Archived Content

The Costs of Regulatory Overload

May 1, 2014

Wayne Crews of the Competitive Enterprise Institute has just released his annual report, "Ten Thousand Commandments," on the cost and economic impact of federal regulations. The highlights, as always, should sound alarms about over-regulation's impact on economic growth: 

  • Costs for Americans to comply with federal regulations reached $1.863 trillion in 2013. That is more than the GDPs of Canada or Australia.
  • This is the 21st edition of Ten Thousand Commandments. In that time, 87,282 final rules have been issued. That’s more than 3,500 per year or about nine per day.
  • Regulatory costs amount to an average of $14,974 per household – 23 percent of the average household income of $65,596 and 29 percent of the expenditure budget of $51,442. This exceeds every item in the household budget except housing – more than health care, food, transportation, entertainment, apparel, services, and savings. Some 63 departments, agencies and commissions have regulations in the pipeline.
  • The 2013 Federal Register contains 79,311 pages, the fourth highest ever. The top two all-time totals are 81,405 pages in 2010 and 81,247 in 2011, both under Obama.
  • The top six federal rulemaking agencies account for 49.3 percent of all federal rules. In 2013, these were the Departments of the Treasury, Commerce, Interior, Health and Human Services, and Transportation and the Environmental Protection Agency.

Then there's the question of transparency:

“Federal agencies crank out thousands of new regulations every year, but we have little information on the cost or effectiveness of most of them,” said Clyde Wayne Crews, Jr., CEI’s vice president for policy. “There is little transparency and no reliable source of information on exactly what benefits rules are supposed to be generating or if they are serving their intended purpose.”

Elsewhere, the Joint Economic Committee held a hearing this week on regulations, "The First Step to Cutting Red Tape." Excellent testimony all the way around, but we were especially struck by the statement from John Graham, former head of the Office of Information and Regulatory Affairs in the Bush Administration and now Dean of the School of Public and Environmental Affairs at Indiana University Excerpt:

[The] federal government’s regulatory system could be much more effective and economically efficient if regulatory policies were developed based on high-quality regulatory analyses. Those analyses encompass tools such as risk assessment, cost-effectiveness analysis, benefit-cost analysis, uncertainty analysis, and value-of-information analysis.

It is not enough for Congress to insist that regulatory analysis be undertaken. A regulatory analysis is no better than the quality of data used in the analysis and the quality of the analytical procedures that are employed. Congress needs to insist that the federal government’s standards for information quality be respected by regulators.

Those principles match up very well with Business Roundtable's advocacy of "Smart Regulation," which proposes:

  • The government should objectively analyze the costs and benefits of proposed and 
final major rules from all agencies, including “independent” regulatory commissions.
  • Agencies should publicly disclose the estimated costs of planned regulatory actions 
early in the regulatory process and with greater specificity.
  • Congress should consider changes to the “Administrative Procedure Act,” particularly 
relating to the content of the rulemaking record and greater judicial scrutiny of that record.

For more, see this BRT Bottom Line, "Nearly Three-Quarters of Business Roundtable Members List Regulations as one of the Top Three Cost Pressures Facing their Businesses."

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