by Jon Sanders
Research Editor and Senior Fellow, Regulatory Studies, John Locke Foundation
• Overregulation is a well-recognized problem by members of both political parties. Regulation imposes significant costs on the economy through deadweight loss — i.e., labor and capital employed in complying with government edicts and red tape, as opposed to being used for productive purposes.
• Unlike cutting taxes, cutting regulations doesn’t require having government make do with less revenue in Year One.
• Regulations are taxes on time, which for industry translate into real monetary costs. Reducing regulation allows more time to be spent instead on productive activities, encouraging more entrepreneurship, more job opportunities, and more economic growth — which in turn means government collecting more revenue in a more vibrant economy.
• A stronger form of periodic review, sunsetting is having government regulations, programs, and agencies conclude after a set period of time unless positive action is taken by the government to reauthorize them.
• A 2012 study conducted by the Mercatus Center of George Mason University of different kinds of regulatory review processes used in all 50 states found that the presence of a sunset provision was “robustly statistically significant” in reducing a state’s regulatory burden.
• Furthermore, the Mercatus study found that a sunset provision’s impact was also economically significant.
• With North Carolina bound up in over 22,500 permanent administrative rules, Democrat and Republican leaders alike have recently taken actions against overregulation. A measure before the current General Assembly would institute a process for periodic review and sunset of rules.
• An effective sunset approach needs an effective “sunrise” approach, including a REINS law, strong cost/benefit analysis, requiring agencies to consider alternatives to regulation, stating regulations’ objectives and outcome measures by which to hold them accountable, no-more-stringent laws, regulatory reciprocity, and small business flexibility analysis.
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