With annual spending by the US government approaching $4 trillion and the federal deficit exceeding a quarter of that, why worry about an extra trillion bucks or two in regulatory costs?
Numbers with so many zeros induce dizziness. Who can keep track? Is anyone keeping track?
No. No one keeps close account of the costs of federal regulation. That’s the problem. It amplifies economic pressure from the deficit.
An annual report published by the Competitive Enterprise Institute estimates the cost of federal regulation at $1.8 trillion.
Author Clyde Wayne Crews Jr., a CEI vice-president, bases that number partly on an estimate by the Small Business Administration of regulatory compliance costs in 2008 of $1.752 trillion. To that he adds $55 billion, which the Weidenbaum Center at Washington University in St. Louis and the Mercatus Center at George Mason University in Virginia estimate agencies spend annually on administration and enforcement.
The total is the cost of what Crews calls the “regulatory enterprise.”
Add it to the $3.598 trillion the federal government is estimated to have spent in 2011 and you get a government whose share of the entire US economy reaches 36%.
Indeed, the government mass-produces regulations.
The Federal Register, in which regulators enshrine their handiwork, totaled 81,247 pages last year, according to Crews. It was the second-highest total ever. The 2010 page count was higher: 81,405.
Agencies issued 3,807 final rules in 2011, 6.5% more than in 2010. Proposed rules appearing in the Federal Register increased by 18.8% to 2,898.
What to do?
“Like federal spending, each agency’s stream of regulations and their costs should be disclosed, tracked, and monitored annually,” Crews says. “Occasionally, housecleaning should be performed.”
Cost-benefit analysis is supposed to help. But it’s not always performed and enforced. Adds Crews: “It largely amounts to self-policing.” Agencies have incentive to overestimate benefits.
And the costs? Here’s betting that the annual total of agency projections of proposed regulations eventually implemented, if available, wouldn’t come anywhere near $1.8 billion.
(Online May 25, 2012; author’s e-mail: [email protected])