Ryan Young is a senior economist at the Competitive Enterprise Institute.
Federal Newswire
How has the regulatory state grown?
Ryan Young
We actually saw fewer rules than usual this year. In an average year, agencies will issue well over 3,000 new regulations. That's 24/7, 365 days a year–a new rule every 2-3 hours. Last year,, we were down to just 3,008 rules, whereas the previous year, I think it was 3,168. The year before that it was 3,200.
We're also seeing a lot more rules that aren't going through the formal process. They don't get counted. We call those ‘regulatory dark matter.’ That's where agencies issue notices, press releases, and blog posts, announcing policy changes instead of putting it through the formal process.
Federal Newswire
What are the implications?
Ryan Young
The pioneer on that was my colleague, Wayne Kruse, who's done extensive work on this. When an agency wants to issue a new rule, they have to go through a process. They have to publish a draft version in the daily Federal Register, and then there’s a comment period, which is getting shorter. Only then, after taking all that into account, can they publish a final regulation.
This process for agencies is a hassle. It can take six months to a year. There's a unified agenda where agencies publish all their upcoming rules. Some rules can stay on there for years before they finally run through the whole process. If an agency is facing what it perceives to be an urgent problem–whether it's climate or equity or anything else–sometimes they'll just go ahead and issue a policy change through a press release, or they'll publish a notice in the Federal Register rather than a proper proposed rule.
We call that ‘dark matter’ because we don't know how much of it there is. We know that last year there were 3,008 final rules that went through the proper process. We don't know how many dark matter rules are out there, but we also know that courts uphold them when there's a controversy about them. It gives agencies almost unlimited power, and very little accountability and transparency.
Federal Newswire
Changing the definition of major rules lets agencies get away with this, correct?
Ryan Young
That's an important transparency issue. A lot of times agencies will [change] smaller rules because no one cares if it's just paperwork. For bigger rules, that might have hundreds of millions of dollars of economic impact. From the Reagan administration up until now, any regulation costing more than $100 million per year got a special tag called “Economically Significant.” The Office of Management and Budget would take a look at it and do their own cost-benefit analysis. They get special disclosure and more transparency. The Biden administration didn't care for that.
One of the things they did was they doubled the threshold from $100 million to $200 million. So more rules slip under that threshold and escape review. The other thing they did is they stopped calling it ‘economically significant.’ It's a major transparency dodge and it's a way for agencies to do whatever they want with much less accountability and transparency to the public.
Federal Newswire
What’s happened in the last couple of weeks in terms of regulations?
Ryan Young
For over a decade now, every week I've done a regulatory roundup on the website, www.CEO.org. I look at the day's Federal Register and tally up how many new regulations are issued, how many final regulations, how many proposed regulations, how many notices, how many pages. I also take notes on any new regulations that come out with links to the full text.
All this is on the websites. I have the most recent edition up.
Just to give you an idea of what's going on, there is a national potato promotion board, and they are changing some of their board membership requirements. [Also] a bunch of agencies are inflation-adjusting their civil monetary penalties–pretty harmless administrative stuff. [There are also] new regulations on importing archeological artifacts from China Gulf. There's an emergency-attack action in the Gulf.
All of these little regulations taken by themselves are pretty harmless. But when you have death by a thousand cuts per year, [it adds up].
Federal Newswire
How do administrative courts present a problem?
Ryan Young
We have two court systems in this country. The Constitution outlines the judicial system, along with the executive and legislative [systems]. Three branches of government, separate powers based on the whole principle of “Don't put too much power in one place.” That goes back to our founding. It's a separation of powers issue.
There are more than 30 federal agencies that have their own in-house courts. These include big agencies like the Federal Trade Commission and Securities and Exchange Commission. Inside these agencies, in-house courts hire their own judges and pay their own salaries. They're not independent.
The agencies set the rules of procedure and evidence. Many agencies stack the deck so the prosecution can view some forms of evidence while they withhold that from the defendants who are not allowed to look to defend themselves. Already in the regular court system the government wins about 60% of the time. It's more than 50/50 because usually the government doesn't bring a case unless they think they can win it.
So 60/40, the government wins. The win rate is more than 90% in the Federal Trade Commission's in-house [court]. Last year, they snapped a 25-year winning streak. When they lost that case, the FTC commissioners overruled their own judge and handed themselves the win anyway. The case is still being litigated now. It is blatantly unfair, and it results in many cases being litigated twice. If you're not a wealthy defendant, a lot of times you do not get justice.
Federal Newswire
Can you give examples?
Ryan Young
My colleague, Stone Washington, and I recently published a paper about administrative law courts, making the case for moving them out of agencies and into the regular court system so defendants actually get a fair shot. The administrative law courts do some legitimate things and have some legitimate expertise. There's a reason they exist, but for separation of power and fairness reasons, they don't belong inside the agencies. Don't put too much power in one place, put them in the proper judicial branch where they belong.
Federal Newswire
How does the job market look? Are jobs actually being created or are people just going back to work as a rebound from Covid?
Ryan Young
We're basically at full employment right now. One thing I worry about is people misinterpreting that, especially people at the Federal Reserve. If things start to slow down a little bit, are they going to freak out again? They have to avoid that.
We've been seeing in the last few months that job growth has been slowing to the point where it's under 200,000 new jobs net per month–that’s annualized to a little over 2.4 million per year, which is roughly what population growth is.
That's fine. That's about where you want it to be if you're already at full employment. When people are saying that job growth is slowing, at some point it has to. But on the other side, there's the labor force participation rate, and that went down sharply during Covid in part due to stimulus payments.
Just for context, right now it's about 62.8% of working age adults participating in the labor force. During the worst of the pandemic, that dipped down to about 61%, so about a 1.8% difference in a 165 million-person workforce. We’re talking between 2-3 million jobs. That's a lot of people who just straight up left the workforce. We've had unemployment below 4% for about two years now, but that doesn't really matter because it doesn't count those 3 million people who left the workforce. Now they're coming back. The labor force participation rate at 62.8% is pretty much right where it was from 2014 to 2018.
That's historically very low. It's lower than it was in the ‘70’s-’90’s. That's been a long term decline, and it’s something I'm a little bit worried about. I think there's a deregulatory stimulus that makes it just easier for people to find jobs, without having to ask government permission to get licenses. That could go a long way to getting that back up to where it should be.
We're fine from Covid at this point, finally, but there's still a lot more we can do.
Federal Newswire
Where can we go to find more of your work?
Ryan Young
Our website is www.CEI.org. I'm on Twitter @RegoftheDay.
