Goodlatte Statement at Hearing on "The Federal Government on Autopilot: Delegation of Regulatory Authority to an Unaccountable Bureaucracy"

Chairman Goodlatte: Thank you, Chairman King, for convening this fifth hearing of the Task Force on Executive Overreach, this one focusing on executive overreach in federal regulations. Federal regulations take a huge toll on small business.  Warren Meyer, the owner of a company who runs campgrounds, said recently “In one year, I literally spent more personal time on compliance with a single regulatory issue -- implementing increasingly detailed and draconian procedures so I could prove … my employees were not working over their 30-minute lunch breaks -- than I did thinking about expanding the business or getting new contracts.” On a larger scale, a Mercatus Working Paper concludes that “Had regulation been held constant at [the lower] levels observed in 1980 … the economy would have been nearly 25 percent larger by 2012,” meaning regulatory growth since 1980 cost $4 trillion to the American economy in 2012, or about $13,000 per person. The U.S. economy has generally also grown less dynamic over time, as the number of firms less than one year old as a share of all firms has declined dramatically, hampered in large part by regulatory burdens.  Recently, and for the first time, the number of firms folding exceeded the number of new firms created in America.  It’s no surprise then that the growth in startup company employment has also declined significantly over the last few decades. Surveys of small business owners show a steady rise in the ranking of “government requirements and red tape” as a most important problem.  And this has contributed to American companies’ having to move overseas to thrive.  In a 2011 survey, Harvard Business School alumni were asked about 607 instances of decisions on whether or not to offshore operations.  Of the reported results, the United States retained the business in just 96 cases and lost it in 511 cases.  Research shows that the loss of jobs to overseas markets results in higher unemployment, lower labor force participation, and reduced wages, which in turn increases the demand for spending programs for those who are negatively impacted, making our fiscal crisis even worse. More regulations also means higher prices generally.  For example, since the once heavily-regulated airline industry was deregulated in the 1970’s, inflation-adjusted domestic airfare prices have fallen dramatically.  Overall, while the costs of things the federal government regulates have soared – such as education, health care, and child care -- the costs of things the government generally doesn’t regulate have declined, such as clothing, cell phones, personal computers, and televisions. The way federal agencies operate also makes it very expensive for people harmed by their regulations to challenge them in court.  As Professor Gary Lawson has written:

Consider the typical enforcement activities of a typical federal agency -- for example, of the Federal Trade Commission. The Commission promulgates substantive rules of conduct. The Commission then considers whether to authorize investigations into whether the Commission's rules have been violated.  If the Commission authorizes an investigation, the investigation is conducted by the Commission, which reports its findings to the Commission … The Commission’s complaint that a Commission rule has been violated is then prosecuted by the Commission and adjudicated by the Commission … If the Commission chooses to adjudicate before an administrative law judge rather than before the Commission and the decision is adverse to the Commission, the Commission can appeal to the Commission. If the Commission ultimately finds a violation, then, and only then, the affected private party can appeal to an Article III court.  But the agency decision, even before the bona fide Article III tribunal, possesses a very strong presumption of correctness on matters both of fact and of law.

That’s not a recipe for freedom in America. I look forward to hearing from all our witnesses today about the growth in federal regulatory burdens imposed by an increasingly unaccountable federal bureaucracy. For more on today’s hearing, click here. Learn more about the Task Force here. ###