The Fiscal Cliff

A forum on America’s impending budgetary doom and what to do about it

(Page 4 of 6)

Tad DeHaven (tdehaven@cato.org) is a budget analyst at the Cato Institute and co-editor of downsizinggovernment.org.

Fear the Regulatory Cliff, Too

Susan Dudley

Much attention has been focused on the economic risks posed by the approaching fiscal cliff. Yet fiscal policies are not the only way the federal government diverts private-sector resources to achieve its own goals. Regulations, which dictate what employers, workers, and consumers can and cannot do, can have as large an effect on the economy as taxation and spending. Americans should be aware that we are headed for a regulatory cliff as well. 

As Sen. Rob Portman (R-Ohio) highlighted in an August op-ed piece for The Wall Street Journal, the Obama administration has explicitly postponed several multibillion-dollar regulatory decisions until after the election. These include environmental regulations tightening ozone air quality standards and cooling water intake standards at electric utilities, Department of Labor rules on investment advice, Department of Transportation regulations requiring rearview cameras in new vehicles, and numerous regulations resulting from the Dodd-Frank and Affordable Care acts.  

The Obama administration published a record-setting average of 63 final rules with impacts of $100 million or more annually in its first two years. The 2010 midterm elections seem to have imposed some restraint on its regulatory agenda, with the pace slowing to an annual average of 44 major rules since then. (That is about the same as the average of 45 major rules per year issued by Presidents George W. Bush, Bill Clinton, and George H.W. Bush, although much higher than President Reagan’s 23.) 

The recent restraint is just the calm before the storm, however. The Office of Information and Regulatory Affairs (OIRA), which reviews all significant executive branch regulations before they are published, has a large backlog. While OIRA typically reviews regulations in fewer than 60 days on average, currently more than 70 percent of the regulations under review have been sitting at OIRA for longer than 90 days, and about 10 percent have been there for more than a year. This backlog is unprecedented. 

Not only are fewer regulations emerging from OIRA review, but they are being submitted at a pace that is about half of that during Obama’s first three years.  Given that the White House has not published a semi-annual agenda of upcoming regulations since the fall of 2011, it seems likely we are witnessing an effort to hold off on controversial regulations until after the presidential election. 

Regardless of the election’s outcome, a regulatory cliff is coming. If Mitt Romney wins, bipartisan history suggests we will see a midnight rush of lame-duck Obama regulations. If President Obama wins a second term, we can expect to kick off four years of unchecked regulatory growth. Like the fiscal cliff, either scenario could alter how Americans live and work for a long time to come.  ρ 

Susan E. Dudley (sdudley@gwu.edu) is director of the George Washington University Regulatory Studies Center and a research professor in the Trachtenberg School of Public Policy and Public Administration. Her new book, Regulation: A Primer, co-authored by Jerry Brito, is available on Amazon.com in paperback and Kindle formats.

A Challenge and an Opportunity

Maya MacGuineas

Washington has yet to find a way of avoiding the fiscal cliff without adding to our mountain of debt. Political gridlock could lead to massive, abrupt, and across-the-board spending cuts and tax increases, which would throw the economy back into recession. Worse, lawmakers might agree to waive deficit reduction measures, in which case our debt would continue to accumulate, our long-term growth prospects would slow, and we would eventually hit a fiscal crisis.

The United States can and must do better. The fiscal cliff is a challenge, but it is also an opportunity to re-form our biggest spending programs and our outdated tax code. By replacing the sudden and mindless measures of January 1 with a gradual and thoughtful plan to move the debt onto a downward trajectory, we can place the economy on an upward one.

Such a plan must make real choices, carefully balancing short- and long-term economic growth and aligning both sides of the budget closer to the core values of the American people. It should start quickly but phase in slowly to give the economy time to recover, while restoring confidence in our ability to pay back our debt. It should cut spending on programs we don’t need while protecting important investments in our future. And it should reform the tax code to make it simpler, fairer, and more pro-growth.

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  • sarcasmic||

    I predict that they will sail over the cliff, and many federal workers will go on an unpaid vacation.

    After much wringing of hands and rending of clothing, a compromise will be reached that cuts nothing and includes back pay for vacationing federal workers.

    It will be Bush's fault.

  • John||

    The cliff doesn't shut the government down. So no paid vacations.

  • Ken Shultz||

    I predict they come to a deal before the cliff.

    Unfortunately.

    I wish they'd go over the cliff and then reinstate the tax cuts after the spending is slashed by the cliff, but they won't.

  • Restoras||

    That word, slashed. It does not mean what you think it means inside teh beltway.

  • Calidissident||

    I don't understand why Republicans don't just pass tax cuts for everyone in the House, and then force the Democrats to "hold the middle class hostage" just to spite the rich

  • Stormy Dragon||

    Because the senate just ammends it to not include the top 2%, leaving the GOP to either filibuster the bill in the senate or vote against it when it comes back to the house.

  • R C Dean||

    Let's see, its a revenue bill, so I think the Senate can do amend it under reconciliation without clearing a filibuster.

    I still think it puts the GOP in a better position, negotiating-wise and PR-wise. They passed a clean bill, the Senate junked it up with this pointless and vindictive tax increase rather than fix the problem.

    If the House waits until the last minute, passes the bill and adjourns sine die, that's pretty much a take-it-or-leave-it for the Senate. Leaves the Prez and Reid holding the bag: either throw a huge temper tantrum and try to recall the House for the sole purpose of the tax increase, or suck it up and pass the House bill.

  • Stormy Dragon||

    Let's see, its a revenue bill, so I think the Senate can do amend it under reconciliation without clearing a filibuster.

    The senate can, but don't forget the Dems control the senate. Why would they want to use reconciliation to break the filibuster rather than just letting it continue and then blaming the fillibuster when the taxes go up?

  • Anonymous Coward||

    Because the God-Emperor Barack has deemed that lower tax rates for all is not "balanced" and he will not support any plan that is not balanced.

    Of course, "balance" means Barry gets what he wants and everyone else can suck it.

  • AlmightyJB||

    OT: Looks like Ohio's new casinos are wasting no time getting the competition shut down.

    Ohio Senate to shut down internet cafes

  • Citizen Nothing||

    The senate failed to act, so the bill can't come back until the next session. Chalk one up for the good guys.

  • nicole||

    OT: My comment disappeared from another thread but we are getting carry laws in IL. Finally. Last state without any carry provisions falls! And thank you Judge Posner!

  • ant1sthenes||

    Apparently someone figured out what "bear" meant to people living a hundred years ago.

  • Caleb Turberville||

    Oh, for the love of...

    I was just reading an article (by a liberal, fwiw) that gave a pretty good case for cutting the defense budget. It was awesome, except for the comments, which argued that the cuts would hurt because of the newly unemployed personnel it would cause.

  • ||

    This is one of the reasons we will ultimately never see anything cut.

    I don't remember the exact details but I recall that Welfare Reform ended not going as far as originally planed because of a handful of Republicans who were afraid that the cuts might lead to women having more abortions if there wasn't some kind of support. Clinton had indicated he was willing to sign the bill before that amendment so it didn't change any veto prospects.

  • Restoras||

    No alt+text? Really? I am disappoint.

    "This is ______!!!"

  • sarcasmic||

    Q: What did Geronimo say when he jumped off a cliff?

    A: Meeeeeeeeeeeeeeeeeeeeeee!

  • kinnath||

    There are some "fiscal cliff calculators" out there that show what happens if all the tax rates revert to pre-bush levels, if the democratic plan passes, and if the republican plan passes. The only reall difference is that the democratic and republican plans provide a small amount of lubricant before the ass fucking begins.

  • R C Dean||

    So what should Congress do about the fiscal cliff?

    "Jump, you fuckers!"

  • Ronulanus||

    *heavy sigh*

    If only there were more Rand Paul-like politicians in Washington, we wouldn't have to see and hear about this insipid "fiscal cliff" every single day. Slash defense spending, slash entitlements, and end the War on Drugs. All taxes can then be extended without the "fear" of the debt going up (which is actually a myth, since cutting taxes doesn't cost a single dime of taxpayer money).

    It's a simple solution where EVERYONE would have to give up their preferred sacred cow, but alas, it wouldn't really be Washington if that was the case, would it?

  • ||

    According to the Congressional Budget Office, in fact, going off the fiscal cliff would shrink the economy by almost 4 percent in the first quarter of 2013 and drive the unemployment rate up to 9.1 percent in the next year.

    Can't wait for Shrike to tell us again about how great the recovery is.

    Of course if the recovery was so great then how come a slight slowing of the growth of military spending and returning to the tax rates of Clinton will utterly obliterate our economy?

  • 16th amendment||

    If we don't deal with the double dip recession now we will have to deal with a depression later.

  • MacKlingon||

    They will continue kicking the can down the road, both sides will claim partial victory and blame the other side for the problems. Money printing/quantitative easing will continue. The dollar will continue to lose value at an increasing rate. Team red will continue to claim that 2+2=7, team blue will continue to claim 2+2=something in the double digits.
    The Pols and there friends get a lot richer and more powerfull, we get screwed.

  • uythsb||

    Merry Christmas

  • Tablet pc||

    This is so cruel

  • JayDick||

    At this point, the whole thing is political. The Dems will not accept anything that will actually help the economy. They are looking for a big political victory that will prevent Republican success in 2014 and maybe 2016 as well. The best the Republicans can hope for is to make sure Dems get blamed for the weak economy that will last for the foreseeable future.

    The best long-term strategy may be to give the Dems much of what they campaigned on; no more than necessary, but enough of what they want to hang the economy around their necks. That will put the Republicans in a strong position in 2014 and 2016. Only then is there any hope of getting things done that will help the economy.

    The only other alternative is an all-out war with the Dems, similar to a Presidential campaign. What are the chances the Republicans could win such a war? I'd say 50-50 at best.

  • chenyan||

    Christian Louboutin high heels http://chenyanyanyanyan.blogspot.com

  • Tablet pc||

    Fiscal is the life to a country

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