Excessive regulations act as an unseen tax, costing businesses and consumers. Quantifying that tax is difficult, but the Competitive Enterprise Institute has made a solid effort at doing so. CEI says that overall, regulations at the federal, state and local levels cost Americans $1.9 trillion last year alone.
It’s report is called “Ten Thousand Commandments,” and it’s updated each year.
“When the era of executive regulation began in the 1920s, few likely imagined the dense tangle of rules that it would produce or how they would envelop the economy and society,” CEI explains. “But over decades, the federal regulatory state has continued to grow, with rules accumulating year after year.”
Congress alone isn’t responsible for all of these.
“In 2016, 214 laws were enacted by Congress during the calendar year, while 3,853 rules were issued by agencies,” CEI says. “That means, 18 rules were issued for every law enacted last year.”
But lawmakers aren’t off the hook. They often use regulations as a way to avoid raising taxes or increasing government spending – by putting the burden on the private sector.
“For example, a new government program like job training could involve either increasing government spending or imposing new regulations that require businesses to provide such training,” CEI says. “Spread throughout the economy, the costs of such rules and mandates pile up high.”
You can’t trust government to accurately assess the impact of such regulations.
“The limited cost-benefit analysis currently undertaken at the agency level covers only a fraction of rules,” the report notes. “Furthermore, cost-benefit analysis relies primarily on agency self-reporting. Regulators are reluctant to acknowledge when a rule’s benefits do not justify its costs. In fact, one could expect agencies to devise new and suspect categories of benefits to justify agency rulemaking activity and new endeavors.”
Not all regulations are unnecessary, of course. We all need clean air and clean water, and we want to be sure our restaurants are safe and that our physicians are qualified.
But these days, regulations go much, much further.
“Although many of the things that regulations purport to do are worthy and needed pursuits, that does not mean that the federal bureaucracy and administrative state are the best ways to achieve them, CEI adds.
President Trump’s administration is working to reduce some of this regulatory overreach. One of his first actions was to restrict government agencies in how many new rules they can impose.
“President Trump on Monday signed an executive order that would require agencies to revoke two regulations for every new rule they want to issue,” NPR reported in February. “The executive order is aimed at dramatically rolling back federal regulations, one of his top campaign promises. Senior administration officials touted it as the ‘most significant administrative action in the world of regulatory reform since President Reagan created the Office of Information and Regulatory Affairs (OIRA) in 1981.’”
The administration is on the right track. Excessive regulations are holding back the economy and innovation. It’s high time to fully count the cost, and start making cuts.