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President Barack Obama’s recent federal budget proposal for fiscal year 2012 sought $3.729 trillion in discretionary, entitlement and interest spending . For reference, George W. Bush had proposed the first-ever $3 trillion U.S. budget. President Bush was also the first to propose a $2 trillion federal budget —in 2002, only nine years ago. It took us from the founding to Reagan to get a $1 trillion budget.
The result: Thanks to the bailouts and other amplified spending, the Congressional Budget Office projects a FY 2011 deficit of a previously unthinkable $1.48 trillion, greater than FY 2010’s actual deficit of $1.294 trillion.
To be sure, many other countries’ governments consume more of their national output than the U.S. government does . But in absolute terms, the U.S. government is the largest government on planet Earth, whether one’s metric is revenues, expenditures, deficits or accumulated debt .
Regulation: A Hidden Tax
Those costs fully convey the federal government’s on-budget scope, and they are sobering enough. Yet the government’s reach extends well beyond the taxes that Washington collects and the deficit spending and borrowing that now overwhelm. Federal environmental, safety and health and economic regulations cost hundreds of billions of dollars every year over and above the costs of the official federal outlays that dominate the policy agenda.
One could cut government spending to the bone, but government regulatory control over many economic sectors would remain the dominant modern reality. And of course, regulatory compliance costs that businesses face find their way into prices and consumer wallets just as taxes do.
Precise regulatory costs can never be fully known, because, unlike taxes, they are unbudgeted and often indirect. But scattered government and private data exist on scores of regulations and on the agencies that issue them, as well as on regulatory costs and benefits.
Some of that information has been compiled in the latest edition of the Ten Thousand Commandments  report. Consider:
Budget this Stuff, then “Liberate to Stimulate”
Without better regulatory oversight and monitoring — without an effort to measure and “budget” the flow of regulations, and in turn to consciously “liberate to stimulate” — the urgency of deficit reduction invites lawmakers to opt for off-budget regulations on the private sector rather than adding to already unchecked deficit spending. Taxation and regulation can substitute for one other.
Disclosure and Accountability
In any event, like federal spending, each agency’s stream of regulations and their costs should be tracked, monitored and talked about. Cost-benefit analysis has a certain role (cost-only analysis in particular has more of a legitimate role).
Still, Congress will need to leapfrog the cost-benefit debate and address the source of unchecked regulation; over-delegation of lawmaking power to the (unelected) agencies. Requiring expedited votes on economically significant or controversial agency rules before they become binding on the public would reestablish congressional accountability and would help establish a principle of “no regulation without representation.”
Increasingly, “Ten Thousand Commandments” is looking like an understatement.