Examining the U.S. Regulatory 'Budget'

By Batkins, Sam; Brannon, Ike | Regulation, Winter 2012 | Go to article overview

Examining the U.S. Regulatory 'Budget'


Batkins, Sam, Brannon, Ike, Regulation


The nation's federal budget deficit gets a lot of attention from policy wonks and political commentators, and for good reason. Most people agree that the rapid rise in deficit spending in the last several years represents a genuine threat to our long-term economic well-being. But government affects the economy not only by taxing, borrowing, and spending, but also by telling businesses how they need to spend their money, via the issuance of regulations. This can have just as much of an effect on the economy as the government's fiscal policies. And just like government spending, the cost to the economy from the expanding regulatory state has been steadily increasing as well. In the last decade, regulations issued by the federal government have forced businesses, individuals, and various state and local governments to spend at least $570 billion on compliance--and probably a lot more.

While that number by itself is instructive, it's even more illustrative to look at where regulations direct private spending. We examined 10 years of data and more than 230 regulations issued during that period, and we found that the bulk of the costs of regulations involve mandates to improve energy efficiency, with various environmental edicts coming in second place. Together, these two categories account for roughly two-thirds of the economy-wide cost of complying with various federal regulations.

The data | For the costs of various regulations, we compiled the regulatory costs reported in the Federal Register, which is the most inclusive source that exists for federal government regulatory activity. However, it does have a couple of important holes.

For starters, independent federal agencies routinely omit quantified cost-benefit analyses in their regulations. They are free to do this because Executive Order 12866, which mandates that executive branch agencies conduct such analyses for "economically significant" regulations, does not apply to independent agencies. This omission results in some obvious lacunae; for instance, the reported costs of complying with various financial regulations comprise only $24.9 billion, or less than 5 percent of the total regulatory compliance costs. The Federal Communications Commission, Consumer Product Safety Commission, Office of the Comptroller of the Currency, and the new Consumer Financial Protection Bureau are among the independent agencies that do not have to estimate the costs imposed by their regulations.

[FIGURE 1 OMITTED]

The other problem is that the agencies issuing the regulations are the ones tasked with estimating the costs and benefits. Given that the Office of Information and Regulatory Affairs has the power to return proposed rules to the agency and request that changes be made, the agencies have an incentive to do everything they can to inflate benefits and deflate costs to keep that from occurring. Thus, we suspect that a wholly inclusive, objective analysis of the costs of regulation would be significantly larger and skew more toward those areas of the economy that our government largely regulates through independent agencies.

And while we include the costs that regulations impose on federal, state, and local governments to implement new regulations, we do not consider the cost of maintaining the bureaucracy that creates those regulations in the first place--a cost that is not trivial. Susan Dudley of George Washington University and Melinda Warren of Washington University in St. Louis estimate that cost as roughly $59 billion, or enough to support nearly 300,000 regulators.

Below, we divide the regulations that we examined into six categories and rank the categories by aggregate cost.

Energy efficiency | It might surprise some readers that energy efficiency regulations, including several recent changes to the Corporate Average Fuel Economy (CAFE) standards, provide the top regulatory cost burden, especially given that the recently passed Affordable Care Act (ACA) and Dodd-Frank finance law promise to significantly increase regulatory compliance costs for businesses in the health care and financial services industries. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • A full archive of books and articles related to this one
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Examining the U.S. Regulatory 'Budget'
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

    Already a member? Log in now.