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Q&A: Red Tape

June 17, 2016
Senator Chuck Grassley , Traer Star-Clipper

Q: Why does red tape harm economic growth?

A: The crown jewel of our system of free enterprise is America's entrepreneurial spirit. Jumping through regulatory hoops and red tape make it hard to open a business and keep its doors open. The twin combination of a crushing regulatory and tax regime makes it even harder to create new jobs, boost wages and grow the business. The nation's founders established a constitutional framework for economic freedom, innovation and opportunity by limiting government's role in society. Extending that pipeline of prosperity into the 21st century includes making sure our patent, trademark and copyright laws continue to drive innovation and creativity. Policymakers need to foster fair, free trade rules that open up markets for farmers and manufacturers that help drive job creation on Main Street and build strong communities. Excessive federal regulations essentially tighten the noose on economic growth and job creation by adding a hidden tax of compliance. An estimated regulatory cost to the economy exceeds $2 trillion annually.

Q: How big is Washington's regulatory wheel of red tape and why does it matter how big it gets?

A: Just last year, the Obama administration added 43 new major rules, adding $22 billion in yearly regulatory compliance costs. President Obama's regulators have imposed 229 major federal regulations, costing $100 billion since he took office. This peek at America's regulatory landscape may illustrate why the jobless recovery continues to suppress household income. Stunningly bad news came out with the May jobs report as U.S. employers put the brakes on hiring. It was the worst employment report in five years. Nearly 500,000 people have dropped out of the workforce entirely. Still more worrisome, the labor force participation rate fell to 62.6 percent. The United States needs to be firing on all cylinders to restore productivity and prosperity. Adding more taxes and more regulations is not going to put the seven million Americans who are still looking for a job back to work.

The Obama administration's regulatory pipeline hampers innovation, growth and productivity. Big businesses can afford the lawyers and lobbyists to navigate the regulatory onslaught. Small businesses and start-ups get crushed. More bad news could be on the way if the President continues a regulatory agenda in his final months in office. That's why our system of checks and balances is a necessary hallmark of our republic. Elections hold lawmakers accountable. But when federal regulators hand down a rule affecting ownership and management of a farm or small business, for example, they are not directly accountable to the people. That's why I'm working to enact legislation called the Regulations from the Executive in Need of Scrutiny (REINS) Act. It would require a direct vote in Congress on major new regulations, which for too long have been imposed on American job creators without a sufficient check.

I work to make sure the concerns of Iowa farmers, workers, families and retirees are heard at the policymaking tables. Often times, federal regulators and interest groups would prefer the opposite. They use the courts and backroom negotiations to achieve their policy agendas outside of public scrutiny. To combat this tactic, I've introduced the Sunshine in Regulatory Decrees and Settlements Act. My bill would ensure that those most affected by new regulations have a seat at the table. And it would protect the public's interest in transparent government. Most recently, I also led an effort by the entire Iowa congressional delegation to call out the U.S. Labor Department for a misguided regulation that could harm retirees. We are working to see that the Labor Department doesn't do damage to fixed indexed annuities as a retirement tool for Iowans who rely upon them for a guaranteed income stream. Washington's wheel of red tape has a tremendous impact on our economy, society and way of life. I'll continue working to apply the brakes when it crosses constitutional boundaries.

Q: How is concern about too many laws and over-regulation rooted in our nation's history?

A. Writing in Federalist 62, the Father of the Constitution, James Madison, warned that a government that produces so many new laws that no one can keep track of them "poisons the blessing of liberty itself." Madison wrote, "It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is to-day, can guess what it will be to-morrow." That sounds a lot like the modern regulatory state, except that instead of laws being made by legislators chosen by the people, regulations with the force of law are promulgated by unelected federal regulators so fast that the average citizen cannot keep track. Moreover, Madison issues a warning about how such a situation opens the door to special interests that seems especially applicable today. "Another effect of public instability is the unreasonable advantage it gives to the sagacious, the enterprising, and the moneyed few over the industrious and uniformed mass of the people. Every new regulation concerning commerce or revenue, or in any way affecting the value of the different species of property, presents a new harvest to those who watch the change, and can trace its consequences; a harvest, reared not by themselves, but by the toils and cares of the great body of their fellow-citizens. This is a state of things in which it may be said with some truth that laws are made for the few, not for the many."

 
 

 

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