Will Regulatory Burden Increase Under Biden?

Nov 18, 2020

EL SEGUNDO, CA – Politicians loves construction. Construction means jobs for everyone—trained and untrained. No one objects to construction and never has. In my life, I’ve never heard anyone say, ‘Oh I hate construction’ or ‘Don’t put construction in my jurisdiction.’ Not only do construction workers earn an income, but they pay taxes—so construction is always a winner. 

However, it’s always had hints of corruption and pork barrel spending, with one district getting more money than another, or one county getting a disproportionate amount of construction dollars. Why does that happen? There might be one judge, or a friend of a congressman. We’ve done a lot better in the last 30 or 40 years at mitigating that corruption, and that’s why construction still has a good reputation.

There’s still a lot of business done by cash, based on personal relationships, but the government has done a pretty good job of trying to turn it into a shoulder’s length transaction with transparent bids, transparent relationships, and identifying conflicts of interest. I’m emphasizing the negative aspects of public spending, but in general everyone wants highways to be repaved, roads to be maintained, bridges to be safe, and water to be clean. I don’t know one republican who wants dirty water or dirty air. Anything you can do to improve infrastructure is a winner. 

The point is every administration loves infrastructure. There is only so much money that goes around though, and construction is expensive, and you have to be fair in how you allocate the money between the states. Every state has its own wish list. When you add up all those wish lists, there’s no way you have all the money to fund all these projects, and on top of that to fund other initiatives. 

Everyone says going in, ‘I’m all on board with construction,’ but then the realities of a limited budget come in, and if we start giving money to California for transportation infrastructure, we have to give it to Texas. And then we have to give it to Michigan, and oh by the way we can’t ignore Montana. You can’t just give all the money to one place. And then it turns out that if I can’t give it to one, I’m not going to give it to any.

Then there’s the political and financial pragmatism of only so much money to go around. The new administration may say, ‘Look, we want to focus on alternative energy, which means technology. It’s not necessarily construction, although that is the downstream—but really it’s developing alternative energy technologies.

They are talking about upgrading infrastructure in the financial industry. If so, those are dollars you can’t spend on construction. How much is going to be allocated to transportation infrastructure? I think President Biden would be surprised at how his hands are going to be tied. If it were easy, Trump would have done it. Obama would have done it.

Obama did to an extent, but not as much as he wanted. If Biden is going to focus on these alternative forms of research and development, and healthcare infrastructure, and pharmaceutical delivery—it’s a zero sum game. Every dollar you apply to one is one dollar less that the other has to spend.

Will the regulatory climate change? It’s hard to know because President Trump did a lot of this through executive orders or bureaucratic mechanisms, which can be easily undone. Anything done through the legislature is difficult. Anything not in the legislature is easy—both to create and then to undo. Many of the streamlining procedures in the regulatory environment that Trump established were items that I think an opposing administration could easily undo. The question is; Will Biden do it?  

Arguably those reduced regulatory burdens have fostered economic growth, and they haven’t necessarily done much harm. Biden may want to do it just out of spite, or out of political gamesmanship. Unless there’s a good reason to undo them, I would hope any administration would look and ask, ‘Does it make sense to undo it? Is it a good policy?’ Maybe our policies were becoming more burdensome than they should have been, and the current approach works. Or maybe you want to poke the last president in the eye.

I am hoping the new administration does not necessarily undo all of the decreased regulatory burdens that have been mandated during the last four years. At the very least, they should not undo these without a serious review of whether or not things are ok as is. 

The jury is still out. I don’t know the level of vitriol that will exist. I do think there is that kind of sentiment that could turn a rational discussion into something less than rational. If they undo some of these regulatory issues, and tighten them back up, I’m hoping it’s for a really good reason.

Wayne H. Kalayjian, PE, SE, CFE, is director at El Segundo, Calif-based Secretariat. He is a frequent speaker at CSC.