Americans cashing their first paychecks of the year are starting to feel the pain. Higher taxes in the “fiscal cliff” deal are just the beginning of the extra cash Uncle Sam will be collecting in 2013. The unprecedented expansion in regulation on President Obama’s watch means wallets are going to be much thinner by the end of the year.
According to an analysis released on Monday by the American Action Forum, Mr. Obama in his first term added nearly half a trillion dollars to the cost of doing business. In 2012, the administration shattered all records by imposing $236 billion in red tape. Regulators added an average of 315 pages worth of new directives and red tape every day in the first nine months, telling the public what it could and couldn’t do. The pages governing Obamacare will require Americans to spend 44 million hours filling out forms created by the president’s health care takeover. Thanks to the Dodd-Frank bill, businesses will have to find an extra 33 million hours to spend on compliance efforts.
The manufacturing sector will be hardest hit, having to come up with $15 billion to follow the administration’s new rules, based on official estimates. That’s equal to the cost of hiring 300,000 productive new employees. The American Action Forum report dug deeper by looking at the financial statements of 30 large firms to determine how much more they had spent to comply with the latest Obama administration regulations. The result was a direct cost of nearly $35 billion. For example, three companies reported a $1 billion impact from the Durbin Amendment, which capped the transaction fees on debit cards.
Such costs are wholly regressive. Small companies face a heavier burden of compliance than larger firms because they have a smaller customer base over which to spread the additional costs. The same is true for individuals. Utah State University economist Diana Thomas concluded in a Mercatus Center study that lower-income households bear a disproportionately large share of health and safety regulations. That means poorer households face a double burden, paying more in payroll taxes while at the same time bearing greater regulatory costs.
Usually, there’s little evidence these regulations are even worthwhile. The Department of Transportation is about to require every new car to install rearview cameras at a cost to industry of $3 billion, adding at least $200 to the price of each automobile. Bureaucrats insist the pricey cameras are needed because they might save lives. The presumption is that every accident caused by someone driving in reverse would be solved by forcing vehicles to have a television screen in the dashboard — something that could create distractions and accidents of its own. Automakers already make backup camera systems and parking sensors available to drivers who want them and are willing to pay. Bureaucrats in Washington are only satisfied when they can impose their personal choices on everyone else.
America can no longer afford the out-of-control nanny state. Regulations must be subjected to wider and more rigorous cost-benefit analysis. Otherwise, our already sluggish economy will continue to choke in an ever-increasing tangle of red tape.
The Washington Times