Thinking Small in Regulatory Reform

Published September 7, 2011

If nothing else, House Majority Leader Eric Cantor thinks big. He has promised that in the next few weeks the House of Representatives will vote on legislation to require congressional approval for major executive branch regulations, pare the powers of the National Labor Relations Board (a key source of power for the unions so central to the Democratic Party), and eliminate some potential environmental regulations key to the Obama administration’s agenda.

These actions would significantly reduce the size of the regulatory state over time–but none of the proposals has a real chance of passing the Democrat-controlled Senate or being signed into law by President Barack Obama. And although much of Cantor’s agenda would do long-term good for the economy, it won’t offer an immediate economic boost the way paring back many other existing regulations would.

In addition to their high-profile agenda, then, Cantor and other House Republicans should consider a broader regulatory freeze and a fine-tuned, cooperative effort to eliminate many of the smaller laws and regulations holding back the economy right now.

A regulatory freeze should come first. Congress should ask the Obama administration to stop issuing new regulations, except in true emergency situations, for a few months and simultaneously review all existing ones. The administration already has begun a worthy effort to pare back the worst-designed government regulations. Congress should encourage the president to expand that effort to include a freeze. The administration and Congress should then work together during the freeze to find and eliminate growth-stopping regulations. Such a freeze by the George H.W. Bush administration in 1991 helped set the stage for buoyant economic growth in the 1990s.

Second, Congress and the administration should look for ways to spur job growth right now through smaller-scale regulatory reforms. While most attention, understandably, focuses on the biggest regulations, the total of poorly written small regulations places at least as big a drag on the economy. For example, current laws created to protect banks make it impossible for credit unions to make loans to small businesses that want them. A common-sense reform to these laws–which has significant bipartisan support–would create thousands of jobs and inject billions of otherwise-unused funds into the economy.

Although this isn’t enough to revive the economy by itself, there are similar opportunities all over the place. Current federal laws, for example, make it unnecessarily difficult to conserve water, export goods, and do the paperwork needed to start a small business. All of these laws should go.

Reforming these laws and reviewing existing regulations isn’t going to make headlines, and it’s true that big, sweeping regulatory reforms are also necessary to secure the nation’s economic future. But big reforms provide only part of the needed regulatory reform agenda. If Congress wants to prove it’s serious about regulatory reform, it can do more than just take votes on a few big bills. It needs to think small, too.


Eli Lehrer ([email protected]) is vice president of Washington, DC operations for The Heartland Institute and national director of its Center on Finance, Insurance, and Real Estate.