The Regulatory State is Here to Stay - Unless a Better Way is Found

We embrace market-based approaches over regulation that grows bureaucracy and harms growth. Environmental rules pick winners and losers, reduce economic growth, burden job creators and middle-class families, and stifle innovation. For decades, the U.S. government has sought to curb carbon pollution and mandate energy efficiency standards through a host of regulations and tax subsidies that have largely withstood legal challenges. Most were mandated by court decisions and legislation.

Republican elected officials will lift some of this regulatory burden. But, even after these efforts, Americans will still be living in a regulatory state, one that is sure to grow over time. This regulatory state is a major hidden tax on Americans and our economy, and we need a better way.

EPA has the regulatory authority to reduce carbon pollution. In 2007, the U.S. Supreme Court held that the EPA has the authority to regulate carbon dioxide emissions.1 And since 2009, the EPA has proposed or finalized over 100 global warming regulations, encompassing more than 5,000 pages in the federal register. It is highly unlikely that this will all be reversed.

Not just EPA – Over decades, three other federal agencies have been involved in picking winners and losers through regulations. The Department of Energy has issued a host of regulations on appliances, buildings, and other products. The Department of Transportation participates in setting standards for automobiles, aircraft and trains. The Department of Treasury oversees tax subsidies.

Legislative attempts to repeal EPA authority are going nowhere. Many opponents of carbon pollution regulation argue that EPA’s current authority should be repealed, but legislative attempts to do that have floundered. In fact, a bill aimed at achieving this goal was able to gain only 152 cosponsors in the House of Representatives – all Republicans – suggesting that nearly one-third of GOP House Members are opposed to this approach.

In order to prevent government growth and bureaucratic meddling by any administration or any Congress in our economy – especially in industries like manufacturing, fuel refining, heavy-duty trucks, natural gas, trains, aircraft, and agriculture – we must embrace pro-growth solutions. The next few years are the right time to be building a thoughtful policy and political basis for future action.

What Conservative Experts Are Saying

“In the absence of some alternative method of reining in carbon emissions, the EPA will, in the end, be allowed by the courts to proceed with its draconian and expensive regulations.”2Irwin Stelzer

Stelzer directs the conservative Hudson Institute’s Economic Policy Studies Group, and is also the U.S. economic and political columnist for The Sunday Times (London), a contributing editor of The Weekly Standard, and a member of the Advisory Board of The American Antitrust Institute.

“Much of the policy discussion of a carbon tax in the United States has debated whether scientific evidence merits a carbon tax or what should be done with the revenue should policymakers pursue the tax. The discussion would be much richer with a counterfactual: How does a carbon tax compare with an alternative command-and-control regulatory system in terms of economic efficiency and growth?”3 – Glenn Hubbard

Hubbard is the Dean and Russell L. Carson Professor of Finance and Economics at Columbia Business School, and former Chairman of the U.S. Council of Economic Advisers.

“The federal government has embarked on a troubling regulatory path, with the goal of making energy use and lifestyle choices on behalf of American families and businesses. Since the 1970s, Congress has empowered agencies to micromanage Americans’ energy use and override personal preferences through energy-efficiency mandates. With ever-shifting goals to forestall ostensibly imminent resource exhaustion, stimulate economic recovery, or reduce global warming, the regulations are as unnecessary today as they were four decades ago.”4Heritage Foundation Scholars Katie Tubb, Nicolas Loris and Paul Larkin

Katie Tubb is a Policy Analyst and Nicolas Loris is a Fellow at the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation. Paul Larkin is a Senior Legal Research Fellow at the Edwin Meese III Center for Legal and Judicial Studies, also at the Heritage Foundation.

“This regulatory approach is fraught with problems. One is that it creates an inevitable tension between the products that consumers want to buy and the products that companies are allowed to sell. Robert A. Lutz, the former General Motors executive, laments that (vehicle fuel efficiency or “CAFE”) standards are “a huge bureaucratic nightmare. CAFE is like trying to cure obesity by requiring clothing manufacturers to make smaller sizes.”5Greg Mankiw

Mankiw served President George W. Bush as Chairman of the President’s Council for Economic Advisers from 2003 to 2005 and was a top economic adviser to 2014 GOP Presidential Nominee Mitt Romney. He is now a Professor of Economics at Harvard University.

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1. US Supreme Court Ruling on Massachusetts v EPA, April 2, 2007.

2. Irwin Stelzer, "A Deal Over Climate Change," The Weekly Standard, February 29, 2016.

3. Glenn Hubbard, endorsement of Carbon Tax Policy: A Conservative Dialogue on Pro-Growth Opportunities, Alliance for Market Solutions, 2017

4. Tubb, Loris and Larkin, “The Energy Efficiency Free Market Act: A Step Toward Real Energy EfficiencyThe Heritage Foundation, August 17, 2016.

5. Gregory Mankiw, “A Carbon Tax America Could Live With,” The New York Times, August 31, 2013.