Too much regulation? Senator Mark Warner’s proposed legislation is an interesting approach.
Concerned that regulation is “stifling fresh investment and discouraging innovation,” Senator Mark Warner says the incentives have to change. Currently, when federal agencies create new rules, their power expands, their budget grows, and their work force balloons. Burgeoning regulation, he says, pushed us down from #4 to #5 on the World Bank’s “Ease of Doing Business” rankings.
Instead, Warner suggests that agencies create “a credible, quantifiable estimate of the economic impact” for every regulation. Calling it “regulatory pay-go,” his proposed legislation would require eliminating old rules when new ones are added. The net result? The regulatory impact remains constant.
It sounds good to me. Your opinion?
The Economic Lesson
Pay-go refers to pay-as-you-go, a legislative approach that involves budgetary neutrality. New legislation is characterized as pay-as-you-go when it replaces existing spending instead of adding to the federal budget. Social Security is called a pay-as-you-go program because the money collected from current workers is paid to current Social Security recipients.
Now that we have a health care reform bill, I wondered about the next step. After a law is passed, how are the provisions implemented? A recent Washington Post article provided the answers.
The next step unfolds in government offices where staffers decide what each provision means and how it will be applied. With more than 2,000 pages of provisions, for health care reform, the decisions are countless and the logistics unfathomable. According to the Washington Post, government staffers are arriving earlier, staying later, and seeing White House officials oversee key timing and content decisions.
Immediately, $250 checks have to be sent to seniors because of Medicare’s drug benefit coverage gap, small businesses will receive a tax break in exchange for their employees’ insurance coverage, and insurers will have to let families keep adult children on their policies. The law prohibits an “unreasonable” premium increase but what is “unreasonable”? Because the law says that insurers have to spend premiums on improving members’ health, insurers have begun to reclassify activities as improving members’ health. Who determines their validity? Even agency names are being debated. Creators of OCIIO (The Office of Consumer Information and Insurance Oversight), for example, have to decide what to call themselves, “oh-sig-oh” or “C-C-I-I-O”. And this is only the beginning.
Reading the legislation (H.R.4872 and H.R. 3590), I recalled that Otto von Bismarck said, “Laws are like sausages. It is better not to see them being made.” And we should add, “and implemented”.
The Economic Lesson
Fiscal polcy can be defined as the activities of the President and the Congress that relate to spending, taxing, and borrowing. It sounds so concise and clear until we look at health care reform and see how complicated fiscal policy can be.