HomeBudget & Tax NewsReport: Federal Regulations Cost Nearly $2 Trillion Last Year

Report: Federal Regulations Cost Nearly $2 Trillion Last Year

Federal government over-regulation of the nation’s economy did almost $2 trillion of damage last year, the 2020 edition of the Ten Thousand Commandments report states.

The report, produced by The Competitive Enterprise Institute (CEI) every year, found the aggregate economic cost of federal regulation is more than $1.9 trillion per year, which amounts to $14,000 per U.S. household each year, approximately one-fifth of the average household budget.

“Federal government spending, deficits, and the national debt are staggering, but so is the impact of federal regulations,” the report states. “Unfortunately, the financial impact of these rules gets little attention in policy debates because, unlike spending and taxes, they are unbudgeted and difficult to quantify.”

CEI’s report includes the most recent “Unconstitutionality Index,” a ratio of rules issued by agencies compared to federal laws passed in Congress and signed by the president. In calendar year 2019, Congress enacted 105 laws, whereas federal agencies issued nearly 3,000 rules, the study found. That put the 2019 Unconstitutionality Index at 28, more than double the 2018 score of 11.

Regulation Decreased Under Trump Administration

The report notes that regulation has decreased significantly during the administration of President Donald Trump. According to the report, Trump has averaged 66,490 pages per year in the Federal Register, nearly one-fourth less than former President Barack Obama’s annual average of 80,420 pages per year.

Additionally, at the end of calendar year 2019 there were 2,964 final rules in the Federal Register, the lowest number since the start of records in the 1970s. That figure makes 2019 the only year ever with a tally of less than 3,000, pointing to a large decrease in regulation during the Trump administration.

Big Economic Impact

Federal regulation has a significant impact on the economy, especially as regulations typically extend beyond health, safety, or antitrust concerns and serve to boost big businesses and crush competition, the report states.

“Government spending has often disregarded regulatory effects, such as the displacement of private action, by steering toward government-chosen ends, and by creating marketplace distortions,” the report states.

Federal regulations provided some relief for small businesses, the report states. Of the 3,752 regulations in the pipeline, 644 affect small businesses, according to the report. Only 347 of those regulations required a Regulatory Flexibility Analysis, which assesses the impact of a regulation on small businesses, down from 412 in 2016, the report states. According to the report, more than 100 rules affecting small business were deemed deregulatory.

Overall, the proportion of total rules affecting small business is 17 percent, but it varies among agencies, the report states. For example, the Federal Trade Commission (FTC) issued 19 rules in 2019, 16 of which—more than 80 percent—significantly affected small businesses, according to the report.

FTC Antitrust Scrutiny

The report highlights an instance of the FTC overstepping its bounds in early 2019 when it “announced a ‘technology task force’ to assess tech sector ‘antitrust’ violations and increase scrutiny of acquisitions beyond current practice.” That set in motion an analysis of how regulations have negatively impacted the technology sector, the report states.

“In the wake of that, and in contrast to the administration’s recognition of the misuse of guidance elsewhere, the FTC is now in the process of drafting guidance on how the antitrust laws apply to the technology sector and defending its own role in policing it,” the report states.

‘No Regulation Without Representation’

The report’s author highlights a few possible ways to decrease federal over-regulation, including making data about federal regulation more easily accessible to the public.

“Scattered government and private data exist about the number of regulations issued by agencies and their costs and effects,” the report states. “Improving and compiling some of that information can shed light on the scope of the federal regulatory enterprise.”

Another remedy the report proposes is for Congress to accept responsibility for its rule-making power.

“Excess regulation is largely driven by the longstanding delegation by Congress of its rightful lawmaking power to executive branch regulatory agencies,” the report states. “Getting lawmakers on the record as supporting or opposing specific rules would reestablish congressional accountability and affirm a principle of ‘no regulation without representation.'”

Emma Kaden
Emma Kaden
Emma Kaden is an assistant editor at The Heartland Institute.


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