Business and Academic Leaders Join Call for Regulatory Reform

Published May 1, 1998

As prospects for regulatory reform in this session of Congress fade, a nonpartisan group of business and education leaders has called for a major overhaul of the way Congress writes regulatory legislation.

Such an overhaul “could dramatically lower the cost of federal regulation and increase the benefits Americans receive from it,” according to a report released April 1 by the Committee for Economic Development (CED). The report, Modernizing Government Regulation, argues that the American people “deserve better results from the resources, time, and effort going into government regulation. . . . Our air should be cleaner, our water purer, and our workplaces safer.” Making the case that more of the same won’t do, the CED report says the current system “costs many billions of dollars more than is necessary and often secures only limited benefits.”

To obtain better results, the report contends, “the basic focus of regulatory legislation must be shifted.” While previous reform efforts have concentrated on rule-making by regulatory agencies, “defects in our basic regulatory law are the major shortcoming in the American regulatory system.”

Because legislators often write regulatory laws without adequate information and analysis, CED calls on Congress to:

  • Require Congressional committees recommending regulatory legislation to affirm that the program is justified by its expected benefits, in light of its expected costs. Congress should not consider such legislation without an analysis of benefits and costs.
  • Establish a new nonpartisan professional agency in Congress to provide information and analysis. The agency could stand on its own or be a division of the Congressional Budget Office (CBO).
  • Eliminate provisions in existing laws that prevent regulatory agencies from considering costs when designing legislation. The Occupational Safety and Health Act, the Federal Food, Drug and Cosmetics Act, the Clean Air Act, and the Superfund law now prohibit agencies from considering economic impacts when setting standards.
  • Require better regulatory analysis and strengthened regulatory review of proposed and existing regulations by the Executive Branch. Regulatory review under presidential executive orders has been uneven in its scope and implementation.

In 1996, the report notes, complying with federal regulations cost Americans up to $677 billion–“a hidden tax on consumers of more than $3,000 per person.” In some industries, unnecessary or inappropriate regulations have impeded innovation and driven operations off shore. For example, “medical equipment and pharmaceutical companies have moved critical research operations to the more flexible regulatory environment of Western Europe, taking high-paying, high-tech jobs with them.”

Modernizing Government Regulation was prepared by a task force of business and academic leaders chaired by Roderick M. Hills, president of Hills Enterprise Ltd. and former chairman of the Security and Exchange Commission. The project was directed by Murray Weidenbaum, chairman of the Center for the Study of American Business at Washington University in St. Louis and former chairman of the President’s Council of Economic Advisors.