As the “fiscal cliff” has gathered a great deal of attention, another cliff is waiting on the horizon in the shape of vast regulations that President Obama will try to push through in his second term.
In fact, some observers contend that the US is headed for a steep regulatory cliff that could compound the damage of the big bad fiscal cliff. Of course the latter may ultimately prove to be much ado about nothing as an 11th hour deal could be worked out. And failing that, Congressional lawmakers and the Obama administration may postpone dealing with the fiscal issues again like they have done many times in the past.
But a new wave of far reaching if not excessive regulations could pose a bigger threat to the US economy that appears to finally be turning the corner from the financial crisis of 2008.
As the Obama administration has planned a series of multibillion-dollar regulations, these new rules coupled with about 130 unfinished mandates under the 2010 Dodd-Frank reforms may prove to be a wet blanket on the US economy in 2013.
More than 80 percent of “regulatory actions” currently under review by the Obama administration have passed the deadline of typical review time and many regulations have been held past their scheduled release dates.
Besides aggressive regulation of financial industry and Obamacare, the Labor Department is crafting a new rule that would increase the cost of retirement planning for middle-class workers. The so-called Fiduciary Rule would tighten restrictions and increase litigation risks for businesses that offer investment guidance on a commission basis.
The bottom line: the Fiduciary Rule could result in higher retirement account minimums and cause $7.2 million individual retirement account (IRA) holders to lose access to investment advice.
Another consumer protection play on the horizon is a new Department of Transportation rule that will increase the costs of new cars and trucks by mandating expensive new technology. The Rear-View Camera Rule would require that all cars and trucks be equipped with a rear-view camera and video display on the dashboard, at a cost of some $2.7 billion to auto makers and car buyers.
While the long term effect of all this regulation remains to be seen, it could also be that the massive boom to economy driven by demand for new housing and hundreds of thousands of cars ravaged by devastating Hurricane Sandy provides safe passage over the dreaded regulatory cliff.