WASHINGTON – Chairman Ron Johnson (R-Wis.) and the Homeland Security and Governmental Affairs Committee (HSGAC) examined the burden of federal regulation on the American economy in a hearing Wednesday titled, “Toward a 21^st–Century  Regulatory System.” Information on hearing witnesses can be found here.

Using the common business planning tool of a strengths, weaknesses, opportunities and threats, or SWOT, analysis, Johnson laid out the factors affecting American economic growth: “From my standpoint, the greatest strengths we have in this nation is – we’re the world’s largest economy,” he said. Another strength: “We have relatively low energy prices.”

But the nation’s huge regulatory burden is one of its chief economic weaknesses, said Johnson. He cited estimates by independent groups of a regulatory burden of $1.75 trillion to $2 trillion a year. “The regulatory burden potentially could be more than 12 percent the size of our economy,” he said. “That is a massive burden on job creators, and we need to recognize that is a huge weakness. That’s something this committee can really concentrate on because there’s literally got to be thousands of regulations that are hampering the ability of businesses in red states and blue states.” [AUDIO HERE]

Later, Sen. Johnson questioned witnesses about regulators’ lack of private sector experience. He cited former Sen. George McGovern’s experience of opening a bed and breakfast after leaving office and his “if I’d only known” moment of finally understanding the difficulty of complying with so many rules and regulations.

“Part of the problem is the intersection of different regulations,” responded Michael Mandel, chief economic strategist at the Progressive Policy Institute. He said regulators too often think of the effects of a rule in isolation. “When I talk to business people, a lot of what they complain about, they can deal with any single regulation, it’s when they start layering on top of each other that it becomes a real problem.” [AUDIO HERE]

Johnson said he believes that a targeted approach to reforming especially ineffective or harmful regulations can win bipartisan support. He acknowledged that some regulations have yielded great benefits. “But there’s a point of diminishing returns,” Sen. Johnson said, in a quest for a “risk-free” society. “I think the return on investment in terms of regulatory costs is dramatically diminishing, and I would say it’s certainly overtaken the benefit.” [AUDIO HERE]

The expert witnesses later outlined ideas for a process to review and streamline regulations. The review process should include experts from outside of government agencies, said witnesses, and Johnson agreed. “I would pick the low-hanging fruit. Let’s find an area that really needs regulatory reform – something relatively simple – and let’s get some experts in that particularly area, set up an ad hoc commission and have it operate and report back,” Johnson suggested. [AUDIO HERE]

One witness, Sally Katzen, who headed the Office of Information and Regulatory Affairs in the Clinton administration, thanked Johnson for the hearing, saying, “I thought that what you brought to the table today was highly constructive and forward-looking. … I thank you for the approach you are demonstrating.”

Video of the full hearing here.

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