NCPA - National Center for Policy Analysis

Red Tape Rising

October 28, 2010

Next January the Environmental Protection Agency (EPA) is set to issue new regulations on emissions from boilers used in facilities like oil refineries, paper mills and shopping malls.  The EPA claims their new regulations will only cost the economy $9.5 billion by 2013.  But the American Chemistry Council says the cost will surpass $20 billion and kill 800,000 jobs.  Who is right?  We don't know.  But what we do know is that if you total up all of the new regulations already passed by the Obama administration last year, using their own cost estimates, fiscal 2010 saw the largest increase in regulatory burdens placed on the U.S. economy in the nation's recorded regulatory history, says Conn Carroll, assistant director for the Heritage Foundation's Strategic Communications.

  • According to a report released last month by the Small Business Administration, existing total regulatory costs already amount to about $1.75 trillion annually -- nearly twice as large as the sum of all individual income taxes collected last year.
  • Adding to this burden, federal agencies promulgated 43 new rules during the fiscal year ending September 30, 2010.
  • The total cost of these rules, each one individually calculated by the Obama administration itself, was $28 billion.
  • On net, the Obama administration inflicted $26.5 billion in new regulatory costs on the economy last year.

As high as this $26.5 billion total is, the actual cost of all these new regulations is almost certainly much higher, says Carroll.

  • First, the cost of noneconomically significant rules -- rules deemed not likely to have an annual impact of $100 million or more -- is not calculated.
  • Second, no costs were given for 12 of the rules that were deemed economically significant.

Most importantly, the costs that were given are likely minimized because the regulators are allowed to make up the cost of their own regulations.  Indeed, a 2005 Office of Management and Budget Report to Congress found that regulators underestimated the costs of their rules 34 percent of the time.

Source: Conn Carroll, "Red Tape Rising," Heritage Foundation, October 27th, 2010.

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