• With: Scott Walker, Joe Rago, Mary Kissel, James Freeman, Bret Stephens

    JOE RAGO, EDITORIAL BOARD MEMBERS: Right. And if look at the Bush and Clinton administrations, they all averaged about the same number of major rules every year. It was about 45. Obama's first two years, that surged to about 66, 63, in that range. Now, we're starting -- then it fell in the second two years, in the lead-up to the election. This wasn't because the regulators slowed down.


    It's because they delayed everything until Election Day. Now, we're about to get -- they're about to make up for last time.

    GIGOT: Mary, what do you think are the big rules you're following?

    MARY KISSEL, EDITORIAL BOARD MEMBER: Think about energy, Paul, particularly EPA. EPA's starting to bring out billion-dollar rules, something we haven't seen before. And it's going to really affect almost every part of our economy, because energy goes into the production of pretty much everything. You're talking about ozone air quality standards, carbon standards and greenhouse gas emissions, maybe fracking on federal lands. We're --


    GIGOT: Fracking being the hydraulic fracturing technique that has lead to so much new natural gas and oil production.

    But that, Mary, that's regulated by the state. Are you saying that the fed wants to get in on the act and preempt the states?

    KISSEL: I think it's a possibility, Paul, yes.

    GIGOT: OK, so that would complicate drilling decisions by companies and potentially add to costs, even though it's been a big boon to President Obama's economy.

    KISSEL: You'd think this is the one area, Paul, where the regulators might want to have a light touch. But unfortunately, probably not.

    GIGOT: James, I've been following the financial services industry. And Dodd-Frank, I know it's your favorite bill.



    GIGOT: It's much loved across the land.

    FREEMAN: Certainly.

    GIGOT: But most of these bills, most of the rules, I think, haven't been written.

    FREEMAN: Yes. You think of the first Obama term with its slow growth, this kind of regulatory frenzy, as a nightmare, may that will end. But really, from that 2010 law, most of the burden on the economy hasn't happened yet. The law firm, Davis Polk, does a scoreboard. They say there are 398 rule makings, separate rule makings that were required by the law.

    GIGOT: These are relatively major rulemakings.

    FREEMAN: Yes. Really, remaking the financial markets. Only a third of them have been enacted. So most of the big regulatory footprint is coming in the second Obama term, even from a law that was passed in 2010.

    GIGOT: What kind of -- give us an example or two?

    FREEMAN: Well, it runs the gamut, from derivatives trading on Wall Street to bank regulation, mortgages, the terms of consumer loans. It's all over the board. And on top of that, you have what bankers called the Basil Standards, so these are incredibly complicated rules that helped give us the financial crisis, now coming back more complicated. So it's hard to be optimistic about economic growth when you see this behemoth.

    GIGOT: And, Joe, then we have the full glory of ObamaCare. We talked to Governor Walker about it, and he's got a deal with the issue of exchanges in Medicaid. But all of these rules for the insurance industry are all going to be rolling out as well.

    RAGO: Right. The day after Thanksgiving, we say about 300 pages of new rules come out on essential benefits all health plans must cover.

    GIGOT: And your job, Joe, to read all 300 pages --




    GIGOT: So -- I'm sorry.

    RAGO: So we're starting to see the wave. All these rules are going to the White House budget office for review. And if you think about it, this law is supposed to be up and running on October 1st, 10 months from now. We're really going to see a crush in the meantime.

    GIGOT: What about the economic costs of this, Mary? And not just in terms of how much each rule may affect the economy, but is there a larger cost to the economic growth?

    KISSEL: Sure. I mean, take Dodd-Frank, what James was just talking about. That will affect access to credit for hundreds of millions of Americans. It will affect financial innovations and the kinds of products available to buy. Businesses that don't know what kind of regulatory costs they're going to face, they'll have to make decisions whether or not to hire more people, to invest. And these have almost incalculable costs to the economy.

    GIGOT: There's also a question of what we can do about this. I mean, with Congress -- Congress can't stop it.

    FREEMAN: It's only two terms by the Constitution.

    GIGOT: But Congress can't do much. Are the courts the only --

    FREEMAN: The court -- I mean, it's possible, now that the election is over, that you see some willingness among Democrats to maybe pare back a few of these laws where they don't want -- didn't want to acknowledge their failures before the election. But I wouldn't be that optimistic. Yes, you've got some court challenges. There is reasonable constitutional argument against Dodd-Frank, for example and perhaps others.

    GIGOT: All right. Well, we saw what happened with the constitutional challenges. I wouldn't put that in the bank.


    GIGOT: All right, when we come back, as talks to avoid the fiscal cliff continues, deep defense cuts are on the table. So should Republicans embrace the so-called sequester or cut a deal to avoid it? There's a debate ahead.