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The Public Policy
Washington’s Ten Thousand Commandments
Regulations and red tape should be campaign issues this year.
Deficits, taxes, and spending are the defining issues of the 2012 campaign. Regulation deserves a seat at the table, too. The federal government spent $3.6 trillion in 2011. But according to the Small Business Administration (SBA), the annual cost of complying with federal regulations has exceeded $1 trillion since around 2005, and none of those costs appear in the federal budget. The federal government actually costs us half again more than most people think it does.
By way of comparison, Canada’s entire Gross National Income is $1.42 trillion. The budget deficit is currently $1.08 trillion. Those are big numbers. And the cost of federal regulation is an even bigger number. This needs to change if the economy is to get back on track.
Politicians love to blame unregulated markets for America’s economic troubles. But as the just-released 2012 edition of the Competitive Enterprise Institute’s annual Ten Thousand Commandments report shows, those unregulated markets are hard to find. The federal government lists all of its regulations in the Code of Federal Regulations. It is more than 169,000 pages long and growing. Last year alone, 3,807 new final rules were published in the Federal Register — more than 10 per day. In 2010, it was 3,573 new rules.
Small businesses bear an outsize share of regulatory burdens. Candidates from both parties constantly climb over each other to seize the mantle of Protector of Small Business. But their claims ring hollow if they don’t work to enact top-to-bottom regulatory reform.
Big businesses, with more than 500 employees, pay about $7,755 per employee to comply with federal rules each year, according to the SBA. But small businesses with fewer than 20 employees pay $10,585 per employee per year. That’s a built-in competitive advantage for big business of nearly $3,000 per employee, courtesy of Washington.
The states pile on regulations, too. No wonder a recent Kauffman Foundation-Thumbtack.com survey of 6,000 small businesses found that, “Small businesses care almost twice as much about licensing regulations as they do about tax rates when rating the business-friendliness of their state or local government.”
President Obama has made some gestures in the direction of regulatory sanity. He recently guided the repeal of five rules, which should save $6 billion over five years. That’s a good start — an average of $1.2 billion per year will soon be put to more productive uses than, say, redundant vapor recovery systems in gas pumps. But trimming $1.2 billion from $1 trillion lightens the regulatory burden by only a fraction of a percent. It’s the equivalent of a 200-pound man declaring his diet a success after shedding less than three ounces.
Congress passed 81 new laws last year, but agencies issued 3,807 new regulations. This is called regulation without representation, and needs to be stopped. Of those rules, 212 are classified “economically significant,” which means they cost more than $100 million per year. Congress should, at the very least, vote on rules with such a large price tag.
There is now a bill that would require Congress to do just that, the Regulations from the Executive in Need of Scrutiny (REINS) Act. It passed the House, but is stalled in the Senate. The world’s greatest deliberative body should pick up the baton that it so carelessly dropped and take it to the finish line.
Just as Congress is supposed to pass a budget every year for what it spends, it should pass a regulatory budget. If it caps regulatory burdens at, say, $1 trillion, it would then have to prioritize which rules it believes provide the most bang for the buck. Voters would also know when Congress votes to increase regulatory costs, giving members at least some incentive to keep regulation in check.
The fight for real regulatory reform is a long one, not least because neither party has shown the seriousness needed to see it through. But the only way to win is to fight. That’s why politicians and agencies are so resistant to transparency reforms like the ones above. If enough people learn the truth about regulatory costs, the politicians lose.
About the Author
Ryan Young is Fellow in Regulatory Studies at the Competitive Enterprise Institute.
Letter to the Editor View all comments (14) | Leave a comment
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Purp| 6.5.12 @ 7:38AM
"Politicians love to blame unregulated markets for America's economic troubles. " - actually it was all economists that provided that information about unregulated markets.
"Competitive Enterprise Institute’s annual Ten Thousand Commandments report shows, those unregulated markets are hard to find." - Gee, a right-wing org that can't find unregulated markets - what a surprise. Ever hear of the $600 Trillion Credit Default Swaps (CDS) market? The small little item that caused the financial crash in 2008? Or how about the poorly regulated subprime loan market, where banks and Wall Street were free to lend to anyone that fogged a mirror? How about the faulty ratings of all this trash investing by the 3 main ratings agencies? Where were the regulators then? All 3 of the items above were far and away to blame for the economic disaster that descended on us under George W Bush.
There is nothing inherently wrong with regulation - it protects our clean air, clean water, safe food, safe drugs (and even at that it's not perfect), etc. I think we've seen what happens in China with little or no regulations - poison pet food, lead in children's toys - you want that here too? Of course, the violators that got caught got executed - that's one way to regulate that's pretty permanent.
Purp| 6.5.12 @ 7:40AM
Moreover, regulation provides a framework for businesses to compete a more level playing field - they all must comply, and so are equally impacted. Unless one Corporation or Company can buy off the political types to provide special interest legislation. (Citizens United, anyone?)
If there had been proper regulations in place, Europe's problems would be ameliorated. And, this in the Evil Socialist Europe! What were they thinking? I thought they were regulated to death?
Of course, business complains about regulation, it's their job to make more money and will bitch and moan to reduce your wages, cancel your pensions, increase the costs of your healthcare, and avoid following regulatory compliance. What would you expect? But that doesn't mean we should agree with business.
The economy isn't hurting because of regulation. It's because everyone stopped spending at once, scared to death by the crash. Now, how do you get them spending again? And with customers comes the need to make more or do more - which translates to the need for more workers to make more or do more. Without customers, no jobs. Without jobs, no customers. The billionaires and millionaires (the "job creators") got all the money - where are the jobs? Can anyone answer that one? Who's going to spend money to get us out of this Depression? That's the real problem. But businesses won't tell you that - at least not the ones that sit on the right wing.
chuck| 6.5.12 @ 7:54AM
Of course you would pop your head up from whatever hole you occupy and argue that we need more regulation, not less. You've also argued that we need more stimulus, that 800 billion was far too little.
Typical liberal, never wrong about anything. If an idea didn't work, it's not because it was a bad idea, it was because we just didn't put enough money behind it.
You are a shining example of the idiocy of the Left.
Purp| 6.5.12 @ 8:06AM
Are you nuts? Where were you in 2007-2008 when the economy crashed? You blame left wing ideas for the crash? Seriously? Who was in charge then - oh that's right - Bush. He has been blamed, will continue to be blamed and will always be blamed - just like Herbert Hoover before him. That's just reality. Get a grip.
Stay on the subject - it's regulation, not stimulus this time around. So what has been deregulated that has been good for us? Airline deregulation? Fly lately? Trucking deregulation? Ever have an 80,000 pound truck barreling up your behind? How about telephone deregulation? You like your flimsy little phones and the myriad of charges from who knows where on your bill? Of course there are some bad regulations, that need to be changed or made smarter. But wholesale "regulation is bad" is just stupid. Regulation is not a left idea, it's in the Constitution. 2nd Amendment "... a well-regulated militia..." the Founders knew it wasn't bad to regulate. And, with 150 times the population now, it is needed more than then.
chuck| 6.5.12 @ 8:40AM
Telephone deregulation in the 70's set up the whole era of wireless communication we now have. Airline deregulation set up cheap air travel that millions can now afford.
Over-regulation kills business.
Take housing. Government regulates how much water your toilets can use, how much water may flow out of your faucet, the type of windows allowed, the type of roofing allowed, the efficiency of your HVAC unit, all the building materials allowed, and just about everything else in your home.
New Jersey wants to require you to buckle up your pets. NYC wants to ban sodas larger than 16 oz. We are tired of the nanny state, and a bunch of blithering idiots like you, telling us what we can't do, and what we must do!
You can live your life the way you want, but you and your minions have no right to tell me how to live mine by implementing all these stupid laws and regulations.
Truth to Power| 6.5.12 @ 9:42AM
"Are you nuts?"
Purp is projecting again. Before airline deregulation rich people and business people were the only travelers. The problem with cost now is due to fuel and that of course has been over regulated. Trucking was a great union job where a lucky fellow with little to recommend him could make a ridiculously high wage. Like all union jobs it was unsustainable. People making the middle class wages will not prop up union workers. It is amazing that Purp believes that some regulation will stop tailgating. There are already traffic laws against this. My phone is superior in every way to the phones prior to deregulation. Something tells me Purp would have loved the consermer products in the Soviet Union. The government caused almost all our recent problems. The Clinton/Bush/Obama efforts at home affordability caused the housing bubble that Obama won't let go away. Many a fat cat Democrat made big bucks on this. Barney Frank propped it up and kept reforms from taking place using the Democrat's favorite charge, racism. All the while he was protecting the interests of a boyfriend. It is disgusting that Frank and Dodd have their names on the so-called reform bill. Purp needs to stop supporting corrupt candidates if he cares. I won't be holding my breath.
2Anglico| 6.5.12 @ 12:41PM
Wow, what a shining example of COLOSSAL IGNORANCE. "Well regulated militia" meant the founders wanted a proficient, well trained militia. And the militia was NOT a standing army. There are a few articles you could read that discuss the whole background of the "well regulated" phrase, they are called the Federalist Papers. You will probably need a dictionary before you begin reading them.
Government=good, business=bad, a simple philosophy for a simple mind.
Who Knows?| 6.5.12 @ 12:06PM
Who will regulate the regulators?
Who will regulate the regulators of the regulators?
Who will regulate the regulators of the regulators of the regulators?
Turtles, all the way down---and up.
Caveat emptor.
There’s a sucker born every minute.
Never give an even break to a sucker.
To be whatever you appear to be doesn’t really make a damn bit of difference.
Ponder the last insightful sentence. In our world of heavy light, in which we “appear” as dense material---trillions of cells composed of chemical elements, which are just stepped down frequencies of the Mystery = Light---and call ourselves Joe Blow, “appearing” inside a body, there’s a whole lot of serious attachment going on.
It “appears” so!
Absolutely, though, even as this fancy dancing “appearing” seems to be going on, truly there is NO difference happening. Not a DAMN bit of it!
Have you ever wondered where, EXACTLY, you, bodily, start and end? We humans maintain the conventional “wisdom”, felt so painfully, usually, that the epidermis is the enveloping barrier that bounds us.
Yes, we are THUS bound, “hand and foot”, appearing to be slaves to this notion. And, when we get around to remembering what we “appeared” to learn in science class, to wit that the skin is CONSTANTLY shedding elements, well---how marvelous!
Gulp.
Swallow.
Breathe.
Defecate.
Urinate.
Think.
Or, not!
Here I come.
There I go.
There, I came---bliss!
Here, I AM coming.
TLP| 6.5.12 @ 4:49PM
I like it!
Good job.
Who knows?
You knows.
marque lunettes de soleil | 6.5.12 @ 9:20PM
The fight for real regulatory reform is a long one, not least because neither party has shown the seriousness needed to see it through. But the only way to win is to fight. That's why politicians and agencies are so resistant to transparency reforms like the ones above. If enough people learn the truth about regulatory costs, the politicians lose
maillot de bain pas cher | 6.5.12 @ 9:24PM
Deficits, taxes, and spending are the defining issues of the 2012 campaign. Regulation deserves a seat at the table, too. The federal government spent $3.6 trillion in 2011. But according to the Small Business Administration (SBA), the annual cost of complying with federal regulations has exceeded $1 trillion since around 2005, and none of those costs appear in the federal budget. The federal government actually costs us half again more than most people think it does.
Petronius| 6.6.12 @ 12:10PM
Government regulators know what every criminal knows. A Law is just an inconvenient piece of paper. And the former will tell you who God really is. Defy one of these self serving bastards and see what happens to you.