Regulation vs Legislation

Last week, the president signed an executive order that changes the way that regulations are made. The order establishes a new standard for creating regulations: the agency must show that the market has failed to correct the problem. Most consumer advocates are upset by the move which will make it harder to regulate business that harm the public.

I agree that the order will end up harming the public; however, I also think that the president does have the right to issue the order. Our government is divided into three branches, two are relevant here: congress (the legislative branch) and the presidency (the executive branch). The executive is the only branch with a single outlook – that of the president. All of the executive agencies report to him through the cabinet.

The founders recognized that this singular position and outlook gave the executive branch much more vitality and an ability to act in a unified manner than any other branch. To guard against the president becoming king in all but name, they gave congress the power to legislate. The executive branch has the role of implementing or executing the policies of congress.

With the power to legislate, congress could craft very specific legislation that would require the executive to implement their policies in very specific ways. However, most legislation is not written that specifically, nor should we want it to be. In order to last for decades, legislation relies heavily on the executive rule making process. The rule making process within the executive branch dictates how the laws will be implemented. Rule making is much more flexible and can change more rapidly than could the original legislation. The rule making must still fill the original intent of the law (or the third branch gets involved); but within that context, it is very broad. In the IT area, we have found over the past 5 years or so, that rule making is more worrisome than legislation – after all, legislation is passed with ample representation. Rule making is largely at the whim of the executive in charge at the time.

So, the president, and therefore the executive branch, want to limit new regulations – in some cases, overriding the opinions of professionals in the departments that know the science, the economics and the facts better than the politicians. Should we be upset? Yes – good government depends on expert opinions and not political ideology. Is it improper? No. The fact is, elections do have consequences. If the country voted for a conservative who is more concerned with businesses than the public, then we shouldn’t be surprised when he puts limits on good government practices that favor the public.

Of course, liberals should highlight that fact come election time. We should note that Bush’s own administration produced a report showing that regulations save the country more money than they cost businesses:

A major feature of this report is the estimates of the total costs and benefits of regulations reviewed by OMB. Major Federal regulations reviewed by OMB from October 1, 1993, to September 30, 2003, were examined. The estimated annual benefits range from $63 billion to $169 billion, while the estimated annual costs range from $35 billion to $40 billion. A substantial portion of both benefits and costs is attributable to a handful of clean-air rules that reduce public exposure to fine particulate matter. Technical limitations in these estimates are significant and are discussed in the text of the Report.

Even this report is limited and given the political process involved in producing it, I suspect that it under-represents the benefits and over-represents the costs of regulations.

So here’s my proposal. We accept the fact that the Bush administration is going to interpret and implement federal laws with an eye to making things cheap for businesses at a cost to the public. Between limits on new regulations and attempts to limit torts, the public is getting the short end of the stick, and that needs to change with the next president. When the next president is a Democrat, we need to revise the executive order so that an agency only has to show that a proposed regulation is minimally cost effective (i.e., the cost is less than or equal to the public benefit) before it gets implemented.

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