Romney’s Regulatory Agenda – Right Turn?

Presidential campaign documents seldom read like carefully crafted scholarly work. It is no surprise that the section on Regulatory Policy in Believe in America: Mitt Romney’s Plan for Jobs and Economic Growth emphasizes broad themes, impressionistic evidence, and solutions that are less than fully developed. The relevant question in evaluating such documents is not whether they offer precise and well-crafted specifics but whether they offer sensible direction dressed in a politically attractive package.

Judged by that yardstick, the Romney campaign’s Regulatory Policy program is generally successful. It identifies a serious risk—that excessive or ill-conceived regulations can hinder economic growth (and, by extension, reduce employment); it targets specifically two unpopular, unwieldy, and costly initiatives (the Patient Protection and Affordable Care Act, better known as ObamaCare, and the Dodd-Frank financial reform law) for repeal; and it expresses support for three steps that offer promise for better balance between the costs and benefits of regulation, namely reforming environmental regulation, considering a regulatory cost cap, and shifting the presumption from broadly delegated power to more narrowly delegated power for agency adoption of important rules. I put to one side the proposal for liability reform—this proposal fits with the overall tilt to less regulation and more freedom for private actors, but it is part of a far more complex set of issues and difficult calculations about the right ways to limit untoward effects of classes of litigation that can provide little compensation or deterrence of socially harmful conduct at high cost (a set of considerations sufficiently complicated and distinct from other parts of the plan that it seems more fruitful to concentrate attention elsewhere).

The overall thrust of the Romney regulatory agenda is to bring down the costs of regulation, eliminating or rewriting rules that impose costs that exceed their benefits or that could be re-cast to yield a more attractive benefit-cost ratio. The goal of that agenda should be widely embraced—especially in a nation where growth in federal economic regulations has been rapid and where overall economic growth is somewhere between sluggish and dismal. No one should doubt that excessive or poorly designed regulations can discourage investment in innovation, business creation, and employment.

And, of course, no one does. Every Administration since at least President Jimmy Carter’s has had some form of regulatory control that seeks to balance costs and benefits.  President Reagan’s executive order creating the modern OMB-OIRA review process, President Clinton’s reformulation of it, President George W. Bush’s modification of his predecessor’s reformulation, and President Obama’s orders refining (and softening) aspects of that edict and adopting mandates to review regulations to prevent undue interference with business—these all stand for essentially the same proposition, and the implementation of benefit-cost review within the White House has largely conformed to very similar profiles under each of these presidencies. Romney’s proposals, including his proposal to stop-and-frisk Obama-era regulations to assure compliance with cost-benefit ideals, generally reprise earlier efforts and will not significantly change this process.

But the tone of presidential pronouncements and the selection of presidential appointees do make a difference. Reagan-era regulation was not identical to Carter-era or Clinton-era regulation. Although in some cases both Carter’s and Clinton’s appointees were tougher sells on particular regulatory initiatives, they also were more interventionist than Reagan’s in a number of important, high-profile areas. There is no magic formula for doing benefit-cost analysis; both costs and benefits can be difficult to calculate. Within the range of plausible approaches to this calculus, presidential enthusiasm for or suspicion of regulation (or sensitivity to particular aspects of it) can significantly affect how administrative agencies go about their business.

Even with the Romney reforms, the overwhelming bulk of Obama-era rules would go forward without even a hiccup. Virtually all regulatory programs would continue in pretty much the same form no matter who occupies the White House, because the programs respond to political forces that do not greatly change. Yet the Romney platform signals that his administration would push agencies hard to justify regulatory cost estimates that seem low—the EPA’s Utility MACT regulations, for example—and that it would be skeptical of major rules in general and of those that are designed for environmental or financial clean-ups in particular. All of this is apt to be music to business executives’ and investors’ ears.

Romney’s plan also calls on Congress to play a more interactive role in at least one way, by requiring a REINS Act-style affirmative congressional approval before major rules take effect. Congress already is deeply engaged in regulatory matters, both in designing the contours of laws that authorize agency action and in providing oversight through budget, personnel, and committee review processes. Congress delegates broad authority to agencies for reasons that will persist even in an era of heightened skepticism of what some agencies do, but Congress doesn’t give simple, all-or-nothing delegations. Instead, congressional delegation sets bounds around the matters agencies have first-mover rights over and how free agencies are to act within those bounds. At present, the Executive (in review by the Office of Management and Budget), the courts (in their review for conformity to authorizing legislation and to general administrative law doctrines), and the Congress (in their oversight, standard revisions of legislation, and the theoretical prospect of a presidentially approved joint resolution of disapproval) all get to restrain agency decision-making to some extent. Romney’s plan calls on Congress to narrow the ambit of delegation a bit more, increasing congressional accountability for what rules are enacted, and reducing the likely influence of some well-placed groups that work closely with agencies having a relatively narrow focus.

Reducing the scope for independent action by agencies will be seen by some people as a threat to efficient government, an invitation to greater “gridlock.” Our Constitutional scheme, however, is biased in favor of gridlock and against facile government action; it has made law making difficult, with the default position being against creation of new rules. Those who bemoan increased difficulty in solving societal problems through government tend to overlook the important lesson that there often is broad consensus that a problem exists, but no consensus at all that a particular solution is better than the current problematic state of affairs—witness the difference between Senator Obama’s success with health care as a campaign issue and President Obama’s difficulty selling his preferred solution.

A program that asks for more caution in regulating business, for more attention to costs, and for greater congressional involvement in writing important rules will not dramatically reshape our government, but it well might move us in a positive direction.

Ronald A. Cass is President of Cass & Associates; Dean Emeritus of Boston University School of Law; Chairman of the Center for the Rule of Law; and a Senior Fellow at the International Centre for Economic Research. He is a former Commissioner and Vice-Chairman of the U.S. International Trade Commission and has received five presidential appointments from presidents Reagan to Obama.