Tuesday, January 18, 2011

Well, it's all very nice, but.....

President Obama has an article in the WSJ announcing that he is going to sign an executive order to reduce federal regulations that stifle business growth.
From child labor laws to the Clean Air Act to our most recent strictures against hidden fees and penalties by credit card companies, we have, from time to time, embraced common sense rules of the road that strengthen our country without unduly interfering with the pursuit of progress and the growth of our economy.

Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs. At other times, we have failed to meet our basic responsibility to protect the public interest, leading to disastrous consequences. Such was the case in the run-up to the financial crisis from which we are still recovering. There, a lack of proper oversight and transparency nearly led to the collapse of the financial markets and a full-scale Depression.

Over the past two years, the goal of my administration has been to strike the right balance. And today, I am signing an executive order that makes clear that this is the operating principle of our government.

This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It's a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.
As always, time will tell. The rhetoric is nice, but he has just spent the last two years increasing the number of regulations, many of which will stifle growth. That is piled onto the big increase under President Bush. But the cost of regulations done in the Obama years dwarf those done in the the Bush years, and those were high years for regulatory growth. Here is a chart from Heritage, based on OMB data, charting the financial impact of federal regulations.
The report summarizes their findings.
1 During fiscal year 2010, 43 new major regulations were adopted by the Obama Administration, with net new burdens on Americans exceeding $26.5 billion each year, a record increase.
2 Fifteen of the 43 new major rules involve financial regulation. Another five stem from the Patient Protection and Affordable Care Act. But 10 rules adopted by the Environmental Protection Agency were responsible for the lion’s share of new regulatory costs—some $23.2 billion.
3 Only five significant rules adopted in FY 2010 reduced regulatory burdens. Of these, cost reductions were quantified for only two, for reported savings of $1.5 billion.
4 Regulatory burdens—and the taxpayer burden—are expected to increase again in 2011 as agencies continue to promulgate new rules related to health care, energy, financial services, and telecommunications.
So, while Obama's executive order makes a nice motion and rhetorical flourish, don't expect for the reality to measure up. His past history in office indicates that he is much more inclined to push through regulations than to cut anything. In the WSJ article covering Obama's executive order, it is clear that Obama is not the model of regulatory restraint he is pretending to be. And the effects of those regulations are part of what is slowing down economic recovery.
The move is the latest effort by the White House to repair relations with corporate America, hoping to spur investment by the nation's largest multinationals and reduce unemployment.

Business leaders say an explosion in new regulations stemming from the president's health-care and financial regulatory overhauls has, along with the sluggish economy, made them reluctant to spend on expanding and hiring. Companies are sitting on nearly $2 trillion in cash and liquid assets, the most since World War II.
Now that the damage is done and Obama is running for reelection, he's trying to make nice with business interests. I guess he's noticed that policies and a tone bashing business is not conducive to economic growth.
For close to a year, the White House has been asking leading business groups in the capital to identify regulations they believe are obstacles to job-creating private investment. But these efforts are being dwarfed by complaints about the administration's unfriendly rhetoric toward the financial industry and large corporations, and regulations stemming from its legislative agenda.

Even some of the president's corporate allies have joined criticism of the White House's regulatory and tax policies. The Business Roundtable, an association of chief executives of many of the largest U.S. corporations, last year compiled a 54-page report that includes proposals to streamline rules proposed by the Environmental Protection Agency and the Federal Communications Commission, among scores of others. It was accompanied by public criticism from the Roundtable, whose members have frequently advised the White House on the economy.
Add in the effects on the economy of his regulations that has showed down domestic oil production.

So, hold the applause for today's message until we see some substantive results.