The Costs of Federal Regulations

How much does it cost Americans to be subjected to almost 1.1 million federal regulations? Writing in Ten Thousand Commandments, Clyde Wayne Crews Jr. estimates that the cost of all those regulations is more than $1.939 trillion a year. This figure represents the combined cost of complying with all those regulations and their economic losses.

In the report, Crews compares his annual estimates of the burden of federal regulations with the federal government’s annual budget deficit and spending for the last three fiscal years. For 2022 and 2023, the cost of federal regulations is larger than the annual budget deficits for these years.

2021’s budget deficit was larger than that year’s regulatory burden because of President Biden’s stimulus bill, which was completely funded by borrowing.

Unreliable Cost Estimates of Regulations

Crews indicates his estimate involves a lot of educated guesswork, and it seems the federal government’s numbers on how much it costs to comply with its regulations aren’t trustworthy:

This estimate is based on a nonscientific, disclaimer-laden, amalgam of GDP losses and compliance costs derived from available official data and other accessible sources. It recognizes that significant figures are indeterminate not only in the millions and billions place figures, but also in the trillions place figure. This report is not alone in finding itself in this predicament.

The government also cannot round with exactitude on even easier matters, like paperwork reduction information as required by the Paperwork Reduction Act. As of January 22, 2023, OMB reported that government-wide totals for “Active Information Collections” imposed a “total annual cost” of $143,731,031,418 (notice those fantastical significant amounts down to the ones place figure) and take up 10,419,273,111.45 hours. One might note with amusement the three-quarters-of-an-hour precision.

It’s scary to think Crews’ $1.939 trillion estimate of the cost of federal regulations may be an underestimate:

This report’s assessments do not capture numerous other categories of costs, such as the costs of antitrust, common-carriage telecom network regulations, federal health care spending, predominance of public–private partnerships in large-scale infrastructure projects, resource-use restrictions on western lands, a “too big to fail” stance toward large financial institutions, the permanent war economy, surveillance of private citizens, overcriminalization, monopolization of airport security, influence on the housing market and financing, and much more—now including the entire Biden compulsory reset agenda.

President Biden’s Impact

Writing at Forbes, Crews also notes the Biden administration doubled the cost threshold that subjects federal government agencies to more scrutiny over their regulatory actions. The new limit makes finding out the costs of federal regulations harder:

What is a “significant” rule or regulation these days?

The past few days have brought renewed attention to Biden’s Executive Order 14,094 on “Modernizing Regulatory Review,” issued April 6, 2023 and published in the Federal Register on April 11.

The concern is over the raising of the threshold for what gets considered a “significant regulatory action” warranting additional scrutiny from $100 million to $200 million in annual effect. That new hurdle is subject to further upward ratcheting by the Office of Management and Budget as GDP changes. Biden also directed the OMB to revise so-called “Circular A-4” guidance to agencies on how to conduct regulatory review to reflect the new higher bar as well as make other changes that will unfortunately result in less, not more, regulatory supervision.

Like many of President Biden’s other fiscal policies, it seems the costs of regulation imposed by the federal government are on an unsustainable path.

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