Deregulation: A Thankless Task

by Stuart Shapiro

The Obama Administration announced this week the results of their efforts to streamline regulations that they began back in January.  The results are reasonably impressive:

The reforms announced today span a wide range. Consider just a few examples:

• The Department of Health and Human Services will soon propose to remove unnecessary regulatory and reporting requirements now imposed on hospitals and other healthcare providers, potentially saving an anticipated $4 billion over the next five years.
• The Department of Labor is finalizing a rule to simplify and to improve hazard warnings for workers, likely saving employers over $2.5 billion over the next five years without compromising safety.
• The Department of Transportation is proposing a rule, announced just today, that will eliminate unnecessary regulation of the railroad industry, saving up to $340 million in the near future, and avoiding the risk that regulatory costs will be passed onto consumers.
• By the end of this year, the Internal Revenue Service will eliminate 55 million hours in annual paperwork burdens by consolidating reporting requirements and streamlining various tax forms.

Many of the new reforms focus specifically on small business. For example, the Department of Defense recently issued a new rule to accelerate payments on contracts to as many as 60,000 small businesses, thus improving their cash flow in an economically difficult time.

But these types of policy changes (in addition to being away from the headlines) buy you little support from interest groups on either side.  From the right:

…the anticipated savings from the proposed reforms are swamped by the torrent of new regulatory burdens unleashed by this Administration.

and the left:

 They fall far short of their obvious goal: to placate greedy and intemperate industry demands that major rules be cancelled. And they distress public interest advocates, who fear they will preoccupy agencies with make-work at the expense of crucial life-saving initiatives.

These changes are all good things.  But given the interest group reactions to these relatively small changes, you can understand why good policy changes in major areas are so hard to achieve in Washington.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.