risk legal penalties? Because taxes and regulations, no matter how prettily they're framed or how "necessary" their advocates consider them, create difficult and expensive hurdles to starting businesses. And the situation is getting worse, crippling the employers of the future—or, often, driving them to operate out of sight of tax collectors and regulators. Complying with regulations cost businesses an average of $8,086 per employee, the Small Business Administration reported in 2008. But businesses with fewer than 20 employees took the biggest hit at $10,585, vs. $7,454 for firms with 20-499 employees, and $7,755 for large businesses. In the manufacturing sector, which so many people, Trump included, want to cultivate within the nation's borders, the disparity was much worse: $28,316 per employee for small businesses, $13,504 for medium, and $12,586 for large outfits. In 2012, the National Association of Manufacturers brought in the original SBA report's authors to revisit the topic. They found that regulations now cost each business an average of $9,991 per employee, with $11,724 the average for small businesses, $10,664 for medium businesses, and $9,083 for large ones. The situation further soured in the manufacturing sector, at $34,671 for small outfits, $18,243 for medium ones, and, $13,750 for large companies. Even allowing for inflation, that's a big jump in costs. Trump threatens "consequences" for companies that move operations outside the United States, but they really would have to be "yuge" to offset the price of staying. "The impact of regulatory burden cannot be overstated: more than one-third have held off on business investment due to uncertainty on a pending regulation," the National Small Business Association reported in this year's Small Business Regulations Survey, "and more than half have held off on hiring a new employee due to regulatory burdens." The worst offenders, by the way, are said by small business owners to be the federal tax code and the Affordable Care Act, although there's plenty of pain to go around. "These[...]



Trump May Dabble in Deregulation, But He Doesn't Believe in Free Markets

Wed, 03 May 2017 00:15:00 -0400

My head spins. Before President Trump was elected, FCC Commissioner Ajit Pai came on my TV show, upset because President Obama ordered his agency to regulate the internet. For the first time, "decisions about how the internet works are going to be made by bureaucrats and politicians instead of engineers and innovators," he complained. Pai was outvoted by Democrats who supported Obama's "net neutrality" rule. "Neutrality" sounds good, but the rule actually meant the end of the permissionless innovation that allowed American companies to lead the world in cyberinnovation. Now they would have to get government permission before trying anything new. They would not be allowed to charge big users like Netflix more, or create "fast lanes" for customers who pay extra. Such experiments do discriminate, but they also bring innovation like free-data plans. They create incentives for building better fiber-optic networks, meaning faster speeds and lower prices for most everyone. Under Obama's rules, said Pai, we would have "slower speeds, fewer competitive choices. This is a massive shift in favor of government control." That was then. Now Pai chairs the FCC, and he's dismantling the burdensome rules. Victory! President Trump appointed other sensible deregulators: Betsy DeVos, Elaine Chao, Tom Price, Scott Pruitt, Shirley Ybarra. Many of them criticized the same agencies they will now run. They are in a position to say, "Stop! This endless red tape kills opportunity. Let the free market work!" Bob Poole's fine research on reducing flight delays by replacing the bureaucratic FAA with private air traffic control might actually come to fruition. His ideas on reducing traffic jams by allowing congestion pricing are getting a hearing. Victory! Wiser people are in charge. But deregulation still won't be easy. That becomes clear reading Matt Welch's article "The Deregulator?" in the new issue of Reason. Welch points out that not only did the president appoint deregulators, "Trump put taxpayer money where his mouth is, unveiling a budget blueprint that cut spending at every non-military/security-related agency...31.4 percent from the EPA, 28.7 percent from the State Department, and 20.7 percent each from the departments of Agriculture and Labor." The bad news is that proposing cuts doesn't mean they will happen. It's Congress that writes budgets. "The president is asking the most politically sensitive branch of government to approve the deepest funding and staffing cuts the EPA has ever seen," writes Welch, "all while surviving an onslaught of headlines such as the San Francisco Chronicle's 'Trump budget would make America dirty and sick again.'" Trump's EPA cuts won't make America "dirty and sick," but try un-scaring voters who read headlines like that, along with New York Times diatribes like "Leashes Come Off Wall Street, Gun Sellers, Polluters and More." Will Congress ignore that hysteria and still vote for deregulation? I fear they will not. Welch also mocks my beloved "Stossel Rule," although it's the one idea of mine that President Trump wholeheartedly embraced: Before regulators pass a new rule, they must repeal at least two existing ones. Welch points out that serious reformers call that "a toothless publicity stunt" because bureaucrats would game the system—repeal tiny rules but still pass gigantic new ones. Another obstacle to reform is that President Trump is not consistent. Yes, he reversed the Obama administration's shortsighted ban on finishing the Keystone Pipeline, but then he told his secretary of commerce to "Buy American, Hire American." Infrastructure can't be built efficiently using just U.S.-made steel. Trump eventually granted an exemption to the Canadians building Keystone, but every project should be built with the best materials available for the lowest cost. Since there [...]



How Protectionism Shields United Airlines From Competition

Thu, 13 Apr 2017 10:20:00 -0400

As Brian Doherty observed here yesterday, the United Airlines outrage does not require new laws, though that is certainly news to microphone-hogging pols like New Jersey Gov. Chris Christie. In fact, let's round up some of the opportunistic political responses, shall we? * Rep. Jan Schakowsky (D-Illinois): her bill "will end the practice of involuntarily 'bumping' passengers from oversold aircrafts once and for all. If an airline chooses to oversell a flight, or has to accommodate their crew on a fully booked flight, it is their responsibility to keep raising their offer until a customer chooses to give up their seat." Schakowsky said her legislation also will require that any dickering over how much a passenger will get for voluntarily relinquishing a seat is "carried out before they board the aircraft. These fixes would prevent the situation we saw on video from ever happening again." * Sen. Chris Van Hollen (D-Maryland): he is readying legislation to prohibit airlines from forcibly removing passengers due to overbooking or to free up seats for crew. The Maryland Democrat released a letter to colleagues seeking sponsors for what he has called the "Customers Not Cargo Act." There is another way, I argue in today's L.A. Times. If lawmakers really want United to feel the lash, they should remove the politically motivated protectionism that blocks foreign competitors from driving customer-unfriendly American airline behemoths out of business. Excerpt: Foreign companies and individuals—think Richard Branson and Virgin Atlantic Airways—are forbidden by U.S. law from owning more than 25% of a domestic airline. That's why Virgin America could be sold last year to Alaska Airlines over the express wishes of Virgin's famous founder: He just didn't have enough votes. The differently headquartered are banned outright from servicing routes between two American cities, a practice with the sinister-sounding name of cabotage. And carriers from Singapore to the Gulf States are not only barred from competition, but subject to sneering taunts by American legacies from behind the protectionist firewall, such as when United CEO Oscar Munoz this March said that companies including the well-regarded Emirates "aren't real airlines." What on Earth justifies such pre-Trump xenophobic mercantilism in our increasingly globalized world? According to North America's Air Line Pilots Assn.: "These regulations ensure the national security of our country and the integrity of our airline industry." Or translated into honest-ese, "These regulations ensure the job security of unionized U.S. nationals and the continued existence of poorly run U.S. airlines." Read the whole thing here.[...]



Turns Out Congressional Republicans Don’t Really Want to Cut Spending

Wed, 29 Mar 2017 12:16:00 -0400

In a post yesterday about President Donald Trump's record number of Congressional Review Act-enabled repeals of regulations, I tacked on a bullet-pointed list of other Trumpian moves to roll back the regulatory state. Not included was his proposed budget, despite the fact that it features impressive year-over-year cuts to the executive branch—30.4 percent from the Environmental Protection Agency, 20.7 percent from the Departments of Labor and Agriculture, and so on. So why didn't I include Trump's proposed deconstruction of the administrative state? Because presidents don't pass budgets, and congressional Republicans don't want to cut spending. Last night, in an episode of The Fifth Column, I asked the great libertarian-leaning Rep. Thomas Massie (R-Ky.) to assess the realistic possibilities that Congress this year will approve such budgetary measures as a 30-plus percent cut in the EPA. "You want me to give you odds?" Massie said. "I'd go with five percent odds." To be clear, Massie is in the lonely minority that would delight in taking a machete to the regulatory state—the man did, after all, propose a one-sentence bill last month to abolish the Department of Education. But as we lurch from the Ryancare debacle to yet another self-inflicted government shutdown deadline of April 28, congressional Republicans are already going on the record as saying Trump's cuts, as predicted in this space, ain't happening. "We just voted to plus up the N.I.H.," Sen. John Cornyn (R-Texas), complained to The New York Times, referencing Trump's proposed $1.2 billion cut to the National Institutes of Health. "It would be difficult to get the votes to then cut it." Also balking at the N.I.H. cuts are Rep. Fred Upton (R-Mich.) ("It's penny-wise but pound-foolish") and Sen. Lamar Alexander (R-Tenn.), who told the Washington Examiner that "You don't pretend to balance the budget by cutting life-saving biomedical research when the real cause of the federal debt is runaway entitlement spending." More GOP objections, as reported by the NYT: Senator Susan Collins, Republican of Maine, was more blunt. "I think it is too late for this year," she said about the proposed cuts, echoing several Republican colleagues. As for a border wall, which is not well supported by American voters, "that debate belongs in the next fiscal year," she said. […] "I'm not going to spend a lot of money on a wall," said Senator Lindsey Graham of South Carolina. "I'm not going to support a big cut to the N.I.H. I'm not going to support big cuts to the State Department." Recall, too, that Robert Draper of The New York Times Magazine quoted a "top House Republican staff member" on Trump's agency cuts thusly: "even the cabinet secretaries at the E.P.A. and Interior are saying these cuts aren't going to happen." So these are your politics for the next calendar month: The media and various activist/constituency groups will sound a never-ending alarm about the terrible effects of Trump's heartless budget cuts, while a unified Republican Congress that cannot even pass a budget anymore blunders along toward another artificial government-funding deadline that will likely result in some kind of spending deal that does not, in fact, cut spending. Good work, America![...]



Relax: Gutting the EPA Won't Make Your Air Dirtier and Water More Polluted

Tue, 21 Mar 2017 14:35:00 -0400

President Donald Trump's proposed cuts in the Environmental Protection Agency's budget "will not 'Make America Great Again', " asserted Conrad Schneider, the advocacy director at Clean Air Task Force activist group. "It will 'Make America Gag Again.'" Schneider and other alarmed activists are conjuring the bad old days of the mid-20th century when America's cities were blanketed with smog and its streams clotted with filth. In his new budget blueprint, Trump wants to cut back Environmental Protection Agency funding by 31 percent and fire 3,200 of agency's bureaucrats. But would such steep EPA budget cuts really unleash polluters to pump out more smoke and sewage? To get a handle on this question, let's take an amble down memory lane to assess the evolution of pollution trends in the United States since President Richard Nixon cobbled together the Environmental Protection Agency in 1970. First, with regard to air pollution, air pollution in most American cities had been declining over the course of the 20th century. Why? Many American cities had recognized the problem of air pollution in the late 19th century. Consequently they passed ordinances that aimed to abate and control the clouds of smoke emitted from burning coal in industry, heating, and cooking. For example, Chicago and Cincinnati adopted smoke abatement ordinances in 1881. American Enterprise Institute scholars Joel Schwartz and Steven Hayward document in their 2007 book, Air Quality in America, that emissions of smoke, soot, ozone and sulfur dioxide had been falling for decades before the creation the EPA and the adoption of the Clean Air Act. For example, ambient sulfur dioxide had fallen by 58 percent in New York City during the seven years preceding the adoption of the Clean Air Act. "Air quality has indeed improved since the 1970 passage of the" Clean Air Act, they claim. "But it was improving at about the same pace for decades before the act was passed, and without the unnecessary collateral damage caused by our modern regulatory system." They attribute a lot of the pre-EPA improvement in air quality to market-driven technological progress and increases in wealth that enabled households to switch from coal to cleaner natural gas for heating and cooking; railroads to replace coal-fired locomotives with diesels; more efficient industrial combustion that reduced the emissions of particulates; and improvements in the electrical grid that allowed power plants to be situated closer to coal mines and further from cities. Even if the Clean Air Act did not noticeably speed up the rate of air pollution abatement, the air is nevertheless much cleaner than it used to be. How clean? Since 1980 the index for six major pollutants, carbon monoxide, ozone, particulates, sulfur dioxide, nitrogen dioxide and lead has dropped by 65 percent since 1980. In the meantime, the economy grew more than 150 percent, vehicle miles increased by more 100 percent, population grew by more than 40 percent and energy consumption rose by 25 percent. And yet, a 2016 Gallup poll found that 43 percent of Americans say that they worry about air pollution a great deal. Schwartz and Hayward persuasively argue, "The public's interest lies in sufficiently clean air, achieved at the lowest possible cost. But federal air quality regulation suffers from incentives to create requirements that are unnecessarily stringent, intrusive, bureaucratic, and costly." Basically, the costs of ever tightening federal air pollution controls are now exceeding their benefits. Since most remaining air pollution (except for greenhouse gases which we will set aside for a discussion at another time) is now concentrated in discrete regions rather than crossing jurisdictional lines, cities, counties [...]



Scott Gottlieb: Trump's Nominee for Food and Drug Administration Commissioner

Mon, 13 Mar 2017 14:32:00 -0400

Products regulated by the Food and Drug Administration (FDA) account for about 20 cents of every dollar of annual spending by U.S. consumers, amounting to more than $2.4 trillion in annual consumption that includes medical products, food and tobacco. The agency regulates medicines, diagnostic tests, medical devices, food safety including those made from modern biotech crops and livestock, food labeling, and tobacco and nicotine products. What the agency's bureaucrats decide has signifcant impact on U.S. economic growth and the livelihoods of Americans. President Donald Trump has nominated physician and American Enterprise Institute scholar Scott Gottlieb to become commissioner of the agency. Gottlieb earlier served as deputy commissioner during the Bush administration. Gottlieb has long been a critic of FDA's increasingly risk-averse culture that is slowing down the approval of new medicines. Defenders of the agency often cite data suggesting that the agency approves new medicines faster than other drug approval agencies abroad. That is true if only the period of time after a drug maker has submitted its New Drug Application (NDA) for approval is taken into account. More consequentially, increasing FDA requirements for longer and more extensive clinical trials before the NDA is submitted has substantially lengthened the periods and raised the costs of getting new treatments from petri dishes to patients' bedsides. Consider that researchers at the Tufts University Center for the Study of Drug Development have estimated that in 1991 it cost $412 million (2013 dollars) to develop and obtain approval for a new pharmaceutical. Last year, they calculated that it now takes more than $2.5 billion, a six-fold increase. Gottlieb, who has been associated with venture capital side of medical innovation, will seek to change the agency's culture from the current highly precautionary approach to one that more readily recognizes that benefits always come with risks. Under his direction, the agency would likely exercise a lighter regulatory hand over the development of new medical apps and diagnostics while seeking to work out the best way to speed up the approval of novel therapeutics based on stem cells and gene-edting technologies like CRISPR. Gottlieb is keen to get generic drugs approved quickly in order to bring down prices for consumers. In an August 2016 op-ed in the Wall Street Journal, he noted it now takes more than 2 years for the agency to approve a generic drug application and that the costs had risen from $1 million in 2003 to over $15 million now. He added, "This means that a drug may not face brisk generic competition until it exceeds $25 million in annual revenue. Thanks to these changes, infrequently used generics—such as clomipramine for major depression—may now have only one competitor and cost as much as branded drugs." Gottlieb also cited research that estimated the FDA's proposed generic labeling rule would expose generic drug manufacturers, who supply 84 percent of all prescriptions, to failure-to-warn product liability lawsuits, costing more than $5 billion in 2017. That rule is supposed to be finalized in April. As commissioner, Gottlieb might be able to halt it. While not a radical reformer, Gottlieb clearly has a good understanding of how over-regulation has been slowing down innovation in medicines and foods.[...]



At SXSW, Mark Cuban Calls Himself a Libertarian 'at Heart,' Wants to Be Convinced to Run for President

Sun, 12 Mar 2017 20:45:00 -0400

(image) "At heart I'm a libertarian," famous entrepreneur Mark Cuban said at a South by Southwest panel focused on disruption and government regulation.

But moments later, he said that while he believed many government regulations are bad, he had "evolved" on some healthcare issues and believed that America had taken on a liability and should guarantee that citizens have access for emergency or chronic medical problems.

"If a toilet falls out of a space lab and hits you on the head," Cuban joked, you should be guaranteed healthcare. But he also made it clear that healthcare shouldn't be guaranteed for every medical problem, and he thought the terms should be provided by a constitutional amendment.

Many libertarians may look askance at such a position, and perhaps also wonder why guaranteed government healthcare was even a topic of discussion for a panel titled "Is Government Disrupting Disruption?" In reality, talks about disruptive innovation and government regulation probably took up only a quarter of the conversation of the panel.

The panel's apparent actual function was to float the trial balloon of "Mark Cuban: 2020 Presidential Contender."

Interestingly, while Cuban is critical of Trump's mental acuity (diplomatically speaking), he made it clear that he is indeed in favor of much of Trump's deregulation hopes, though Cuban believes there are regulations that should be preserved (including federal water management) if they achieve a public safety goal. It was not pointed out to him that nearly every single regulation is claimed to preserve public health and safety even when they do not, but he's at least aware that there are other regulations that are designed to "protect moneyed interests" or to serve as a "source of revenue" for government agencies. (Also of interest, he told the SXSW crowd that net neutrality was "bad, scary" and the Federal Communications Commission "worse, worse, worse.")

Cuban was critical of Trump's economic growth strategy while accepting the reality of the tough lives of people in parts of the country. He, like many trade and economic analysts, doesn't believe the president can roll back the clock to give people their old jobs back. "Our current administration is not going to solve this problem by thinking they're bringing back factories," he said.

When moderator Michele Skelding, an entrepreneurial advisor with the University of Texas at Austin, suggested his comments were "a great platform to run on." Cuban wouldn't commit one way or the other as to whether he would consider a presidential run in 2020, but it seemed clear it was something he was thinking about.

"There's somebody who has to run that looks forward and not like it's 1975," he said. But while the former Trump-praiser-turned-critic ("I got to know him," he explained) could oppose Trump, he made it very clear there are parts of Trump's agenda (deregulation) that he actually supports.

"But I like presidents who read," he said, to the crowd's cheers.