Obama’s Regulatory Cliff Draws Near


Many Americans believe the biggest problem the nation currently faces is the so-called fiscal cliff. Unfortunately, the fiscal cliff is nothing compared to the avalanche of new regulations that will be coming in 2013. That Americans remain unaware of this ominous development is understandable. The most transparent administration in history ignored the provisions of the Regulatory Flexibility Act and a subsequent series of executive orders that require the semi-annual release of all regulations under development or review by some 60 departments, agencies, and commissions. Thus, the April 2012 and October 2012 deadlines came and went without compliance. Now that the election is over, Americans will discover just how all-encompassing Obama and his big-government zealots intend to be.

The scope is staggering. According to the Competitive Enterprise Institute, the overall regulatory burden has reached $1.8 trillion annually, and $215.4 billion in compliance costs have been added in 2012 alone. The OMB’s Office of Information and Regulatory Affairs website reveals that 4,100 new regulations are in the pipeline, with more than 400 aimed at small businesses, whose compliance costs will exceed those of their larger competitors by 36 percent.

Unsurprisingly, the Environmental Protection Agency (EPA) will be taking the lead role in flexing the administration’s regulatory muscles. Proposals to significantly expand the Clean Water Act will give the EPA power over virtually every body of water in the nation, including farm ponds, streams, and even storm water runoff, all of which could seriously impact family farmers and small businesses. More restrictive requirements for controlling ozone emissions could cost $90 billion annually and trigger the potential loss of millions of jobs. The designation of coal ash as a “hazardous substance” will substantially increase energy costs, adding another $79 billion to $110 billion to the regulatory tab, and eliminating thousands of jobs in Pennsylvania, West Virginia, Missouri, and Ohio. A new rule that tightens allowable levels of so-called fine particulate matter will be added to the mix as well, making it far harder for local governments to issue new manufacturing permits.

Senator James Inhofe (R-OK), who had demanded the Obama administration comply with the law regarding the release of regulations and was ignored, released a list of ominous new rules compiled by his Senate committee on Environment and Public Works, including Greenhouse Gas Regulations that “will cost more than $300 to $400 billion a year, and significantly raise the price of gas at the pump and energy in the home” and affect “not just coal plants” but “churches, schools, restaurants, hospitals and farms [that] will eventually be regulated.” Inhofe further reveals these requirements are “so strict they virtually eliminate coal as a fuel option for future electric power generation.”

Adding to Americans’ misery is a large number of proposed regulations that were piling up at the Office of Information and Regulatory Affairs (OIRA) before the election as well. 78 percent of the 151 regulations awaiting review had been pending for more than 90 days, once again exceeding the maximum time allowed by law. Several of the most costly include a Department of Transportation rule requiring rear-view camera and video displays for all new cars and trucks, at an estimated cost of up to $2.7 billion; stricter limits on industrial and commercial boilers and incinerators that could run as high as $20 billion in costs; energy conservation standards for walk-in coolers, freezers and commercial refrigeration, applying to virtually all equipment used in retail food stores, increasing manufacturing costs by $500 million over four years; and Department of Labor restrictions on worker exposure to crystalline silica common in mining, manufacturing and construction jobs, costing $5.5 billion, as well as inducing a loss of $3.1 billion of economic output on an annual basis. The National Highway Traffic Safety Administration is also joining the frenzy, aiming to implement long-delayed regulations requiring automakers to include event data recorders, aka “black boxes,” in all new cars and light trucks beginning in 2014.

Then there is the Frank-Dodd financial reform law. Although it was written almost two-and-a-half years ago, the 2300 page behemoth, with at least 400 separate rules affecting virtually the entire financial sector, had failed to meet 63 percent of its own deadlines as of July 2, 2012. As a result, thousands of businesses, already reeling from the uncertainty of the fiscal cliff, are dealing with more uncertainty here as well, having no idea what they must do to be in compliance. Despite the idea that the law was ostensibly written to address the financial crisis of 2007-2008, many of its provisions are completely unrelated to it.

Yet in keeping with this administration’s “never let a crisis go to waste” mentality, Dodd-Frank offered the administration yet another opportunity to expand the size and scope of government. These include vast new powers granted to the Consumer Financial Protection Bureau (CFPB), the regulatory authority for credit and debit cards, mortgages, student loans, savings and checking accounts, and most other consumer financial products and services. The CFPB’s power is further enhanced by the reality that it is immune to congressional control, because its funding is now a fixed portion of the Federal Reserve’s budget.

Dodd-Frank also expands government authority to seize control of firms that regulators designate as failing and, unlike bankruptcy proceedings, the process is not supervised by a court and grants only limited judicial review, raising the possibility that government can illegally seize property in violation of the Constitution. Other regulations will impact consumer credit, result in higher service fees and, as financial institutions are forced to pay for regulatory compliance officers and attorneys, money that would otherwise be loaned for mortgages and new businesses will be tied up.

Other parts of Dodd-Frank yet to be finalized are rules for such items as living wills, capital requirements and proprietary trading restriction for banks and other financial institutions, along with possible court challenges that would most likely hinge on whether a rule can withstand a cost-benefit analysis. In short, businesses and financial institutions expected to lead the nation in growth and job creation will be flying blind–meaning they will most likely wait and see what Congress does before expanding, or adding new employees.

The other 800-pound gorilla with loads of uncertainty attached to it, even as it begins to affect Americans in 2013, is Obamacare. It wasn’t until right after the election that Americans learned they will be paying a $63 fee to offset what the administration concedes will be a massive disruption in the insurance markets, courtesy of new healthcare requirements. Yet this is nothing compared to the 13,000 pages of federal ObamaCare regulations that still don’t fully address how the maze of new programs will operate. Many Americans are already aware that several companies are cutting back on employees and/or employee hours to avoid the mandate that requires companies with 50 full-time employees to pay their healthcare, or pay a fine. Yet the law is so confusing it took a whopping 18 pages of gov-speak to define a full-time employee. Equally vague are the regulations states must follow to set up health care exchanges, so much so that even those that support the process don’t know how to proceed. Health insurance companies also remain in the dark regarding what benefits must be covered and at what price so they can design and price their policies, develop marketing materials that meet yet-to-be-announced government specifications, and deal with a seeming endless maze of other calculations.

Once again, many of the new regulations were approved as early as last May by the Health and Human Services Department (HHS), yet kept from the public until after the election. Such surreptitiousness produced an embarrassing moment for 18 Democratic senators and senators-elect, who “discovered” the bill they had voted for or supported contained a job-killing $28 billion tax on medical device sales.

Yet the most ominous aspect of Obamacare is the power it confers on the Secretary of Health and Human Services, a position currently held by Kathleen Sebelius. The American Spectator’s Philip Klein gave Americans a hint in 2010. The new healthcare law “finds that there are more than 700 instances in which the Secretary is instructed that she ‘shall’ do something, and more than 200 cases in which she ‘may’ take some form of regulatory action if she chooses. On 139 occasions, the law mentions decisions that the ‘Secretary determines,’” he writes. As a result Sebelius can “determine what type of insurance coverage every American is required to have. She can influence what hospitals can participate in certain plans, can set up health insurance exchanges within states against their will, and even regulate McDonald’s Happy Meals. She’ll run pilot programs that Democrats have set up in an effort to control costs, and be in a position to dole out billions of dollars in grant money.”

In short, one could make a reasonable argument that a healthcare bureaucrat is the most powerful woman in the nation.

Other than the details of the regulations themselves, none of this should surprise anyone. This president and his party have made it very clear they will spare no effort to insert government into the lives of Americans wherever possible, even testing the limits of the Constitution to do so. The avalanche of new regulations, piled on top the hundreds of thousands of those that already exist, is further testament to a progressive ideology that has taken the concept of government by, for and of the people and turned it on its head. Now more than ever Americans are expected to serve government, not the other way around.

Sadly, a substantial number of Americans don’t mind, having bought into a devil’s bargain of entitlements and handouts aimed at convincing them such an odious tradeoff is reasonable. Yet the words of former President Gerald Ford ring truer than ever: “A government big enough to give you everything you need, is a government big enough to take away everything that you have.”

Freedom Center pamphlets now available on Kindle: Click here.  

  • http://www.adinakutnicki.com AdinaK

    There is NO way that the Radical-in-Chief will do a deal to save the 'fiscal cliff'. This is because he is invested in driving it into the abyss, as he/they grab for America's guns too – http://adinakutnicki.com/2012/12/27/dhs-americas-

    It is what is is. Time to recognize it.

    Adina Kutnicki, Israel – http://www.adinakutnicki.com/about/

  • http://libertyandculture.blogspot.com/ JasonPappas

    The CEI is doing great work exposing the strangling reach of government regulation. Sadly, as long as most Americans believe in paternalistic government and vilify businessmen, there will be little change. I thank Ahlert for bring us the details.

    Some of us are interested in the facts. The CEI's attempt to put a dollar figure on the regulations gives us an order of magnitude of the damage. The indignity of our loss of liberty is, however, priceless.

    Hernando DeSoto has done an excellent job of exposing the regulatory strangulation of third world nations. Most importantly he shows the lack of property rights leads to poverty. Obama appears to be doing exactly what DeSoto shows leads to third world poverty. No surprise here–right folks?

  • chris gleason

    Are there no patriots in Congress? No one who can get together the backbone to stop this insanity? Obama needs to be impeached, and soon.

    • NAHALKIDES

      Obama deserves to be impeached, yes, but the people would not tolerate the House impeaching him, nor would the Senate Democrats ever remove him no matter what he's done.

  • Thomas Wells

    Condensed regulations summary: " You can't do that", you must do this."

  • NAHALKIDES

    "testing the limits of the Constitution" my eye – Obama and his gang have trampled all over that founding document, and will continue to do so unless and until stopped. Obviously, we can't count on SCOTUS to do so.

  • Ghostwriter

    Oh boy! We're in for a bumpy ride on the regulation front.

  • John_Kelly

    Four years ago America stood on the brink of disaster but since then Obama has taken us a giant step forward !