NCPA - National Center for Policy Analysis

Reducing the Regulatory Bureaucracy

April 27, 2011

Researchers at the Phoenix Center used 50 years of data and modern econometric methods to provide an estimate of the relationship between government spending on regulatory activity and economic growth and job recovery.  It is estimated that reducing the size of the regulatory bureaucracy may grow the economy and invigorate the labor market, say the researchers.

  • Even a small 5 percent reduction in the regulatory budget (about $2.8 billion) is estimated to result in about $75 billion in expanded private-sector gross domestic product (GDP) each year, with an increase in employment by 1.2 million jobs annually.
  • On average, eliminating the job of a single regulator grows the American economy by $6.2 million and nearly 100 private sector jobs annually.
  • Conversely, each million dollar increase in the regulatory budget costs the economy 420 private sector jobs.
  • Accordingly, as Congress and the president struggle with the difficult decisions of how to shrink federal spending, an excellent place to start would be to investigate responsible cuts in the size of the federal regulatory budget.

In recent years, the size of the regulatory budget has risen sharply, with the Obama administration proposing numerous new regulatory agendas.  This expansion in the regulatory budget will be a drag on the economy and job creation.  If policymakers wish to stimulate jobs and reduce federal spending, then responsibly trimming the regulatory budget may be a viable option.

Source: T. Randolph Beard et al., "Regulatory Expenditures, Economic Growth and Jobs: An Empirical Study," Phoenix Center, April 2011.

For text:


Browse more articles on Economic Issues