A better fiscal fix

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Real recovery will not occur in Washington; rather it will be accomplished through the hard work of the millions of business owners and employees stimulating our economy through their productivity.  And right now, what these engines of economic recovery need more than anything from policymakers is certainty, stability, and an environment that enables them to thrive and create jobs.
 
With continued high unemployment and tepid economic growth, we need to restructure, rebuild, realign and modernize our regulatory process to provide great certainty and a solid foundation for economic growth. Doing so would alleviate one of the most frequently cited barriers to job creation and growth for business large and small – overly burdensome regulations.
 
New federal regulatory requirements are coming out at a breakneck pace.  According to a recent report, the federal repository for regulation changes – regulations.gov – posted 6,120 regulations and notices in the 90 days leading up to the election. That’s an average of 68 a day.  Now that the election has past, most experts predict regulatory agencies, such as the EPA, will move forward with a multitude of delayed rules that will cost the American economy millions of dollars. This leaves businesses scrambling to understand how new rules will impact them financially and operationally.
 
It’s no wonder that so many regulatory requirements are being introduced. There were 281,832 full-time government employees dedicated to drafting and enforcing regulations in 2011, according to a study by the George Washington University Regulatory Studies Center.  In contrast, there are fewer than 50 employees at the Office of Management and Budget responsible for reviewing the new regulatory mandates to ensure they are justified and accurate prior to implementation.
 
This 5637-to-1 ratio speaks to the skewed focus of our rulemaking process, where far more attention is paid to adding new regulations than to carefully reviewing the wisdom of those regulations on the economy.
 
Effective governance should strive to be fair and accountable. Though our regulatory process doesn’t currently live up to those goals, changes that will measurably improve and stabilize the structure are within reach.
 
Modernizing the regulatory process requires that greater attention be paid to how the government determines whether a regulatory change or addition is needed – in other words, weighing the risks. Risks must be measured, assessed, and considered using the best available data and science. This will not only help businesses manage and reduce risk, but also encourage more protective and achievable regulations.
 
Careful analysis of the benefits and costs associated with a regulatory change should also be incorporated into the reform process. Understanding a regulation’s net cost is a critical step in avoiding regulations that either don’t work, or don’t work well enough to justify their cost. A standard process for calculating such costs and benefits must be determined to ensure they are neither over- or under-stated.
 
Lawmakers and federal agencies should also take a hard look at the current peer review process. The background and motivations of peer reviewers must be taken into account to ensure that they follow federal guidelines and don’t simply serve as a rubber stamp for agency decisions. Effective peer review should bring to the table differing opinions and greater transparency, and ultimately contribute valuable questions and considerations that will foster more effective regulation.
 
Finally, once a rule is on the books, it cannot simply be forgotten. Government must remain accountable for regulations beyond their printing in the Federal Register. A process of review – through the courts and through Congressional oversight – will ensure that regulations are still appropriately protective and ensure that no relic regulations are duplicative or cast an undue burden on American business.
 
Our current fiscal circumstance is unsustainable, and significant reform is needed both in the form of increased revenue and reduced spending. But unless and until we prioritize removing barriers to economic growth, we will continue to find ourselves on the precipice of fiscal cliff after fiscal cliff.

Lincoln is a former Democratic Senator from Arkansas.

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