- - Thursday, January 29, 2015

Taxes take a bite out of the economy, but regulations take a bigger one. Congress has surrendered much of its lawmaking authority to the president and a growing swarm of unelected bureaucrats, and regulations are growing faster than ever. The Obama administration thinks this is the way to run an economy. It’s actually the way to cripple it.

The Competitive Enterprise Institute calculates that regulations will cost the economy an additional $1.9 trillion this year alone. This cost of big government is more harmful because, unlike taxes, the taxpayer rarely notices it. The price of red tape is deftly hidden. “Rather than pay directly and book the expense of a new initiative,” observes Wayne Crews of the institute, “Congress can require that the private sector and lower-level governments pay. By regulating, the government can carry out desired programs but avoid using tax dollars to fund them.”

These extra costs show up as higher prices, slowed innovation and consequently fewer jobs.

The explosive growth of regulatory burdens is easily revealed on the FederalRegister.org website. Several hundred pages of new laws, rules and regulations are published every day. It’s like watching the American Dream not-so-slowly strangled by red tape. On Wednesday, for example, 263 pages of commandments were released to govern the lawful use of snowmobiles, tow-behind lawn groomers and vacuum pumps. Not long ago the bureaucrats issued 189 pages of rules about washing machines.

Nobody knows exactly how many laws there are on the federal books, but the number couldn’t compare to the number of rules. In 2013, for example, 72 new laws were enacted by Congress, but 3,659 agency rules were established — a ratio of 51 rules for every law. There’s a new rule born every two-and-a-half hours.



The real costs of compliance can hardly be confined to dollar figures. The burden of keeping up with hundreds of new dictates every day must be weighed as well. The arbitrary and contradictory nature of federal rules and regulations severely hampers entrepreneurial risk-taking.

According to economist Robert Higgs, this type of “regime uncertainty” can lead to all kinds of problems. The regulators who run the federal regulatory leviathan inspire investor and business apprehension, leading entrepreneurs to withhold capital.

Congressional oversight boards routinely fail to provide information needed to conduct business. According to the Competitive Enterprise Institute, “the fall 2011 edition of the Unified Agenda of Federal Regulations did not appear until January 20, 2012, whereas the spring 2012 edition was never published at all.”

The institute recently released several ideas intended to tame America’s growing regulatory beast. One proposal, to return decision-making to the legislative branch, would require Congress to approve any regulation deemed to have more than $100 million impact on the economy. Another would promote greater transparency, more accurate reporting and require federal agencies to consider costs they impose on businesses indirectly through new rules.

With Republicans in control of both houses of Congress, these reforms, which died in the previous Senate, could soon become reality. When that happens, American business can focus on creating jobs, making quality goods and worry less about jumping through regulatory hoops.

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