House REINS in Government Red Tape
Yesterday, an eager House of Representatives got to work and quickly fulfilled one of the season’s most significant campaign promises—regulatory reform. With an eye toward protecting the economy from the deluge of federal regulations that have become all too commonplace, the House passed the Regulations from the Executive in Need of Scrutiny, or REINS Act, for the third and likely final time. As the name implies, the law is a powerful tool for reining in the powers of the executive branch, most often exercised through sweeping regulations that face no Congressional oversight. The new law will require that any regulation with an estimated economic impact of $100 million or more must be approved by both houses of Congress and obtain a Presidential signature within 70 legislative days of its promulgation. Without the approval from Congress, these sweeping rules will not go into effect.
Such a law could have prevented the economic devastation caused by federal regulations like the recently blocked overtime rule. Under Labor Secretary Thomas Perez, the Department of Labor issued a new overtime rule that increased the threshold under which employees are eligible for overtime wages from $23,660 to $47,476 and indexed the threshold to increase further in the future. Despite strong economic evidence the rule would be ineffective in increasing workers’ pay and concerns from the business community regarding the increased costs, the Department of Labor forged ahead. Fortunately, a federal judge blocked the rule and issued an injunction stopping the Department of Labor from implementation. With the election of Donald Trump, it is unlikely the rule will be revived, but costs businesses paid to adjust to the new rule have already taken their toll. With the REINS Act now in place, similar scenarios can be avoided in the future.
Furthermore, the REINS Act will ensure American businesses have a safeguard against the mountain of federal regulations that increase costs, decrease flexibility and hurt the economy. According to data from the nonpartisan Competitive Enterprise Institute, federal regulations cost the economy approximately $1.885 trillion in 2015. That burden amounts to a “hidden tax” of about $15,000 per household every year. As noted by the Mercatus Center at George Mason University, the most recent edition of the Code of Federal Regulations (CFR) has more than 175,000 pages of federal regulations contained in 236 volumes—nearly twice the size it was in 1975. These costly regulations range from obscure environmental rules to massive regulatory packages like the infamous Dodd-Frank banking regulations. With each new rule, starting or running a business is made even more difficult and innovation is hampered.
The need to rein in the regulatory state and return to an environment conducive to economic growth and innovation is clear. The House of Representatives has made this a priority by demonstrating its willingness to fight government red tape, and has just given itself a potent new tool to do just that. President-elect Donald Trump has signaled he will sign the legislation and support Congressional efforts to fight over-regulation. Reining in big government will be a key driver of economic growth, and the passing of the REINS Act is a strong first step toward making America great again.