Seasoned Perspectives on Money, Markets and Institutions
Saturday, August 6, 2016
More on the Net Regulatory Burden
by Roy C. Smith
The Wall Street Journal today has an editorial entitled "The All-Time Regulation Record" quoting a forthcoming report prepared by Sam Batkins of the American Action Forum, a right-of-center nonpartisan think-tank, that illustrates the continuing problem of net regulatory burden described in our post on July 5th ("Economic Growth and Regulatory Relief").
The Batkins report, based on data supplied by federal agencies, concludes that the Obama Administration has issued a record-setting 600 "major" rules since taking office, with perhaps 50 more to come. A major rule is one that imposes regulatory costs of more than $100 million. Altogether, Mr. Batkins estimates these rules will cost up to $743 billion, or 4.2% of GDP, and will require nearly 200 million hours a year for compliance. Cumulatively, the WSJ estimates that this regulatory burden costs the US economy, now stuck in a seemingly endless low growth mode, about 1%-2% of its annual rate of growth.
Certainly some of this regulatory burden is beneficial and necessary. But certainly too, a lot of it is not. And as oblivious of the net regulatory burden as the Obama team may be, the trend towards excessive regulation did not start with it. The George W. Bush Administration provided nearly 500 major rules during its eight year term. There is little evidence of rigorous cost-benefit analyses being applied to either of these teams' regulatory agenda.
Yet voters in a crucial presidential election in November hear little of this. Both candidates have promised all kinds of things that would require considerable additions to the net regulatory burden if passed by Congress, and, if not, the candidates would seek to deliver them instead through executive orders.
We seem to be getting close to a point where Americans will have to choose between growth and regulation, but so far, few seem to recognize the trade-offs needed to get the balance right.