NCPA - National Center for Policy Analysis

The Cost of Ever-Increasing Federal Regulations

May 21, 2012

The federal government's reach extends well beyond the taxes Washington collects, and its deficit spending and borrowing.  The laws that it promulgates, especially those that affect our everyday lives, act as a means of control that greatly expand its role in society, says Clyde Wayne Crews, vice president for policy and director of technology studies at the Competitive Enterprise Institute.

Federal regulations cost hundreds of billions -- perhaps trillions -- of dollars every year over and above the costs of the official federal outlays that dominate the policy debate.

  • Estimated regulatory costs, while "off budget," are estimated to be $1.75 trillion and are equivalent to over 48 percent of the level of federal spending itself.
  • Regulatory compliance costs dwarf corporate income taxes ($198 billion), exceed individual income taxes ($956 billion) and even surpass pretax corporate profits ($1.3 trillion).

The issuance of such regulations and the rapid expansion of government in the private market has been a signature style of the Obama administration since 2009.  During his tenure, the president has unleashed federal agencies to regulate at will and to grant the government dominance over broad swathes of economic activity.

  • The 2011 Federal Register finished at 81,247 pages, just shy of 2010's all-time record-high 81,405 pages.
  • Agencies issued 3,807 final rules in 2011, a 6.5 percent increase over 3,573 in 2010.
  • Of the 4,128 regulations in the works at year-end 2011, 212 were "economically significant," meaning they generally wield at least $100 million in economic impact.
  • The total number of economically significant rules finalized in 2011 was 79, down slightly from 2010 but up 92.7 percent over five years, and 108 percent over 10 years.
  • These costly regulations do not only hit companies that can afford them -- 822 of those 4,128 regulations in the works would affect small businesses.

Large sections of the Federal Register are filled with individual pieces of massive legislation, such as the health care reform and the finance regulatory bill.  However, the next year will have its own behemoth pieces: the Environmental Protection Agency's Mercury and Air Toxics Standards Rule and the Department of Transportation's Fuel Economy Standards.

Source: Clyde Wayne Crews, "Ten Thousand Commandments 2012," Competitive Enterprise Institute, May 15, 2012.

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