CARLOS CURBELO TALKS ABOUT BROADENING THE GOP’S BASE: “I am proud of our nation’s rich ethnic diversity.”
December 2015 Volume 49, No. 4
REGULATORY BEAST The fight to cut government red tape and restore common sense to the law With essays by Majority Leader Kevin McCarthy, Governor Dennis Daugaard, Philip K. Howard, Clyde Wayne Crews Jr. & others
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“Ideas that matter, since 1965.“ Volume 49, Number 4 Politics and Perspective
Cover Story (cont’d)
Congress, Heal Thyself By Robert Livingston
Making Our Auto Safety Laws Work Better By Michael Burgess
The FCC: Obama’s Broadband Bully By Brent Skorup
How Cutting Red Tape has Helped Fuel South Dakota’s Economic Success By Dennis Daugaard The Governor of South Dakota discusses the effort he is leading to peel back regulations -- an effort that has helped create one of the top business climates in the U.S.
Q&A with Mike Oxley about the career of John Boehner
The Cost of Overregulation: America’s Small Business Owners Speak The owners of four small businesses in the United States share their stories about government red tape and how it is impacting their livelihoods.
Fighting Government Red Tape: What the Next President Might Do By David Hebert When it comes to reining in the regulatory state, there are are key differences about the 2016 presidential candidates that could be a factor in the election next year.
Cover Story 14
Regulatory Reform That Restores Government Of, By, and For the People By Kevin McCarthy According to the House Majority Leader, fixing the administrative state is about much more than economics. It is about holding government accountable
How Congress Can Fix Broken Government By Philip K. Howard With the regulatory state growing out of control, it is time for Congress to reclaim its authority to regularly update existing legal frameworks.
Pen and Phone… Meet Liberty’s Meat Axe By Clyde Wayne Crews Jr. Regulations cost some $1.8 trillion per year. By being AWOL in addressing this “hidden tax,” policymakers are missing government’s greatest impact on the economy. Publisher The Ripon Society
Editor Louis M. Zickar
President Jim Conzelman
Deputy Editor Jarrad Hensley
Editorial Board Thomas Tauke Michael Castle Michael Oxley Billy Pitts Pamela Sederholm Judy Van Rest Jim Murtha
Editorial Assistant Stephen Jackson
© Copyright 2015 By The Ripon Society All Rights Reserved
News & Events 29 Portman Pushes for Tax Reform In remarks to The Ripon Society, the Ohio Senator says the current code is hurting American workers and squeezing the middle class Sections 3
In this Edition
Ripon Profile - U.S. Rep. Carlos Curbelo
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RIPON FORUM December 2015
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THE RIPON SOCIETY HONORARY CONGRESSIONAL ADVISORY BOARD U.S. Senators: Shelley Moore Capito - Senate Co-Chair Cory Gardner - Senate Co-Chair Roy Blunt Richard Burr Bill Cassidy, M.D. Susan M. Collins Joni Ernst Deb Fischer Orrin G. Hatch Pat Roberts Thom Tillis Roger Wicker U.S. Representatives: Pat Tiberi - House Co-Chair Renee Ellmers - House Co-Chair Martha Roby - Vice Chair, South Erik Paulsen - Vice Chair, Midwest Bill Shuster - Vice Chair, Northeast Greg Walden - Vice Chair, West Mark Amodei Andy Barr Mike Bishop Diane Black Marsha Blackburn Charles Boustany Susan Brooks Vern Buchanan Larry Bucshon, M.D. Michael C. Burgess, M.D. Ken Calvert Jason Chaffetz Tom Cole Barbara Comstock Ryan Costello Ander Crenshaw Rodney Davis Jeff Denham Charlie Dent Bob Dold Sean Duffy Rodney Frelinghuysen Chris Gibson Kay Granger Sam Graves Richard Hanna Darrell Issa Lynn Jenkins Dave Joyce John Katko Mike Kelly Adam Kinzinger Leonard Lance Billy Long Frank Lucas Tom Marino Kevin McCarthy Cathy McMorris Rodgers Patrick Meehan Candice Miller John Moolenaar Randy Neugebauer Kristi Noem Bruce Poliquin John Ratcliffe Tom Reed Jim Renacci Reid Ribble Tom Rooney Peter Roskam Steve Scalise John Shimkus Lamar Smith Steve Stivers Glenn Thompson Mac Thornberry Mike Turner Fred Upton Jackie Walorski Mimi Walters Edward Whitfield Steve Womack Todd Young
In this Edition
With 19 percent of the American people saying they do not trust the federal government, it goes without saying that most Americans view Washington as a dysfunctional place. And yet when you look back at some of the things that have been accomplished over the past 12 months, you can argue that 2015 has actually been a fairly productive year. Congress approved Trade Promotion Authority for the President this past summer, and, this fall, reached agreement on a debt and deficit plan that, among other things, included the first significant reform to Society Security in more than 30 years. More recently, the parties have come together to approve a long-term highway bill to rebuild America’s crumbling roads and rewrite the No Child Left Behind Act to give states more control over what our children learn in school. While none of these plans and agreements are perfect, they collectively represent the kind of common sense compromise that has been in short supply in our Nation’s capital in recent years. In this latest edition of THE RIPON FORUM, we look at another area where common sense is too often lacking and compromise is sorely needed – overregulation. In his first Inaugural Address, Ronald Reagan famously stated that, “In this present crisis, government is not the solution to our problem; government is the problem.” But even Reagan knew that government has a role in our society. He understood that in addition to promising to make government smaller, Republicans also had an obligation to make sure government operated efficiently and effectively. “Now, so there will be no misunderstanding,” Reagan declared in this same address, “it is not my intention to do away with government. It is, rather, to make it work.” If there were ever an area where government needed to work, it is in the area of regulations. From clean air to highway safety, government has a responsibility, in the words of Abraham Lincoln, to do for the people “whatever they need to have done, but cannot do, at all, or cannot, so well do, for themselves.” Unfortunately, that responsibility has grown over the years to include more areas than Lincoln likely would have ever imagined. In fact, as Clyde Wayne Crews of the Competitive Enterprise Institute points out in this edition of the FORUM, if the regulatory state were a country today, “it would be the 10th largest in the world.” What led to this growth? According to author Philip K. Howard, the growth is due to a lack of proper oversight and good intentions gone astray. “American government today is run by dead people,” he writes, “past members of Congress who wrote all these statutes, and bureaucrats long gone who wrote the millions of words of regulations.” Fixing broken government is not just about economics, argues House Majority Leader Kevin McCarthy in this latest edition. It is also, he writes, “about holding government accountable, putting a stop to corruptive influences in Washington, and ending the proliferation of bad rules.” McCarthy goes on to note that the House has passed legislation to tame the regulatory beast, and it remains one of the top priorities for Congressional Republicans in the coming year. As Republicans move ahead in this regard, they may want to look to the example set in South Dakota, where Governor Dennis Daugaard launched a “red tape review.” Daugaard writes that this review has “eliminated over 4,000 sections of law and regulations” and helped make South Dakota one of the top states in America to do business. This latest edition of THE RIPON FORUM also includes an important essay by former House Appropriations Chairman Bob Livingston on the need for congressional reform, and a timely interview with former Congressman Mike Oxley on the career of his good friend and colleague, the recently-retired Speaker of the House, John Boehner. And in our latest Ripon Profile, we feature one of the rising stars of the Republican Party, Florida Congressman Carlos Curbelo, who, among other topics, discusses his first year in Congress and the need to broaden the GOP’s base. As always, we hope you enjoy this edition of the FORUM, appreciate your readership this past year, and encourage you to contact us with any thoughts or comments you may have. Lou Zickar Editor of THE RIPON FORUM firstname.lastname@example.org RIPON FORUM December 2015
Politics & Perspective
Heal Thyself ROBERT L. LIVINGSTON
Seldom has there been such widespread agreement in This provision is the foundation of Congress’s Washington among Republicans and Democrats, Senators “power of the purse” and is a duty the legislative branch and House members, and most of the general public: undertakes each year. This process enables Congress to Congress doesn’t function and something needs to change, affirm the country’s priorities and set specific amounts soon. for Federal programs and agencies. Congress has for The reasons why Congress doesn’t work are many. most of its existence achieved this by dividing the They cross party lines. They funding of most activities of go beyond just Congress to the government – transportation, Executive Branch. They are homeland security, defense, affected by and in some cases education, foreign aid and other caused by the media. They basic government operations – have caused public trust in their into individual appropriation government to evaporate. bills, now 12 in number. Both There is no sense pointing Houses of Congress are supposed the finger of blame. There’s to pass these bills separately and plenty to go around, and blaming reconcile their differences by others may be good politics, but the beginning of the next fiscal it accomplishes nothing for the year that starts on October 1st. American people. That hasn’t been done correctly So, what to do? The first step to since 1996. I know. I did it. solving a problem is to understand Here’s the problem. The it. The primary problem with Congressional Budget and Congress is that the legislative Impoundment Control Act of and political processes that dictate 1974 requires Congress to first how we govern are outmoded adopt an annual budget that and inoperable today. They must sets spending levels for all of be reformed. The second step is government. This relatively The primary problem finding a means to that end – a new budget process has made with Congress is that the legislative vehicle for bringing it difficult for the houses about a change in the rules and a of Congress to produce its legislative and political change in the law that will make individual appropriation bills processes that dictate how on time, or at all. The process Congress effective once again. Let me give you a critical is subject to constant delays and we govern are outmoded example of what’s broken, torn politicization. and inoperable today. from the pages of the annual Over these last 40-plus appropriations process. years, the Congress has been As a former Chairman of the House Appropriations able to complete all its appropriation bills on time on Committee, I believe it is imperative that the appropriations only four occasions. process be among the highest priorities for reform. Congress has more frequently, when encountering The Constitution specifically gives the Legislative deadlines it can’t meet, resorted to interim funding or a Branch the power to spend money. Article 1, Section packaging of some of the bills to prevent any stoppage 9, Clause 7 reads: “No money shall be drawn from the of the necessary operations of government. But what treasury, but in Consequence of Appropriations made by was meant to be an emergency back-up procedure has law…” become the regular order of the day. For more than a 4
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decade, the Congress has essentially extended the fiscal the rights of individual members by denying them their year for several months through continuing resolutions, right to influence and vote on the individual bills. We and then at the last minute has had to pass all the must examine whether the current fiscal year deadline appropriation bills in one omnibus bill. This results in is the proper date, and find a way to expeditiously move the Congress voting on entire funding of government in funding bills through both Houses of Congress and into one up-or-down vote on one piece of legislation with conferences to resolve their differences. thousands of pages, with usually only the majority James Madison believed that the “power of the party voting “aye.” purse” was the central responsibility of representative This is bad government, bad politics and bad government. As he penned in Federalist Paper 58: business for the country. This has also got to change. “The power over the purse may, in fact, be regarded Some of that change must come in the Senate where as the complete and effectual weapon with which any supermajority constitution can votes are required arm the immediate under their rules to representatives proceed to consider of the people, for individual bills. This obtaining redress makes individual of every grievance appropriations and for carrying into difficult if not effect every just and impossible to pass salutary measure.” there. Now is the time Add to that toxic for Members of mix a continuing Congress to regain failure in both their rightful stature the House and and work together on Senate authorizing finding a process to committees to restore and preserve authorize federal their constitutional programs and responsibilities over agencies under appropriations. their jurisdiction, It is one more Now is the time for Members of including the reason, one among Congress to regain their rightful stature establishment of many, for the Congress the funding levels and work together on finding a process to to create a special that guide what Joint Committee on restore and preserve their constitutional the appropriators the organization of ultimately fund. Congress, which can responsibilities over appropriations. This means serve as a repository that appropriation for reform and make bills are also burdened with legislative language recommendations to the full Congress. Reform should continuing many policy provisions (authorizations) not occur on a piecemeal basis. It has to be done in their bills. There are now annually more than $300 comprehensively to produce meaningful results worthy billion in unauthorized appropriations, many of which of the peoples’ trust. are absolutely critical to the national welfare, such as Let’s call it the Joint Committee on the Congress Homeland Security. The Congress must also recognize of Tomorrow, because it is the future we need to be the need to force the authorizing committees to fulfill concerned about. Let this be the first step to move their responsibilities. the Congress and the Executive into the 21st Century During the last effort at legislative reorganization, of effective, consensus-driven, public interest there was little focus on the appropriations process, as governance. RF then Senate Appropriations Chairman Byrd testified not to encumber the process: “We need to make the goal not Robert L. Livingston is a Founding Partner of The one of efficiency, but one of effectiveness.” Livingston Group. He represented the 1st District of I agree that we must preserve the fundamentals Louisiana in the U.S. House of Representatives for 22 of a separate appropriations process, but procedures years, and served as Chairman of the Appropriations must be changed. We currently are disenfranchising Committee from 1995 until his retirement in 1999. RIPON FORUM December 2015
Making Our Auto Safety Laws Work Better MICHAEL BURGESS With the holiday season in full swing, millions of hearings we have examined new technologies, like vehicle-toAmericans are bracing for the long traffic jams that may stand vehicle communications and the internet of things. between them uniting with their loved ones. Planes, trains, As a result of these hearings, we were able to craft auto and automobiles all contribute to transportation delays which safety legislation that will modernize NHTSA, improve recall have become an inevitable part of the holidays. However, the processes, and transition our view to the future, where there are nation’s roadways remain one of the most efficient means of boundless opportunities to improve safety and experience for travel. They are fundamental to our economic and societal those behind the wheel. backbone – they connect us to family, Working in a divided government friends, schools, businesses, and much has not made it easy to get important more. While we are fortunate to enjoy initiatives signed into law. But such a thriving transportation system, since taking over as chairman of the much of that success is dependent on subcommittee, I have worked closely keeping the traveling public safe. with NHTSA and its Administrator, There is no doubt that cars are Dr. Mark Rosekind, to improve safer today than ever before. Many safety compliance for automakers and cars are now equipped with cameras dealers. and automatic braking features As part of the long term highway that give drivers greater situational bill that was recently signed into law, awareness and can help them avoid we included a number of bipartisan crashes altogether. Cars may even provisions that will make the recall be able to communicate with each process work better for consumers, other on the road as early as next year. increase funding for NHTSA’s The automotive sector is currently safety programs, and provide other undergoing a technology revolution. meaningful safety reforms that will Despite these automotive safety make automakers more accountable advancements, automakers and the to safety regulators and keep NHTSA It is imperative that National Highway Traffic Safety focused on its core mission of saving Administration (NHTSA) have a NHTSA, as chief lives. responsibility to ensure the safety of Safety behind the wheel is our regulator of vehicle the driving public. Automakers are top priority. We are joined by the safety, keeps pace with required to meet strict safety criteria automakers and NHTSA in that goal, to sell vehicles in the United States. and we are uniquely positioned on the complexities of Following a record year of vehicle Capitol Hill to do something about those next-generation recalls due to safety defects, it is clear it. To that end, our commitment to that automakers must do more to meet technologies. Lives vehicle safety cannot stop with the those standards, and congruently, newest model year or safety feature. depend on it. NHTSA must do more to enforce It must define the work and culture them. of automakers, dealers, part suppliers, As we look to the future, embracing automotive safety officials, and all others contributing to the maintenance, technologies will provide even greater life-saving benefits. development, and advancement of the industry. American Simultaneously it is also imperative that NHTSA, as chief motorists do not deserve any less than that. RF regulator of vehicle safety, keeps pace with the complexities of those next-generation technologies. Lives depend on it. Michael Burgess represents the 26th District of Texas in the In the Commerce, Manufacturing, and Trade U.S. House of Representatives. He serves as Chairman of the Subcommittee, which I chair, we have held several hearings Energy & Commerce Committee’s Commerce, Manufacturing, over the last year to address vehicle safety issues. During those and Trade Subcommittee. 6
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The FCC: Obama’s Broadband Bully BRENT SKORUP The current administration, frustrated with a – has been abandoned. The Obama administration Congress that won’t enact progressives’ policies, pushes is determined to reinvent the agency and shape this federal agencies to twist existing laws until they are influential new medium, broadband Internet. According to unrecognizable. This explains many of the Federal this newer view, the FCC has all these powerful regulatory Communication Commission’s actions in the last few tools from earlier eras gathering dust – why not use them? years, and it has just embarked on its boldest regulatory Technological advance has defanged the FCC’s content experiment yet – regulating our modern printing presses controls, like the Fairness Doctrine, and industrial policy – broadband providers and other Internet-based media for broadcast, but the Commission has discovered or voted companies. itself new tools to shape the communications and media Twenty years ago, some farsighted lawmakers saw industries. broadband Internet’s potential Several initiatives mark to transform communications, the agency’s assertive role in technology, and media. Therefore, the broadband era. The most in 1996 Congress amended the notorious and significant attempt Communications Act to announce at agency reinvention--the 2015 that “it is the policy of the United Open Internet Order – came States” that the market for the after President Obama implored Internet and Internet access should the nominally independent be “unfettered by Federal or State agency to regulate the Internet. regulation.” Congress knew the The President was encouraged FCC’s history of overreach and by media activists who were did not want the labyrinthine alarmed, after several setbacks television, radio, and telephone in federal court, that Internet regulations to limit the then-nascent companies might escape Internet. As a result, the Clinton pervasive regulatory scrutiny. and Bush administrations shared an The professional advocates (imperfect) express hands-off policy and the President demanded “net regarding the Internet. neutrality,” which is a pliable This benign neglect of the term designed to obscure their Brent Skorup Internet encouraged rapid changes less PR-friendly aims--applying in several major industries as common carriage telephone video, music, news, gaming, travel, regulations to Internet providers The Clinton and Bush and other services moved online. and technology companies. With The Internet Age is one of content administrations shared an these phone regulations, called abundance and consumer choice. II, the FCC has tried to (imperfect) express hands- Title As the economic and social import guarantee its long-term vitality off policy regarding the of the traditional areas of regulation by functioning as a zoning board – like cable TV, local telephone, for the Internet. Under these Internet. and broadcast radio – diminished subjective rules, Internet service in the 1990s and early 2000s, the providers and tech companies FCC seemed prepared to accept its role as a more modest, often must seek FCC permission before making changes to specialized agency focused on paring back the regulatory Internet-based protocols, technologies, and services. Even edifices that it had built up since the 1930s. routine commercial agreements between Internet-based That regulatory philosophy – dubbed “vigilant companies are subject to agency second-guessing and restraint” by Clinton’s FCC chairman William Kennard punitive fines. These new regulations plus the agency’s 8
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growing abuse of its essentially blank-check authority to undoes what several states have carefully implemented approve media and communications mergers mean that after finding that city-operated networks frequently turned the FCC will be instrumental in shaping what voices are into taxpayer-funded boondoggles and therefore should heard over the airwaves, online, and on TV. be deployed only sparingly. This major priority for the The FCC has also redirected billions of dollars of administration is likely to be ruled unconstitutional but it telephone subsidies toward broadband connections, signals a disregard for federalism and for markets. despite the fact that, according The late Clay T. to Pew surveys, less than 3% Whitehead, a Nixon of Americans say affordability administration official, once The Obama administration is the main reason they don’t noted that, “The main value is determined to reinvent the use the Internet. These poorlyof the sword of Damocles designed phone subsidy agency and shape this influential is that it hangs, not that programs have been plagued it drops.” The FCC has new medium. by waste and fraud from the voted itself several hanging very beginning. Economists swords in order to gain Scott Wallsten and Thomas control over the structure Hazlett found that, at best, the cost to connect a hold-out and composition of Internet-based economy. Limited household to the telephone network exceeded $100,000. government and free speech advocates must sound the There is every reason to expect waste to continue with the alarm as the FCC attempts, based on pretext and flimsy new broadband program since, per Pew, 92% of offline legal rationales, to reinvent itself and regulate the most adults, most of whom are over 60, say they simply aren’t powerful mass medium yet. RF interested in subscribing. The agency is also seeking to unilaterally negate Brent Skorup is an attorney and a research fellow focused states’ laws in order to fund government-owned broadband on telecommunications and media policy. He is based in networks across the country. This violation of federalism Arlington, Virginia.
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RIPON FORUM December 2015
“There were times when I felt he was the only adult in the room who would actually tell the truth.”
Q&A with Mike Oxley about the career of John Boehner
Shortly after John Boehner was elected House Majority Leader in February of 2006, then-Chairman of the House Financial Services Committee Mike Oxley issued a statement praising Boehner’s election to the post. “He will bring good, sound Ohio sensibilities to this important position,” Oxley stated. “He is a leader who is true to his principles, but who has shown time and time again that he can work across the aisle to reach bipartisan agreement … John Boehner is the perfect man for the job at the exact right time.” Oxley knew Boehner’s character and qualifications better than most. Born five years and 150 miles apart in the Buckeye State, they were elected to Congress within a decade of each other and shared a brand of common sense conservatism that puts a premium on governance and finding solutions to the problems of the day. They also shared a love of golf that helped forge a strong friendship off the House floor. Oxley retired from the House at the end of 2006 and, among his many positions and activities, now serves as a member of The Ripon Forum’s editorial board. With Boehner stepping down as Speaker of the House earlier this fall, the Forum sat down with Oxley to ask him about the career of his good friend and colleague.
RF: Talk about your had spent the past 40 relationship with John years in the minority, Boehner for a moment – how but the political winds and when did you first meet were starting to blow him, and do you recall your at their backs. Then, first impressions about him 1994 comes around, at that time? Republicans win control MO: Well, I first met of Congress, and Boehner John when he was running for is elected Chairman of the the legislature. I already had Republican Conference been elected to Congress. He – the 4th highest became a freshman member of ranking position in the the legislature. We first met at a House. How did someone political event – I’m not sure if with only two terms under it was for him or not – but it was his belt rise so far, so a golf event, of course. It was fast? What qualities did the first time I played golf with he have that put him in “He was just a very evenhim, and it was the first time I that position? keeled kind of Midwestern met him. We hit it off. MO: I think the key was conservative who made people We had things in common that Newt Gingrich liked him – politics, golf, some mutual and saw him as a future leader. feel comfortable in friends from Columbus Newt wasn’t good at some his presence.” who were associated with things, but he was pretty good Republican politics or lobbying at identifying talent. I think he for different groups. So we had a lot in common for a lot recognized that John had the leadership qualities necessary of reasons, and that was the beginning of a long friendship. for that position and really advocated for him. That’s because leading up to that historic occasion when we took the majority, RF: Talk for a moment about the Congress that John had done his homework, worked hard, helped organize Boehner was elected into in 1990. Republicans the House, and didn’t appear overly eager to take charge. 10
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He was just a very even-keeled kind of Midwestern conservative who made people feel comfortable in his presence and understood that he was a leader. Of course, he was part of the Gang of 7 that really shook things up and paved the way for the reforms that we made when we finally retook the majority. RF: Flash forward three years, to 1998 – Boehner is booted out of leadership along with Newt Gingrich in what had to be one of the lowest moments of his congressional career. What was his attitude during that time, and talk about the patience, resilience and discipline that allowed him to recover and work his way back up the leadership ladder. MO: Yeah, it’s pretty amazing, you know. First of all, he was Chairman of the House Education & Workforce Committee and did an outstanding job in that regard. He was recognized as being even-keeled and for working in a bipartisan way with George Miller, the very liberal ranking member of the committee. John bent over backwards to get legislation passed, like No Child Left Behind, where he worked with Ted Kennedy. I think that most of the members that I talked to on the Democrat side were very praiseworthy of John for being a fair Chairman. When I became Chairman of Financial Services, I learned that working with the minority can pay dividends in getting legislation passed, and you have a much better chance of it becoming law if you treat the minority with respect. Boehner did that. But he got caught in a weird kind of situation where everybody wanted to throw everybody else out and J.C. Watts was elected in place of John. I don’t think it was so much against John. But I do think it’s kind of funny how things turned out. Newt was gone. Armey was gone. Paxon was gone. By 2005, Delay was gone. Ten years after we won the majority, all of the top leadership from ’95 was basically gone. But Boehner was still there. I think that is a real tribute to his steadfastness and to his standing with the majority in our conference. That says a lot right there – that he withstood these challenges, came back, and became Speaker of the House. It’s extraordinary, and probably the only time that has ever happened in that kind of a sequence.
RF: Talk for a moment about his Speakership– he led the House during a very turbulent time politically. When people look back on his Speakership one year from now, what quality – or qualities – do you think they will realize they miss? MO: Well, I think they will find out pretty quickly that, first of all, it’s a tough job – especially in today’s climate. John was the perfect fit for that because he had a lot of positive personal relationship on both sides of the aisle. People wished him well because he treated them like they wanted to be treated and he didn’t try to push anything down. He passed virtually every piece of legislation that the conservatives wanted. I asked a conservative once whether there was ever a bill – any bill – that they wanted passed where Boehner didn’t accommodate them. And he said “no.” They tried to repeal Obamacare about 30 or 40 times. The problem, of course, was the 60-vote rule in the Senate. Somehow, Boehner got blamed for doing what he could do, which was to pass legislation in the House. He had no control over the Senate. There were a lot of Senators out there who were blowing smoke about how pathetic Boehner was. How could they say that? He passed what he had to pass, and with large margins. So I think he really got a bum rap on that. He did a lot of positive things in terms of the budget and other legislation. He didn’t get any credit for it, but down the road, I think it will look pretty good in the rear view mirror. RF: Finally, looking back on his career – as Speaker, as Minority Leader, as Chairman of the Education & Workforce Committee, and as a freshman reformer – what do you think will be seen as his greatest achievements and lasting legacy on Capitol Hill? MO: Legislatively, I think it was No Child Left Behind. Even though it is controversial now, he was very supportive of some needed changes in it at the time, which shows you how flexible and how common sense he was then and remains today. There were times when I felt he was the only adult in the room who would actually tell the truth. In the end, I think providing that kind of steady hand – I can’t think of one individual over the past few years who could have guided the House any better than he did – helped him make a positive difference for the American people. RF
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REGULATORY BEAST The fight to cut government red tape and restore common sense to the law With essays by Majority Leader Kevin McCarthy, Governor Dennis Daugaard, Philip K. Howard, Clyde Wayne Crews Jr. & others RIPON FORUM December 2015
Regulatory Reform That Restores Government Of, By, and For the People KEVIN MCCARTHY But in the Executive Branch where regulations are When Republicans talk about regulations, we usually focus written and enacted, the reality is much different. When the on the economics. Regulations drag down our economy. They administrative state was first created in the 20th century, people make hiring new employees more expensive. They increase thought that removing political oversight or the threat of firing the costs of goods and services for consumers. Reducing the would free regulators to act with complete neutrality. That burden of regulations would undoubtedly spur economic would allow decisions to be based not on what the people or growth and improve the job market. However, that is not the even elected officials want, only reason Republicans but rather on what the want to cut regulations and “expert” regulators decide is reform the regulatory state. in the people’s best interest. Long-term reform of The results of this have how America handles and been disastrous. Rather than reviews regulations would acting as enlightened despots not only help our economy, in Washington (something but has the potential to reduce freedom-loving people don’t government corruption want anyway), regulators are and restore a constitutional still imperfect people who system that returns ultimate can be corrupted like anyone power to the American else entrusted with power people. and without accountability. But we must first They also have a history understand how and why of favoring interest groups regulation has become so over the common good, harmful. using the regulatory process When our Founders to get around democracy drafted the Constitution, when their policies are too they recognized that the unpopular to win at the ballot federal government couldn’t Fixing the administrative state and box. be trusted with unrestrained reducing the broken regulatory Because of that, we power. That’s what led to have a series of regulations the creation of checks and system in America is about much with the force of law that balances, as well as regular more than economics. It is about few read, fewer understand, elections, which allow holding government accountable... and most don’t even want the people or Congress to in the first place. remove government officials A prime example is who aren’t doing their jobs the President’s clean power plan. This rule, if implemented, and protect the people from oppressive government. Over our history, we’ve seen just how important these would damage businesses, drag down our economy, and checks on power are. When President Franklin D. Roosevelt hurt workers. But beyond these harmful effects, a Democrattried to pack the Supreme Court by adding additional justices controlled Congress rejected largely the same policies just a who favored his theories of constitutionalism, the legislative few short years ago. Ultimately, entrenched regulators in Washington don’t branch blocked him and the people punished his overreach at actually reflect what the people are concerned about because the next midterm election. Likewise, if a congressman isn’t their decision-making process does not have to be transparent listening to his constituents or is misusing his power, the next and the regulators themselves are unelected, unaccountable, election is only a short time away. 14
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and can’t easily be fired. That means laws that affect the people should be written Add to that the various cases of fraud and by representatives elected by the people who must continually mismanagement within the executive branch that never get listen and react to what the people are asking for. When the answered for — the hack of the personal data of millions buck stops with Congress, the people always have the ultimate Americans at the Office of Personal Management, the lack authority. of firing VA bosses even after a terrible scandal, and the House Republicans have already started the work of EPA employee who watched reforming this system by pornography for hours a day passing the REINS Act, which Republicans in Congress have at work but couldn’t be fired, requires Congress to actively to name a few — and what we approve any rule with a large a strategy that is simple but have is a system that is prone to economic impact. This is a first will have profound effects: corruption and is an affront to step in making sure Congress, the very idea of self-rule. not the bureaucracy, passes laws We must rein in the power of So fixing the administrative and is held accountable for those regulators and put that power state and reducing the broken laws. back in the hands of Congress. regulatory system in America When we stop the power of is about much more than bureaucrats to act as legislators, economics. It is about holding America will not only be government accountable, putting a stop to corruptive influences economically stronger. We will have restored government of, in Washington, and ending the proliferation of bad rules. by, and for the people that has made America so uniquely great Though the system is deeply entrenched and will take in this world. RF consistent effort and courage to reform, Republicans in Congress have a strategy that is simple but will have profound Kevin McCarthy represents the 23rd Congressional District of effects: We must rein in the power of regulators and put that California. He serves as Majority Leader of the U.S. House power back in the hands of Congress. of Representatives.
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How Congress Can Fix Broken Government PHILIP K. HOWARD The battle line between right and left is drawn at big second part of the blame lies with post-1960’s culture government vs. smaller government: But it’s largely a changes, weakening authority in favor of individual battle of rhetoric, not reality. rights throughout society, including within Congress. Government is big, really big — with 438 federal Speaker Sam Rayburn’s authority is a distant memory. agencies and so many thousands of programs that no All that’s needed to keep programs in place is a few one has counted them. More are added every year. Big congressional supporters. government is winning. Republicans are relegated to American government is not managed by majority fighting a rear guard action — for example, with the vote. It is run, as political scientist Francis Fukuyama puts proposed REINS Act, it, as a “vetocracy.” to prevent government Any small group from getting even can prevent change. bigger by asserting Who, then, is in legislative authority charge? to veto major new Nobody. regulations. American What accounts government today is for the invincibility run by dead people of big government? — past members of Americans know it’s Congress who wrote broken. According all these statutes, to a Clarus poll, over and bureaucrats long 80 % of Americans gone who wrote the believe the federal millions of words of government needs regulations. Year to be overhauled. after year, all these Most liberals see the programs have absurdity of wasteful piled up — with American government today is run and duplicative 82 teacher quality by dead people — past members of programs. Why can’t programs, 47 job the will of the people training programs, Congress who wrote all these statutes, get transformed into and procedural and bureaucrats long gone who wrote the mazes that make legislative change? The roadblock is common sense millions of words of regulations. not ideological, but illegal in almost structural. Congress every public choice. must change how laws are amended if it wants to take From the White House to the school house, everyone in back control of government. government, even the President, is stuck in all this legal Our system favors the status quo. The rules of goo. Congress make it almost impossible to repeal or modify Congress accepts all this law as a state of nature. old programs, no matter how broken or obsolete. Part But no one designed this regulatory swamp. Congress of the blame lies with the Framers: they thought they in 1933 never intended Depression farm subsidies to would deter big government by making it hard to enact be paid to corporate farmers 80 years later. Congress new laws. What they didn’t anticipate was that the same in 1975 never intended special education to drain over checks and balances make it hard to amend old laws. The 25% from the total K-12 budget. Congress in 2008 16
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didn’t expect Dodd-Frank to drive small banks into the the BRAC model, vote the proposals up or down; arms of mega-banks that are too big to fail. 2) Going forward, congressional committees Government is broken not mainly because past could have presumptive authority to change existing lawmakers were stupid, but because legislative programs programs to make them work more effectively, and be almost never work out as planned. Like riding a bike, accorded deference by majority vote except in unusual you must lean this way and that to stay upright. But circumstances. This would work best as a matter of Congress almost never adapts laws when circumstances comity, so that leadership of either party could object change. So they crash. It’s hard to find a government if the changes effectively undermined the original program that isn’t broken to some significant degree. legislative compromise. Another variation might be for The flaw is usually in implementation, not the committee amendments to earn deference if supported regulatory goal. Most Americans think the FDA should by a supermajority committee vote. approve new drugs. But should the approval process It’s not that hard to bring programs back to reality. cost a billion dollars and take a decade? Environmental In many areas, broken programs can be readily fixed review of infrastructure by creating clear lines of projects is supposed to be authority and accountability. 150 pages and take a few For example, combining months — not run 10,000 overlapping programs into pages and delay projects by one coherent structure only a decade. takes a few legislative lines. At this point, 50 years Streamlining infrastructure after the surge of regulation red tape from 10 years to that began in the 1960s, two years can be achieved American government is, by giving the White House literally, out of control. authority to resolve disputes Laws and regulations among agencies. The total passed decades ago plow legislative package needed into the future irrespective to cut through the red tape of changing needs and and unleash a surge of priorities. Government is infrastructure investment too big, but not because it’s — enhancing America’s designed to work this way. competitiveness, creating a Government is too big, and greener footprint and creating Philip K. Howard wasteful, and ineffective, 2 million jobs — is less than because neither Republicans three pages. (This proposal by nor Democrats in Congress the nonprofit Common Good, Government is broken have the ability to adapt old which I chair, can be found at not mainly because past programs to new realities. www.commongood.org.) The cure to runaway Of course, no legislative lawmakers were stupid, but government is structural, not reforms will work with because legislative programs ideological. Congress must hyper-partisanship. That’s almost never work out change its rules to reassert just a formula for continued control over existing law. paralysis. Because the real as planned. This should be approached enemy is the status quo not as a partisan battle of big — a huge, bloated blob of government vs. small government, but as restoring the ineffective government programs — and continued foundation of democratic responsibility. stalemate is the worst possible result. The only way to Congress must take responsibility for all bring big government under control is for Congress to legislative programs, not just new laws. What’s reclaim its authority to regularly update existing legal needed is a practical way to adapt old law to meet new frameworks. RF circumstances. This requires delegation of responsibility to smaller committees, subject to approval (but not Philip K. Howard chairs Common Good, which micromanagement) of the whole. Here are two ideas: advocates common-sense reforms of law and 1) To push the reset button on obsolete law, government. He is the author of several books, Congress could authorize independent committees to including The Rule of Nobody (2014) and The Death of make overhaul proposals in each area, and then, as in Common Sense (1995). RIPON FORUM December 2015
Pen and Phone… Meet Liberty’s Meat Axe CLYDE WAYNE CREWS JR. The U.S. National Debt clock tells us we’re over $18 House Office of Management and Budget. trillion in the hole. Executive oversight is weak already, yet President But at least we can measure that. Obama promises vetoes of the majority Republican 114th Conversely, I’m here to say that, by being AWOL Congress’ reform proposals. on addressing the “hidden tax” of federal regulation, The President promised to veto the Regulatory policymakers miss the government’s greatest impact in the Accountability Act of 2015 (H.R. 185), the signature economy. regulatory reform bill that By my reckoning, regulations passed the second week of cost some $1.8 trillion per year, the new session. It would a “hidden tax” half the level of codify some executive today’s $2.5 trillion in annual orders that define central federal spending. The regulatory Office of Management and burden exceeds individual income Budget oversight of agencies’ tax receipts of $1.39 trillion and regulations and cost-benefit corporate income tax of $333 analyses, and also formalize billion combined. semi-judicial proceedings for Regulatory burdens even rival major rules and address abuse corporate pretax profits, of $2.2 of “guidance documents.” The trillion. Senate has yet to pass the bill, If the “regulatory state” were but should. a country, it would be the 10th This year and in both largest, between Russia and India. prior Congresses, the House Clearly, Congress has not passed the so-called REINS only lost its grip on the power Act (Regulations from the of the purse, it has relinquished Executive In Need of Scrutiny) its lawmaking power to federal to reverse regulation. REINS Clyde Wayne Crews Jr. agencies. would require an expedited Consider: There were 224 congressional vote on all laws last year, but 3,554 rules and major or significant agency If the “regulatory state” were regulations issued by unelected before they are effective. a country, it would be the 10th rulesREINS bureaucrats. I like to call the should be largest, between Russia multiple (16 in this case) the expanded to apply to any “Unconstitutionality Index.” controversial rule, whether or and India. Regulation from the unelected not tied to a cost estimate that bureaus seems to be accelerating: declares it major or significant of the six highest ever Federal Register page counts, five (such as the Federal Communications Commission’s net have occurred under President Barack Obama. And at 74,964 neutrality rule). Furthermore, congressional approval should on November 30, the year 2015 may set another record. extend further to guidance documents and other “regulatory Ill-founded, overlapping and unclear regulations (like dark matter” decrees. over-taxation) undermine business creation and job growth. This positive affirmation would be a major advance in Startups are at a record low. Hiring is risky. The uncertainty accountability for each year’s thousands of regulations. The created by Washington undermines entrepreneurial Senate hasn’t passed REINS yet — but the President promises breakthroughs, slowing growth. a veto here, too. Rudimentary constraints on the regulatory state are Ultimately, only Congress can compare questionable lacking; fewer than one percent of federal agency rules get rules to the benefits that could be gained if resources went cost-benefit analysis reviewed by overseers at the White elsewhere. So, Congress should also explore allocating 18
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regulatory cost authority among agencies in a “regulatory budget.” A “budget” could incentivize other supervisory mechanisms like central review, cost analysis, sunsets, plus inspire agencies to “compete” with one another in terms of lives saved rather than think within their own box. Perhaps the most promising option for bipartisan cooperation at the moment is a “regulatory reduction commission.” This body would initiate review, similar to the military base closure and realignment commission, of the entire existing regulatory apparatus (as distinct from the one-by-one appraisal that characterizes OMB review). The commission would compile a bundle of rules for rollback with expedited congressional vote. Alas, today’s policy climate is quite different from the 1990s, when Republicans proposed outright elimination of agencies like the Department of Energy. But at the very least, Congress should pass regulatory liberalization legislation in the Senate and force Obama to veto it, and get members on the record. Surely, some Democrats are not going to go to the mat for maintaining a regulatory state that harms their constituents. Meanwhile, as the presidential election approaches, we might ponder what the executive’s “pen and phone” (a term popularized by Obama) can do to reduce rather than increase government influence in the economy.
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We knew from our Constitution’s framers and we know now from the modern pen and phone era that, for better or worse, an energetic executive’s hands are far from tied. Alexander Hamilton sought a king, but settled for vigorously defending “Energy in the Executive.” An “energetic” liberalization attitude prevailed in the executive branch during the Reagan administration and resulted in the creation of the very executive branch review and oversight process that we have now (albeit since watered down by Bill Clinton and Obama.) Reagan brought both Federal Register page counts and numbers of annual rules down by thousands. Instead of a “pen and phone,” we can give “liberty’s meat axe” a try again. The President must execute duly enacted laws; but the thousands of arbitrary decrees of unelected bureaucrats do not always require the same deference. The proper balance between the executive and legislative branches can be restored by a Congress that reasserts itself, especially in concert with an executive branch led by a President who knows when and how to say “no” to the seizure of power. RF Clyde Wayne Crews Jr. is Vice President for Policy and Director of Technology Studies at the Competitive Enterprise Institute.
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“We don’t overregulate those who do business here.”
How Cutting Red Tape has Helped Fuel South Dakota’s Economic Success DENNIS DAUGAARD When people around the country think about South 100 percent funded, and our per-capita tax supported Dakota, the first image that comes to mind is probably debt is among the lowest in the nation. Other states Mount Rushmore. Of course, we’re proud to be the home will eventually be forced to confront those liabilities – of Gutzon Borglum’s masterpiece, but in truth we are probably at the expense of entrepreneurs and businesses. much more than the stone-carved presidential tribute. Private enterprise is seeing success in South Dakota South Dakota is a great place to do business. because we believe in allowing businesses to prosper. But don’t just take it from me; as Governor, it’s my We have no corporate income tax, no personal income job to promote South Dakota. tax, no business inventory tax, Read what others are saying. no personal property tax and no A number of independent inheritance tax. This puts more groups who conduct state-bymoney in the pockets of our state studies are rating South businesses and citizens, creating Dakota at the top. Last month, a more favorable environment for the U.S. Chamber of Commerce growth. Foundation, once again, named Perhaps most importantly, we South Dakota’s business climate don’t overregulate those who do best of all the states. Earlier this business here. year, CNBC named us no. 2 in the In 1913, South Dakota nation for business friendliness. Governor Robert S. Vessey said We ranked second in the Tax in his State of the State address, Foundations’ State Business Tax “It is my conviction, and in it I Climate Index. We also ranked am not alone, that the tendency first in the Small Business & of very many legislative bodies is Entrepreneurship Council’s 2014 toward too many rather than too Small Business Policy Index. few new laws and I again offer the In my first term as Our business friendliness is oft-repeated statement that there governor, I started asking in part a result of the financial is a demand for the reduction stewardship exercised by and curtailment of the amount of state agencies to identify governors and legislators over legislation biennially passed by unnecessary and complex the last century. Since we became the Legislature and placed among a state in 1889, the South Dakota laws and regulations that our laws.” Legislature has balanced the Governor Vessey was right. could be repealed. budget every year. We don’t do It’s the nature of government to it with accounting gimmicks, add to the body of laws. When either. We don’t push one year’s expense into the next. We someone is running for office, others tend to ask, “If don’t use one-time windfalls to fund ongoing expenses. elected, what will you do?” Elected officials sometimes We never issue general obligation bonds. take that to mean, “What law will you pass?” And we Many other states are required by law to balance sometimes measure productivity by the number of bills their budgets also. But far too many of those other that we pass. states achieve that “balance” by deferring their pension With laws, more isn’t necessarily better. Laws contributions, or by borrowing. These states have long- should be clear, concise, and easy to follow. Government term liabilities – unfunded pension obligations and large shouldn’t place unnecessary hurdles before our citizens general obligation liabilities. In South Dakota, we have or entrepreneurs, and things shouldn’t be overly neither of those things. Our state’s pension is more than complicated for people who are trying to follow the law. 20
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frustrated with government’s increasing tendency to That’s why, a few years ago, I began a red tape become involved with small details of our daily lives. review. In my first term as governor, I started asking Business owners are trying to create jobs, farmers state agencies to identify unnecessary and complex and ranchers are trying to stay in operation, and laws and regulations that could be repealed. In 2012, we families are trying to make ends meet. It can be hard introduced our first round of “repealer bills.” for people to achieve these Over the last few years, things when a government legislators have been supportive imposes unnecessary and of these bills and have even In total, we have eliminated overly-burdensome rules introduced their own red tape without regard for how those bills. In the last legislative over 4,000 sections of law regulations affect individuals. session alone, we repealed 235 and regulations – which In South Dakota, we are sections of law and 90 sections amounts to a total of more making it easier for our citizens of administrative rules. In total, we have eliminated over 4,000 than 450,000 words that have to know and obey our laws. We understand that businesses sections of law and regulations been repealed. need to be able to plan for the – which amounts to a total of long term. When considering more than 450,000 words that moving or expanding, they have been repealed. need stability and certainty. They need to know that We’ve repealed outdated provisions dealing with a government won’t get in their way. That’s what we are wide range of subjects, from petroleum products, to county striving to offer here in South Dakota. RF prisoners, to the federal census, to traction engines, to the medical department of the National Guard, and more. Dennis Daugaard is the 32nd Governor of South Dakota. Our efforts to cut red tape don’t usually generate a He was elected in 2010. lot of headlines, but they’re important. Americans are
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The Cost of Overregulation:
America’s Small Business Owners Speak The Ripon Forum recently contacted the National Federation of Independent Business with a simple request – namely, to find out how federal rules and regulations are affecting the 325,000 small and independent business owners they represent around the United States. Below are first-person accounts from four NFIB members about their own experiences with government red tape, how it is impacting each of their businesses, and how what often sounds like a good idea in Washington too often causes problems for hard-working Americans as they try to make a living and go about their lives.
Randy Ballinger - Owner
Walnut Creek Golf Course Marion, Indiana When Congress passed the Clean Water Act, they wrote that it should cover “navigable waters.” For a while now, the Environmental Protection Agency has been pushing the boundaries of that law, trying to regulate tiny bodies of water and even places where water only occasionally flows. This summer, the EPA released a new rule that could be devastating for small businesses who own land. Effectively, the reach of the Clean Water Act would be pretty much
“We simply don’t have the money to hire someone to take us through the complex permitting process.” Randy Ballinger anywhere water can run. Almost any modification to your land could invite the scrutiny of regulators, leading to fines and fees that could be devastating. Dozens of states and groups including the National Federation of Independent Business are suing to stop this from happening. There’s a good chance that they could win. Twice in recent years the Supreme Court limited the power of the EPA over water. Maybe this could be strike three. The new regulation is so bad that a federal court actually stopped the EPA from enforcing it for now. No doubt they will fight all the way to the Supreme Court to expand their power. The EPA’s talking points pretend that only the federal government can protect water when states already have significant power to regulate within their borders. Washington isn’t the only place where people care about the quality of our streams and rivers. Small businesses shouldn’t have to worry about duplicative regulations. My family built our first golf course decades ago. We’ve 22
built a second course and a thriving business with a third generation of the family now involved. If the EPA gets their way, our land could be made practically worthless. We simply don’t have the money to hire someone to take us through the complex permitting process. This is a regulation that could do real and lasting damages to family businesses and we can only hope that the courts or a future President puts a stop to the madness.
Kevin Vanatta - Owner
Newberry Motors Newberry, Michigan The cost of regulation to the American economy is reaching an estimated $2 trillion annually. That is a huge and growing weight on our economic growth. For small business, regulations hit especially hard. A few years ago, the Small Business Administration tried to figure out how much more costly regulations are to small businesses compared to larger ones. They found that it costs small businesses about 36 percent more to comply. Federal agencies are continually churning out new and burdensome regulations at an astonishing rate. In just the last few months, the Obama administration has pushed forward
“It’s impossible for a small business owner to keep up with the standard regulatory process.” Kevin Vanatta new rules that make electricity more expensive, that change long-standing rules for independent contractors, and that expand the reach of water regulations. My business, Newberry Motors, sells a product that was highly regulated before the Obama administration. This President has piled on additional rules, driving the price higher and higher. The Heritage Foundation estimates that new fuel
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efficiency standards could raise the cost of a car more than $3,000 by 2025. What is the breaking point for consumers? We may find out. The NFIB Small Business Legal Center recently put out a report documenting the many new ways that the bureaucracy is creating “underground regulations.” In recent years federal agencies have promulgated more than 80,000 pages annually in new regulations – and that’s only counting those rules that have gone through the formal notice-and-comment process. But increasingly, agencies are making new binding rules, under the radar, with obscure opinion letters, “guidance” documents, legal briefs and enforcement actions. It’s impossible for a small business owner to keep up with the standard regulatory process. Underground regulations are just making it even harder to comply with all the rules.
Seth Reeves - Owner
Reeves Mortgage Longview, Texas At Reeves Mortgage, we help people live their dream of owning a home. It’s a big decision. They may spend the rest of their lives in that home. It’s a big expense and there’s a certain amount of caution that should be undertaken by buyers and banks. Unfortunately, the federal government has complicated that process; not to defend homebuyers, but to benefit highly connected banks. A few years ago, the New York Attorney General, the Federal Housing Finance Agency, and Freddie Mac created the Home Valuation Code of Conduct. This
“Decisions made behind closed doors and with no input from the public are increasingly becoming the law of the land.” Seth Reeves forced appraisers to work for an Appraisal Management Company, many of which are partially owned by big banks. The rule was a de facto law created outside the typical notice and comment procedure. Small businesses like mine had no ability to object or even offer constructive criticism. The small business organization I’m a member of, the National Federation of Independent Business (NFIB), recently documented many of the ways government agencies are creating these underground regulations. Decisions made behind closed doors and with no input from the public are increasingly becoming the law of the land. Tens of thousands of pages of regulation are
written through the standard process, and now small businesses have to also be worried about all sort of letters, enforcement actions, and amicus briefs that could affect how we are ruled. Federal agencies should regulate only with the consent of the governed. They should not be independent bureaucracies operating as the legislative, executive, and judicial branches all on their own.
Patti Zayas - Owner
Emerald Medical Staffing Cleveland, Ohio There aren’t many bureaucrats who run a business before they embark on a career of writing regulations. It’s a big reason why all too often rules intended to help people backfire. I’m seeing this firsthand with a new Department of Labor rule extending overtime pay to home health care workers. For many years, home health care workers were like many other domestic workers, they were not subject to typical overtime pay rules. Home health
“Home health care work is rather different from most other blue collar jobs, but now the government equates it with high impact jobs like construction or manufacturing.” Patti Zayas care work is rather different from most other blue collar jobs, but now the government equates it with high impact jobs like construction or manufacturing. Emerald Medical Staffing provides home health care workers, mainly for homebound elderly persons. Our reimbursements are fixed by insurers, so we have a hard cap when it comes to our personnel costs. We will now have to strictly limit worker hours. Many of our customers appreciated having the same worker with them all week. Now, we will have to rotate workers out when they reach their limit. This will make both our customers and our workers unhappy. The new rule doesn’t make a business more profitable – the only way that employers can actually increase wages. Businesses will adjust worker hours to prevent payroll costs from swamping their budget. Workers won’t see more take home pay, just more rules requiring them to document their hours. There is no real upside to this rule change. At the end of the day, the only people who might get paid more are the regulators at the Department of Labor working overtime to check up on millions of workers now subject to increased oversight. This rule will only have negative effects on workers and businesses. RF
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Fighting Government Red Tape:
What the Next President Might Do DAVID J. HEBERT As Philip Howard correctly pointed out in his 1995 for American consumers to buy imports through book, The Death of Common Sense, government has aggressive tariffs and quotas. The idea here is that systematically replaced Adam Smith’s invisible hand with forcing American consumers to buy more American the visible fist of government regulation. Unfortunately, made products will create middle class jobs. Sadly, government officials have doubled down on this losing making consumers pay more for goods and services is a proposition over the last twenty years. Even more path towards poverty, not prosperity. Marco Rubio is making a name for himself with his unfortunately, it is the American people who must pay for this failed bet and are paying dearly – to the tune of regulatory budget plan, essentially the idea that the only way to get a new regulation $1.9 trillion. passed is to strike an equally Today, the need to reverse costly regulation from the this course has never been books. In his time in the Senate, greater. As evidence of this, all Rubio has been a champion of of the presidential hopefuls from deregulation, notably his 2012 across the political spectrum vote to allow individuals to have said that they are in favor import FDA-approved drugs of striking onerous regulations from Canada. Allowing to help get government out of the people to buy approved drugs way of businesses and help grow from approved vendors in the middle class. This aphoristic other countries would help statement conceals as much keep healthcare costs down truth as it contains, as several of for everyone. He also wants these same candidates also want to restrict H1B visas to high to impose new regulations. This skilled foreign workers and ban essay highlights the records of David J. Hebert companies that “abuse them top Republican and Democratic from ever using them again,” candidates and outlines what When it comes to the but it’s unclear what his metric they are likely to do if elected as will be. President. Republican Party, every On the Democrat side, When it comes to the candidate is united on the general consensus is that Republican Party, every corporate greed and Wall Street candidate is united on two two fronts: the need to excess are ruining the middle fronts: the need to repeal and repeal and replace the class and that the solution is replace the Affordable Care Affordable Care Act and the to regulate the behaviors that Act and the idea that the middle cause these problems to go class has been harmed due to idea that the middle class away. What’s also clear is that overregulation. Some are more has been harmed due to the Democrats believe – given vociferous on these than others, the primacy these issues have with several supporting a freeze overregulation. received at the debates – that on new regulations, but the imposing these new regulations message is all largely the same. is more important than striking When it comes to growing the onerous ones. To be sure, there are differences between middle class, however, the differences are vast. Donald Trump wants to tackle the issue of a Hillary Clinton and Bernie Sanders, but they don’t seem stagnating middle class by making it more expensive as wide as the differences between the Republicans (at RIPON FORUM December 2015
of a deregulator and, as his track record in Florida least, at the time of this writing). Hillary’s campaign focuses on excess corporate demonstrates, he also walks the walk of a deregulator. greed and the idea that the one-percent are exploiting He has a specific regulatory reform plan. Like the workers, earning record profits while the wages of Rubio, he wants a regulatory budget. He also wants the middle class have either stagnated or declined. At to get Washington out of the business of regulating the first debate, she opened by saying that she wants to and return that power to the states, reserving federal “find ways so that companies share their profits with power only for cases where “state-based solutions are the workers who helped to make them.” She wants to insufficient.” Further, he wants to “streamline the regulate companies into giving paid family leave, has permit process so that infrastructure projects can be voted for mandatory equal pay for women, and wants permitted or rejected within two years” and put a freeze to promote long-term growth by discouraging short- on new regulations. These are lofty goals that will lead to a tremendous term profits through reduction in tax policy. the costs of Bernie Sanders overregulation if almost certainly he can implement agrees with Hillary them. Clinton on the While there above, but places a may be problems in larger share of the society that require blame for the current regulation to solve, economic disaster 1) that number is on Wall Street. He closer to zero than wants to “reregulate” most candidates the banking system, seem to think and believing that the 2) the number Great Recession was of problems that a direct product of overregulation banking deregulation; has caused is far deregulation which greater. Looking according to a through the Federal Mercatus Center study On the Democrat side, the general Registry, every didn’t happen. He also single industry has wants to reign in Wall consensus is that corporate greed and regulations in place Street speculating Wall Street excess are ruining the that may have been through a special tax sensible in 1975 and use the revenue middle class and that the solution is to but are patently from this new tax to regulate the behaviors that cause absurd in 2015, pay for college tuition. these problems away. with the number Whether or not this of regulations plan is viable remains growing each to be seen, but history has shown that college tuition has increased almost and every year since. By constantly changing in lock step with increases in government subsidies the rules, government has created intense regime for education, suggesting that this is perhaps not the uncertainty in the business world and wrought havoc on our economy. The current administration has been wisest of plans. While each candidate has recognized the need for especially good at creating this regime uncertainty, relief from a broken regulatory system, most want to and it looks as if the Democratic candidates are most RF replace or supplement what we have currently. There likely to continue this trend. are two exceptions to this: Ben Carson and Jeb Bush. As of this writing, it’s difficult to say in detail what Carson would want to regulate, though we do know David J. Hebert has a Ph.D. in Economics from from his 2012 book that he believes some markets do George Mason University and is currently an assistant need regulation, with health insurance being his go-to professor of Economics at Ferris State University. His specialties include taxation, regulation, and public example. When it comes to Jeb Bush, he talks the talk policy. 26
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PORTMAN PUSHES FOR TAX REFORM
Says Current Code is Hurting American Workers and Squeezing the Middle Class WASHINGTON, DC – In a speech competitiveness, and reiterated that of the Permanent Subcommittee on yesterday morning before a breakfast what was ultimately needed was Investigations. In this position -- as in meeting of The Ripon Society, U.S. comprehensive tax reform. his past positions as a Congressman, Senator Rob Portman (R-OH) laid “With all due credit to him,” the U.S. Trade Representative, and out a case for rewriting the U.S. tax Ohio lawmaker stated, “Secretary Director of the Office of Management code, saying that American workers Lew does want to do business tax and Budget – he has been a leader in are the ones who are ultimately being reform. But he also has to know the effort to reform the U.S. tax code hurt by the current system, and that that what he’s going to announce so it better serves American workers. reforming the system would help this week or next week makes no To that end, Portman stated that ease what he called “the middle class sense, because it doesn’t deal with he and U.S. Sen. Claire McCaskill squeeze.” the underlying problem “We haven’t and, therefore, is not reformed the going to solve it. In fact, international tax code it will create additional in any fundamental problems. What’s going way since the 1960s,” to happen? More and he stated. “With more of those companies regard to the tax rate will become foreign and broader reform on companies. Inversions the individual side, we are the tips of the iceberg. haven’t done anything “Last year, there was since the 1980s. What’s a doubling – a doubling – happened during this of the number of foreign period? Every single acquisitions of U.S. one of our competitors companies. We welcome has reformed their tax foreign investment in codes. They’ve not this country. What we “We haven’t reformed the only lowered their rates, don’t welcome is having but for the most part, a tax code that makes it international tax code in any the vast majority of the so disadvantageous to be fundamental way since the 1960s.” countries that compete an American company with us have gone to a that U.S. companies territorial type system. are getting gobbled up by foreign (D-MO), the Subcommittee’s “And we have sat back and companies, to the point that we’re Ranking Democrat, convened a allowed our tax system to become going to look back four or five years hearing this past July looking at antiquated and inefficient, in part from now if we don’t fix this and say, the tax code and how it is putting because it is hard to take this on. U.S. companies at an economic ‘What happened?’ We talk about entitlement reform as Portman also commented on disadvantage with their competitors being like the third rail on the New recent remarks by Massachusetts around the world. Noting that York Subway system, in that if you Senator Elizabeth Warren, who Treasury Secretary Jack Lew plans grab it, you’ll get electrified. I would delivered a speech on Wednesday to issue new rules in the coming suggest to you that the same is true in which she criticized some of the week related to one of the topics of with many other issues, and tax tax reform proposals currently being this hearing, corporate inversions, reform is certainly one of them.” discussed, calling them “a giant wet Portman stated that new rules will do Portman serves as Chairman kiss” for American companies. nothing to improve America’s global RIPON FORUM December 2015
“The people who get hurt under rates high or even higher – is a big, end up complying with all these new a 35% tax rate in the worldwide tax wet kiss to our foreign competitors. regulations. There are about five of system are the workers,” Portman And frankly, it’s a hug to the them that have hit our power plants. stated. “The Congressional Budget corporate boardroom. We used to be 86% coal back when Office did a study on this that “If we really are concerned I first got elected, and now we’re showed that 70%. We think rates 70% of the are going to go up by benefits of double-digits over “You ask people who are struggling about a lower rate the next 10 years. the percent of their budget that they have to and a more So your electricity competitive pay for energy costs, health care, or food. It’s costs when you system will go turn on the lights growing, and yet their wages are flat.” to workers in are going to go up, terms of higher tuition costs are up, pay and better food costs are up. benefits. The boardrooms are doing about the middle class squeeze … “You ask people who are just fine. The idea of reforming this it is real. When I’m home in Ohio, struggling about the percent of their is not to help the big businesses. It’s I talk to people who have not seen budget that they have to pay for not to give a ‘big, wet kiss’ to the their wages go up in five or ten years energy costs, health care, or food. big businesses and the boardrooms, and have seen their expenses go up It’s growing, and yet their wages are as Elizabeth Warren is asserting. In on the other hand. And now in Ohio, flat. There are lots of proposals out fact, what she is advocating – which it’s not just health care costs which there to deal with this, and lots of is to increase the noncompetitive are skyrocketing. They’re now also ways to give the economy a shot in nature of our code by keeping seeing their electricity costs go up. the arm. I can’t think of one that is deferral light and by keeping the We think Ohio is going to have to more obvious than tax reform.” RF
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Name: Carlos Curbelo Occupation: U.S. Representative (FL-26) You started a media relations firm right out of college. How has owning your own business affected your approach in public life? Owning my own business instilled in me many life-long lessons which have proven indispensable throughout the years. One important skill that I regularly find myself practicing is time management. As a family man who balances working in Congress and spending time with my two very young daughters, I use this skill on a daily basis. As the grandson of a man who was once a political prisoner under Fidel Castro, why is it a mistake to renew relations with the people of Cuba today? As the son of Cuban exiles, I am proud of our nation’s rich ethnic diversity. I know, from first-hand experience, the great and generous spirit of the American people and the opportunities our nation provides to all who are willing and able to work for it. Regarding Cuba, President Obama has ignored the realities and the ruthless and violent nature of the Castro regime. Unfortunately the President is putting American national security interests at risk and prolonging the suffering of the Cuban people living under the oppressive dictatorship. It is crucial to remember that the men in power of Cuba today are the same men who had nuclear missiles pointed at the United States in the Cold War. The Administration has afforded the Cuban dictatorship a myriad of unilateral concessions while receiving little in return. America must once again take up the mantle of the protector of human rights and the promoter of democracy; however we cannot accomplish this as long as we confer legitimacy on military dictatorships. I will continue to work to restore our place as a leader on these issues. As a Cuban-American, do you believe the Republican Party is doing enough to broaden its base? We have to do a better job of sharing our story with young and minority voters. The Republican Party led the reform movement that has saved U.S. public education. I’ve seen this firsthand in Miami-Dade, where we rescued public education from mediocrity. That’s important to a lot of Hispanic families, in particular, because they know that their children will need the best education possible to move up in life. Young people want higher education to be more affordable, and we’re working on that. Republicans also want to save Social Security and Medicare for young people. I’m 35, and I know that many people my age don’t believe they’ll ever get benefits back from those programs. Democrats don’t even want to acknowledge that those programs face a long-term funding crisis. Republicans want to make the reforms that are necessary to ensure those programs will still be around in the future. As your first year in Congress is coming to a close, what has proven to be your greatest legislative success so far? I am proud of H.R. 1386, the Small Entrepreneur Subcontracting Opportunities (SESO) Act which is my first piece of legislation to pass both the House and Senate and be signed into law by the President. Also, as a former Miami Dade School Board Member, I am proud of our recently passed bill in the House, the Every Student Succeeds Act which will replace and improve upon No Child Left Behind. This bill included my provision which grants English Language Learners additional time to become proficient in reading and math and puts children, not Washington Bureaucrats, at the center of America’s education system. On the other hand, what has been your greatest legislative challenge? Though this year has been filled with great moments, I have also experienced some challenges. I’d say that one of my greatest legislative trials has probably been finding common ground to update our current Cuba policy, while still making the changes that are necessary to have productive reform. This has been one of my top priorities this year and something I will continue to fight for.
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