If small businesses were to add a third certainty in life—beyond death and taxes—it would probably be federal regulations. There are currently 192,000 federal regulations on the books, and more than 500,000 guidance documents. The number of regulations has been increasing by approximately 4,000 annually. Total annual paperwork compliance time: 10 billion hours. Total annual price tag for compliance: $1 trillion.

Given the enormous impact of regulations to the bottom lines of small businesses, one important blow to overregulation went relatively unnoticed two weeks ago. President Bush amended an Executive Order that will help tame our out-of-control regulatory system.

The amendment to Executive Order 12866, first issued by President Bill Clinton in 1993, would do three things. First, it would require federal agencies to identify the specific market failure the proposed regulation is intended to address before issuing it. What a novel concept! This acknowledges that market forces might better address a challenge than more government red tape.

Second, new regulations would require the approval of the agency's Regulatory Policy Office, headed by a presidential appointee. This would help ensure that the federal agencies are implementing the policies of the administration.

Third, it would require agencies to assess the combined aggregate costs and benefits of all the regulations they plan to issue in a year. This will create more transparency in government and help regulators better understand the implications of their actions.

Some charge that this was a "power grab" by President Bush. A power grab? Bush is chief executive of the federal government. The federal agencies report to him and are supposed to implement his policies. Those same people would prefer to have faceless, unaccountable bureaucrats circumventing the president and pursuing their own agenda. That's not how our government is supposed to work, regardless of what party is in power.

The amendment of this Executive Order is one of the first truly significant attempts by an administration to hold federal bureaucrats to account and insist they act with discretion when imposing new and expensive burdens on businesses and consumers. 

Regulations play an important role in ensuring the safety of our citizens and guarding against corporate abuses, which is why it's so important that we have a well-functioning, rational rulemaking process. That's not what we have today, and this amendment will go a long way toward fixing it.

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