Political discussion in the US has become so polarized that questions about regulation evoke countercharges about the questioners' alleged dislike of government. Yet it's possible to like government in principle while disliking unbridled governance in practice. Unbridled governance manifests itself as questionable regulation. And questionable regulation manifests itself in work not performed and high cost.
The American Action Forum (AAF), which seeks a "smaller, smarter government that will serve its citizens better," estimates the administration of President Barack Obama has implemented regulations that ultimately will cost more than $488 billion. That's more than the US gross domestic product has grown in the past three quarters.
Costs underestimated
The group bases its estimate on data from Government Accountability Office reports on rules projected to impose costs exceeding $100 million/year and from the Federal Register. It didn't start tracking regulations expected to cost less than $100 million/year until 2011. Because the full estimate excludes "nonmajor" regulations implemented in 2009 and 2010, the projected total of nearly half a trillion dollars underestimates eventual costs.
AAF notes that the administration hasn't been unresponsive to expressions of concern about regulation. In 2011, two executive orders called for program reviews and elimination of regulations found to be unnecessary. Agencies took deregulatory steps worth $187 million and rescinded regulations estimated to cost a total of $1.16 billion. But those steps were overwhelmed by new regulations published in 2011, which will cost an estimated $231.46 billion.
AAF says it reviewed 6,705 regulations in 2011. So far this year it has tracked more than 4,700 regulations costing an estimated $70 billion. Energy figures prominently in projections of regulatory cost, of course. AAF points out that the regulatory impact analysis for the Environmental Protection Agency's fuel-efficiency standards for new vehicles in 2017-25 estimates lifetime costs of more than $156 billion.
The most costly regulation of 2012, according to the AAF, is the final EPA regulation on maximum achievable control technology (MACT) standards for utility emissions: $10 billion. The next-most costly measure is a final Department of Justice regulation on prison reform, $6.9 billion, followed by community first-choice option implementation for centers for Medicare and Medicaid facilities, $5.7 billion, proposed Department of Energy distribution transformer standards, $5.2 billion, and the final Securities and Exchange Commission conflict-minerals rule, $4.7 billion. While those costs were materializing, AAF says, agencies responded to executive orders on regulatory reform by rescinding measures costing a relatively paltry $2.4 billion.
Agencies imposing these costs insist they're just performing righteous work, which isn't cheap. Too often, though, the allegedly righteous work looks like caprice. The utility MACT rule, for example, supposedly targets mercury and air toxics. But nearly all the $37-90 billion in "monetized benefits" estimated for 2016 in EPA's final rule come not from lower emissions of mercury and air toxics but of fine particles, which fit neither category. EPA calls these emission cuts "cobenefits." Fine particles already are controlled under the Clean Air Act. EPA is leveraging its case for a very costly initiative—an initiative forcing many coal-fired power generation plants to close—on redundant regulation.
This is excessive governance. To say so is not to disparage government in general. It is to suggest that a government gone so obviously haywire needs more than a few largely ignored executive orders calling for reform.
Hallmark of presidency
Excessive governance has been a hallmark of the Obama presidency. The utility MACT rule is hardly the only cost EPA has loaded onto the US economy. And EPA, aggressive as it has been, isn't the costliest federal agency. It can claim credit for imposing regulatory burdens worth $12.1 billion this year. But the Department of Health and Human Services tops that total with $16.7 billion. The Department of Energy ranks third with $10.6 billion.
These numbers in no way suggest Americans should hate their government. They suggest Americans should want to control their government before it controls them.
