What issue found common ground between such foes as Presidents Jimmy Carter and Ronald Reagan, Sens. Jesse Helms and Ted Kennedy, and Gov. Bev Perdue and the Republican General Assembly? The answer is overregulation.
From the outset of his presidency, Carter attempted to “free the American people from the burden of overregulation.” Less regulation was one of the four principles of Reagan’s economic platform. Helms and Kennedy both supported a law that would, had it passed, sunset federal regulations after 10 years. Perdue and the GOP legislature both instituted regulatory reviews and reforms of rulemaking, and the GOP legislature has continued regulatory reforms in successive years – including a “sunset” provision with periodic review of rules.
There is much more to do, however. A groundbreaking new report from economists Paul Bachman, Michael Head and Frank Conte at the Beacon Hill Institute at Suffolk University estimated the annual burden of state regulations in North Carolina to be, at minimum, over $3.1 billion annually.
That enormous figure, however, is “a fraction of the total cost to the private sector of regulations in North Carolina,” they write, since the bulk of state regulations’ costs were hard even to quantify. The total cost could be as much as $25.5 billion annually.
Numbers that large are hard to translate into everyday effects. In practical terms, it means a deadweight loss to households of up to $6,700 per year that they aren’t able to spend on caring for their children, saving for college, planning for retirement, investing or even funding charitable causes that serve their communities.
Furthermore, those losses are cumulative, growing over time as the regulatory burden grows. Regulations tend to accumulate and are far easier to put into effect than laws – even though they carry the full force of law, and those affected by them can face fines, penalties, and even jail for violating them.
Regulation is a lawmaking power delegated to the executive branch by the legislature. Ideally, the legislature (which is directly answerable to voters) gives statutory guidance and leaves particular details to subject-matter experts in a government agency (which is not). The political realities are that legislatures sometimes give too much leeway to unelected bureaucrats and that agencies sometimes assume too much lawmaking authority.
Either way, a proposed new regulation is far, far more likely to come into effect than a proposed new law in North Carolina. While 99.9 percent of agencies’ proposed new regulations take effect, only about 1 in 5 (19.1 percent) proposed bills become law. The General Assembly can block new regulations, but the same deliberative process that makes passing bills difficult also thwarts or aborts attempts to block regulations.
This combination – accumulating costs of existing regulations plus great ease in making new ones – makes overregulation a significant but perplexing problem. How can we rein it in?
An intriguing answer is a state-based REINS Act. Patterned on legislation before Congress, a Regulations from the Executive In Need of Scrutiny Act would allow the legislature to reclaim ceded lawmaking authority from executive agencies with respect to proposed new regulations that would have substantial economic impact.
A state-based REINS Act would use the deliberative legislative process to approve, rather than reject, a rule with a major impact proposed by a state agency. Without a joint resolution to affirm it, passed within a set period of time (such as 60 days), the regulation would die.
The legislature would not be obligated to draft an affirming resolution. The major rule would have to be compelling on its merits in order for elected, accountable representatives to affirm it. REINS should also inspire more carefully crafted legislation and rules.
With “sunset” provisions recently enacted to cull existing regulations, REINS would serve as a key “sunrise” provision to prevent unnecessary and harmful regulation on the front end. Other sunrise provisions to consider include strong cost/benefit analysis, full consideration of alternatives to regulation, and small-business flexibility analysis.
A leaner, more efficient regulatory environment would help households and businesses thrive in North Carolina, and it would keep this state more competitive over time.
Jon Sanders is director of regulatory studies at the John Locke Foundation.