Editorial: Beware the pen
For businesses counting down the days to the end of the Obama administration and its heavy regulatory hand, the light at the end of the tunnel may indeed be an oncoming train.
The White House is signaling it will quicken the pace of agency rule-making aimed at reshaping the economy and how businesses operate without input from Congress.
Nearly 4,000 new regulations are queued up in various federal agencies, and 144 of them have the potential to cost industry more than $100 million each.
Last week, new rules from Treasury on tax inversions scuttled the $150 billion proposed merger of Pfizer of New York and Alergan, now based in Ireland. The regulations are designed to limit the ability of U.S. firms to use mergers with foreign-based firms to reduce their tax liability.
Meanwhile, neither the president nor Congress has done anything to address the corporate tax rate, which is the highest in the industrial world, or to coax back to the United States the nearly $2 trillion in foreign earnings being off-shored by American firms to avoid double taxation.
By the end of the year, new rules from the Labor Department will very likely make private, individual retirement accounts a thing of the past for most Americans. The restrictions on financial advisers will carry such high risk of liability that most are expected to drop small and mid-size investors and accept only high wealth clients. Everyone else will be forced into new government-run pension plans, which were spared most of the fiduciary burdens placed on the private sector.
Labor also is finalizing overtime rules that would double the threshold pay for eligibility to $50,440 a year, making 5 million additional white-collar professionals eligible for time-and-a-half wages for working more than 40 hours a week. This will drive up labor costs without increasing productivity, a formula that nearly always results in workforce reductions.
The food industry is being targeted for a long list of new labeling mandates, including disclosure of serving sizes that “can reasonably be consumed at one eating occasion.” That would seem a very subjective measure, depending on the appetite of the consumer.
The Equal Employment Opportunity Commission is preparing new wage reporting forms aimed at ferreting out inequities. The agency will now require companies with more than 100 workers to gather 3,360 pieces of data on 14 different gender/ethnicity groups, including tracking total hours worked. It will be a paperwork nightmare for employers.
Other big-ticket regulations include automatic speed regulators for trucks, paid sick leave for contractors and tougher energy conservation mandates on a wide variety of consumer products and appliances.
The 144 high-cost regulations President Barack Obama is proposing to enact this year sets a new record, surpassing the 136 he introduced last year. And it compares with a total of 126 major-impact regulations during the final three years of the George W. Bush administration.
Every regulation carries a cost, and the cumulative total of the new rules the administration seeks and has already imposed will reach tens of billions of dollars. This is money businesses can’t use to expand the economy and put more people to work.
The regulatory flurry, added to the higher taxes on investments required by Obamacare, helps explain why the post-recession economy has struggled to average annual growth of just barely 2 percent. That’s a very tepid recovery in historical terms.
Congress has been ineffective in stopping Obama’s use of his pen to impose vast new costs on job creators. And with the loss of a conservative majority on the U.S. Supreme Court, that check on executive power is less certain.
Over the past seven years, Obama’s rule-making has significantly impacted nearly every segment of the economy. And he’s not done yet.