The US Senate Committee on Homeland Security and Government Affairs held a hearing January 24 on the confirmation of Congressman Mick Mulvaney (R-SC) to become the Director for the White House Office of Management and Budget (OMB). OMB is the largest office under the Executive Office of the President. OMB officials meet with multiple federal agency officials throughout the year to create the President’s annual Budget. The President submits his annual budget proposal to Congress typically by the first Monday in February. For his first U.S. budget proposal as President, the Trump administration has said they will release a FY 2018 budget outline by mid-February. The complete budget proposal for FY 2018 will not be ready until the end of April. OMB also measures the quality of performance of the agency programs, policies, and procedures, ensuring they conform with the president’s policies and agenda.
South Carolina Congressman Mick Mulvaney, President Trump’s nominee for Director, Office of Management and Budget
During the hearing several exchanges helped to reveal some of the thought processes of the OMB nominee toward federal programs and regulations. Committee Chairman Ron Johnson (R-WI) cited a recent example of overregulation and its impact upon researchers at the University of Wisconsin-Madison. Johnson said, “For the last two years the chancellor of the University of Wisconsin-Madison has come into my office complaining about overregulation as it relates to the university system. But last year she came in with a study commissioned by other research universities. The conclusion of that study said that 42% of researcher time for research conducted under a federal grant was spent complying with federal regulations. Think of the opportunity cost… think of the diseases… where we’re spending 42% of the time filling out paperwork as opposed to trying to determine the cure for those (diseases).”
There’s $260,000 on YOUR Credit Card…
During his opening statement, Mulvaney highlighted his focus will be on decisions needed today to curtail the nation’s huge debt in order to avoid more difficult decisions in the future. Mulvaney said, “For the first time in our history there is a chance that the next generation maybe less prosperous than the one that preceded it. To me, to the people in this room I know that that is completely unacceptable. We can turn this economy around. We can turn this country around. But it’s going to take difficult decisions today in order to avoid making nearly impossible decisions tomorrow. Our national debt is roughly $20 trillion. That is a number that is so large it is hard for most people, myself included to grasp. I prefer to look at it in another way. If you convert that amount of money in what we make or take in as a nation every single year, to the ordinary American family that makes $55,000 a year per household, that’s the equivalent of that family having a credit card debt of $260,000.“
Regulatory Reform is Something We Can do Quickly to Spur the Economy
In another exchange between Mulvaney and Oklahoma Senator James Lankford, Mulvaney displayed his thought-process toward federal programs and regulations cost-benefit analysis.
Sen Lankford: What do you see as key aspects of regulatory reform?
Mulvaney responded, “I think a couple of different things. I think it offers us perhaps the best opportunity to have an immediate impact on getting the economy ramped-up even further. There seems to be, in talking with all of the folks on this committee, a good bit of bipartisan support in this house for this chamber for regulatory reform. I’ve really seen some good academic data that would suggest that the number one thing we could do to boost GDP, to boost economic activity would be to engage in significant regulatory reform. We also have should be able to do it rather quickly. Not only because there is bipartisan support for it but there are certain things that President can do by himself in a perfectly legitimate his executive authority general ideas so the general idea is that regulatory reform offers us probably the best options right now to help the economy do even better.
Sen Lankford continued, “So the grand challenge to this is, I can find 50+ of my colleagues easily and bring regulatory reform for president Obama. Now I’m going to work with a Republican administration and I still have the same perspective; we need to do regulatory reform. We need to be able to fix the process of how our regulations are done. I think there will be a greater eagerness on behalf of my Democratic colleagues to say, “yes this is a great time to reform the process of regulations.” We are really looking for a partner in the administration that’s not just looking at what controls now but looks towards the future and says for every president and how we do regulations there should be a predictable reliable system of that.
Mulvaney responded citing the recent caloric intake disclosure regulations as an example of a breakdown in the process. To meet the regulations franchise businesses like Dominoes or Papa Johns would have had to erect signs as large as football fields. “When this happens then something has broken down in the process,” said Mulvaney. “We fixed that one but only after it got beyond all of us and actually made it into the real world before someone caught it.”
Lankford questioned Mulvaney on “one of the major key reforms to be the cost-benefit analysis for regulations and federal programs. My fear is that the cost-benefit analysis, from any administration has become a justification because there’s a way to be able to find a benefit large enough to be able to say no matter what the cost is (of the program or regulation) you found a better, large enough benefit that (justifies) you’re going to do this, rather than looking for what is the least expensive most effective option that is out there. What are your ideas for the cost-benefit analysis and to reform that process?
Mulvaney replied, “as I sit here and I contemplate what it would be like at the OMB should y’all confirm me, it would be to go to the president and say, look here’s data, here’s real hard data, it may be from this source, it may be from that source, it may be from a variety of sources. In fact I think we do a better job if we’re getting information from a variety of sources as we drive these cost-benefit analysis. Then explain to the president what the real world implications of these regulations would be. Not in a justification standpoint, not in terms of shoehorning a regulation that we say we want a ‘square-peg-into-a-round-hole, so to speak, but to actually look at the facts of the circumstances of these regulations. Then the president can say, you know that one makes sense and those four don’t. One thing that I’m very excited about in this administration is that everything that the president has talked about on the campaign trail has included regulatory reform. He has included it in I think in his second day in office, he made a very high profile hire of Carl Icahn to deal with regulatory reform. You read his books and you’ll actually see chapters about how government regulations is an impediment to growth. Say what you want to about the president, he has his critics and supporters, but I am absolutely convinced that his dedication to fixing this regulatory requirement will work hand-in-hand with this Congress.”
Leading studies indicate that today's business value impacted by government and regulatory intervention can reach as high as 30 percent of earnings for most companies. For highly regulated sectors the impact on earnings is greater.
With as much as one-third of earnings at stake, it is imperative companies engaging in government relations do so with collaboration and integration at the forefront of their methodologies.
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