Blog PostMay 19, 2015

Canada Gets Regulatory Reform Right

Federal agencies pile on new rules without touching the old ones. We could take a cue from Canada, the first country in the world to require that for every new government regulation, an old rule be removed.

The cost of government overreach to Americans continues to go in the wrong direction, with businesses and citizens getting crushed in the process.

The most recent edition of the Competitive Enterprise Institute’s (CEI) survey of federal regulations, Ten Thousand Commandments, estimate these government rules and intervention cost us Americans – citizens and businesses – $1.88 trillion in lost economic productivity and higher prices each year. That’s a staggering $14,976 per household, more than the average family spends on health care, food and transportation.

This regulatory burden is also more than the entire economic output of Canada, which, coincidentally can be the nation to whom we can look to as a model for regulatory reform in our own country.

Unelected government bureaucrats in the U.S. last year issued 3,554 new rules, nearly half coming from just six federal agencies.

While the necessity of each new government regulation can be argued, that’s only part of the problem. Another huge factor contributing to our regulatory bloat is that federal agencies pile on more and more rules without doing a thing about the old ones.

Our federal regulatory regiFlag_of_Canada.svgme could take a lesson from Canada. The Financial Post reports that by passing the Red Tape Reduction Act, our neighbors to the north have become “the first country in the world to require that for every new regulation introduced, one equivalent burden must be removed.”

The law was really just a formality. Canadian policymakers have been operating under this policy for years. Even though legislatively enacted rules don’t count, this practice has reportedly saved small businesses 98,000 hours and $20 million in regulatory compliance in 2012-13. British Columbia alone notes a 40 percent reduction in its regulatory requirements over the past ten years without “any serious negative impacts.”

Smaller scale efforts to slash or at least staunch the flow of new regulations have been tried in the United States with little success.

Under the 1996 Congressional Review Act, lawmakers can review and overrule major federal agency regulations that would cost our economy $100 million or more per year, cause major consumer price increases or have “significant adverse effects on competition, employment, investment, productivity or innovation.”

Despite this power, Congress has looked at a mere 43 rules since 1996. And disapproved of just one.

In 2012, the the “Red Tape Reduction and Small Business Job Creation Act,” a measure that tied in a regulatory freeze with the unemployment rate, never made it beyond the U.S. House.

Barring imitation of our Canadian counterparts, the best bet for meaningful regulatory reform we have right now is the Regulatory Improvement Act of 2015. Introduced in March, this bill would create an bipartisan commission to weed out federal regulations that are duplicative, no longer needed, or excessive, and then report to Congress the regulations that need to go.

The public would get a hearing followed by a straight up or down Congressional vote. This means no sneaky deals or amendments. The setup would be similar to the post-Cold War Base Realignment Commission (BRAC), which got politicians to sensibly reduce the size of our military footprint.

The impact of government overreach on business owners is unquestionable. $1.88 trillion is enough money for businesses to provide 35 million private sector jobs, each paying nearly $54,000 per year. Without federal regulations, a business with 10 employees would have $100,000 lower costs.

It is unreasonable to suggest all federal rules be eliminated, however the tools are within reach to release our government’s regulatory reins that would free up time and capital for economic growth.

Now we just need the courage.

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