WOE UNTO the lowly regulators. The Reagan folks and Congress have devised the ultimate control system: Give the regulatory agencies a taste of their own medicine.
While most observers believe change is needed, few agree on the best course. Currently, three key reform salvos take aim at the status quo: the Paperwork Reduction Act, Executive Order 12291 and a proposed Regulatory Reform Act soon to be before the Senate. All are deficient. Each imposes its own special burdens as if to ensure that regulators' hands are tied. Together, by adding so many twists and turns, they will stymie the regulatory agencies.
As Shakespeare put it, "'Tis the sport to have the engineer be hoist with his own petard!" And so it is that today's reformers steal from the ample bag of tricks long used with such success by the regulators themselves. For example:
The Contradictory Requirement Paradox: Both the executive order and the Regulatory Reform Act call for precise economic impact analysis before a rule may be issued. Yet the Paperwork Reduction Act makes getting the needed data much harder by imposing strict limits on the type and amount of information agencies can request. Coming up with sophisticated analysis based on sparse data is like building skyscrapers on a foundation of toothpicks.
The All-Inclusive Jurisdiction: Vague mandates have long tempted regulators to overreach. Now, Executive Order 12291 entices the White House Office of Management and Budget (OMB) to follow suit. In defining a "major rule" -- one subject to OMB review -- the order uses a three-part test: (1) impact exceeding $100 million; (2) major increase in costs or prices; and the old catch-all (3) "significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability ... to compete." In other words, everything.
Delay Ad Nauseam Ploy: The executive order permits the green visor crowd at OMB to get two shots at stemming the regulatory tide. They can clamp down the stoppers at the start or apply the brakes later on. Agencies submit their impact analyses for OMB scrutiny both at the beginning and end of their proceedings and can't issue a rule without OMB's final approval. Regulations can languish due to inattention or delay for as long as OMB sees fit -- precisely what industry, faced with agency inaction, has long termed the "bureaucratic squat."
The Pious Double Standard: By law, agencies follow strict openness and conflict of interest procedures, while keeping a comprehensive record of their proceedings and meetings with outside interests. Yet the executive order allows OMB to make preliminary objections to proposed rules entirely off the record -- in response to whatever special interest just whooshed through the door. While everyone else must tip their hands in public, OMB gets to play its cards close to the vest.
The Oops!-I-Didn't-Mean-to-Strangle-You Tango: In business, where you have multinationals as well as one-person proprietorships, the trend is to differentiate among them as to the relative burdens regulation imposes. Similarly, in government you have very large and very small agencies. Yet these three reform efforts apply equally to all agencies. No distinctions as to size, mission or performance. Regardless of intent, some of the requirements will swallow up smaller units in a morass of red tape and added paperwork burdens.
The Analysis Paralysis: A "sunset" provision in the Regulatory Reform Act allows the administration to set a schedule and select certain rules for review. Any resulting revisions require that a "new" rule be proposed, but not subject to procedures laden with delay. Agencies with limited resources will be pinned down with sunset reviews and rules revisions -- covering the same ground several times over -- instead of looking ahead to emerging problems needing immediate attention.
So what, some contend. We need less regulation and most of us enjoy seeing the bully on the block get his due. What's wrong with some creative tension in the process?
A lot. First, it costs American taxpayers plenty. The techniques used to rein in the regulators are dizzying. It's like a cat chasing its tail: lots of frenetic activity, but nothing gained. Shrinking budgets ought to spur us to reduce the regulatory apparatus-- not add on portly appendages that merely weigh it down.
Second, it won't work. Over the years, what we're learned or should have learned about regulation was that certain methods just don't pan out. Yet here we find the same kinds of techniques used to try to curb regulatory abuses that have utterly failed to curb marketplace abuses. Why should they work this time around?