There’s a lot to be said about government regulation — and much of it not good. Some regulation, given that human nature is what it is, is necessary. But sometimes it seems there’s little difference between the government telling you how to spend your money and the government just taking it. Regulations are a lot like taxes.
Several organizations have tried to calculate the size and weight of the tax burden on the average taxpayer. The Americans for Tax Reform Foundation comes up every year with its “Cost of Government Day,” demonstrating the number of calendar days the average American worker works for the federal government.
The Phoenix Center for Advanced Legal & Economic Policy Studies produced an analysis several years ago called “Regulatory Expenditures, Economic Growth and Jobs,” which its authors said demonstrated how responsible cuts to the federal regulatory budget would produce significant growth in the U.S. domestic product, and the consequent creation of private sector jobs.
This week the Phoenix Center has a follow-up study attempting to determine the “cost per regulator” on the gross domestic product and job creation in the private sector. Like the earlier Phoenix Center study, the new survey shows how shrinking the regulatory regime can produce real economic growth. Among the findings is that a 10 percent reduction in the total federal regulatory budget — about $5.6 billion — will produce an additional $1.2 trillion in the gross domestic product over the next five years.
That’s a lot of dollars, and it works out to about $244 billion annual savings per year, a number large enough to attract the attention of Senate Majority Leader Mitch McConnell, House Speaker Paul Ryan and the economists inside the White House who are working on President Trump’s revisions to the budget left by Barack Obama.
Given the scramble to find “pay fors” to enable health care “repeal and replace,” and the promised tax reform, $244 billion savings per year over the next five years should be attractive indeed.
That’s just for starters. On average, the Phoenix Center says, “a 10 percent reduction in the regulatory budget — which implies a return to pre-Obama levels — leads to an increase of 3 million new private sector jobs per year.” For a president who thinks the three most important issues he must address are American jobs, American jobs and American jobs, it’s a compelling number. Unemployment may be down to pre-Obama levels, but that’s only because so many employable Americans have given up looking for work.
If a relatively modest 10 percent reduction in the regulatory budget implies a $45 gain for every $1 decline, then a serious effort at regulatory reform could be a rich, untapped vein of savings to reassure the concerns of the congressional green-eyeshade caucus, which worries about what the Congressional Budget Office will say about the reforms the American people demand.
On a “cost per regulator” basis, one regulator costs the U.S. economy the equivalent of 138 private sector jobs per year. Each regulator costs the U.S. economy $11 million each year. The Trump administration is off to a good start with regulatory reform, but there’s more to be done. It must do it faster. Congress should help.