The thousands of federal regulations implemented by executive agencies each year impose trillions of dollars in costs on the American people annually, a new report states.
In 2017 alone, federal regulations cost Americans $1.9 trillion, nearly $15,000 per U.S. household, according to the Competitive Enterprise Institute’s (CEI) study, Ten Thousand Commandments 2018: An Annual Snapshot of the Federal Regulatory State.
This amount is more than the average U.S. household spends on any category except housing.
The study, written by CEI Vice President for Policy Clyde Wayne Crews, reports Congress enacted 97 laws in 2017, whereas administrative agencies imposed 3,281 rules, amounting to 34 new rules for every new law.
The cost of federal regulations is as big as the world’s eighth-largest economy, ranking behind India and ahead of Italy, the report states. Total regulatory costs in 2017 exceeded the $1.88 trillion the Internal Revenue Service collected in individual and corporate income taxes.
The five most active rulemaking entities are the Departments of Commerce, Defense, Transportation, and Treasury and the Environmental Protection Agency, accounting for 1,359 rules, or 43 percent of the 3,209 new regulations in various stages of development in 2018, Crews found.
Trump vs. Regulatory State
CEI’s report indicates the Trump administration’s efforts to slow the amount and pace of regulations are having an effect. In 2017, the Federal Register had 61,308 pages, the lowest count since 1993 and a 36 percent decrease from President Barack Obama’s 95,894 pages in 2016, the highest level ever recorded.
President Donald Trump made deregulation an early priority, signing an Executive Order on January, 30 2017 requiring federal agencies to cut two regulations for every new one proposed. Three days later, the White House published a guidance memo clarifying the Executive Order applies only to regulations with a proposed cost of $100 million or more.
Trump and other prominent members of his administration say amending and eliminating ineffective, duplicative, and obsolete regulations promotes economic growth and innovation and protects individual liberty.
Unrecognized High Costs
Jay Lehr, Ph.D., science director of The Heartland Institute, which publishes Environment & Climate News, says if the American people fully understood how much regulations really cost, they would be flabbergasted.
“The $1.9 trillion cost is right in line with what I would have guessed it to be,” said Lehr. “This excessive regulation has stifled the American economy for decades.
“Under Obama, the growth in regulations contributed to the slowest economic recovery in decades,” Lehr said. “Were Hillary Clinton to have been elected president, she would have cemented Obama’s legacy and turned the U.S. economy into one of the worst in the world to do business in.”
Regulatory Reform Continues
The Trump administration is doing the best it can to cut red tape and rein in regulations, Lehr says, but each agency head has to do battle with holdovers from previous administrations, and Trump can oversee just so much at one time.
“The public has little idea of how lucky we have been with Trump, and the Left does not want the people to wake up to what progress is being made,” said Lehr. “President Trump vowed to cancel two regulations for every new one passed, and he has exceeded this significantly.
“For instance, EPA Administrator Scott Pruitt has halted the development of or rescinded 20 regulations for every new one the agency has adopted, and I am now confident almost all new regulations come from the ‘deep state’ bureaucrats who predate the Trump administration and who the new agency administrators have yet to gain control over,” Lehr said. “The administration is also dedicated to providing a deregulatory progress report every year at year’s end, improving the transparency of regulations.”
Consumers Paying the Price
It is important to try to calculate the cost of regulations because they act as a hidden tax on businesses and consumers, says Dan Bosch, director of regulatory policy at the American Action Forum.
“Everyone should care about regulatory costs so they can gauge whether the benefits of regulations are worth the price,” said Bosch. “Ultimately, consumers end up paying for the cost of regulation. Though regulatory costs most often directly affect businesses, not individuals, ultimately these costs often get passed down to consumers in the form of higher prices, limited choice, and slower technological growth.”
Though it is important to find ways to cut existing red tape, it is even more critical to prevent the imposition of additional overly burdensome regulations, Bosch says.
“Congress needs to carefully write laws in ways that limit the authority and discretion of federal regulators so they are only doing what Congress explicitly directs them to,” Bosch said. “Congress also needs to reform the regulatory process so agencies do more thoroughgoing analyses to demonstrate the benefits of their actions outweigh their costs.”
Kenneth Artz ([email protected]) writes from Dallas, Texas.
Clyde Wayne Crews, Ten Thousand Commandments 2018: An Annual Snapshot of the Federal Regulatory State, Competitive Enterprise Institute, April 10, 2018: https://heartland.org/publications-resources/publications/ten-thousand-commandments-an-annual-snapshot-of-the-federal-regulatory-state-2018
“Spring 2018 Unified Agenda of Regulatory and Deregulatory Actions,” Office of Information and Regulatory Affairs, Office of Management and Budget, Spring 2018: https://www.reginfo.gov/public/do/eAgendaMain