As part of the Contract With America, Congress passed the Unfunded Mandates Reform Act of 1995. The legislation restricts the ability of Congress to pass laws that would impose costly burdens on state, local and tribal governments. Under the legislation, any proposed bill that would impose a cost of more than $50 million on a state or local government would be subject to a "point of order" – a procedural move that would permit congressmen to stop the legislation unless a majority voted to override the point of order. In addition, the Congressional Budget Office (CBO) has to estimate the cost of mandates imposed on private-sector businesses if the mandates exceed $100 million.
That legislation was long overdue. For years Congress has been telling the states what to do, then passing the financial burden on to the state or local governments, while reaping the political credit in Washington. When it's someone else's money, we are all philanthropists.
Unfortunately, the 1995 legislation did not prohibit imposing those mandates on the private sector. It just called on the CBO to estimate the cost.
With the private sector, too, Congress has been free with mandates but cheap with money to pay for those mandates. U.S. Chamber of Commerce estimates place the cost of federal regulations and mandates to businesses and consumers at more than $668 billion annually.
Nevertheless, the government is pressing forward. For example, last September, Congress passed for the first time two federal health insurance mandates, requiring insurers to pay for at least a 48-hour hospital stay for mothers delivering babies – so-called "drive-by deliveries" – and to provide the same coverage for mental illnesses that they provide for physical illnesses.
Those mandates will result in higher premiums for health insurance, which most employers will end up paying – though some may cancel their coverage instead. And there's lots more in the wings. There are at least 32 bills before Congress that would impose additional health insurance mandates.
On another front the Environmental Protection Agency (EPA) is moving forward with new clean air regulations that would require businesses to spend billions of dollars in compliance costs – at a time when air in almost every American city is getting cleaner, not dirtier.
And the National Highway Traffic Safety Administration (NHTSA) is considering raising the fuel efficiency standards of minivans and sport utility vehicles (SUVs) from those of the "light truck" category to a car. The costs of the research and necessary changes would initially be borne by businesses, but would eventually be passed on to consumers in the form of higher-priced minivans and SUVs that are smaller and less able to do the work of hauling people and things.
To address this issue of unfunded mandates on business, Senator Spencer Abraham (R-MI) and Rep. Gary Condit (D-CA) have introduced the Mandates Information Act. This legislation would require the CBO to create a Consumer, Worker and Small Business Impact Statement for proposals that included unfunded mandates, and it would create the same kind of opportunity for a point of order against legislation affecting the private sector if those mandates exceeded that $100 million mark.
The purpose of this legislation is to force Congress to consider the financial burdens that it is imposing on private-sector businesses. Congress could then go forward with the legislation, reconsider it or implement some type of offset.
For example, Congress already forces many businesses to incorporate certain types of equipment. Knowing that it is imposing a financial burden, Congress might consider allowing a tax credit to offset the cost.
But why stop with just businesses? Congress also imposes mandates on individuals, requiring them to spend money on goods or services the government thinks appropriate.
To cite just one example, think of all the government mandates that affect you every time you sit behind the wheel of your car. The government requires you to have and wear seat belts and now to have air bags – regardless of the danger they carry. The government also says your car must be equipped with safety bumpers and emission control devices, all of which cost you more money.
Would Congress think a little harder about the issue if it knew it would have to pay – either directly or indirectly through deductions or tax credits – for every mandate it imposed on people? The Abraham-Condit approach would at least force Congress to recognize that it was imposing a huge financial burden on people.
I think it's time that we do unto business what we've done unto the states: protect them from costly mandates imposed by a government that is unresponsive – or maybe just impervious – to the people's pleas for relief.