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Blog: Paul Ryan's Regulatory Reform Proposals

Aug 07, 2014 | By Bethan Johnson, NETWORK Fellow

In recent years, legislation has too frequently forced people to stomach bad policies in order to gain necessary and life-altering improvements. Such can said about Representative Ryan’s proposals in the area of regulatory reform in Expanding Opportunity in America, a mixture of positive anti-poverty suggestions and unnecessary political tactics that have no place in proposals fighting poverty.

Half of the regulatory reform portion of focuses on the currently unjust burden placed on low-income workers seeking occupational licenses. Rep. Ryan highlights the arbitrary and burdensome nature of many licensing requirements—for example, he notes that Minnesota law requires more hours in the classroom for cosmetologists than lawyers.

Occupational certification often protects those already licensed and makes it particularly challenging for low-income workers to gain qualifications. The Institute for Justice explains that “hurdles are exceptionally burdensome for low-income workers” because the process of receiving an occupational license too often requires long hours and high cost, something most workers cannot always afford. By keeping requirements for a license high, license-holders protect their businesses from competition and indirectly continue the cycle of poverty.

Reforming occupational licensing is important. There has been a significant increase in the percentage of laborers in fields requiring state licenses: in the 1950s approximately 5% of workers were licensed; by the 1980s that number tripled to just under 18%; in 2014 roughly 33% of workers must be licensed.

Changing occupational licensing will significantly benefit people with low incomes and benefit our economy. One recent study shows that “licensing is associated with about 18 percent higher wages.” Also, more commonsense licensing requirements will provide more choices for consumers.

The other half of Ryan’s proposal is about “regressive reforms.”

Under the current regulatory system, federal agencies are granted the right to review and, at times, alter agency policies without congressional approval. It is this independence that Congressman Ryan objects to so strongly; it prompts him to argue that our model has bred “seemingly overzealous bureaucracy” that disproportionately harms low-income families.

It is important, however, to look at Ryan’s true intention.

First, whenever a federal agency intended to introduce or change a regulation, it would be required to conduct a three-part distributive analysis of the proposed change in order to assess its effects on low-income Americans. The first analysis would study which demographic bears the greatest cost because of the new regulation, with a particular focus on whether the proposed regulation would disproportionately burden people who are poor. This study would also be required to account for low-income people’s willingness to pay for the change. Second, the agency would need to analyze which group or groups benefit most from the proposed regulation. The final analysis would estimate number of jobs lost or created, both directly and indirectly, either above or below the median income because of the change.

Then, (in what I believe is a clear attempt to ensure a delay in presenting regulations for review) all findings must be translated into layman’s terms, as per the requirements of the Plain Writing Act.

Then the agency would submit their findings to the Office of Management and Budget’s Office of Information and Regulatory Affairs for review. If, upon inspection, a report is deemed “lacking,” it would be returned to the petitioning federal agency for additional information.

Then, if the proposed regulation were regressive, the agency would be required to conduct an additional assessment to see if enacting it would cause an “immediate risk to the public health or safety.”

Then, regardless of findings on the issue of health and safety, Ryan states that reforms with regressive effects must either be changed to mitigate these effects, or receive congressional approval. In addition to the large quantity of analysis already conducted, any regulation needing congressional approval objections must also include a document to Congress explaining why the relevant agency believes the regulation necessary.

It is only after all of these steps are completed that any vote on a change take can be considered. In comparison with all of the hoops necessary for the federal agency, the only requirement Ryan makes of Congress is that it considers the petition in “a timely fashion.” He offers no further explanation on how Congress should assess any of the information, or if the only reason for rejecting a regulation would need to be on its harmful impact on low-income households.

I believe that government agencies must do their utmost to ensure that the largest financial burden in any regulation reform does not fall to those living in or near poverty. However, we find this plan is about politics, not poverty.

The Ryan proposal speaks more to a desire to slow down regulations Republicans dislike than to promoting just reforms. All of the distributive analyses and extra requirements would take significant periods of time, months or years, to complete. Given that Congress would only be required to respond in the vaguely termed “timely fashion,” one must question: what does timely mean when placed next to a years-long process? A disapproving Congress could stall critical pieces of regulation until they had the votes in both houses to reject the regulation. Essentially, Representative Ryan wants to make it possible to crush regulatory reform under paperwork.

Moreover, while Rep. Ryan claims that this document is the manifestation of his nationwide tour, any politically knowledgeable person knows that this suggestion was born out of Republican politics. Citing what he considers an “overzealous bureaucracy,” Ryan drafted this plan thinking about his party’s various failed attempts to block or gut the Affordable Care Act, the recent problems with the Internal Revenue Service and the Office of Veterans Affairs, and, most significantly, the president’s use of executive orders. Some House Republicans like Ryan have concluded that the power of the legislative branch is under attack and it seems they feel that new legislation like this must be enacted to take back lost ground. But in reality this would throw our democracy out of balance.

According to our Constitution, the legislative branch has the power to write and pass laws, the executive to enforce them, and the judicial branch to determine their constitutionality. Part of the executive’s power is its role in devising means to act within the parameters of the laws; this means that they have the authority to propose changes to regulations within their agencies without express Congressional approval so long as they remain within the legal limits. Moreover, it is not Congress’s role to decide if a regulation is constitutional; that is the job of the courts. If Rep. Ryan and Congress want to ensure no regressive reforms exist, they are tasked with writing laws that make this impossible.

Representative Ryan unites the brightest and darkest elements of his plans and of himself. Coupling his truly bipartisan and progressive ideas of improving licensing with his obviously partisan attempt to make it harder to created needed regulations, Ryan shows just how conflicted he is about his growing understanding of poverty; Ryan is not yet the new anti-poverty advocate he calls himself.