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Comprehensive Reform: Regulation Roulette

Blog From
August 18th, 2010

In 1913, Congress passed the Federal Reserve Act. All 31 pages of it. Signed into law by Woodrow Wilson, it created the Federal banking structure, including the national bank and the entire Federal Reserve System. In 1935, Franklin Roosevelt signed into law both the National Labor Relations Act and the Social Security Act. They total a combined 107 pages. The Civil Rights Act, inked 29 years later by Lyndon Johnson, came in at 74 pages.

These pieces of legislation represent sweeping changes in their respective areas. Arguably, they are the most important Acts of the 20th Century. Together, they add up to 212 pages.

Fast forward to 2010 and its comprehensive reforms. Our brand spanking new Obamacare bill is 2,074 pages, or 28 times longer than the Civil Rights Act. The new Finance Reform law breaks the scale at 2,319 pages. It’s 75 times longer than the Federal Reserve Act. And more than 10 times longer than the four seminal pieces of legislation from the past century combined.

This year’s explosion in size of our Federal laws speaks volumes about what’s wrong with our current pack of “leaders”. But, the implications of size alone pale in comparison to the yawning chasm of undefined processes and regulations cutting deep within the voluminous pages. Into this void of uncertainty rides the future of health care and finance in our Country.

How uncertain is it? In creating each law, it’s as if Congress and the President gambled our fate on a single spin of a giant roulette wheel. A straight up bet that the marble will stop in the desired slot. Trouble is, instead of having less than 40 slots, each wheel has thousands of them. We have virtually no chance that the marble will drop in the one labeled, “rational implementation”.

Take Obamacare. Wait. You can’t because you don’t know what it is yet. When Nancy Pelosi crowed that Congress would have to pass it so we could know what was in it, she was being overly optimistic. For example, while the law requires insurance companies to spend a certain percentage of premium dollars on “benefits”, it does not define the term. So, a few heavily lobbied regulators are plugging that hole by picking and choosing from a list of tens of thousands of medical services.

There’s more. Way too much more as it turns out. The Congressional Research Service, Capitol Hill’s independent policy arm, issued a report this month excoriating the unknowable extent of Obamacare’s convoluted bureaucracy. The number of agencies, boards, commissions and panels is impossible to estimate. Attempts to tally them stop at 159, but there’s no certainty in that small of a number. And, the scope of their responsibilities is ill defined and appears to overlap in certain areas.

Even worse, some agencies are empowered to spawn more agencies at their discretion. Raise your hand if you think spontaneous generation of expanding bureaucracy is a good thing. Whether and how many of these entities will be funded is not known. But what is known is that Obamacare is a bungled bureaucratic mess of the highest order. And its mangled mug is the face of our new health care reality. A great big Bronx cheer to the hundreds of politicians who had a hand in spinning that wheel.

And then there’s Finance Reform. Or, as it’s come to be known, the Lobbyist Full Employment Act. In its 2,319 pages, the Act affects every facet of the financial services industry. Yet, it leaves most of the truly difficult decisions to agencies, empowering them to regulate on a scale never before seen. Like Obamacare, the industry will be defined by nameless, faceless bureaucrats unrestrained by public accountability.

The Act leaves to regulators alone the job of formulating 243 new rules of finance conduct. Well, not exactly alone. Since last year, nearly 150 lobbyists registered to work at financial agencies in the executive branch. Many of them are former government employees who will now be lobbying their old colleagues regarding the new rules. So much for Obama’s campaign promise to shut that revolving door.

In science and economics, new theories are tested with vigorous verification and validation methods. Wide ranges of sample inputs churn through simulated models to determine the worth of new ideas. But, when this Congress creates comprehensive reforms, it runs no simulations. It tests none of its assumptions. It just spins a giant wheel. It makes you shutter to think about what’s coming next.

See you on the left-side.


 





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