One example could be a bill to implement job training. Since job training would have an on- budget cost … why not have the appropriate agency mandate new regulations for the private sector to follow instead. That adds nothing to the budget deficit but ultimately it does add costs to companies, which of course, are then passed on to consumers. The result is that the government can take credit for a job training initiative through regulations without impacting the Federal Budget deficit, yet be able to expand its influence at will.
We believe that process can be seen in the following chart which show the number of Final Rules (i.e. Public Laws) issued by regulatory agencies versus actual bills that come out of Congress. For instance, in 2017 there were 3,281 Final Rules that were issued versus only 97 bills passed, for a ratio of 33.8 to one. For the past 25 years, the ratio of Final Rules issued by agencies versus bills that came out of Congress and signed into law was 20.8 times larger.
So, who has more influence on our economy and our lives … the members of Congress whom we elect, or faceless bureaucrats in agencies we know little about, and never garnered our vote?
Source: Federal Register data from National Archives and Records Administration and “10,000 Commandments”
J. Richard Fredericks is founding partner at Main Management, a participant in the ETF Strategist Channel.
A pioneer in managing all-ETF portfolios, Main Management LLC is committed to delivering liquid, transparent and cost-effective investment solutions. By combining asset allocation insights with smart implementation vehicles, Main Management offers a unique approach that translates into distinct advantages for our clients, including diversification, cost efficiency, tax awareness and transparency. http://www.mainmgt.com