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White House Unveils Regulatory Review

President Barack Obama announced earlier this year to undertake a grand review of economic regulation in the United States and get rid of rules that “are not worth the cost, or that are just plain dumb.” Today, the first plans are in and you can review them here.

There is a lot of sensible stuff among the different proposals. Red tape has been rising under Obama’s watch but his initiative to repeal old and superfluous rules deserves credit, even if it’s hardly enough.

The White House highlights the following:

  • The Environmental Protection Agency (EPA) proposes to eliminate a redundant obligation for many states that requires air pollution vapor recovery systems at local gas stations because modern vehicles already have effective air pollution control technologies. That could save some $670 million over the next decade.
  • That’s no small change but far more expensive are new EPA limits on carbon dioxide emissions; their Renewable Fuel Standards, which prescribe that a particular measure of “renewable fuels” must be blended into transportation fuel; and the EPA’s campaign against drilling which just two months ago cost Shell almost $4 billion when a permit was revoked.

  • The Departments of Commerce and State are planning to eliminate unnecessary barriers to exports, including duplicative and unnecessary regulatory requirements, thus reducing the cumulative burden and uncertainty faced by American companies and their trading partners.

Still no word on the status of America’s pending free trade agreement with Colombia and Panama but at least the administration recognizes the importance of free trade.

  • The Department of the Interior is reviewing outdated regulations under the Endangered Species Act to streamline the process, to reduce requirements for written descriptions, and to clarify and expedite procedures for approval of conservation agreements.
  • The Department of Health and Human Services will reconsider burdensome regulatory requirements now placed on hospitals and doctors, like requiring redundant entries of information in medical databases.

In health care, the president has probably added the most new and “dumb” rules of this own, first and foremost among them, requiring every American to buy health insurance whether they want to or not. But insurers are also subjugated to new requirements, notably having to offer a basic plan of care starting in 2014 that covers:

  • Ambulatory patient services and emergency services and hospitalization;
  • Maternity and newborn care;
  • Mental health and substance use disorder services;
  • Pediatric services, including oral and vision care;
  • Prescription drugs;
  • Preventive and wellness services and chronic disease management;
  • Rehabilitative and habilitative services and devices.

If you want to insure yourself against medical catastrophe alone, that’s no longer possible. If you’re a man or not planning on having children, you’re still paying for maternity care. And if you’re not a drunk or an addict, there’s no insurance company in America that can sell you a plan that doesn’t cover rehab.

There are many more new rules in the Dodd-Frank financial reform bill. Among them is the creation of a Consumer Financial Protection Bureau designed to protect consumers from “unfair, deceptive and abusive” business practices. While the bill does not define what “unfair, deceptive and abusive” means, the bureau will be empowered to create and enforce regulations on all financial products, including credit cards, loans and mortgages—without oversight.

The Durbin Amendment to the financial reform law will allow the Federal Reserve to regulate the fees that banks may charge for processing debit card purchases. The amendment prescribes that such fees must be “reasonable” and “proportional”—without defining those terms. In anticipation, major financial institutions are already increasing costs elsewhere to offset the likely expense of price controls.

Before Dodd-Frank, the Credit Card Accountability, Responsibility and Disclosure Act of 2009 imposed federal restrictions on the terms and conditions of credit card services, requiring, among other things, that:

  • Credit card provider allow for a minimum of twenty-one days for bills to be paid;
  • Credit card providers lower the interest rates of clients who have paid their bills on time for six months in a row;
  • Gift cards and gift certificates remain valid for no fewer than five years.

By restricting the ability of financial firms to cover credit risks, the regulations have already caused higher interest rates and fees.

If the administration is serious about reducing the regulatory burden that American companies face, it shouldn’t just eliminate rules that are plainly ridiculous but stop adding new ones altogether.

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