Regulations Just for 2012   Leave a comment

Financial regulation dominated rulemaking in 2012, a direct result of the Dodd–Frank financial regulation act. In total, financial services regulators were responsible for 13 of the 25 new major rules issued during President Obama’s fourth year; led by the Commodity Futures Trading Commission (CFTC), with nine; followed by the Securities and Exchange Commission (SEC), with six (two rules were issued jointly by the two agencies).

The newly created Consumer Financial Protection Bureau (CFPB) chipped in its first major rule, imposing restrictions on money transferred electronically from U.S. residents to relatives and friends abroad. Although outside the scope of this report, the CFPB also issued four more major regulations in January and February 2013. Seven other proposed regulations by the CFPB are pending.

The most costly regulation were issued by the Environmental Protection Agency (EPA). Topping the list were new automotive fuel-economy standards, issued jointly by the EPA and the Department of Transportation, which the EPA calculated will cost $10.8 billion annually. The bulk of this cost will fall on drivers, who will pay an estimated $1,800 more for a new vehicle.

Coming in a close second was the EPA’s so-called Utility MACT regulation at more than $10 billion annually. This 210-page regulation requires utilities and other electricity generators that use fossil fuels to install the “maximum achievable control technology” (MACT) to limit emissions. So stringent are the standards that potentially dozens of coal-fired power plants will close, thereby undermining the reliability of the power grid and substantially raising the costs of electricity for consumers. The EPA is currently reconsidering the portion of this rule pertaining to new power plants, and has stayed its implementation of the rule for such facilities.

Obamacare is also imposing enormous costs on the private sector. For example, businesses with more than 50 employees must either provide health care or pay a fine to offset an insurance tax credit for workers who purchase their own coverage. Some insurers will be effectively forced to subsidize others at an aggregate cost of $18 billion annually by 2016. Although the law does not take full effect until 2014, there is already ample evidence of its grave economic consequences. According to the Federal Reserve Board: “Employers in several districts cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff.” Because many of the new rules are structured as administrative requirements for states or the federal government, rather than prescriptive regulation, they are not fully reflected in our regulatory totals. But that does not mean that their impact is insignificant.

Excessive regulation, of course, cannot be blamed on this Administration alone, although the accelerated rate of regulatory expansion in President Obama’s first term appears unequaled. Congress ultimately authorizes all rulemaking, either through specific requirements, or through broad authorizations, leaving agencies great discretion to impose requirements. Moreover, a majority of rules adopted in the fourth year were promulgated by so-called independent agencies not subject to direct White House control (although they are managed by presidential appointees). Regardless of responsibility, however, the result is the same: more burdens for Americans and the U.S. economy.

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