Reinventing our budget, personnel and procurement systems will strip away much--but not all--of the red tape that makes our governing processes so cumbersome. Thousands upon thousands of outdated, overlapping regulations remain in place. These regulations affect the people inside government and those who deal with it from the outside. Inside government, we have no precise measurement of how much regulation costs or how much time it steals from productive work. But there's no disagreement that the costs are enormous. And on the matter of external regulation, a 1993 study concluded that the cost to the private sector of complying with regulations is at least $430 billion annually-- 9 percent of our gross domestic product! See Note 40
We can lick gravity, but sometimes the paperwork is overwhelming.
Wernher von Braun
We must clear the thicket of regulation by undertaking a thorough review of the regulations already in place and redesigning regulatory processes to end the proliferation of unnecessary and unproductive rules. We have worked closely with administration officials responsible for developing a new approach to regulatory review, and incorporated that work into the following action.
Can regulations be eliminated? The answer is yes, as evidenced by promising experiments in several federal agencies. In the Management Efficiency Pilot Program (MEPP) in five of the Department of Veterans' Affairs regional benefits offices, the offices were encouraged to do away with red tape. See Note 42 At several benefits offices, 895 of 1,969 regulations were dropped, saving the staff more than 3,000 hours and $640,000 in one year. And productivity at MEPP centers increased by 35 percent in one year (1988-89), more than double the increase at other centers. A similar effort by five VA medical centers redirected $13.1 million to much-needed funding for acute care centers.
An even more sweeping example of a fresh start in internal regulations comes from the Air Force, where the chief of staff has established a servicewide program to streamline the organization and cut out bureaucracy. Under the Policy Review Initiative begun in 1992, the Air Force is replacing 1,510 regulations with 165 policy directives and 750 sets of instructions. This effort will cut 55,000 pages of intermingled policy and procedure to about 18,000 pages clearly separating policy from procedure. This deregulation effort, managed by a staff of 10, is expected to be completed in fiscal year 1994.
Over the next 3 years, each federal agency will undertake a thorough and systematic review of its internal regulations. Agencies may choose their own strategies for reaching the goal of reducing internal regulations by 50 percent.
In 1981, frustrated at the inconsistencies and duplication among federal regulatory efforts and their burden on government and the private sector, President Reagan required the Office of Management and Budget specifically, the Office of Information and Regulatory Affairs (OIRA) to review all regulations proposed by executive agencies.
With a limited staff, many of whom are also involved with paperwork reduction issues, the review process for proposed regulations can be lengthy. And while a lengthy review process may be appropriate for significant rules, it is a waste of time for others. In early 1993, Vice President Gore convened an informal working group to recommend changes in the regulatory review process. The working group and the National Performance Review coordinated their efforts closely. We endorse the recommendations of the working group and the President's executive order, which will implement those changes and streamline the regulatory review process.
The order will enhance the planning process and encourage agencies to consult with the public early in that process. In addition, in an effort to coordinate the regulatory actions of all executive agencies, the Vice President will meet annually with agency heads, and the Administrator of OIRA will hold quarterly meetings with representatives of executive agencies and the administration.
Improving the regulatory review process also means being selective in reviewing regulations. Through this order, the President will instruct OIRA to review only significant regulations--not, as under the current process, all regulations. The new review process, which will take into account a broad range of costs and benefits, will be more useful and realistic. To ease the adverse effects of regulation on citizens, businesses, and the economy as a whole, the executive order also will require an ongoing review of existing regulations. Agencies will identify regulations that are cumulative, obsolete, or inconsistent, and, where appropriate, eliminate or modify them. They will also identify legislative mandates that require them to impose unnecessary or outdated regulations.
With the advent of the Government Performance and Results Act, which Congress passed in July 1993, we have begun to acknowledge the important principle of "flexibility in return for accountability."
Under the act, some agencies may apply for waivers from federal regulations if they meet specific performance targets. In other words, they will be exempt from some administrative requirements if they do their jobs better. The law applies only to internal regulations and government agencies, but it also urges wider waivers authority to test the potential benefits. In the spirit of that legislation, we seek to expand the concept of greater flexibility for greater accountability.
The President should direct each federal agency to establish and publish,in a timely manner, an open process through which other federal agencies can obtain waivers from that agency's regulations--with an expedited appeals process. Rules adopting this new waiver process would state that all future agency regula-tions would be subject to the waiver process unless explicitly prohibited. We will also ask Congress to specify that legislation would be subject to waivers unless explicitly prohibited.
Woodrow Wilson was right. Our country's 28th president once wrote that "there is no distincter tendency in congressional history than the tendency to subject even the details of administration" to constant congressional supervision. One place to start in liberating agencies from congressional micromanagement is the issue of reporting requirements. Over the past decades, we have thrown layer upon layer of reporting requirements on federal agencies, creating an almost endless series of required audits, reports, and exhibits.
Today the annual calendar is jammed with report deadlines. On August 31 of each year, the Chief Financial Officers (CFO) Act requires that agencies file a 5-year financial plan and a CFO annual report. On September 1, budget exhibits for financial management activities and high risk areas are due. On November 30, IG reports are expected, along with reports required by the Prompt Payment Act. On January 31, reports under the Federal Civil Penalties Inflation Report Adjustment Act of 1990 come due. On March 31, financial state-ments are due and on May 1 annual single-audit reports must be filed. On May 31 another round of IG reports are due. At the end of July and December, "high-risk" reports are filed. On August 31, it all begins again. And these are just the major reports!
In fiscal year 1993, Congress required executive branch agencies to prepare 5,348 reports. See Note 46 Much of this work is duplicative. And because there are so many different sources of information, no one gets an integrated view of an agency's condition--least of all the agency manager who needs accurate and up to date numbers. Meanwhile, trapped in this blizzard of paperwork, no one is looking at results. We propose to consolidate and simplify reporting requirements, and to redesign them so that the manager will have a clear picture of the agency's financial condition, the condition of individual programs, and the extent to which the agency is meeting its objectives. We will ask Congress to pass legislation granting OMB the flexibility to consolidate and simplify statutory reports and establishing a sunset provision in any reporting requirements adopted by Congress in the future.