[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
THE BENEFITS OF A DEREGULATORY AGENDA: EXAMPLES FROM PIONEERING
GOVERNMENTS
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON
INTERGOVERNMENTAL AFFAIRS
AND THE
SUBCOMMITTEE ON HEALTHCARE,
BENEFITS, AND ADMINISTRATIVE RULES
OF THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 27, 2018
__________
Serial No. 115-108
__________
Printed for the use of the Committee on Oversight and Government Reform
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
http://oversight.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
32-690 PDF WASHINGTON : 2018
Committee on Oversight and Government Reform
Trey Gowdy, South Carolina, Chairman
John J. Duncan, Jr., Tennessee Elijah E. Cummings, Maryland,
Darrell E. Issa, California Ranking Minority Member
Jim Jordan, Ohio Carolyn B. Maloney, New York
Mark Sanford, South Carolina Eleanor Holmes Norton, District of
Justin Amash, Michigan Columbia
Paul A. Gosar, Arizona Wm. Lacy Clay, Missouri
Scott DesJarlais, Tennessee Stephen F. Lynch, Massachusetts
Virginia Foxx, North Carolina Jim Cooper, Tennessee
Thomas Massie, Kentucky Gerald E. Connolly, Virginia
Mark Meadows, North Carolina Robin L. Kelly, Illinois
Ron DeSantis, Florida Brenda L. Lawrence, Michigan
Dennis A. Ross, Florida Bonnie Watson Coleman, New Jersey
Mark Walker, North Carolina Raja Krishnamoorthi, Illinois
Rod Blum, Iowa Jamie Raskin, Maryland
Jody B. Hice, Georgia Jimmy Gomez, Maryland
Steve Russell, Oklahoma Peter Welch, Vermont
Glenn Grothman, Wisconsin Matt Cartwright, Pennsylvania
Will Hurd, Texas Mark DeSaulnier, California
Gary J. Palmer, Alabama Stacey E. Plaskett, Virgin Islands
James Comer, Kentucky John P. Sarbanes, Maryland
Paul Mitchell, Michigan
Greg Gianforte, Montana
Michael Cloud, Texas
Vacancy
Sheria Clarke, Staff Director
William McKenna, General Counsel
James Lesinski, Counsel
Brick Christensen, Senior Policy Advisor
Sarah Vance, Healthcare, Benefits, and Administrative Rules
Subcommittee Staff Director
Sharon Casey, Deputy Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Intergovernmental Affairs
Gary Palmer, Alabama, Chairman
Glenn Grothman, Wisconsin, Vice Jamie Raskin, Maryland, Ranking
Chair Minority Member
John J. Duncan, Jr., Tennessee Mark DeSaulnier, California
Virginia Foxx, North Carolina Matt Cartwright, Pennsylvania
Thomas Massie, Kentucky Wm. Lacy Clay, Missouri
Mark Walker, North Carolina Vacancy
Mark Sanford, South Carolina
------
Subcommittee on Healthcare, Benefits, and Administrative Rules
Jim Jordan, Ohio, Chairman
Mark Walker, North Carolina, Vice Raja Krishnamoorthi, Illinois,
Chair Ranking Minority Member
Darrell E. Issa, California Jim Cooper, Tennessee
Mark Sanford, South Carolina Eleanor Holmes Norton, District of
Scott DesJarlais, Tennessee Columbia
Mark Meadows, North Carolina Robin L. Kelly, Illinois
Glenn Grothman, Wisconsin Bonnie Watson Coleman, New Jersey
Paul Mitchell, Michigan Stacey E. Plaskett, Virgin Islands
C O N T E N T S
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Page
Hearing held on September 27, 2018............................... 1
WITNESSES
Ms. Laura Jones, Executive Vice President and Chief Strategic
Officer, Canadian Federation of Independent Business
Oral Statement............................................... 6
Written Statement............................................ 9
Mr. Matt Vickers, Product Sales Engineer, New Markets, Xero
Oral Statement............................................... 49
Written Statement............................................ 51
Mr. Scott Brinkman, Secretary of the Executive Cabinet,
Commonwealth of Kentucky
Oral Statement............................................... 56
Written Statement............................................ 58
Mr. Amit Narang, Regulatory Policy Advocate, Public Citizen
Oral Statement............................................... 61
Written Statement............................................ 64
APPENDIX
January 13, 2015, Gallup ``American Entrepreneurship: Dead or
Alive? submitted by Mr. Palmer 98
THE BENEFITS OF A DEREGULATORY AGENDA: EXAMPLES FROM PIONEERING
GOVERNMENTS
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Thursday, September 27, 2018
House of Representatives,
Subcommittee on Intergovernmental Affairs, joint
with the Subcommittee on Healthcare, Benefits, and
Administrative Rules,
Committee on Oversight and Government Reform,
Washington, D.C.
The subcommittees met, pursuant to call, at 2:14 p.m., in
Room 2247, Rayburn House Office Building, Hon. Gary Palmer
[chairman of the Subcommittee on Intergovernmental Affairs]
presiding.
Present from Subcommittee on Intergovernmental Affairs:
Representatives Palmer, Grothman, Massie, Walker, Raskin, and
DeSaulnier.
Present from Subcommittee on Healthcare, Benefits, and
Administrative Rules: Representatives Jordan, Walker, Grothman,
and Krishnamoorthi.
Mr. Palmer. The Subcommittee on Intergovernmental Affairs
and the Subcommittee on Healthcare, Benefits, Administrative
Rules will come to order. Without objection, the presiding
member is authorized to declare a recess at any time.
Over the past several decades, regulations imposed by the
Federal Government have had an adverse impact on economic
activity as these Federal regulations have accumulated over
time. Regulatory accumulation is a drag on our economy, and it
stifles innovation. According to a recent study by the Mercatus
Center, the Federal regulations had held at the 1980 levels,
our economy would be nearly 25 percent larger than it was as of
2012.
We have seen the results of this regulatory accumulation
and the stunning decline of the number of new businesses. A
Gallup organization report from back in 2015 showed that
American business deaths outnumbered business births. I have a
copy of that entitled, ``American Entrepreneurship: Dead or
Alive?'' that I would like to enter into the public record and
will do so without objection.
Mr. Palmer. In my experience in Alabama, people don't want
to start a business when the overwhelming uncertainty of the
regulatory process threatens to come down on them. Why bother
when the risks are compounded by a myriad of complex and
sometimes contradictory regulations?
Recognizing the potential benefits of a deregulatory
agenda, President Trump called for a one-in, two-out ratio for
new regulatory actions. The shift in regulatory policy is
expected to save business owners and entrepreneurs both time
and money. While the United States is still in the early stages
of implementing regulatory reform, we know from some of our
foreign friends and allies that the push for deregulation has
resulted in tremendous outcomes.
In British Columbia, the Canadian Government experimented
with regulatory reform beginning 2001. To date, the British
Columbia Government has repealed more than 40 percent of their
regulatory requirements. As a result, British Columbia
experienced a period of per-capital GDP growth and business
development that outpaced the national average in Canada.
Another success story took place in Australia where the
national government initiated a standard business reporting or
SBR system that made it easier for businesses to report one
time rather than typical duplicative reporting mechanisms.
Savings from the SBR from 2015 to 2016 were roughly $1.1
billion in Australian dollars or $750-800 million U.S.
However, we don't have to look so far for success stories.
Our 50 States have shown what may work for the rest of the
country. Kentucky Governor Matt Bevin instituted a red-tape
reduction initiative. State officials are undertaking review of
the entire pool of State regulations to identify those that are
unnecessary, duplicative, and ineffective.
In a short period of time, Kentucky has repealed 453
regulations, which is nearly 10 percent of Kentucky's total
pool of regulations. Kentucky officials report these efforts
have led to the creation of roughly 40,000 jobs and $9.2
billion in direct investment in the State.
We are fortunate to have with us at today's hearing
witnesses who can speak to each of these examples. I am eager
to learn from them, what worked, what didn't, and what could be
done differently.
I would like to make clear that this hearing is not about
slashing regulations, as some may suggest. Our focus today is
on streamlining reporting to make compliance burdens easier.
Our focus is on helping small businesses survive and thrive in
the 21st century. We are talking about eliminating obsolete,
duplicative, and contradictory regulations that don't make
sense.
I will close with something President Obama said about
regulations back in 2011 in the Wall Street Journal. He wrote
that, ``Sometimes those rules have gotten out of balance,
placing unreasonable burdens on business, burdens that have
stifled innovation and have had a chilling effect on growth and
jobs.'' I bring this up because to me this is something that we
should all agree is important to our nation.
For a nation as economically powerful as ours to lag behind
our friends and allies when it comes to innovation and new
business creation is not only unfortunate, it is a missed
opportunity. I ask my Democratic friends to join us in making
this a priority.
I thank the witnesses again and look forward to hearing
from each of you about regulatory reform success stories. I
will also ask to have this Gallup report included in the
record, as I mentioned earlier. And without objection, so
ordered.
Mr. Palmer. I now recognize the ranking member of the
Healthcare, Benefits, Administrative Rules Subcommittee, Mr.
Krishnamoorthi, for his opening statement.
Mr. Krishnamoorthi. Thank you, Mr. Chairman, for holding
today's hearing, and thank you to all the witnesses for coming.
And thank you for the audience for participating.
I agree with all my colleagues that we need smart
regulations, and we need to make sure that we keep the
interests of taxpayers first. On the other hand, I am
incredibly concerned about recent actions by the Trump
administration, which I believe are shortsighted and will harm
millions of Americans and increase costs to the Federal
Government.
In his second week in office, President Trump issued an
executive order mandating that two regulations be eliminated
for every new regulation proposed. This so-called two-for-one
policy ignores numerous and well-documented economic benefits
derived from many of the regulations that are proposed to be
eliminated.
President Trump's attempts to rollback student loan
protections, offshore drilling protections, environmentally
sound fuel-efficiency standards, and consumer financial
protections should alarm all people, Democrats and Republicans
alike. If your workplace is OSHA-certified, if your food is
approved by the FDA, or your local water supply certified as
clean by the EPA, this executive order places your well-being
potentially at risk.
Just this week the House overwhelmingly passed an FAA
reauthorization that contains several pro-consumer protections.
It prohibits airlines from forcibly removing passengers,
requires a minimum leg room for each seat, prohibits the use of
cell phones in flight, and requires all airports to provide
nursing rooms for mothers and babies. I don't think that we
should be forcing unelected bureaucrats to repeal any of these
requirements without adequate thought and investigation.
The President's order imposes a needlessly arbitrary
standard on public agencies that have a charge to serve the
public. This particular rule ties the hands of public employees
and prevents them from using the best-available evidence about
which regulations should stay and which should be revised or
repealed. The Office of Management and Budget annually issues a
congressionally mandated report that identifies the cost of
government rules on the private sector and the estimated
financial benefits produced for the American people. Every
Federal rule has a cost and a benefit, and this report is key
to making sure that the benefits always outweigh the costs. We
owe this to every taxpayer.
Every year, this OMB-mandated report shows objectively that
the economic benefits of Federal rules far outweigh the costs.
Just last year, the totals were $4.9 billion in costs on
businesses and $27.3 billion in benefits to the American
public. This is a report that was commissioned by the Trump
Office of Management and Budget.
Let me be clear. The benefits always have to outweigh the
rules. There is no question about it. We have to make
regulations smart, and we owe this to the taxpayers. However,
in a case like this where the Trump administration's own OMB
issues a report showing that the benefits of these rules and
regulations outweigh the costs by a measure of five to one,
does it really make sense to have a two-for-one policy in terms
of eliminating one for every two that are proposed?
I thank our witnesses for sharing their testimony today,
and I look forward to continuing this important discussion.
Thank you.
Mr. Palmer. I now recognize the chairman of the--excuse me.
That is not predicative.
Mr. Raskin. Let's not get ahead of ourselves.
Mr. Krishnamoorthi. Let's not get ahead of ourselves.
Mr. Palmer. Yes. Yes. I now recognize the ranking member of
the Intergovernmental Affairs Subcommittee, Mr. Raskin, for his
opening statement.
Mr. Raskin. Chairman Palmer, thank you so much. So a couple
months ago we convened a hearing to discuss the theory that
government-issued regulations are failing the American people,
and at that hearing I tried to defend our regulatory process
from the notice and comment period through regulatory
enforcement as simply a set of rules. And I reminded my
colleagues that rules are ubiquitous. There are sets of rules
we follow every day, and all of us have no doubt followed
dozens of rules even just since waking up this morning.
Our job in Congress here is to pass laws that reflect the
values of the people and implement our priorities, and agencies
help us do that by adopting rules to execute and enforce those
laws.
At that same hearing we took a tour of some of the most
celebrated rules ever promulgated by agencies, for example, the
seatbelt rule, the overtime rule, and so on. Like these, most
Federal rules are commonsense protections of vital freedoms
that we cherish, freedom from air pollution and water
pollution, freedom from dangerous consumer appliances, freedom
from workplace discrimination and predatory business practices
and monopolies. Rules have made our people freer and our
country safer, healthier, cleaner, and more secure. And my
opinion has not changed on that.
As we know, regulation is just a fancy name for a rule, and
we all live according to them. Every household, every family,
every sport, every school, every road and highway, every
institution, every economy, every corporation, Congress and
indeed this committee, we all have rules that we adhere to and
live by.
In one of his first official acts, President Trump issued
an executive order directly targeting rules. His so-called two-
for-one policy arbitrarily called for the repeal of two
existing rules for every new one promulgated with zero
attention to the economic and social benefits that those rules
might be continuing to our country. That's like saying every
time we pass a law, we should have to repeal two laws. But I
remember a moving passage from Judge Learned Hand who said
``Thou shalt not ration justice.'' President Trump and my
colleagues in the House have made destroying government rules
one of their top priorities. They have made deregulation a
political fetish. And they are indeed rationing justice.
Behind all the deregulatory rhetoric, the majority is on a
crusade to scrap rules that limit the power of big corporations
or rein in Wall Street and the financial industry. They are
targeting regulations under the Clean Water Act and the Clean
Air Act, rules that restrict the freedom of polluters. I can't
count the times we voted in the House on creating new rules
that interfere with women's rights to make their own healthcare
decisions and decisions about birth control and reproduction.
We have stalled the Farm Bill over new regulations that
they want to seek. They want to impose work requirement rules
on SNAP recipients, and they are inventing new rules to stop
legal immigrants who want to become citizens from accessing
certain government programs. This kind of bureaucratic
extremism proliferates more regulation and more red tape not in
the pursuit of justice or freedom but control and power.
Since our last hearing in July, the administration has only
added to its hit list of targeted Obama-era rules. The
administration sold out working-class families who strive to
attain a college education by allowing Secretary DeVos to
rescind the borrower defense rule. For-profit colleges will now
be able to engage in predatory behavior again with relative
impunity. Just last month, the White House announced the repeal
of fuel-efficiency standards. This troubling rule reversal will
allow almost a billion metric tons of carbon dioxide into the
atmosphere in the next 20 years and increase consumer spending
on gasoline by $20 billion by 2025.
Rules generally make our country safer, healthier, and more
just. Unfortunately, the administration is using rules to
rollback progress, pollute our environment, and imperil our
freedoms. The costs of an America without any rules are not
hard to imagine and they are impossible to accept. We cannot
risk American lives and our nation's environment because the
President wants to reward big campaign donors and corporations
while using the regulatory boogieman to try to destroy
democratically chosen regulations. Let's think pragmatically
and not ideologically. Let's remember that Federal regulations
are just our rules, and when it comes to building a strong
democracy, laissez isn't fair.
I appreciate all of our witnesses for their time and
testimony today, and I look forward to an important discussion
about the continued utility of the rules we all rely on.
I yield back, Mr. Chairman.
Mr. Palmer. I thank the gentleman.
The chair now recognizes the chairman of the Healthcare,
Benefits, and Administrative Rules Subcommittee, Mr. Jordan,
for his opening statement.
Mr. Jordan. Thank you, Mr. Chairman. And I disagree with so
much of what my good friend and colleague from Maryland just--
and I do mean good friend. We got a bill we are working on
together that would--actually, he mentioned rationed justice. I
do think we need to ration regulations, but we got a bill we
are working on that focuses on the Constitution and the rights
of those in the press not to have the government force them or
compel them to give their confidential source away. So I
appreciate the gentleman, the professor from Maryland, but I
just disagree.
I think you go ask almost any American, do you think 72,000
rules that the EPA has on the oil and gas industry in our State
is probably too many? It probably is. So that is all we are
focusing on here is that idea that maybe we got a little too
much government. Let's get back to commonsense regulation. Some
of the things I think that the administration has done on the
regulatory front have been helpful and have led to this amazing
economic growth we have witnessed over the last 20 months, 4.2
percent annualized growth rate right now, which is tremendous,
and far better than where we were just a few years ago. So that
is what is at stake here.
And I appreciate the chairman having this hearing. And
because I walked in 22 minutes late for committee, I am going
to yield back the remainder of my time so we can get right to
our good set of witnesses here. Thank you, Mr. Chairman.
Mr. Palmer. I thank the gentleman.
I am now pleased to introduce our witnesses: Ms. Laura
Jones, executive vice president and chief strategic officer of
the Canadian Federation of Independent Business. Thank you for
being here; Mr. Matt Vickers, product sales engineer, New
Markets at Xero. Thank you; Mr. Scott Brinkman, secretary of
the executive cabinet for the Commonwealth of Kentucky,
appreciate your presence; and Mr. Amit Narang, regulatory
policy advocate at Public Citizen. Thank you, sir, for being
here.
Pursuant to committee rules, all witnesses will be sworn in
before they testify. Please stand and raise your right hand.
[Witnesses sworn.]
Mr. Palmer. The witnesses may be seated. The record will
reflect that all witnesses answered in the affirmative.
In order to allow time for discussion, please limit your
testimony to five minutes. Your entire written statement will
be made part of the record.
As a reminder, the clerk in front of you shows--the clock
in front of you--and we can get a clerk if we need to. As a
reminder, the clock in front of you shows the remaining time
during your opening statement. The light will turn yellow when
you have 30 seconds left--and unlike a traffic light, that does
mean speed up--and red when your time is up. So please remember
to press the button in front of your microphone before
speaking.
I am pleased now to recognize Ms. Jones for her testimony.
WITNESS STATEMENTS
STATEMENT OF LAURA JONES
Ms. Jones. Chairman Jordan, Chairman Palmer, Ranking
Members Raskin and Krishnamoorthi, I want to thank you for
inviting me to testify. I bring very warm wishes from north of
the border.
And by way of background, my interest in regulatory reform
comes from my roots as an economic researcher and also from my
current position at the Canadian Federal of Independent
Business, representing and advocating for small-business owners
who, like their American counterparts, are deeply affected by
regulation.
I'm here today to talk about the British Columbia model of
regulatory reform, and I think the overarching lesson from this
model is that a substantial reduction in government rules is
possible without negatively affecting the human health, safety,
and environmental outcomes that we all care about. And I think
this is important because it speaks directly to the challenge
that modern governments in developed countries face, which is
how do you best control red tape while protecting the important
justified regulations?
And we know this is important because excess regulation or
red tape leads to a host of bad consequences from reduced
incomes to increased income inequality and poverty. Governments
of all stripes tend to agree that reducing red tape is a worthy
objective, but accomplishing this objective can prove elusive.
This is where the British Columbia model stands out. It
stands out as a model that has delivered results. The main
result is a 49-percent reduction in regulatory requirements
since 2001. And the three keys to accomplishing this result:
political leadership, regulator involvement, and simplicity.
By way of context, British Columbia is Canada's westernmost
province, and its reform started 17 years ago in 2001. At the
time, economic growth and employment in the province lagged the
rest of the country and had done so for most of the previous
decade. The '90s is often referred to as the dismal decade in
British Columbia. Excessive regulation was--examples of
excessive regulation were just not that hard to come by, so,
for example, forest companies were told what size nails they
had to use to build small bridges over streams. Restaurants
were told what size television sets they could have in their
establishments.
So in 2001, a new government was elected, and they had made
the campaign promise that they would improve the economy,
including reducing regulation by one-third in three years. The
government accomplished this goal and more, and there were
three key elements to the reforms. First, a minister was
appointed whose only job it was to quarterback and champion
these reforms and make sure they were put in place. Second, a
measure that was simple enough that it could be applied broadly
across government rules was used. And finally, two regulatory
requirements had to be eliminated for every new one introduced.
And this policy was later changed to one in, one out.
In terms of the reforms outcomes, by 2004 the one-third
target had been exceeded. And once the target was met, this new
one-for-one policy was put in place. But here's the interesting
thing: The regulatory restrictions level, requirements level
did not stabilize at the one-third reduction but continued to
go down to the 49-percent reduction that I said. Regulators
continued to identify rules to cut faster than they were adding
rules, although there was no longer any pressure to cut. I
think that's an interesting outcome.
In terms of outcomes, of course, it's also important that
this wasn't just about cutting rules for the sake of cutting
rules. It was also about maintaining high outcomes. And there
were high outcomes of health, safety, and environment that were
maintained. Another outcome, the province went from being one
of the worst-performing economies in the country to being one
of the best.
So in conclusion, I want to repeat the three lessons that I
think come from this model. Political leadership matters. The
involvement of regulators matters. Regulators are not the enemy
in this story. They were an important part of the solution. And
the final reason for success is simplicity. Somewhat
ironically, I think it's tempting to overcomplicate regulatory
reform, and the thing that really distinguishes B.C.'s
regulatory reforms is its reliance on a clear simple measure
that could be applied broadly and communicated easily. And so
there's a place for more complicated measures, but there's also
a place for simpler ones.
And with that, I'll conclude my comments and thank you very
much. I look forward to questions.
[Prepared statement of Ms. Jones follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Palmer. Thank you for your testimony.
The chair now recognizes Mr. Vickers for five minutes for
his testimony.
STATEMENT OF MATT VICKERS
Mr. Vickers. Great. Firstly, I want to thank the Committee
on Oversight and Government Reform and the subcommittee members
here today for the opportunity to discuss standard business
reporting.
My name is Matt Vickers. I work for a publicly listed
accounting software company Xero.
In 2005, the Australian Government established a task force
to review compliance burdens on Australian businesses. Their
report shared that a typical New South Wales business spends
400 hours per year or A$10,000 on the preparation and sending
of paperwork to government. It's estimated that the total cost
of regulation to the Australian economy in 2005 was A$86
billion or 10 percent of that country's gross domestic product.
That's about $62 billion U.S. And Australia has 7 percent of
the population of the United States, so you can extrapolate
from there.
The task force offered 100 recommendations for reducing the
regulatory burden on businesses. One recommendation was to
simply financial reporting for individual businesses, and a
standard business reporting work group was established. The
work group aimed to optimize existing government processes to
reduce business compliance costs to A$800 million over six
years at a cost of A$320 million.
Standard business reporting, or SBR, is the idea that
multiple regulatory agencies should agree on common
standardized data structures and elements for the information
they collect from private sector businesses. By asking for this
information in a consistent fashion, it removes the need for a
business to resubmit the same information in multiple ways for
multiple agencies.
So I could ask you to imagine a small business in Wisconsin
or Kentucky or California being able to add a new employee into
their system or add a new director or shareholder or prepare
all their State and income taxes and have all the relevant
Federal and State agencies being given updated information
almost instantaneously as the result of one data change
within--made by the business owner. And imagine being able to
do all that from a single piece of software. That's the power
of this SBR and that's what we're talking about here.
SBR does not change the intent or the content of regulatory
reports but instead improves the efficiency of the government-
business interactions by standardizing the information the
private sector is required to report. The implementation of SBR
began in 2008 and the first reports were available two years
later. It did not require any regulatory change. And as the
chairman stated in his opening remarks, the Australian Tax
Office estimated that the changes saved the government and
companies A$1.4 billion in compliance costs during the 2016 tax
year, far exceeding that original six-year goal of A$800
million. In 2018, an Australian business can now interact with
three Federal and eight State agencies in a single software
environment. More agencies are planned to come on board in the
future.
SBR removed the technology and cost barriers for Xero and
other software vendors like us to integrate securely with
multiple government systems. Xero's software now allows
Australian businesses to make use of a single regulatory
reporting solution for multiple agencies direct from their
accounting system.
In the U.S., there are a number of relevant policy reforms
already under way. This committee has already accomplished a
large governmentwide data standards project. The Digital
Accountability and Transparency Act of 2014 mandated that the
Treasury Department create a governmentwide data taxonomy. The
DATA Act information model scheme that now governs around 100
Federal agencies report their spending activity. This shows
that the government here is now practiced at such reforms.
The House of Representatives unanimously passed the Open,
Public, Electronic, and Necessary Government Data Act as part
of the Foundations for Evidence-Based Policymaking Act, which
would require all Federal agencies to maintain public data
assets in machine-readable formats. And just last night, the
House passed the Grant Reporting Efficiency and Agreements
Transparency Act, which accomplishes reforms similar to SBR for
U.S. Federal grant reporting.
Though none of these ledgers of reforms explicitly address
Federal financial reporting by all businesses, they do offer
examples of efforts to seek governmentwide reporting standards
and require machine-readable data for reporting in other
domains. In the United States where Federal and State agencies
operate on a much larger scale, legislation is likely to be
required to compel agencies to work together to accomplish
reforms similar to the SBR program in Australia.
The Financial Transparency Act is a bipartisan legislative
proposal which would require all eight major Federal financial
regulators to adopt a standardized data structure for the
information they collect from public companies, banks, and
financial firms, and with the right support in Congress, such
legislation could form the basis of genesis of SBR in the
United States.
It's our belief that well-deployed technology has the
potential to reduce the cost of government and compliance to
the taxpayer. By reducing the compliance burden of small
businesses, the capital can be redeployed to pursue income-
generating activities. Like a tax cut, this puts money back in
the hands of small businesses. But unlike a tax cut, this gives
them something else: time. We believe the U.S. Government can
realize these benefits on a far greater scale than the
Australian example.
Thank you for the opportunity to testify. Thanks.
[Prepared statement of Mr. Vickers follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Palmer. I thank the gentleman.
The chair now recognizes Mr. Brinkman for five minutes for
his testimony.
STATEMENT OF SCOTT BRINKMAN
Mr. Brinkman. Thank you, Chairman Palmer and Jordan,
Ranking Members Krishnamoorthi and Raskin, and members of the
subcommittees, for affording me this opportunity to discuss
Governor Bevin's Red Tape Reduction Initiative.
Governor Bevin campaigned on a theme that is all about
jobs, which at its core means creating a more inviting
environment to attract both human and financial capital.
Candidate Bevin's Blueprint for a Better Kentucky listed seven
action items that he would pursue if elected Governor. One of
the action items was reforming State Government. Although there
are many aspects to reforming State Government, a key component
of that effort is modernizing Kentucky's administrative
regulations, and one of the first undertakings of the
administration was the formulation and implementation of its
Red Tape Reduction Initiative.
As part of this initiative, every cabinet and agency within
the executive branch has been directed to review every
regulation promulgated by--over the years and make one of the
following determinations: First, completely repeal the
regulation as its original purpose is no longer relevant.
second, amend the regulation to conform it to a Federal
counterpart. This effort includes eliminating inconsistent
definitions and standards with the goal that the State
regulation should never be more burdensome than the Federal
counterpart unless circumstances unique to Kentucky require a
stricter standard.
Third, amend and modernize the regulation to make it clear
and simpler to understand by those subject to the regulation,
and also make it easier to update in the future.
Fourth, combine the regulation with other regulations to
include a single subject matter such as fees and applications
in one regulation for ease of review by those subject to it.
Finally, leave the regulation as it's currently written.
The goal of the administration is to reduce by one-third
the number of restrictions on businesses and individuals in
Kentucky. In 1975, there were four volumes of regulations in
effect in Kentucky. That number had grown to 14 volumes when
Governor Bevin took office. Our current data reflects that, of
the approximately 4,700 separate regulations on the books at
the outset of the administration, over 2,700 regulations have
been reviewed, 488 regulations have been repealed, 454
regulations have been amended, and 56 new regulations have been
promulgated.
The initiative has the support of business groups, trade
associations, chambers of commerce, and other organizations
across Kentucky. There are several lessons to be learned from
Kentucky's Red Tape Reduction Initiative. First, the Governor
must own the initiative in every aspect, and it helps to have a
tangible symbol associated with the endeavor. In the case of
Kentucky, we created the lapel pin that I'm wearing today, and
Governor Bevin and his top officials wear this pin every day.
Further, Governor Bevin speaks out regularly regarding the
initiative--the importance of the Red Tape Reduction Initiative
to individuals and groups throughout Kentucky. As a result of
the Governor's leadership, there is growing awareness of the
initiative every day throughout the Commonwealth.
Second, it is important to create a website that is
interactive with the public and allows for individuals to post
recommendations on the repeal or amendment of regulations.
Kentucky's Red Tape Reduction Initiative website is
RedTapeReduction.com. Kentuckians have submitted scores of
thoughtful ideas on how to reduce unnecessary regulations that
drive up the cost of conducting business and create
inefficiencies without contributing to public health or public
safety.
Finally, the effort of the cabinets and other agencies must
be sustained on a regular basis. Our cabinets and other
agencies regularly review and re-review existing regulations to
ensure that the goals of the Red Tape Reduction Initiative are
being met. This is a thoughtful and deliberative process that
never ends.
We have also decided to digitize and modernize the manner
in which our State agencies draft and promulgate regulations.
To that end, Kentucky has contracted with Esper Regulatory
Technologies, Inc., to provide state-of-the-art technological
tools to our regulation drafters throughout the executive
branch to assist them in the review of existing regulations and
the promulgation of new regulations.
In conclusion, the administration's efforts to simplify the
ability of Kentuckians to conduct business are paying valuable
dividends. As of last month, Kentucky's unemployment rate was 4
percent, which is the lowest it has been since 1976 when this
statistic began to be tracked, and its workforce participation
rate is trending towards 40th in the Nation from 47th when
Governor Bevin took office.
Kentucky also realized during the month of April this year
the highest amount of monthly tax receipts in its history,
driven largely by corporate and individual income tax receipts.
Also as of last month, there were 1,983,103 Kentuckians in the
workforce based upon preliminary numbers for August, which is
the highest number of employed Kentuckians in the history of
the Commonwealth. Kentucky attracted $9.2 billion of announced
direct investment in the State in 2017, which is a record
amount for any year, and approximately $16.8 billion since
Governor Bevin took office, representing the creation of almost
46,000 jobs.
There are many factors contributing to the success,
including the enactment of smart and innovative legislation.
However, it is the firm belief of the Governor that the
implementation of the Red Tape Reduction Initiative and the
exposure that it has received has contributed in large part to
the growing perception that Kentucky is an attractive State in
which to create and sustain good-paying jobs for its citizens.
Thank you.
[Prepared statement of Mr. Brinkman follows:]
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Mr. Palmer. Just to inform our witnesses and the members of
the committees, votes may be called between 3:15 and 3:30. It
is my intent to conclude the hearing with the members who are
present so that we do not have to hold you hostage while we go
vote.
So with that, I will now recognize Mr. Narang for five
minutes for his testimony.
STATEMENT OF AMIT NARANG
Mr. Narang. Chairmen Palmer and Jordan, Ranking Members
Krishnamoorthi and Raskin, and members of the committee, thank
you for the opportunity to testify today. I am Amit Narang,
regulatory policy advocate at Public Citizen's Congress Watch.
Public Citizen is a national public interest organization with
more than 500,000 members and supporters. For more than 40
years, we have successfully advocated for stronger health,
safety, consumer protection, and other rules, as well as for a
robust regulatory system that curtails corporate wrongdoing and
advances the public interest.
Public health and safety regulation has been among the
greatest public policy success stories in our country's
history. Regulations have made our air far less polluted and
our water much cleaner; they've made our food and drug safer;
they've made our workplaces less dangerous; they've made our
financial system more stable; they've protected consumers from
unsafe products and from predatory lending practices; they've
made our cars safer; they've outlawed discrimination on the
basis of race, gender, and sexual orientation; and much more.
These regulations are now considered to be bedrock public
protections widely popular with the public. In short, our
regulatory safeguards are to be celebrated and emulated. Yet
there is much more progress to be made addressing threats to
the health, safety, environment, and financial security of
hardworking American families.
Unfortunately, President Trump and his administration are
taking the country in exactly the opposite direction, embarking
on a radical and unprecedented deregulatory agenda that has led
to the corporate capture of our regulatory system of public
protections. One of the key drivers of this administration's
attack on public protections is Executive Order 13771, the so-
called two-for-one executive order that imposes a regulatory
budget on agencies.
When the executive order was issued, Public Citizen, along
with partner groups, challenged the order in court as
unconstitutional and illegal. And this lawsuit is ongoing and
pending a district court. Our lawsuit stipulates that the order
exceeds the President's constitutional authority, violates his
article II duty to take care that the laws are faithfully
executed, and directs Federal agencies to engage in unlawful
actions that harm members of the public, including members of
Public Citizen.
The order places requirements on agencies that are nowhere
authorized by any statute, and in fact are in direct conflict
with numerous bedrock public protection laws passed by
Congress, which should be of utmost concern to members of this
committee and all Members of Congress. None of the laws passed
by Congress direct or even permit agencies to issue regulations
that protect the public only if they can first get rid of
existing regulations that protect the public and only if the
new regulatory protections impose no new costs on corporations
or hurt corporate profits.
The message the executive order sends to hardworking
Americans and their families is this: It is more important for
our government to boost corporate profits than it is for our
government to ensure that Americans have the right to clean air
and water, safe food, safe workplaces, civil rights
protections, safe and non-toxic consumer products, including
children's products, safe cars, financial protections that hold
Wall Street accountable, and many more commonsense safeguards.
The executive order has now been enforced for roughly 20
months, and the results are clear: The order has blocked and
delayed agencies from issuing hundreds of public protections
according to official government data listed on OMB's unified
regulatory agenda, while providing underwhelming cost savings
to corporations of $570 million under fiscal year 2017, which
amounts to about .001 percent of GDP growth under the second
quarter of this fiscal year. In other words, the cost of the
executive order in terms of public protections that have been
blocked significantly outweigh the minimal benefits to
corporations that the order has provided with respect to cost
savings.
Among the protections that the public has lost are new
lead-in-drinking-water standards; new gun-control measures; new
vehicle, truck, and train safety standards; dozens of new
environmental protections, including restrictions on toxic
chemicals under TSCA; safety standards for new tobacco products
like e-cigarettes; numerous workplace safety protections; and
updates to energy efficiency standards. It is likely that
agencies will be unable to accumulate enough cost savings to
corporations under the executive order to be able to issue
important new protections that will save lives such as new auto
safety technology that allows vehicle-to-vehicle communications
that can potentially save thousands of lives per year.
The executive order has failed to unleash economic growth
as promised by supporters of the order, at least according to
Goldman Sachs. Goldman Sachs studied whether job growth and
capital spending have been stronger in sectors in companies
that were more highly regulated before the most recent
election. According to Goldman Sachs' January 2018 report,
quote, ``We find no evidence that employment or capital
spending accelerated more after the election in an area where
regulatory burdens are higher.''
In sum, the executive order has been a lose-lose for our
country. It has made Americans less safe by blocking or
delaying critical new regulations that protect the public,
while providing underwhelming cost savings to corporations and
failing to create economic growth. Public Citizen encourages
this committee and Members of Congress to conduct vigorous
oversight over the continuing implementation of Executive Order
13771 to ensure that Federal agencies are doing their
statutorily mandated duty to protect the public by issuing new
health, safety, environmental, and consumer protection
regulations, as Congress intended. Public Citizen also
encourages Members of Congress to be mindful of the need to
explicitly exempt agencies from complying with this executive
order when drafting and enacting new legislation designed to
protect the public by requiring agencies to issue new
regulations.
Thank you, and I look forward to your questions.
[Prepared statement of Mr. Narang follows:]
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Mr. Palmer. I thank the witnesses for their testimony.
The chair will now recognize Mr. Massie for five minutes
for his questions.
Mr. Massie. Thank you, Mr. Chairman.
Secretary Brinkman, you mentioned that Kentucky, under
Governor Bevin's leadership, has repealed over 400 regulations
and amended over 400 regulations? I didn't get the exact
numbers, but can you tell us what some of the more
consequential regulations have been in terms of easing up
burdens on companies or fostering economic development?
Mr. Brinkman. Thank you, Congressman. The current data as
of a couple days ago is 480 regulations have been repealed, 454
regulations have been amended. A good example of a regulation
that we inherited was a--that older buildings that--above 45
feet you could not use PVC; you had to use cast-iron piping
and--even though the International Plumbing Code authorizes PVC
as a permitted piping material.
And what we found particularly in cities like Louisville
and Lexington is we have older office buildings that are class
C office buildings, and developers want to convert those to
residential properties. And most of the traditional office
buildings have their plumbing stacked near the elevator shafts.
If you convert them to residential, you're going to have to
expand the piping and-- to accommodate residential living. And
so we've estimated that that will save anywhere from, you know,
$100,000, $200,000 per floor for developers to redevelop these
office buildings into downtown living. So that's a perfect
example where we had an outdated regulation that was just
making it more difficult to redevelop these properties into
downtown living.
We also had a rule that we called our cut rule that any
boxing or wrestling match, if participants started bleeding in
any instance, the match had to cease immediately. We repealed
that, and now we have a very vigorous--become a very vigorous
State for holding martial arts, wrestling, boxing matches,
which are very popular with our population and adding to the
economic vibrancy of our communities.
Mr. Massie. So did you get any pushback when you changed
the regulation to allow PVC from the steel and cast-iron
manufacturers or ----
Mr. Brinkman. There was nothing major. There was ----
Mr. Massie. Okay.
Mr. Brinkman. Because I think people recognized it was
outdated and not necessary and in fact would further economic
development without in any way compromising public safety.
Mr. Massie. And, you know, when we talk about reducing
regulation at the government level, a lot of times we are
thinking about reducing regulation on private business, but I
served in county government, and there were State regulations
that always constrained the county government. I am sure there
are Federal regulations that constrain the State Government. Do
you know of any of those regulations that eased up sort of the
onerous demands on counties and cities or--not to put you on
the spot but ----
Mr. Brinkman. Right.
Mr. Massie.--it may be easier for me to ask it at another
level. Are there regulations at the Federal level that you
would like to see us reduce that are constraining your ability
to improve things in Kentucky?
Mr. Brinkman. Well, I mean, certainly, the Waters of the
United States and the regulations promulgated thereunder have
been very restrictive and have made it difficult to develop
property and add to the tax base, which, as you know, is
critical for our counties and cities throughout Kentucky,
particularly in light of the pension liabilities that exist.
There's a perfect example of that where if we have sensible
regulation at the Federal level, we believe that we can have
further economic development, which will add to the tax base,
which will help all our counties and cities meet their
financial obligations, help our school districts, which, as you
know, education funding has been a challenge in light of our
pension obligations. So that's a perfect example where we think
that with sensible regulations at the Federal level, our school
districts, or cities, and our counties will benefit immensely.
Mr. Massie. Ms. Jones, did you mention that you had a two-
for-one rule in the regulation there in Canada? The President
signed an executive order with a similar rule. I am a little
bit worried that it is not really the number of the regulations
but, I mean, regulation could be three orders of magnitude more
restrictive than another regulation. Can you speak to the value
of having a two-for-one rule and is it important to look at the
magnitude of the regulation or the number of the regulations?
Ms. Jones. I think it's important to do both, so I think
for the biggest rules you want to have robust benefit-cost
analysis in place, but just like in a toolkit, you want to have
maybe--if you wanted to have a robust toolkit, you'd have a
sledgehammer and a hammer and a wrench and a screwdriver. You
want to pick the right tool for the right job. And I think it
is important to capture the blizzard of small things that can
add up to a very big cumulative burden. And to do that with a
simple measure that you can use broadly is good.
And the difference--there is a difference between the Trump
two-for-one, which uses a more complicated measure and the
British Columbia two-for-one, which used a simpler measure and
was applied much more broadly. So the Trump two-for-one policy
applies to about 8 percent of the most economically significant
rules, using a cost-benefit analysis, which again absolutely
has its place. British Columbia's was much more granular, so
they counted everything. And each regulation could have
literally thousands of regulatory requirements associated with
it. That's what B.C. counted. It was very broad.
Mr. Massie. I like the granular approach. My time is
expired, so I am going to yield back, Mr. Chairman.
Mr. Palmer. I thank the gentleman.
The chair now recognizes the ranking member, Mr. Raskin,
for five minutes for his questions.
Mr. Raskin. Thank you, Mr. Chair.
Ms. Jones, let me stick with you for a second. The project
that you describe that took place in British Columbia was
undertaken on a bipartisan basis ----
Ms. Jones. It was ----
Mr. Raskin.--or a multi-partisan basis?
Ms. Jones. No. In British Columbia, it was a new government
that came into power, a liberal government that came into
power, and won an overwhelming majority actually because of
concern around economic issues.
Mr. Raskin. Yes.
Ms. Jones. However, the government has since changed, and
the government that was previously in power has so far kept the
reforms in place.
Mr. Raskin. So, in other words, it's not so much a bone of
ideological contention in Canada. Is that right? Or ----
Ms. Jones. I think red tape reform has broad support across
the political spectrum ----
Mr. Raskin. Yes.
Ms. Jones.--in Canada. You see that at the Federal level as
well.
Mr. Raskin. Yes.
Ms. Jones. Canada's one-for-one rule, you had all parties--
in fact all votes except for one in Parliament on that
legislation were for it.
Mr. Raskin. Thank you. So, Mr. Narang, let me come to you.
So I think everybody can agree that we would want to have as
few rules as possible but all the rules that we need in order
to advance what our public priorities are. How do you see the
administration's deregulation campaign? Is it something that is
focused on bureaucratic simplification, or do you see it as a
cover for dismantling substantive rules that the administration
opposes?
Mr. Narang. Well, I'd say it's more the second, and the
reason I say that--and look, I'll agree with others when I say
it's not--it's probably good policy to get rid of regulations,
as long as those regulations don't provide any safety benefits.
But that is not what we're seeing with this executive order.
There are no exemptions for regulations, for example, that
provide safety benefits that have been proven to protect the
public and have been proven to provide economic and social
benefits above the cost. All the regulations are subject to the
executive order, whether or not they protect the public and
provide health and safety to the public.
Mr. Raskin. Got you. So what would be a way to advance the
goal of bureaucratic simplification, reducing red tape, and
especially the time that is required to comply with
regulations, while at the same time not undermining the public
interest as it is embodied in specific legal mandates? And I
don't know, Ms. Jones, whether you have got some take on that
from the Canadians?
Ms. Jones. Yes, I think one of the important things that
happen in British Columbia is that regulators themselves were
part of the solution. This wasn't just the private sector
saying here's the long list of rules that we want you to cut or
eliminate. This was much more of a partnership. The private
sector was engaged and consulted for where--small businesses
were consulted. But regulators, too, had a very important role,
and I think they did a great job of helping to protecting the
most important rules ----
Mr. Raskin. So it was like a broadly ----
Ms. Jones.--while getting rid of the rest.
Mr. Raskin.--consultative process where people are
collaborating and then also the regulators are not demonized in
the process but they are people who actually know where the
different skeletons are and which rules seem to be atrophying
or obsolete?
Ms. Jones. The way I would characterize it is you take
regulation makers and you turn them into regulation managers,
so they have two parts of their job. One is to find and develop
new rules, but another part of their job is to continuously
find and get rid of those ones that are duplicative or obsolete
or no longer work anymore. And I think they're doing a pretty
good job in British Columbia.
Mr. Raskin. Yes. Mr. Brinkman, did you want to comment on
that?
Mr. Brinkman. Yes. Under Kentucky law, we have a very
rigorous process for promulgating and amending regulations. We
have a public comment period. We get comments, and then
oftentimes we amend the regulations. We have a statement of
consideration, and then it goes before a standing committee of
both the House and Senate of Kentucky with members of both the
majority and minority parties that review those regs, and the
regs go to the committee of jurisdiction, whether it's health
and welfare or transportation, and any of those committees can
find the regulations deficient. To my knowledge, and it's just
to my knowledge, but I do not believe any committee has found
any of our regulations--or proposed regulations deficient to
date. I may be wrong, but I don't believe so because we have
this consultative process with stakeholders and members of both
chambers in both political parties.
Mr. Raskin. Okay. Thank you, Mr. Chairman, I yield back.
Mr. Palmer. The chair recognizes the gentleman from
Wisconsin, Mr. Grothman, for five minutes for his questions.
Mr. Grothman. Yes. First thing, in dealing with rules, of
course, rules have different sizes, you know? There are 100-
page rules and there are one-page rules. And sometimes if you
do like one in, one out or whatever, there are rules you want
to change, and you call that a regulatory rule change but
really what you are doing is you are putting in a rule that is
beneficial. So at first blush they did one in, one out or one
in and two out or whatever seems kind of simplistic because
there are rules you want to change.
Do any of you want to respond to that?
Mr. Vickers. I think, you know, rules are valuable, et
cetera, but we need to consider as we're making them the cost
of compliance. The cost of compliance is, you know, the
handbrake that comes in ----
Mr. Grothman. And nobody doubts that the rules are horrible
and particularly on a Federal level they are probably
unconstitutional to boot, but I am talking about a technical
question, you know? If we are going to say we are going to get
rid of one rule for every new rule we promulgate, new rules can
come up that we like, right, because they kind of replace old,
bad rules. I guess that is what I'm saying. Just physically how
do you deal with that problem?
Mr. Brinkman. If I might, one of the initiatives we've
undertaken is we're looking at our section 1915(c) waivers.
Those are the waivers for our individuals with development of
disabilities. And these waivers were--and the accompanying
regulations were written over a period of decades, and they're
very inconsistent. They're difficult to understand. They're
difficult to administer. And so we've undertaken an initiative.
It's--we've been working on it for about a year. It's probably
going to encompass another couple years because you have to get
this right obviously. This--these clients, there's no margin
for error.
But by just making the waivers and the regulations
consistent and easier to understand, we believe that four
groups are going to benefit: first and foremost, the clients
and their parents and caregivers; second, the independent case
managers; third, the providers; and then four, our internal
staff within our cabinet. This is a situation where we are
cleaning up relations for the benefit of four different
populations.
Mr. Grothman. If you are able to do that. Now, I am going
to give you another question, which really gets to me the guts
of the problem because I have dealt with administrative rules a
lot on a State-level, and I am going to cover three areas I
think we ought to completely undo on a Federal level: nursing
homes, where so many employees spend forever filling out
paperwork rather than taking care of their residents; special
education, where I think we have people in special ed that
shouldn't be there or in which the teachers spend an inordinate
amount of time in this country filling out forms rather than
working with students; and transportation, where everybody
agrees that as soon as you put Federal dollars in a project, it
costs wildly more than if there are no Federal dollars.
Nevertheless, I know on all three of these if we simplified
them, in this country we would have a problem because, while I
love friends of both parties, sometimes people of one party,
out of maybe just a general distrust of business, will fight
any changes that would seem just common sense.
What I will ask you to do if you have had any less
regulation in your country, how do you deal with the more
government-worshiping side of the aisle? How did you get them
to go along and admit that sometimes the government is wrong or
it is possible to put too much paperwork on business?
Ms. Jones. One of the arguments that we make when we're
talking to those that might be a bit skeptical about cutting
rules and the outcomes that might--that you might get as a
result of that is that we need a lot more transparency in the
system. And so with the B.C. regulatory requirements, you can
see that if there were 10,000 regulatory requirements cut in
the environmental area, you could ask--start asking tough
questions like if there were worse outcomes, you could say look
at those rules, and you could have those kinds of challenge
functions. If the rules were cut and the outcomes were
maintained at high levels, that gave you a different kind of
feeling, but it gave more accountability and transparency into
the system, which is good whether you think there should be
more rules or there should be fewer rules. And that's the kind
of transparency we have on the tax side.
Mr. Grothman. Mr. Brinkman, if you were able to reduce the
regulatory burden in Kentucky, were you able to do it and both
parties were able to go along with it?
Mr. Brinkman. Well, again, because of our statutory scheme,
both parties have a role in reviewing regulations and voting on
them and they could find them deficient. And again, we invite
stakeholders to our public comment period. So we feel it's a
very collaborative process, and to my knowledge I don't think
the other party has found any--to my knowledge any of our
regulations to be alarming, any regulations we've repealed or
amended. I may be wrong, but I don't believe they've found any
of those alarming ----
Mr. Grothman. Good for you ----
Mr. Brinkman.--but sensible.
Mr. Grothman.--and I look forward to dealing with the other
Congressmen on this panel next year, and maybe we can sit on
the side and make suggestions but I'm particularly focusing on
those three areas, transportation, oh, the paperwork with the
poor nursing homes, and special ed. Thanks.
Mr. Palmer. The gentleman yields back.
The chair recognizes the ranking member, Mr. Raskin, for--
oh, wait a minute. The ranking member Mr. Krishnamoorthi--I am
having a tough day today--for five minutes for your questions.
Mr. Krishnamoorthi. Thank you, Mr. Chairman.
You know, my--look, I am a former small-business man, so I
really appreciate any efforts to cut red tape and regulations,
unnecessary regulations. However, you know, at the same time
that we want to cut red tape, we don't want to, you know, lay
out the red carpet for predatory practices or anticompetitive
practices or anti-consumer practices, what have you.
So, you know, one--I am on the Ed and Workforce Committee
in addition to being on the Oversight Committee, and one thing
I wanted to ask Mr. Narang about is basically what we are
seeing in terms of cutting rules that would basically prevent
predatory practices in the education space and specifically the
borrower defense rule. I think you mentioned this before. I am
very concerned about this. This is the rule that basically
allows students to basically recoup money that was fraudulently
taken from them when they paid for worthless degrees or an
education that really didn't pan out to anything. And so I
would just like to get your sense of, you know, repealing the
kind of a rule, you know, what kind of effect does that have
and how do we, you know, deal with something like that?
Mr. Narang. Thank you, Congressman. So we are also at
Public Citizen are quite concerned about the growing student
debt crisis in this country. It is maybe the biggest debt
crisis that we have, and obviously it is handcuffing
opportunities for students across the country. The borrower
defense rule was an important rule that was put forward in
during the Obama administration by the Education Department to
make sure that students that do not get degrees that work out
for them are able to avoid the kind of massive debt that we're
seeing way too often with students.
Unfortunately, the Trump Administration's Education
Department is rolling that back. They've done so in an illegal
way, at least according to one court that has struck down the
massive delay of the rule. These are critical protections for
students. I don't--you know, if the Trump Administration
continues down this road, we're not looking at any solutions
for the debt crisis.
Mr. Krishnamoorthi. So here is ----
Mr. Narang. We are just looking at actions that make it
worse.
Mr. Krishnamoorthi. Here is the deal, okay? Like when we
promulgate the rules, we have to make sure on the one hand that
we don't issue excessive red tape, we don't put obsolete
regulations in place, and so forth. However, on the other hand,
you have to balance that against regulatory capture by the
industry that you are regulating. You don't want them to
necessarily start to decide what the regulations are going to
be so that they can continue with practices that perhaps the
public is uncomfortable with.
And so I go to Ms. Jones and just ask you, how do you
balance that? Because that is kind of what is happening in the
education space. We know that in the current Education
Department there are officials at senior levels who come from
the very industries that they are trying to undo regulations
on. So how do you prevent that ----
Ms. Jones. Well ----
Mr. Krishnamoorthi.--because we all want to see less red
tape, but we don't want to open the door to predatory
practices.
Ms. Jones. Well, I'll come back to two of the--what I think
are the lessons from British Columbia. One is political
leadership. And the minister responsible for the regulatory
reforms in British Columbia was very clear that this wasn't
just about cutting rules, that enforcement was going to be
strong, fines in many cases went up so there were fewer rules,
but enforcement and the penalties for disobeying the rules were
in place, so that's ----
Mr. Krishnamoorthi. So there is real independence.
Ms. Jones. So that's an important ----
Mr. Krishnamoorthi. Yes. Yes.
Ms. Jones.--part of the equation. And I would say the
second lesson from the British Columbia model that's relevant
here is really the engagement of regulators. So this isn't just
about--it's not one extreme or the other. You're looking for
that happier middle ground ----
Mr. Krishnamoorthi. Right. Right.
Ms. Jones.--right, where it's not no rules. That's not what
they were doing. But the--the overarching lesson is you can
have high levels of health, safety, and environmental outcomes
with many fewer rules. And that's good for everyone. And, by
the way, not just for business, for citizens. So things like
the childcare ----
Mr. Krishnamoorthi. Right.
Ms. Jones.--subsidy application that used to take four ----
Mr. Krishnamoorthi. Right.
Ms. Jones.--that used to take--you know, it was 18 days and
now it takes four days, you know, things like that were good
for citizens.
Mr. Krishnamoorthi. So I agree. I was just recently in
Kentucky, sir, and I see that there is change afoot, but I
heard a lot of complaints about the Federal Government. Do you
know why? Because of uncertainty on trade rules and tariffs at
the Federal level. And you know the bourbon industry is
obviously intensely affected. So talk to me about uncertainty
and unpredictability with regard to Federal trade rules and
regulations and how does that affect you?
Mr. Brinkman. Well, I mean, obviously, that's a national
debate that's going on that affects a number of industries in
Kentucky, as you referenced. But more to the point in terms of
our efforts with our Red Tape Reduction Initiative, as I
indicated in my testimony, one of the things we're doing is
we're conforming to the Federal counterparts, so if the Federal
Government determines that a regulation is appropriate, we're
conforming to that Federal counterpart. Too often in the past
we had a separate regulation dealing with the same subject
matter with inconsistent definitions and standards. That makes
it impossible for any business, including any small business --
--
Mr. Krishnamoorthi. Sure.
Mr. Brinkman.--to try to figure out what the rules of the
game are. So that's part of our ----
Mr. Krishnamoorthi. Sure.
Mr. Brinkman.--initiative where we're not necessarily
weakening the regulatory regime. We're simply recognizing the
supremacy of the Federal Government ----
Mr. Krishnamoorthi. Sure.
Mr. Brinkman.--and conforming to it.
Mr. Krishnamoorthi. Sure. But where you don't have a State
analog to a Federal rule, which has supremacy or, you know,
takes the whole domain like trade, you want predictability, you
want some certainty?
Mr. Brinkman. Of course.
Mr. Krishnamoorthi. Yes.
Mr. Brinkman. Of course. As you well know, being a small-
business person, that predictability, understanding the rules
of the game is paramount of the ability to, you know, sustain
the business. We know that's very important.
Mr. Krishnamoorthi. Got it. Thank you.
Mr. Brinkman. Yes.
Mr. Palmer. I thank the gentleman.
The chair now recognizes the gentleman from California, Mr.
DeSaulnier, for five minutes for his questions.
Mr. DeSaulnier. Thank you, Mr. Chairman.
The chairman and some of my colleagues are sometimes
mystify that I was once a Republican when they see how I vote,
but this is an area where at least in my life experience it was
a bipartisan effort, and these questions are directed to Mr.
Narang because I understand you have done some investigation on
this.
I was appointed by Governor Pete Wilson in 1996, '94, to be
a member of the California Air Resources Board. This is to
enforce the U.S. Clean Air Act and the California Clean Air
Act. The U.S. Clean Air Act, which was signed originally by
Richard Nixon, a Republican from California, recognizing that
California had much more severe public health costs when it
came to pollution. Then reauthorization was signed by another
Californian, Ronald Reagan, and a Republican. I was reappointed
by Governor Schwarzenegger, a Republican, and then Governor
Davis, a Democrat.
So one of the joys of being on that board was that it was
largely nonpartisan up until recently, that there were always
equal members left over from previous administrations. But we
did cost-benefits that I thought were terrific. The staff knew
that they wouldn't bring something to the board or committee of
the board until it had been thoroughly cost-benefited, which I
thought was really good, particularly the public health costs,
given its charge.
So in that context we spent many, many years coming up with
State statutes that went to issues around climate change and
carbon emissions. We were very careful that we wouldn't be
preempted under CAFE standards at the Federal level. We applied
for a waiver. We had never been denied a waiver under the Clean
Air Act until this instance. The Obama administration came in
and gave us the waiver. We were going to prevail, most legal
experts opined. And now we have this administration wanting to
roll Obama administration regulations around carbon to
complement California Air Resources Board work that has been in
effect in a bipartisan level way for 20 years, actually longer
than that when our Scientific Advisory Committee first came to
us and said this is a problem.
So the estimate I understand that you have done some work
on is that this rule, if it goes into effect and we can't work
something out with California, the Administration, the car
industry, will cost $100 million to enforced but will cost
almost $1 billion to the economy. So could you talk a little
bit about that? And politics and political opinions being
driven and entering into, which I think should be nonpartisan
if we had the benchmarks right in measuring statutes and
regulatory efforts to make sure that they were--we could have a
real conversation about their benefits and their costs.
Mr. Narang. Thank you, Congressman. So there are reams of
evidence demonstrating that fuel economy standards are good for
the economy, for the national economy, for State economies.
This is separate of course from the, you know, environmental
benefits that we get from increased fuel economy standards.
This is--actually I think maybe the most interesting recent
piece of evidence is when the Trump Administration proposed the
rollback and potentially, you know, superseding of California's
waiver. There was a lot of internal disagreement between the
Department of Transportation and EPA. And the EPA experts, you
know, were showing--this all came out post-proposal of the
rule, but the EPA experts were showing strong data to the
Department of Transportation officials saying, look, all of
the--the methods that you're using, the numbers that you're
using, they are wrong. You're making assumptions that are not
based in fact, and the EPA can't support these conclusions.
Now, obviously, the EPA, you know, is partly involved in
the rollback, but I think it was very telling to see those
behind-the-scenes documents from EPA staff to the Department of
Transportation staff, making it clear that they did not feel
that the evidence that now, you know, the Department of
Transportation is relying on in rolling back the fuel economy
standards, that that is solid evidence that--lots of EPA
studies, cost-benefit studies dating back decades show that the
Department of Transportation numbers are wrong.
Mr. DeSaulnier. So I would just like to conclude. When I
was in the legislature, I was a big supporter because I
represented California in the National Conference of State
Legislators. And I looked at what States were doing around
regulatory authority, and I actually thought one of the really
good things that Texas did was their Sunset Commission, an
independent commission that did terrific work in looking at
statutes and regulatory issues and doing cost-benefits and
saying, you know, it is not working as intended. The
legislature either needs to change it or we are going to sunset
it.
So I really think there is a wonderful opportunity here, as
I say, if we get the framework right, that this would be
nonpartisan. I think all of us want government to work better
and more efficiently for Americans. And, Mr. Chairman, I know
you feel the same way, so hopefully, this can become more of
that dialogue and less of the political dialogue. Thank you,
Mr. Chairman.
Mr. Palmer. I thank the gentleman, and I do have great hope
that this can be a bipartisan effort. It is interesting. We had
three regulatory reform task force hearings last year in 2017
with agency representatives who came and testified about agency
employees implementing the executive orders. And frankly, when
we announced these hearings, I thought that we would get some
pushback. I thought there would be some resistance, but what we
found was not only was there no resistance, there was
enthusiasm for it. And the thing that I tried to get across to
people is, first of all, we all breathe the same air, we are
all drinking the same water, whether it is bottled or
otherwise. We are walking on the same grounds. Our kids and
families are breathing the air and drinking the water. That is
not what this is about. What this is about is having a sensible
regulatory environment.
And what we have found from the regulators who came over,
the folks who were trying to implement this is this helps them
do their job. When you have regulations that are accumulated to
the degree that they have over time, you start to realize that
you are trying to implement regulations that are obsolete. You
are implementing regulations that people have forgotten were on
the books that you have duplicated, and they don't match, and
in many cases they are contradictory. It imposes an enormous
cost on businesses. This is not rolling out the red carpet, as
somebody said, to business. That is not what this is about.
This is about sensible regulation because I think that it is
one area where we agree.
The regulations that we have adopted over the years,
particularly on the environment, have resulted in dramatic
improvement in environmental quality. I mean, our economy has
grown almost 500 percent since 1980. Vehicle miles have gone up
over 100 percent. Population has increased over 30 percent.
Energy consumption is up over 30 percent, but emissions, for
instance, are down over 50 percent. We are making progress.
What we want to do is make sure that we can continue to make
progress, but at the same time allow people to flourish. And it
almost sounds like another opening statement, so I am now going
to recognize myself for five minutes for questions as we await
the call of votes.
And one of the things in the State of Alabama that we were
looking at doing--I was on the Governor's Task Force for
Improving State Government--was to create a one-stop shop. And
we are talking about getting rid of the obsolete regulations
and the duplications and the contradictions, but we also need
to make it easier for people, whether it is getting permits or
being able to get answers in regard to their questions about
regulations. Has that been part of what has been done in
British Columbia or Australia or Kentucky? And we will begin
with Ms. Jones.
Ms. Jones. Yes, in British Columbia there's been some work
to do one-stop shopping for sure. That was part of the reforms,
and I think that's gone over very well. There's also at the
Federal level ongoing work to simplify that and have one
business number and that kind of thing, so that's certainly
very popular. I think it's one of many, many things that needs
to be done, and that was, again, one of the things that B.C.
did right was they didn't say bring us-- often, I've been
involved in regulatory reform exercises where people will say
bring us your top 10 irritants. And it's not about the top 10
irritants. The one-stop shop may be very well on that list, but
it really is about the blizzard of little things. So, again,
having that broad, clear, simple measure was very helpful in
that regard.
Mr. Palmer. Mr. Vickers?
Mr. Vickers. Yes, SBR and Australia is in effect a one-stop
shop. It allows you to file your taxes, to register a business,
to register an employee, and so on through a single reporting
framework. And the way that that worked was agencies came
together, agreed on a common taxonomy, and generated reports
using those common data elements. And when you do that, you
reduce the cost of compliance significantly, and that has huge
benefits for business. I quoted the A$1.4 billion figure
before. Ninety-seven percent of that was savings to small
business, so a huge number of that.
Mr. Palmer. Yes.
Mr. Brinkman. Yes, Mr. Chairman, that's the other part of
this initiative that I didn't discuss, but clearly, we are
creating one-stop. We have initiatives for one-stop for
businesses and individuals to go to one portal to handle all
their needs. And our applications are going online so people
can complete the applications online, submit the payment for a
renewal fee for a license, that type of thing online, and we're
also working with our agencies every day to cut down on the
processing time to respond to requests for permits or
applications or things of that sort because we know that one of
the more frustrating things for individuals and businesses is
the uncertainty of not knowing when or if an application, a
license, a permit, et cetera, is going to be granted. So we are
very cognizant of the need to be responsive, and that is part
of our initiative.
Mr. Palmer. You know, Mr. Vickers--well, go ahead. You
would like to follow up?
Mr. Vickers. Yes, just quickly. I would encourage you to
think about the harmonization--potential harmonization between
Federal and State compliance regulations. It's one thing to
focus on, say, the State of Alabama or Kentucky, but if you
still have to deal with the Federal Government separately, that
is--that introduces a burden.
Mr. Palmer. Well, that is part of what we are trying to do,
and you, in your previous response to my question, said that 97
percent of the savings went to small business, and that is
really the economic engine of the American economy. It is the
employment engine of the American economy. Massive corporations
have the resources to hire compliance people to make sure they
comply with this, but small business really gets hammered by
the overaccumulation of regulations.
And I had entered into the record this--it's actually an
article about the Gallup report, the Gallup organization report
that came out back in 2014. It showed that we were averaging
100,000 more business startups than closures prior to 2008. And
then we went through--and this sounds partisan, but it is just
facts. We went through what I would consider a blizzard of new
regulations, and there were also other issues with the
recession, but I think this compounded the problem, that by
2014 we had gone from 100,000 more businesses opening than
closing to 70,000 more businesses closing than starting up. And
on a per capita basis we no longer ranked first in
entrepreneurism or third or fourth. We ranked 12th. And it is
particularly harmful for small business.
And one of the things about what we are trying to do with
the regulatory reform, the red tape reduction and what you
people have done successfully I might add is that you have
removed uncertainty. And I preach this till I am blue in the
face, but money is just like water. It will always seek the
path of least resistance. And when you have got particularly
small businesses, they are already taking risk, you just add to
that risk aversion when you have overly complex regulations.
What people want is a predictable environment in which to
invest.
And if you do what has been done in British Columbia and
Australia and Kentucky and in the U.K., you reduce the
uncertainty. And for us in our economy that is particularly
important because we see what is happening right now in the
economy and the low unemployment. As we continue to create an
environment where people will start a business, you will hire
more people, wages will go up because it puts upward pressure
on wages, that is really what we are trying to do here. We want
to create an environment where we don't diminish the quality of
our environment. We want to continue to improve that. And by
the way, wealthy nations do that. Poor nations don't as well.
But we want people to flourish.
And really the good thing about this--and I speak to my
good friend from California, Mr. DeSaulnier--and he is a good
friend. We have become very good friends since our time in
Congress; we came in at the same time--is that what British
Columbia and Australia and Kentucky and even the U.K. have done
is they have created a model. You have worked out some of the
kinks that I think is going to be very, very helpful and
instructive to us so that it significantly reduces the
potential for missteps and what we are trying to do.
So I want to thank our witnesses for appearing today and
for the great work that you all have done. As I said before, it
has been very helpful to us all, and we look forward to
interacting with you again in the future.
The hearing record will remain open for two weeks for any
member to submit a written opening statement or questions for
the record. If there is no further business, without objection,
the subcommittee stands adjourned.
[Whereupon, at 3:31 p.m., the subcommittees were
adjourned.]
APPENDIX
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