American Elephants


Costly Regulations Are Made by Unaccountable Bureaucrats by The Elephant's Child
April 20, 2011, 6:51 pm
Filed under: Capitalism, Economy, Law, Taxes | Tags: , ,

“Every year we are reminded how much money the government filches from us on Tax Day. However, there is no equivalent “Regulation Day” to remind us of the extra cost government imposes on us through pettifogging regulation.  The fact is that federal regulations (never mind state and local) cost even more than the skyrocketing federal budget deficit, and help bring the federal government’s share of the economy to over 35 percent.”  An important observation from Iain Murray, a vice president at the Competitive Enterprise Institute.

Regulations cost $1,75 trillion in compliance costs, according to the Small Business Administration. That’s bigger than the record federal budget. Wayne Crews, also at CEI, compiles a guide to federal regulation each year: Ten Thousand Commandments; An Annual Snapshot of the Federal Regulatory State.

Last year, Congress passed and the president signed into law a comparatively few 217 bills.  But Congress has delegated to unelected bureaucrats in federal agencies considerable lawmaking power. Agencies issued 3,573 final rules.  As there is no “Regulation Day”, there is also no “De-Regulation Day” when the government gets rid of bad, outdated, useless or too expensive regulations.

  • Of the 4,225 rules now in the regulatory pipeline, 224 are “economically significant”—that is they wield at least $100 million in economic impact.
  • Government’s spending level is $3,456 trillion. The regulatory “hidden tax” of $1.75 trillion is 50.7 percent of the level of federal  spending itself.
  • Regulatory costs exceed all 2008 corporate pretax profits of $1,463 trillion.
  • Regulatory costs dwarf corporate income taxes of $157 billion.

It’s a lot easier for members of Congress to shove off the tedious business of rule-making to unelected agencies than to devote their time to proper lawmaking. Even Republican reformers haven’t gone much farther than trying to require Congress to vote on final rules. Rule-making  just isn’t exciting information to take back to the constituents at home. Nobody gets very interested in regulations until they affect your own life. Mr. Crews survey is an important tool for government reform, but unless it has a lot more pictures than I assume it does, it’s probably not going to replace thrillers as bedtime reading.

Congress devises programs which are funded in three ways:  They can raise taxes to pay for new programs, they can borrow money to pay for them (with a promise to pay back that borrowed money, with interest, from taxes collected in the future). The third way is to regulate.  Instead of paying directly, it can require that the private sector or local governments pay.

This has created enormous problems for the states, as government airily decrees that the states shall do certain specific things, but doesn’t supply the money that the tasks entail.  “Unfunded mandates”— a term you’ve probably heard and not paid much attention to.  President Obama was excited to begin requiring states to start developing his desired high-speed rail network.  So far three states have turned down federal funds because the state portion for high-speed rail was just too costly.

More to the point, there is no accountability,  no disclosure and thus no public fuss. You can think of regulation as off-budget taxation.

Real reform may be a lot harder than we imagined, and a lot more important.


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[…] Costly Regulations Are Made by Unaccountable Bureaucrats This has created enormous problems for the states, as government airily decrees that the states shall do certain specific things, but doesn’t supply the money that the tasks entail.  “Unfunded mandates”— a term you’ve probably heard and not paid much attention to.  President Obama was excited to begin requiring states to start developing his desired high-speed rail network.  So far three states have turned down federal funds because the state portion for high-speed rail was just too costly. […]

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