Opinion: Feds love regulation, hate budgets

By Marty Carpenter, KSL.com Contributor | Posted - Feb 6th, 2013 @ 11:54am

SALT LAKE CITY — As we are all now a full month removed from setting those pesky New Year's resolutions—and let's face it, most of them were dumped by the wayside a few weeks ago—perhaps we should take some time to review what we do well, and where we can improve.

Specifically, let's look at some things our government is good at, and some areas where it could definitely work on its game.

Let's start with an area of needed improvement.

My kingdom for a budget

For starters, the federal government is very, very bad at budgeting. I suppose it's not so much that they are bad at it—they just don't really try. Do you know the U.S. Senate has not passed a budget since April 29, 2009? That's just 82 days short of four years!

To help put that into perspective, here's what has happened since the upper chamber of Congress last produced a budget:

  • Avatar became the highest grossing film of all time
  • The iPad was introduced (not the iPad 2 or the iPad Mini, the now ubiquitous iPad)
  • The final Harry Potter film was released
  • The U.S. hit its $14.3 trillion debt limit (May 16, 2011)
  • The national debt increased by $6 trillion
  • The U.S. hit its new $16.4 trillion debt limit (Dec. 31, 2012)
  • Water was discovered… on the moon

Clearly, there are some really sound reasons to construct, haggle over, debate, pass and enact a budget. Businesses don't operate without the guidance of a detailed and well-thought-out budget, and the U.S. government is in many ways the biggest of big business.

If you need further convincing that the U.S. government needs improvement when it comes to handling its finances, consider the mixed news released just this morning. The non-partisan Congressional Budget Office (CBO) says if we don't change our current course, the national debt will be 77 percent of our gross domestic product by the end of the decade. If you're looking for any potential silver lining, the CBO analysis says the government did actually trim the annual budget deficit from the $1.1 trillion shortfall we had last year. Projections show we'll only spend approximately $845 billion we don't have this year. That is still enough red ink to require the government (meaning you and me, your kids and mine) to borrow 24 cents of every dollar it spends.

By comparison, the elected men and women of the Utah State Legislature are hard at work right now producing a budget for the coming fiscal year. They will carefully weigh the options for public spending and investment and produce a balanced budget—as they are required by state law to do—all in just 45 days.

The regulatory flood

There is one area where the federal government is as tireless in its efforts as it is in spending money. Unfortunately for all of us, that is in writing regulation.

First, a clarification: most regulations are necessary to ensure there are clear rules for operating in a complex society. We need rules to the game, we need lines on the road and we need standards for safety. But excessive and costly regulations harm the economy and inhibit job creation. Regulatory uncertainty is one of several reasons employers are reluctant to hire and you can see the results in the U.S. non-farm year-over job growth rate of an anemic 1.4 percent.

I also want to draw the distinction between federal and state regulations. Here in Utah, Gov. Gary Herbert ordered a review of business regulations that resulted in the modification or elimination of 368 regulations that had become nothing more than obstacles to growth. The story at the federal level is quite different.

The Dodd-Frank financial reform law mandates 447 new rules, though regulators have finalized only about a third of them. The Affordable Care Act (more commonly known as "Obamacare") is 2,700 pages long and the term "The Secretary shall determine…" appears in the bill 1,563 times while creating 180 boards and commissions. Proposed regulations from the Environmental Protection Agency could negatively impact power plants, hydraulic fracturing and refineries, costing the economy hundreds of billions of dollars and millions of jobs.

That's a lot of new regulations for American businesses to digest.

Tom Donohue, the president and CEO of the U.S. Chamber of Commerce, says, "Sometimes our economic or policy challenges become so big and so daunting that politicians, pundits and the media have to use dramatic or catastrophic images in nature to effectively describe them. The fiscal cliff comes to mind. Next up? The regulatory flood."

Regulatory impact on business

With every new regulation on business comes a compliance cost that harms small businesses. Though small businesses are the jobs engine of the economy, they pay the heaviest price of mounting regulation.

Consider that businesses with fewer than 20 employees incur regulatory costs 42 percent higher than larger businesses of up to 500 employees. The average regulatory cost for each employee of a small business exceeds $10,000 annually.

Restoring balance

As I pointed out earlier, too often regulations are framed in bills voted on by our elected representatives and then left to the bureaucrats to fill in the details. Many are written and then enacted without sufficient time for review or commentary by the businesses they impact.

And when something negatively impacts a business, it will ultimately have a negative impact on the consumer. Add regulations to power plants and ultimately your energy bill increases. Add regulations to farmers and food producers and watch your grocery bill increase. Add any regulation that increases a business' operating costs and that business will have to offset that increase. That means fewer jobs created and often some jobs eliminated.

Rather than regulating free enterprise to death, we should work to simplify the rules of the game to protect the consumer and allow businesses to plan for the future and to grow.

We would all—businesses, consumers and families—benefit from a government that could publish a budget (preferably balanced) and have the discipline to work within it.

Unfortunately, these seem like New Year's resolutions—great ideas that are unlikely to be put into practice.

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