Ten Thousand Commandments

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Ten Thousand Commandments Ten Thousand Commandments An Annual Snapshot of the Federal Regulatory State by Clyde Wayne Crews Jr. Competitive Enterprise Institute Ten Thousand Commandments An Annual Snapshot of the Federal Regulatory State 2010 Edition by Clyde Wayne Crews Jr. Executive Summary President Barack Obama’s federal budget for Regulation: A Hidden Tax fiscal year (FY) 2011 proposes $3.83 tril- lion in discretionary, entitlement, and inter- Those costs fully convey the federal govern- est spending.1 In the previous fiscal year, the ment’s on-budget scope, and they are so- president had proposed $3.552 trillion. For bering enough. Yet the government’s reach reference, George W. Bush had proposed The government’s the first-ever $3 trillion U.S. budget. In fact, extends well beyond the taxes that Washing- President Bush was also the first to propose a ton collects and the deficit spending and bor- reach extends well $2 trillion federal budget—in 2002, a scant rowing now surging. Federal environmental, beyond the taxes eight years ago.2 safety and health, and economic regulations cost hundreds of billions of dollars every year that Washington Meanwhile, the Congressional Budget Office over and above the costs of the official federal (CBO) projects FY 2010 spending will end outlays that now dominate the policy agenda. collects and the up at $3.524 trillion.3 The result: thanks to the bailout and “stimulus” frenzy, a projected Firms generally pass along to consumers the deficit spending FY 2010 deficit of a previously unthinkable costs of some taxes. Likewise, some regula- $1.349 trillion, down slightly from 2009.4 tory compliance costs that businesses face and borrowing will find their way into consumer prices. To be sure, many other countries’ govern- Precise regulatory costs can never be fully now surging. ments consume more of their national known, because, unlike taxes, they are un- output than the U.S. government does.5 budgeted and often indirect. But scattered However, in absolute terms, the U.S. gov- government and private data exist on scores ernment is the largest government on planet of regulations and on the agencies that issue Earth, whether one looks at revenues or ex- them, as well as on regulatory costs and ben- penditures.6 efits. Some of that information can be com- Crews: Ten Thousand Commandments 2010 1 piled to make the regulatory state somewhat Center at George Mason University in more comprehensible. That is one purpose Arlington, Virginia, jointly estimate that of the annual Ten Thousand Commandments agencies spent $54.3 billion to adminis- report, highlights of which appear next. ter and police the regulatory enterprise. Adding the $1.187 trillion in off-budget • A very rough extrapolation from an compliance costs brings the total regula- evaluation of the federal regulatory tory burden to $1.24 trillion. enterprise by economist Mark Crain esti- • The 2009 Federal Register dropped mates that annual regulatory compliance significantly from its all-time high of costs hit $1.187 trillion in 2009. 79,435 pages in 2008. It fell nearly 14 • Given 2009’s actual government spend- percent to 68,598. ing of $3.518 trillion, the regulatory • Federal Register pages devoted specifi- “hidden tax” stood at 34 percent of the cally to final rules fell by 21 percent, level of federal spending itself. (Because from a record 26,320 in 2008 to 20,782 of the recent federal spending surge, this in 2009. proportion is lower than the near–40 • In 2009, agencies issued 3,503 final percent level of recent years.) rules, an 8.5-percent drop from 3,830 • The dramatic reality that regulations rules in 2008. and deficits now each exceed $1 trillion • The annual outflow of roughly 4,000 a year is an unsettling new development final rules has meant that nearly 60,000 for America. In 2008, regulatory costs rules have been issued since 1995. were more than double that year’s $459 • Although regulatory agencies issued billion budget deficit. Now, the 2009 3,503 final rules in 2009, Congress deficit spending surge has catapulted the passed and the president signed into law deficit well above the costs of regulation a comparatively few 125 bills. Consider- ($1.414 trillion compared to $1.187 tril- able lawmaking power is delegated to lion, respectively). unelected bureaucrats at agencies. • The game has changed, with respect to • According to the 2009 Unified Agenda, government spending versus govern- which lists federal regulatory actions at ment regulation. Although the spending various stages of implementation, 59 and deficit levels eclipse federal regula- federal departments, agencies, and com- tory costs now, unchecked government missions have 4,043 regulations in play spending can translate, in later years, at various stages of implementation. into greater regulation as well. • Of the 4,043 regulations now in the • Regulatory costs are equivalent to 63 pipeline, 184 are “economically signifi- percent of all 2007 corporate pretax cant” rules wielding at least $100 million profits of $1.89 trillion. in economic impact. Assuming those • Regulatory costs dwarf corporate income rulemakings are primarily regulatory taxes of $147 billion. rather than deregulatory, that number • Regulatory costs exceed estimated 2009 implies roughly $18 billion yearly in individual income taxes of $953 billion future off-budget regulatory effects. by 25 percent. • “Economically significant” rules in- • Regulatory costs of $1.187 trillion creased by 2 percent between 2008 and absorb 8.3 percent of the U.S. gross 2009 (following 13- and 14-percent domestic product (GDP), estimated at increases in the prior two years). High $14.253 trillion in 2009. federal budgetary spending now likely • Combining regulatory costs with federal implies higher future regulatory costs as FY 2009 outlays of $3.518 trillion im- well. plies that the federal government’s share • The five most active rule-producing of the economy now reaches 33 percent. agencies—the departments of the Trea- • The Weidenbaum Center at Washington sury, Agriculture, Commerce, and the University in St. Louis and the Mercatus Interior, along with the Environmental 2 Crews: Ten Thousand Commandments 2010 Protection Agency—account for 1,763 the other. If regulatory costs remain largely rules, or 44 percent of all rules in the hidden from public view, regulating will be- Unified Agenda pipeline. come increasingly attractive compared with • Of the 4,043 regulations now in the increasingly unpopular taxing and spending. works, 758 affect small business. Disclosure and Accountability Liberate to Stimulate? Like federal spending, each agency’s stream The short-lived string of budgetary sur- of regulations and their costs should be pluses enjoyed from 1998 to 2001 (the first tracked and monitored each year. Cost-ben- since 1969) seems like ancient history—even efit analysis of rules is the usual approach The short-lived inconceivable—in today’s spending culture. suggested for policing regulation. A problem Indeed, CBO projects no surpluses whatso- with cost-benefit analysis, however, is that string of budgetary ever over the coming decade, merely deficits it largely amounts to agency self-policing. of hundreds of billions each year (the “low- Agencies that perform “audits” of their own surpluses enjoyed est,” of $475 billion, in 2014).7 However, if rules would rarely admit that a rule’s benefits regaining and maintaining an honest surplus do not justify the costs involved. At the least, from 1998 to ever again become political priorities, policy some third-party review is needed, and cost- 2001 seems makers must control regulatory costs as well. benefit analysis at the agency level is already The dramatic fact of regulations and defi- controversial. like ancient cits now each exceeding $1 trillion a year is an unsettling new development for America. Another approach is to leapfrog the cost- history—even The deficit is already widely—and appropri- benefit debate and go back to the source of ately—criticized by the media, citizens, and delegation to the agencies. Congress should inconceivable—in policy makers, but reducing the scope of the answer for the compliance costs (and ben- regulatory state and fostering a “deregula- efits) of federal regulations. Requiring ex- today’s spending tory stimulus” should occupy policy mak- pedited votes on economically significant ers as well. When it comes to stimulating a or controversial agency rules before they culture. limping economy, reducing both deficits and become binding on the population would regulations is critical. reestablish congressional accountability and would help fulfill the principle of “no regula- Without better regulatory oversight and tion without representation.” monitoring—without an effort to “liberate to stimulate”—the urgency of deficit reduc- Disclosing regulatory costs remains impor- tion invites lawmakers to opt for off-budget tant even if Congress approves rules. Open- regulations on the private sector rather than ness about regulatory facts and figures is adding to already unchecked deficit spend- critical, just as disclosure of program costs is ing. Taxation and regulation can substitute critical in the federal budget. Simple federal for each other. A new government pro- regulatory “report cards,” similar to the pre- gram—for example, job training—would sentation in Ten Thousand Commandments, require either increasing government spend- could be officially issued each year to distill ing on the one hand, or imposing new rules information to the public and policy makers and regulations requiring such training on about the scope of the regulatory state. Crews: Ten Thousand Commandments 2010 3 Overview: Toward Ending “Regulation without Representation” The federal government funds new programs government can require the private sector either by raising taxes or by borrowing money (and state and local governments) to pay for —with a promise to repay, with interest, from federal initiatives through compliance costs. future tax collections. However controver- Congress sial government spending programs may be, Because disclosure of, and accountability can escape taxpayers can examine costs in the federal for, regulatory costs are both spotty, policy budget.
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