Regulations Cost Families 20 Percent of Income

Regulations Cost Families 20 Percent of Income
May 1, 1998



As Congress continues to ponder the fate of regulatory reform legislation, a new study shows how federal mandates are eating away at family incomes.

Federal regulations cost taxpayers $688 billion in 1997, over 40 percent more than the size of the entire U.S. government budget, according to a report released on February 5 by the Competitive Enterprise Institute (CEI). Clyde Wayne Crews, the report’s author, put the figure in perspective.

“Regulations cost the typical family $6,800 in 1997,” Crews writes, “almost 20 percent of their after-tax budget. More is spent on regulation than on medical expenses, food, transportation, recreation, clothing, and savings.”

The study, “Ten Thousand Commandments: An Annual Policymaker’s Snapshot of the Federal Regulatory State,” points out that elected officials are increasingly relying on off-budget regulations, as opposed to new taxes or deficit spending, to fund new government programs.

Because the cost of complying with regulations is less visible to voters, Congress has managed to avoid the wrath of overburdened taxpayers. But, as the CEI study shows, its failure to rein-in the increasingly powerful federal regulatory bureaucracy makes it in large part responsible for the burdens being placed on families and communities.

Crews notes that the true scope and cost of federal regulations is unknown, but a review of the available government and independent data paints a sobering picture:

  • The 1996 Federal Register was 64,591 pages long: the second highest page count over the past ten years.
  • Agencies issued 4,937 final rules in 1996’s Federal Register, the most since 1984.
  • All told, agencies have issued 45,783 final rules in the past decade.
  • New regulations that will impose at least $12.5 billion annually in off-budget costs are already in the pipeline. Of the 4,407 regulations now in the works, 125 are “economically significant” rules that will each cost at least $100 million a year.
  • The number of new rules affecting small businesses has increased 10 percent since 1993.
  • The Environmental Protection Agency (EPA) expects to issue 430 of the 4,407 planned rules. EPA regulations are expected to cost at least $3.6 billion annually. The agency has provided benefit estimates for fewer than half its planned major rules.
  • “Rubber Stamp” audits are becoming more common. Despite the growth in the number and cost of new rules, the Office of Management and Budget (OMB) reviews just one-quarter as many rules as it did just three years ago.

Crews argues that the most important measure that could be taken to control the regulatory state would be to make Congress directly accountable for every dollar of costs that are imposed on the American public by unelected agencies.

“Regardless of the precision with which we may someday ascertain regulatory costs, Congressional approval--rather than agency approval--of regulations and regulatory costs is the ultimate realization of accountability to the public,” he writes. “This means requiring Congress to vote approval of agencies’ final rules. Congressional accountability would fulfill citizens’ right to demand ‘no regulation without representation.’”