Red tape must go to get Americans back to work

Mark R. Warner

If Washington expects to partner with the private sector to lead the effort toward economic recovery, we must address the regulatory uncertainty felt by many of our small and large businesses.

Britain has been working on regulatory reform since 2005, and officials there have posted some impressive results in developing an inventory of regulations as well as setting ambitious targets for reducing red tape.

Now, no one is seriously questioning the need for common-sense rules of the road to protect American consumers, public health and our environment, especially in the wake of the BP oil-rig blowout in the Gulf of Mexico and the 2008 near-meltdown of several of our nation's leading financial firms.

But our current regulatory framework actually favors those federal agencies that consistently churn out new red tape. In this town, expanded regulatory authority typically is rewarded with additional resources and a higher bureaucratic profile, and there is no process or incentive for an agency to eliminate or clean up old regulations.

As a former CEO, I think the best option is to adopt a regulatory "pay as you go" system. I am drafting legislation that would require federal agencies to identify and eliminate one existing regulation for each new regulation they want to add.

According to the U.S. Small Business Administration, the estimated annual cost of federal regulations in 2008 exceeded $1.75 trillion. The Office of Management and Budget says that the federal government has issued more than 132,000 final rules since 1981, and over 1,200 of those rules have an estimated economic impact of greater than $100 million each.

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Posted by John J. Ray (M.A.; Ph.D.).