It is pretty well understood that, in the absence of some sort of a deal, America faces a “fiscal cliff” at the beginning of next year. But Sen. Rob Portman shows that we are also headed over a steep “regulatory cliff” that could compound the damage.
The Obama administration already has been quite aggressive on the regulatory front. However, with the presidential election looming, it is holding back on imposing several multi-billion dollar regulatory burdens. As Portman shows, these regs, coupled with more than 130 unfinished mandates under Dodd-Frank, could significantly increase the regulatory drag on our economy.
For example, says Portman, EPA is sitting on a mega-rule that would impose a limit on ozone so strict that up to 85 percent of U.S. counties monitored by that Agency would be in violation. According to regulatory economist Susan Dudley, this rule would force many communities to forgo productive investment and hiring decisions in order to spend hundreds of billions of dollars per year to try to meet unattainable standards.
Call this the anti-stimulus regulation.
EPA’s to-do list also includes a new rule that would increase energy costs by up to $4.5 billion. The rule targets equipment used by power plants to draw in water to prevent over-heating, a process that, according to Portman, is not harmful to human health or water quality. EPA’s own original estimate said that this rule would cost one dollar for every three cents saved.
Call this the liberal idea of a bargain.
Meanwhile, the Department of Transportation is poised to issue a rule that will increase the costs of new cars and trucks by mandating expensive new technology. This rule would require that all cars and trucks be equipped with a rear-view camera and video display on the dashboard. Currently, this technology is available to consumers who desire it, and Portman says that 40 percent of new cars have it. But the Obama administration wants to force it on folks who don’t want the system, or would prefer to economize.
Call this the Nanny State run amok.
Finally, the Labor Department, in its wisdom, is working on a plan that would increase the cost of retirement planning for U.S. workers by discouraging businesses from offering investment guidance on a commission basis (the way most of us obtain such advice privately), rather than the more expensive fee-for-services model. Portman cites a study showing that this rule could cause 7.2 million IRA holders to lose access to investment advice.
Call this the federally mandated “ignorance is bliss” model of investing.
The U.S. urgently needs a regulatory environment that encourages investment, growth, and job creation. Obama is determined to give us the opposite, but only after he has secured reelection.
Unlike the fiscal cliff, its regulatory counterpart cannot be avoided by a deal. Only the defeat of President Obama will suffice.