Charles Schwab has a thoughtful piece in the WSJ today. He makes the critical point that behind every job is a prime mover in the form of an entrepreneur who helped create that job; so to get the jobs machine humming again, policy should encourage entrepreneurial risk-taking. His message to “both parties, Republicans and Democrats alike”:
They need to review every piece of existing legislation and regulation with a clear eye to what impact it will have on business and growth. If something is a job killer, put a moratorium on it. Stop adding to the litany of new laws and regulations until we’ve had time to digest those in place and regain some certainty about the future. Proposed laws and regulations should be put to a simple test: What will this do to encourage businesses and entrepreneurs to invest? What will it do for jobs?
That’s a superb litmus test. And Congress has several good policy options on its plate, a fact pointed out by Warren Stephens in a recent piece:
Regulatory agencies should be required to study the costs and economic impact, including on job creation, of their rule-making before any rules take effect. Legislation to accomplish this goal has been introduced by Sen. Rob Portman (R., Ohio). His amendments to the Economic Development Revitalization Act of 2011 require regulations by independent agencies such as the Securities and Exchange Commission to be subject to the Unfunded Mandates Reform Act of 1995, which forced executive branch agencies (such as the Environmental Protection Agency) to identify the costs of their regulations.
The Regulations from the Executive in Need of Scrutiny Act (Reins) introduced by Rep. Geoff Davis (R., Ky.) would require that any proposed rule with an annual economic impact of $100 million or more be sent to Congress for approval. The Office of Management and Budget (OMB) has estimated that since 1980 federal regulators have written more than 130,000 rules. More than 1,000 of these rules have cost businesses in excess of $100 million just to comply, according to the American Enterprise Institute’s Nick Schulz. The OMB estimates that federal regulation costs the economy over $1.75 trillion each year.
Sen. Mark Warner (D., Va.) has been seeking support for a bill that would require regulators to drop one current rule for each new one adopted. Dubbed the “Pay-As-You-Go Plan,” Mr. Warner’s proposal would offer a solution to regulatory creep, in which new red tape is routinely wrapped by a federal agency around a new rule, creating confusion among American businesses while rewarding bureaucratic ineptitude.