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Regulation Nation

Three Kentuckians join forces to stop America from choking on red tape.

Sep 26, 2011, Vol. 17, No. 02 • By PHIL KERPEN
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As the country teeters on the edge of recession, two competing visions of government’s role in the economy are being offered in Washington. President Obama again proposes big government programs and Keynesian stimulus. House Republicans have a different idea.

Regulation Nation

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In the belief that government regulation is blocking job creation, House GOP leaders aim not only to repeal specific regulations, but also to reform the rule-making system. Their key reform bill is the Regulations from the Executive In Need of Scrutiny Act, or REINS Act. It comes at a crucial time.

The voters who fueled the Republican surge in last year’s midterm elections were aiming to end the “fundamental transformation” of America that Barack Obama promised when he ran for president. They failed. The day after the elections, the president made clear his intention to bypass Congress when he touted EPA regulations as an alternative to the cap-and-trade legislation that Congress failed to pass. Regulation, Obama said, was another way of “skinning the cat.” Then his transition chairman John Podesta issued a 48-page agenda for bypassing Congress. And on December 21, the Federal Communications Commission voted 3-2 on party lines to regulate the Internet. Right in step, the National Labor Relations Board—operating with an unconfirmed acting general counsel and two recess-appointed, union-lawyer board members—launched an assault on right-to-work states.

Even before the Obama administration’s onslaught of new regulations, regulatory costs were depressing economic growth. A study by the Small Business Administration Office of Advocacy pegged the cost of federal regulations in 2008 at an astonishing $1.75 trillion, with costs for small businesses topping $10,500 per employee, per year. Another analysis, from the Phoenix Center for Advanced Legal & Economic Public Policy Studies, found that each regulator on the federal payroll destroys 98 private sector jobs and $6.2 million worth of gross domestic product every year. And the number of regulators is up 13 percent since Obama took office, while private sector employment shrank by 5.6 percent.

Any way you look at it, regulations are damaging our economy. The answer to this insanity comes from the heartland.

In 2009, an Alexandria, Kentucky, man named Lloyd Rogers handed his congressman a piece of paper containing a powerful idea. That idea became the REINS Act, H.R. 10. Speaker John Boehner embraced it, and it is now a centerpiece of the House Republican agenda. 

Rogers is 78 years old, and his is a great American story. “I grew up in an orphans’ home,” he told me. “I never had any college, but I had an ambition. I took speed-reading, I took public speaking, and I took things like that.”

A wounded four-year Navy veteran, Rogers was a commander of both the Disabled American Veterans and the Veterans of Foreign Wars.

“My dad died when I was young,” he explained. “The man who was in charge of the orphanage, he used to be in there when he was a kid. He came back and he ran it, and he was a very conservative fellow. And he used to teach us: If there’s nothing else anybody can ever say about you when you die, they can write on your tombstone that you were honest.”

Rogers worked for 31 years as a supervisor and engineer with Cincinnati Bell. “I never voted until I was 40,” he told me. But at some point he got interested in government. He took courses on the Constitution and became, he said, “very well-versed.” Increasingly, he felt called to get involved. Shortly after he retired, Rogers was elected Campbell County judge executive, a post he held from 1982 to 1985. During that time, he had his first confrontation with the EPA over his opposition to federally mandated tailpipe emissions testing. After going a few rounds with then-EPA administrator Bill Ruckelshaus, Rogers won, and tailpipe testing was ended in his county. 

More recently, as a concerned citizen, he targeted the EPA’s sweeping storm water consent decree, which imposed enormous costs on the three-county sewer district in his area. His congressman, Republican Geoff Davis, shared Rogers’s outrage over the consent decree. “Everybody’s taxes were doubled as a result of it,” Davis told me. “There was no commensurate improvement in service whatsoever.” He pointed out that the money would have been better spent on replacing the I-75 Brent Spence Bridge, which carries 3.8 percent of the country’s GDP every year.

Davis represents Kentucky’s 4th Congressional District, along the Ohio River. He too had a tough childhood. In high school in Pittsburgh, he worked as a janitor to help support his family. Then he enlisted in the Army. Later he attended West Point and spent 11 years commanding assault helicopters before opening his own consulting firm specializing in lean manufacturing.

Davis was elected to Congress in 2004. He serves on the House Committee on Ways and Means and is a deputy Republican whip. He brings a businesslike approach to government and has a keen understanding of regulatory issues.

So Davis saw the power of Rogers’s idea. The piece of paper Rogers handed him said,

Proposed legislation:

In adherence to the U.S. Constitution, Article 1, section 1 .  .  . “All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.” All rules, regulations, or mandates that require citizens, state or local government financial expenditures must first be approved by the U.S. Congress before they can become effective.

Davis took the idea back to Washington and huddled with his advisers. He agreed that what was missing from the regulatory process was accountability. Anticipating objections, Davis and his team worked to make the proposal into a robust, workable bill. They designed a streamlined process to guarantee a quick up or down vote on any economically significant regulation. Under their bill, no major regulation could take effect without the approval of the House and Senate and the president’s signature (or congressional override of a presidential veto). The REINS Act quickly garnered scores of supporters, notably Republican leaders John Boehner, Eric Cantor, and Kevin McCarthy. 

The REINS concept is not anti-regulation. It simply would require transparency and accountability. The hope is that under this improved process, Congress would block unnecessary regulations, and necessary regulations would be less costly. Davis claims to have received positive feedback—privately—from EPA officials. 

In the Senate, Davis found his first partner in Jim DeMint (R-S.C.), who introduced the bill in September 2010 with 12 cosponsors. This year, DeMint handed off REINS to Senator Rand Paul, making it, fittingly, a Kentucky-led effort. Rogers had been a tireless campaigner for Paul, organizing DAV and VFW units around the state.

One of the toughest things to do in a political campaign is get businesses to take sides. They worry about angering part of their customer base. But Paul told me that Rogers personally persuaded hundreds of Campbell County businesses to display Rand Paul signs. Paul had long been concerned about unelected bureaucrats’ writing laws; he saw the issue as perfect for Tea Party activists determined to hold government accountable. After hearing Davis explain the REINS Act, Paul featured it prominently in his insurgent campaign. He called it a “good government, nonpartisan issue,” adding that even liberal colleagues can be persuaded that regulation shouldn’t be left to unelected bureaucrats.

Especially now. The Dodd-Frank Act alone is expected to result in more than 500 rulemakings affecting the financial sector, while the Congressional Research Service (CRS) reports that the number of rules to be imposed by the new Consumer Financial Protection Bureau is potentially limitless. The president’s recent decision to defer his job-crushing ozone regulations until after the next election notwithstanding, the EPA is still busily discovering within 40-year-old laws the power to pursue an anti-energy agenda that Congress and the American people have already rejected. The National Labor Relations Board is telling companies where they can and can’t locate facilities. And Obama’s health care law created an indeterminately large number of new bureaucratic entities (CRS literally cannot ascertain how many). Without reform, none of these regulations will be subject to congressional approval.

In the REINS Act, three Kentuck-ians have given America a tool that can fix the regulatory process and solve one of the basic structural problems destroying jobs and economic freedom. The vote, expected by late November, will put every member of Congress on record: Will elected representatives of the people responsibly exercise the legislative power entrusted to them, or will they sit on their hands while regulators undermine our economy?

Phil Kerpen is vice president for policy at Americans for Prosperity and the author of the forthcoming Democracy Denied: How Obama is Ignoring You and Bypassing Congress to Radically Transform America—and How to Stop Him.

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