How much of a burden do federal regulations place on the U.S. economy? The Competitive Enterprise Institute (CEI) published its annual report on the regulatory state, aptly titled Ten Thousand Commandments, that sets out to do the impossible: calculate the burden on the U.S. economy imposed by the federal regulatory state.
The organization claims that there is $2 trillion in dead-weight regulations holding down the U.S. economy.
"The Federal Register lists 445 agencies with the legal authority to publish regulations," notes JD Tuccille in Reason.com. Last year, the White House acknowledged that "the United States is drastically overregulated" and that "the Code of Federal Regulations contains over 48,000 sections, stretching over 175,000 pages….Worse, many carry potential criminal penalties for violations."
Each and every regulation carries the force of law, and ignorance of the law is not a defense.
It's enough to make you throw up your hands and surrender. That's what most businesses do, as the cost of the regulations imposed is nothing compared to the cost of complying with them.
"According to the Office of Management and Budget, for Americans supplying required information to federal agencies, 'in FY2022, the total paperwork burden…was 10.34 billion hours, compared to 9.97 billion hours in FY2021.'" Jobs for regulatory compliance officers are recession-proof.
"Just as consumers shoulder much of the corporate income tax and tariff burden, regulatory compliance costs and mandates borne by businesses percolate through the economy and materialize as higher prices, lost jobs, and lower output," writes CEI's Clyde Wayne Crews in the report.
"Off-budget regulatory costs can drag down the economy, just as overspending can," he adds.
The complexity of the administrative state is a feature, not a bug. "A century of enabling statutes erecting the administrative state as well as massive spending programs that pre-load regulation across the board are the primary vehicles for regulatory expansion, embedding mandates and incentives that no president can easily undo alone," Crews writes.
The Department of Government Efficiency (DOGE) was a good start, but many of its recommendations were curtailed or eliminated by the federal judiciary, who are turning out to be the bureaucrats' best friend.
Federal rulemaking has plunged during Trump's second term, to what CEI's Crews describes as "the lowest rule tally of all time, compared to the prior record low of 2,964 in 2019, also under Trump." But, he emphasizes, decades of accumulated red tape remains in place, imposing vast "legacy" costs on Americans who enjoy only minor relief from current deregulatory efforts. "Trump's regulatory streamlining has not actually translated into governing less," cautions Crews. The White House continues to impose burdens through jawboning (implicit and explicit regulatory threats), the exercise of emergency powers, antitrust measures, surveillance and data collection requirements, and other intrusive policies.
In other words, despite deregulatory rhetoric and (some) action, the Trump administration actively participates in the decades-long shift in American governance which has resulted in "the executive now doing most lawmaking" in place of an almost vestigial legislative branch. To the extent that there's a solution to the metastasizing regulatory state, Crews believes, it lies in Congress reasserting its constitutionally defined role.
The biggest problem in eliminating tens of thousands of unnecessary regulations is that many rules are worth keeping, and finding the difference between good and bad regulations is a huge challenge.
When I was a kid, I vividly recall the front page of TIME Magazine running a picture of a fire on the Cuyahoga River. That photo set off a nationwide campaign that resulted in the passage of the Clean Water Act. Little did Congress know when it passed that Act what would happen to the authority granted to the Environmental Protection Agency (EPA).
Setting standards for water quality and dumping pollutants into rivers, streams, and lakes was good. But what the Clean Water Act became over the decades was a nightmare of bureaucratic overreach and outright stupidity.
This is where Congress must begin to reassert its authority. "Congress needs to reclaim its responsibilities," Crews writes. It should get rid of or amend "statutes that sustain the counterproductive regulatory enterprise. It must abolish, downsize, defund, and deny appropriations to agencies, subagencies, and programs."
The CEI report also suggests that regulatory sunsetting should become standard practice, so that rules automatically expire after a certain period of time rather than living on as administrative accretions that impose permanent costs. It also calls for the "inventorying of guidance documents to prohibit the rise of largely untraceable rule equivalents that can substitute for conventional rulemaking."
Whether members of Congress want to reassert their role and take on the hard job of debating legislation and casting votes is an open question. The body has largely degenerated into a combination madhouse and steppingstone to gigs as media talking heads. It's difficult to imagine politicians who ran for office largely so they could raise social media follower count suddenly discovering a desire to legislate or repeal legislation.
But in the absence of a reinvigorated Congress, the administrative state will continue to metastasize. Red tape and compliance costs will consume Americans' wealth, leaving us all poorer and less free.
Congress must find a way to fast-track deregulation, or the U.S. economy will become even more beholden to bureaucrats who must justify their existence by looking for things to regulate.
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