On
February 10, 1999, the U.S. House of Representatives passed the
Mandates Information Act of 1999 (H.R. 350), sponsored by
Representatives Gary Condit (D-CA) and Rob Portman (R-OH), by a
vote of 274 to 149. Two days later, Senators Spencer Abraham
(R-MI), Trent Lott (R-MS), Pete Domenici (R-NM), and 15 others
introduced the Senate's companion bill (S. 427). These legislative
proposals seek to build on the successes of the Unfunded Mandates
Reform Act (UMRA) of 1995 so that proposed private-sector mandates
receive as much analysis and deliberation as do mandates affecting
state and local governments. Similar to a version of the bill that
passed the House last year (H.R. 3534), this legislative effort
would make additional improvements to the information and
procedures Congress uses to conduct its daily business. The Senate
now has the opportunity to help Congress to shine an even brighter
light on the ways in which proposed mandates will affect the lives
and prosperity of Americans.
Since UMRA passed in 1995, it has played
an important, positive role in helping Members of Congress to
deliberate, assess, and reassess more carefully the economic impact
of proposed federal mandates. Understandably, those who advance new
legislative proposals have the incentive to highlight the benefits
(economic, social, environmental, and other) of their proposals and
downplay their costs. As Deputy Secretary of the Treasury Lawrence
Summers writes, "There is no sense in which benefits become 'free'
just because the government mandates them."2
The Mandates Information Act would continue to improve UMRA's
effectiveness as a check on that imbalance by demanding recognition
and discussion of economic costs as well as benefits of proposed
new private-sector mandates.
UMRA
permits Members of the House and Senate to raise a point of order
on any bill when its intergovernmental mandates, as estimated by
the Congressional Budget Office (CBO), exceed $50 million in annual
cost. Unless waived by a majority vote, a point of order prohibits
further floor action on the measure. Although UMRA directs the CBO
to estimate whether a bill's private-sector mandates exceed $100
million in annual cost, it does not establish a point of order if
the mandates exceed that threshold.
If
the Senate chose to act, the Mandates Information Act would correct
this unfair preference. It also would direct the CBO to provide
more information to Members of Congress about the effects of the
proposed new private-sector mandates on consumers, workers, and
small businesses.
EFFORTS TO ACHIEVE SENSIBLE DECISION-MAKING
In
passing UMRA, the 104th Congress was responding to the outcry of
states and localities to Washington's growing practice of imposing
unchecked and costly federal mandates. Governors and mayors were
complaining that federal mandates imposed by such laws as the
Endangered Species Act, the Clean Air Act, Superfund, the Family
and Medical Leave Act, and the Individuals with Disabilities
Education Act were costing them billions of dollars
annually.3
Title I of UMRA specifically established a
procedure by which Members of Congress would obtain information
about the economic costs of proposed new public- and private-sector
mandates to enable them to deliberate more carefully before
they passed the legislation. The contribution of the CBO's cost
analysis led to Members' seeking information at an earlier stage in
the development of legislative proposals, which often has resulted
in revised, less costly policy proposals in such areas as
immigration, telecommunications, agriculture, and the
Internet.4
Indeed, as former Acting CBO Director
James Blum recently testified, the CBO has been doing cost analyses
since 1983 of the ways in which federal legislation would affect
state and local governments under the State and Local Governments
Cost Estimates Act of 1981.5 It was not, however,
until the
procedural steps, [that] the point of
order requirement be adopted...that the demand for such information
was set in place, and as a result, we now have a lot of interest in
the analysis we are doing.6
Blum
also noted that
[the] CBO has assisted legislative staff
by identifying mandates in draft legislation and, particularly with
respect to intergovernmental mandates, has seen the language
changed in final versions to reduce or eliminate the costs of the
mandates.7
The
CBO reiterated these conclusions in other testimony before
Congress.8
Not
surprisingly, in an era of fiscal budget restraint and in the face
of being held to the spending caps in the Balanced Budget Act of
1997, private-sector mandates with their more hidden costs can be
politically appealing alternatives to new government programs and
higher direct taxes.
As
Table 1 shows, between 1996 and 1998, the number of reported bills
containing private-sector mandates with costs over the $100 million
threshold has been consistently higher than the number with
intergovernmental mandates. In 1998, the CBO identified three times
as many bills with private-sector mandates above the threshold (18)
as intergovernmental mandates (6).9
EXPOSING HIDDEN COSTS
Such
a proposal as the Mandates Information Act represents an effort to
bring the hidden costs of new private-sector mandates into the
sunshine so that the public and its representatives can be better
informed about their impact. Too often, the best defense a small
business owner has against the annual deluge of constantly changing
federal mandates is simply not to grow--to stay small and not
create additional new jobs (making existing staff work harder and
longer)--just so they can remain exempt from at least some of the
mandates.
As
small business owner Ryan Null of Hagerstown, Maryland, recently
testified before Congress,
We
have Department of Labor reports, unemployment insurance reports,
W2, W3, W4, 1099, I-9, 940, and 941 reports and section 125
deductions...all this and more just to make sure my employees
receive their paychecks on time...some government regulations go so
far as to provide disincentives for my (24-person) company to
grow.10
Legally mandated benefits, such as
unemployment insurance and workers' compensation, are not "free" to
the worker. A range of studies indicates that, on average, some 88
percent of the cost of all employer-paid, government-mandated
benefit taxes is shifted to workers in the form of reduced cash
compensation.11 New federal mandates
can have the effect of slowing investments in new technologies that
improve productivity, and reduce workers' income, which can impact
their quality of life and affect their health and well-being.
The
problem of burdensome federal mandates is real. In 1996, states and
localities reported on 200 separate federal mandates involving 170
federal laws, including labor and health and safety laws.12
The concerns expressed included the costs, lack of flexibility,
unreasonable standards, unreasonable implementation timelines, and
the often overlapping and duplicative roles of the federal agencies
administering the laws.13 These problems demand
attention; and they also are problems for the private sector. The
Mandates Information Act, as it amends UMRA, is just one tool
Congress can use to make sure that it deliberates fully before
imposing new mandates that could make a bad situation worse.
Information, the
"Lifeblood of Democracy"
As
consumer group Public Citizen observes on its Web site regarding
the freedom of information,
The
availability of this [federal government] information is important
for several reasons. First, such information is necessary to inform
the public about what the government is or is not doing with regard
to matters of public concern. Access to such information is the
lifeblood of democracy. Second, government records often
contain facts that can be helpful to organizations, businesses, and
individual citizens.14
Yet
special interest groups like Public Citizen conveniently argue, as
Chicken Little does, that the sky will fall because of the
proposals in the Mandates Information Act. Ironically, they now
argue that giving Congress and the public access to more and better
information is dangerous somehow. For example, Public Citizen
recently testified before Congress and claimed a proposal like the
Mandates Information Act represents a "regulatory rollback" that
will endanger the public. Yet, when pressed to explain what aspect
of the bill represents such a "rollback," the response was that
such a term is a "descriptive phrase for the type of bill this is.
This bill does not roll back one single regulation."15
Indeed, the health of the U.S. economy
and, more important, the desire to achieve the highest level of
investment in public health, public safety, and environmental
protection demand that Congress use exactly the type of information
and analysis provided by proposals like the Mandates Information
Act. As a 1994 Harvard University study that examines 500
life-saving interventions concludes, 60,000 fewer lives are saved
each year because of an inability to set priorities that protect
the public from the most serious risks they face.16
The real costs of mandates are the lives that are lost if Congress
and the public are denied information that would help them to see
what must be done, as opposed to doing what feels good.
Since 1995, the information made available
to Congress and the public through UMRA has proved helpful, not
only to policymakers as they consider new policies but also to
organizations, businesses, and individual citizens. Ultimately,
this information strengthens America's democratic system of
government.
The
Mandates Information Act proposes giving any Member of Congress the
right to use a point of order to make the Congress stop and take a
little more time to consider a proposed, new private-sector mandate
that carries significant costs--a mandate that might force a small
business owner to work longer days because he must cut back on
staff to absorb those costs; that might drive a mother or father
out of a much-needed job. If, after considering the costs, the
majority of Members still want to pass the new mandate, Congress
can do so.
In
almost all cases, having more information and analysis of the
impact of a legislative proposal, whether it adds new mandates or
eliminates or modifies existing ones, would help Congress and the
public debate the best allocation of national resources. A more
informed, democratic process would mean a country that devotes
more, not less, of its resources to policies that will save more
lives, improve the quality of life and the environment, and allow
Americans to become more prosperous.
CONCLUSION
Clearly, there is room for Congress and
federal agencies to do a better job of assessing the impact of
federal mandates on states, localities, and the private sector.
Many American families, unlike the Washington bureaucracies, are
forced to set priorities every day. They work hard to manage their
budgets and allocate their resources in a way that maximizes their
family's health and well-being.
Such
proposals as the Mandates Information Act are intended to give
Congress and the public the very best information and analysis
available about important decisions affecting Americans' health and
prosperity. Most Americans expect their elected representatives to
want to know how proposed policies would affect their ability to
ensure the country is getting the best return on its investment.
They would consider it risky and dangerous to the future of their
families if the Senate turned its back on the opportunity to seek
better information on legislative proposals, which would allow it
to work smarter, achieve higher levels of protection, and promote a
better quality of life for every dollar spent.
Angela Antonelli is the
former Director of The Thomas A. Roe Institute for Economic Policy
Studies at The Heritage Foundation.