On at least one point, most Americans agree: Our government does a lot of stupid things.
Presidential candidates are telling us, in so many words, that they and they alone can stop the stupidity. But they can't. Not by themselves. Every president promises to reinvent government. And each one fails. To revitalize American government, our next president must do something that is a bit un-American.
He or she must appoint a new czar — empowered by the executive branch and Congress — to root out the mindless rules and regulations conspiring to strangle innovation, smother small businesses and destroy the public's faith in government.
Americans agree we need sensible rules to preserve our environment, protect citizens and promote public safety. But there is nothing sensible about the regulatory system America has today.
Phil Howard, a lawyer and founder of the reform group Common Good, told the Washington Post that "generations of lawmakers and regulators have written so much law, in such detail, that officials are barred from acting sensibly."
There are now over 175,000 pages in the Code of Federal Regulation, a two and a half fold increase since 1975. Collectively, these regulations cost the U.S. economy as much as $2 trillion every year. Small businesses are hit particularly hard, with regulations costing them over $10,000 per employee, which is 36 percent higher than the cost to larger businesses.
Virtually every sector of the economy is affected by this burden and the impact cascades down to us all. Next time you're pondering the lengthy delay in your doctor's waiting room, remember that paperwork adds at least 30 minutes to every hour of patient care, according to the American Hospital Association.
"Presidential candidates are telling us, in so many words, that they and they alone can stop the stupidity. But they can't. Not by themselves."
Some regulations are worth the cost for the gains they deliver in health, safety, and security. But too many are effectively solutions in search of a problem.
While federal agencies are required to do cost-benefit analyses of individual regulations, there is little insight into the collective impact of these regulations.
As a consequence, America is fast becoming a compliance economy instead of a competitive economy.
In 1971, the year I joined Loews, our annual report featured a single 39-word section on regulatory and legal risks. In our 2014 annual report, the same section ran 14,870 words, covering every imaginable negative outcome. Think about the time and effort that goes into such a section: the teams of lawyers who need to write it, auditors who need to approve it and the investors and regulators who presumably need to read it, and you begin to understand the growing share of a businesses' resources that are devoted to following the rules as opposed to investing in new products, people, or technology.
Regulatory overload is more than just an administrative headache. It is a significant drag on a company's ability to grow. According to George Mason's Mercatus Center, less regulated industries grow twice as fast as those that are heavily regulated. For many fast growing companies like Uber, Alibaba, Etsy, or Lyft, the biggest threat to their expansion isn't their competitors; it's the regulators forcing them to jump over increasingly higher compliance hurdles.
It isn't just businesses buckling under the weight of regulation either. A recent Boston Consulting Group study found that colleges were accountable to 18 different federal agencies and more than 200 federal laws and guidelines. It also found that faculty and staff at the respective schools were spending anywhere from 4 to 15 percent of their time complying with federal regulations — time that could presumably be better spent teaching tomorrow's Nobel Prize winner or researching the next big medical breakthrough.
I'm a Weill Cornell Medicine board member and I recently learned that it could soon be subjected to a multi-million dollar compliance mandate from the Department of Health and Human Services (HHS) governing the handling of unidentified patient tissue. This tissue — which would otherwise be thrown away — is immensely valuable to researchers.
But the new HHS rule imposes onerous new requirements for doctors and researchers to obtain, store and track patient consent for every single tissue sample, and to renew that consent every 10 years. According to Laurie Gilmer, Dean of Weill Cornell Medicine, "This rule may be a well-intended attempt to enhance patient privacy. But these tissue samples are already completely anonymous. The real world impact of this rule will be unnecessary costs for academic medical centers and fewer tissue samples available for potentially life-saving research."
Successive presidents and Congress certainly didn't intend for the regulatory system to expand this way. But it has and the result, according to another George Mason study, is that "people find it harder to identify or recall all the rules they are supposed to follow. They are more likely to make mistakes and are often less motivated to comply."
Unfortunately, most every mindless regulation has a very smart and powerful interest group committed to keeping it on the books. That's why a new czar is so essential.
This czar — working with a team of deputy czars from both parties — can identify packages of rules and regulations for elimination and submit them to Congress for an up or down vote.
The idea is similar in concept to the Base Realignment Commission (BRAC), which featured a group of independent experts evaluating closures of unnecessary military bases. Since no member of Congress would ever vote to close a base in his or her district, a commission was formed to make decisions that were best for the country as opposed to a narrow constituency.
That's precisely what it will take to fix America's regulatory mess.
Members of Congress and especially the committee chairs who oversee many of these regulatory areas won't like the czar idea because it dilutes their power. But Congress has shown it can't rise above the turf battles and interest group pressure to deal with this challenge.
The American people are in a cranky mood these days and justifiably so. A new regulatory czar could help restore our faith that the government is once again taking seriously the idea that government should work for, not against, the American people.
Commentary by Andrew Tisch, the co-chairman of Loews and a co-founder of No Labels, a national group of Democrats, Republicans and independents committed to new politics for problem-solving.
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