Government’s "10,000 Commandments" Cost Americans More than $1 Trillion

Government’s "10,000 Commandments" Cost Americans More than $1 Trillion
October 8, 2008

Federal regulations cost Americans almost as much as the income tax and more than 40 percent of all federal spending, according to “Ten Thousand Commandments,” the Competitive Enterprise Institute’s annual report on the burdens of federal regulation.

To put that in perspective: President George W. Bush’s federal budget for fiscal year FY 2009 proposed $3.107 trillion in discretionary, entitlement, and interest spending. It was the first-ever $3 trillion budget in the United States.

Bush also was the first president to deliver a $2 trillion federal budget, in 2002.

These costs are alarming in themselves, but the government’s reach extends well beyond the taxes Washington collects and the deficit spending at which it excels. Federal environmental, safety, health, and economic regulations cost more than $1 trillion a year in addition to the costs of official federal spending.

Costs Unbudgeted, Indirect

Firms generally pass the costs of some taxes along to consumers. Similarly, businesses’ regulatory compliance costs can trickle down to consumers as well. Exact regulatory costs can never be fully known because, unlike taxes, they are unbudgeted and often indirect.

But scattered government and private data exist on scores of regulations and the agencies that issue them, as well as on regulatory costs and benefits, some of which can be compiled to make the regulatory state somewhat more comprehensible.

That compilation is one purpose of CEI’s annual report, released this year in July.

Rollback Would Stimulate Economy

Some highlights from the findings:

* Extrapolating from an estimate of the federal regulatory enterprise by economist Mark Crain, regulatory compliance costs hit an estimated $1.157 trillion in 2007.

* U.S. regulatory costs now exceed the entire 2004 gross domestic product of Canada, which stood at $1.017 trillion.

* Since 2007 government spending stood at $2.73 trillion, the hidden tax of regulation now approaches half the level of federal spending itself.

* Regulatory costs nearly match 2005 corporate pretax profits of $1.3 trillion.

* Regulatory costs also rival the estimated 2007 individual income taxes of $1.17 trillion and dwarf corporate income taxes of $342 billion.

* Regulatory costs of approximately $1.16 trillion absorb 8.5 percent of U.S. gross domestic product (GDP), which was $13.67 trillion in 2006.

* Regulations dwarf the $150 billion “economic stimulus package” passed in early 2008, and their rollback would constitute the deregulatory stimulus the U.S. economy needs.

* Combining regulatory costs with federal FY 2007 outlays of $2.73 trillion brings the federal government’s share of the economy to 28 percent.

* The Weidenbaum Center and the Mercatus Center jointly estimate federal government agencies spent $42 billion to administer and police the 2007 regulatory enterprise. Adding the $1.157 trillion in off-budget compliance costs brings the total regulatory burden to $1.201 trillion.

* The 2007 Federal Register contained 72,090 pages, down 3.8 percent from 2006’s 74,937 pages. The record year, 2004, brought 75,676 pages.

* In 2007, federal agencies issued 3,595 final rules, a 3 percent decline from 2006’s 3,718 rules.

* The annual outflow of nearly 4,000 final rules has meant well more than 51,000 final rules since 1995—that is, since the Republican takeover of Congress and its recent Democratic recapture.

* While regulatory agencies issued 3,595 final rules, Congress passed and the president signed into law a comparatively low 188 bills in 2007. Considerable lawmaking power is thus being delegated to unelected agencies.

* In the 2007 Unified Agenda, the 50-plus federal departments, agencies, and commissions detailed 3,882 regulations now at various stages of implementation.

* Of the 3,882 regulations now in the pipeline, 159 are “economically significant” rules packing at least $100 million apiece in economic impact. That number implies a lower boundary of some $15.9 billion a year in additional future off-budget regulatory impacts.

* The number of “economically significant” rules increased 14 percent between 2006 and 2007, from 139 to 159.

* The five most active rule-producing agencies—the departments of Treasury, Commerce, Agriculture, and Homeland Security, along with the Environmental Protection Agency—account for 1,741 rules in the process of being implemented, or 45 percent of all rules in the pipeline.

* Of the 3,882 regulations now in the works, 757 affect small business.


Wayne Crews (wcrews@cei.org) is vice president for policy at the Competitive Enterprise Institute in Washington, DC. Ryan Young (ryoung@cei.org) is a research associate at CEI.

For more information ...

The Competitive Enterprise Institute’s “Ten Thousand Commandments” report: http://cei.org/node/20855