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An executive order issued by President Barack Obama that was designed to “cut red tape” has added $10.2 billion in regulatory costs to the economy, according to a new report.
Tuesday was the third anniversary of Executive Order 13563, prompting the American Action Forum to examine the effects of the order. It was intended to reduce “redundant, inconsistent, or overlapping” regulations.
The order was hailed as “unprecedented” by the president and former Office of Information and Regulatory Affairs (OIRA) administrator Cass Sunstein. However, Sam Batkins, director of regulatory policy at American Action Forum, found that the action was hardly unique and has had the opposite effect of its intended purpose.“Has Washington actually cut red tape? On net, final rules from Order 13563 have added more than $10.2 billion in costs, mostly from new regulations labeled as ‘retrospective,’” Batkins said. “Final rules have cut 7.9 million hours of paperwork, but Dodd-Frank and the Affordable Care Act have easily outpaced those deregulatory gains.”
The “deregulatory measures” resulting from the executive order actually add over $10 billion in costs to the economy. For example, a final rule imposing energy standards for transformers carries a $5.22 billion cost to comply and 58,320 hours of paperwork.
Taken with the proposed regulations under the executive order, the total burden to the economy would reach $13.7 billion.
President Obama promised that the order would reduce paperwork in a January 2011 Wall Street Journal editorial.
“We're also getting rid of absurd and unnecessary paperwork requirements that waste time and money,” he wrote. “We're looking at the system as a whole to make sure we avoid excessive, inconsistent, and redundant regulation.”
The order has added 1.5 billion hours of paperwork to comply with its regulations. “As for the aggregate level of red tape, in fiscal year 2010, the federal government imposed 8.8 billion hours of paperwork,” the report said. “Today, that figure is 10.3 billion hours, a 17 percent increase, despite this ‘unprecedented reform.’”
“It would take more than 750,000 employees working full-time to complete the new annual paperwork added since 2010,” Batkins said.
Regulations under the Department of Health and Human Services (HHS) take 653 million hours of paperwork to comply, a 26 percent increase since the executive order was issued.
Other rules intended to save regulatory costs have resulted in millions of hours of extra paperwork. A “Positive Train Control” rule that removed some regulatory provisions for rail safety saved $645.7 million but resulted in 3.9 million additional hours of paperwork.
The report also found that the administration is recycling regulations in order to achieve savings, citing at least 39 proposed or final rules that were initiated before the executive order, and 15 that were introduced under the George W. Bush administration.
Sunstein claimed in 2011 that the executive order would achieve $10 billion in savings. Batkins did note that the effort has led to cost cutting, including $940 million in savings and 9.8 million less paperwork hours from a Medicare and Medicaid hospital reform rule.
Overall he found $8.7 billion in savings, still short of the regulatory burden that has resulted from the administration’s plan to cut red tape.
“The White House has repeatedly claimed that Order 13563 is unprecedented, but a cursory review of the record proves there is nothing unique about their efforts,” the report said. “Every President since Jimmy Carter has issued an executive order on regulatory reform, and even President Carter urged agencies to ‘periodically review’ existing regulations.”
“President Obama’s deregulatory measures have actually resulted in more than 1.5 billion hours of paperwork and $10.2 billion in new net costs,” Batkins said. “The only aspect of recent regulatory reform that is unprecedented is that the administration has the temerity to recycle old regulations and claim them as part of a historic ‘retrospective review.’”