How would you like to wait 10 years for a COVID-19 vaccine?
I recently wrote that, on average, it takes a decade and $2.6 billion to get a drug approved. In response to the COVID-19 epidemic, the Trump Administration has streamlined the drug approval process. An effective vaccine is expected soon.
While it’s important to ensure that drugs are safe before they are approved, we also have a system that keeps drugs from patients with life-threatening diseases. Expediting the process for all drugs will save lives.
Laws and regulations have been accumulating in the United States for nearly 250 years. Each year, we add new laws and regulations.
Some are needed, but many are not. Regardless, as we add to laws that have been accumulating for two-and-a-half centuries, we slow down the economy. Businesses earn less. The unemployment rate goes up. Productivity goes down. The stock market shutters.
And once a law is passed or a regulation is enacted, it rarely goes away.
In 2017, we wrote that, “The federal tax code alone is now 74,608 pages long, or 187 times longer than it was a century ago. Depending on what you include and how you count the pages, the Affordable Care Act (ACA) has produced anywhere from 10,000 to 20,000 pages of new regulations, while the Dodd-Frank Wall Street Reform and Consumer Protection Act, developed to increase oversight of the financial industry and reduce risk, has produced more than 22,000 pages of regulations.”
The Obama Administration, we reported, set a record by becoming the first administration to approve 600 major rules (e.g., rules that each impose a cost of more $100 million).
Most of the new regulations during the Obama years were never approved by Congress. They were created by an executive order from the president, then bureaucrats wrote the rules. Likewise, the Trump Administration has been removing many rules by executive order. One of his first actions was to require that two existing regulations be rescinded for every new regulation.
The White House Office of Information and Regulatory Affairs (OIRA) reported that in fiscal year 2019, it completed 150 deregulatory actions and 35 significant regulatory actions, eliminating 4.3 existing regulations for every new regulation. It claims to have eliminated $50.9 billion in regulatory costs since 2017 and anticipates saving $51.6 billion in regulatory costs from final rulemaking during the current fiscal year.
Regulations that have been rolled back include “net neutrality,” which sought to regulate the Internet with utility regulations from the 1930s, the Affordable Care Act’s tax on Americans who failed to obtain health insurance and a variety of environmental regulations. Of the 100 environmental regulations being reversed, 67 have already been completely rolled back.
Some argue that the environmental benefits of the regulations outweigh the costs. For example, the Environmental Protection Agency has repealed and replaced Obama-era emissions rules for power plants and vehicles, weakened protection for more than half of the country’s wetlands, and withdrawn a legal justification for restricting mercury emissions from power plants, according to The New York Times.
In addition, the Times noted, the Interior Department has worked to open up more land for oil and gas leasing by cutting back protected areas and limiting wildlife protections.
However, environmental regulations are notoriously bureaucratic and are also used for political purposes, such as reducing or eliminating the use of fossil fuels. While the goal may be worthwhile, alternatives such as solar and wind currently cannot come close to meeting today’s demands. And using regulations to prevent development circumvents the democratic process.
Ironically, environmentalists who shut down pipeline projects, as one example, potentially cause more harm to the environment. Transporting oil by train instead of pipeline poses safety risks and is potentially much more harmful to the environment. When insufficient energy is produced to meet domestic needs, it must be imported, which presents added environmental risks. It also puts the U.S. at a competitive disadvantage with countries like Iran and Russia, which don’t have the environmental restrictions that the U.S. has, so they can produce oil at a lower cost.
In July, the Trump Administration issued the first update to the National Environmental Policy Act (NEPA) since 1978. The 1970 law requires an environmental study for all major projects that receive federal funding or permitting.
In recent years, the average review involving an environmental impact statement took 4.5 years and the final document ran to 661 pages, before appendixes. Lawsuits — which are practically guaranteed when any significant development project takes place — further delay projects by years and add millions to costs.
A full environmental impact statement, the new rules say, should take no more than two years and 300 pages. An environmental assessment, which is less intensive, should be limited to 75 pages and take no longer than a year. When an environmental review exceeds these limits, written permission will be required from a senior agency official.
The White House Council on Environmental Quality “estimates that federal agencies complete about 175 impact statements each year, plus 10,000 assessments,” according to The Wall Street Journal. “Do the math, and in a decade the Trump Administration’s rules could literally cut thousands of years of cumulative delay, speeding everything from interstate highways to gas pipelines to subway lines.”
Overall, “less regulation is correlated with less inflation, higher pace of economic activity, and higher employment and productivity,” hedge fund manager Todd Sullivan recently wrote on Seeking Alpha.
“Strong economic activity and rapid recovery from events like the unexpected COVID-19 is occurring primarily because lower regulatory burden makes it easier for society to adjust and regain its traction,” Sullivan wrote. “Should additional deregulation occur, we can expect additional positive economic responses as long as net deregulation results in positives for society as a whole.”
One indicator of the amount of regulation is the number of pages added annually to the Federal Register, which Sullivan believes is “the most important big picture indicator for future economic activity.”
In 2016, 97,110 pages were added to the Federal Register. In 2017, 61,949 pages were added.
While a cost-benefit analysis should determine which regulations should be killed off, the ultimate goal of increasing economic growth and efficiency is laudable. In addition, though, less regulation means greater freedom.