TCS Daily

Will Bush, Congress Overturn Clintons Parting Shot at Consumers Pocketbooks?

By James Plummer - January 29, 2001 12:00 AM

Even before President Bush was sworn in, teams of well-honed cleaning technicians swept through the White House, tearing up carpets, replacing furniture, and scrubbing the Oval Office sink. The new administration soon did those technicians one-better and announced a plan to sweep out some of the last-minute regulatory detritus left behind by the retreating Clinton team.

Unfortunately, some of the most pernicious rules, which promise to cost consumers big time, can only be reversed with cooperation and, indeed, the initiative of a reluctant Congress. Among these is the final version of rules setting new energy standards for household appliances, from air conditioners to clothes washers, that were published in the Federal Register during Clinton's last weeks in office.

Bush can reverse midnight regulations implemented by Executive Order -- of which Clinton staffer Paul Begala once said, "Stroke of the pen, law of the land. Kind of cool." Regulations that have gone through the so-called "rulemaking process" are trickier, although Bush has issued a moratorium barring federal agencies from publishing new rules in the register until they have been reviewed and signed off on by a member of the new administration. But that doesn't work for rules that are already published.

Which brings us to the costly new rules for new appliances.
Just two days before the Clintons left town (or, perhaps more accurately, moved uptown), the Energy Department and the White House announced that final rules had been issued on making certain household appliances more "efficient." A statement from President Clinton claimed "this administration will save consumers more than $10 billion." DOE's self-congratulatory press release was written in more cryptic bureaucratese, proclaiming: "By 2030, the clothes washer standards will cut water use by 10.5 trillion gallons and save 5.5 quads."

This rhetoric obscures a fundamental truth behind these rules - higher out-of-pocket prices for appliances will have consumers paying through the nose. DOE's own estimates acknowledge the new rules will add $274 to the price of a new residential air conditioning system, $486 to the price of heat pumps, and $241 to a new washing machine.

The Energy bureaucrats rationalized these price increases by proclaiming consumers will save money in the long run from lower energy and water bills. But the one-size-fits-all regulations don't fit everyone. Low-income consumers, for instance, put more value on money currently in-pocket than higher-income consumers - they have more pressing bills to pay and will need the money less in seven years, when they probably will have climbed up the income ladder a bit.

But that's not all.

The new washing machine scheme requires that clothes washers be 22 percent more efficient in 2004 than today. And the class of 2007 must be 35 percent more efficient. How will makers meet those regulations? Regulators anticipate design changes such as "higher spin speeds, ... more sensitive clothes-load technologies, more efficient motors, and increased use of spray rinse cycles" will save the energy. But they also anticipate much greater use of front-loading washers, as opposed to the standard top-loading model that the vast majority of residences use now.
As with government-mandated low-flow toilets in the past, consumers have good reason to be wary if these horizontal-axis washers completely take over the market by 2007. Why? Because these machines spin the clothes through less water and don't feature the deep soaking action possible with today's vertical-axis washers. And just as the low-flow toilets have left many users flushing multiple times to clean their bowls, these new machines may require consumers to wash their clothes twice to get rid of deep stains. That's a potential time, water and energy wasting risk consumers should choose for themselves and not have foisted upon them by the federal government.

Bush administration officials are aware of these problems. But they need to reconsider all of the new appliance rules, not just the ones disliked by the manufacturers. The top washing machine companies support the new rules. The reason: the rules include a big tax credit for manufacturers. In addition, the rules would establish a government-guaranteed market for costlier new products. And the final rules also acknowledge that as a result of the higher cost for washers - and thus reduced demand by consumers -- "one or both of the two smaller companies (among the seven companies that build clothes washers) would cease to produce washers covered by the standard and might also cease to market commercial clothes washers." That's a pretty sweet deal of less competition for the other five.

As mentioned, the administration cannot overturn these already-published rules unilaterally. Bush Chief of Staff Andrew Card has announced a 60-day moratorium and review on rules already published in the Register. But the Reagan administration tried something similar and was eventually rebuked by the courts.

There is a surefire way to reverse these rules published in the final days - the Congressional Review Act. Passed by the reform-minded 104th Congress, but never actually used, the Congressional Review Act allows Congress to reverse some of the executive branch's more heinous rules. By a simple majority of both houses -- under the CRA, filibusters aren't allowed in the Senate - Congress has 60 legislative days after the implementation of any regulatory rule to issue a short joint resolution saying that the rule is no good. The catch is that the president has to sign the resolution.

The clock is ticking. Congress should immediately get to work overturning rules that promise to raise consumer prices -- and President Bush should actively encourage them to do so. Such action would establish a precedent for reform. And by putting money back into Americans' pocketbooks, it would provide a promising start for the 107th Congress and the new president.

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