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President George W. Bush’s federal budget for fiscal year (FY) 2008 proposed $2.902 trillion in discretionary, entitlement and interest spending. Although those costs fully express the federal government’s on-budget scope, the government’s reach extends far beyond the taxes that Washington collects. Federal environmental, safety and health, and economic regulations cost hundreds of billions of dollars every year—in addition to official federal outlays.
Firms generally pass along to consumers some of the taxes imposed. Similarly, some regulatory compliance costs imposed on businesses fall to consumers. Exact regulatory costs can never be fully known; unlike taxes, they are unbudgeted. But scattered government and private data exist on scores of regulations and the agencies that issue them, as well as on regulatory costs and benefits, some of which can be compiled in a way that makes the regulatory state more comprehensible. That compilation is one purpose of the annual Ten Thousand Commandments report, highlights of which appear next.
The U.S. government has conclusively ended its recent short-lived string of budgetary surpluses—the first since 1969. But if their regaining and maintaining a genuine surplus remains a priority, policy makers must control regulatory costs. Consider: the Congressional Budget Office projects no surplus over the coming decade until a speculative $170 billion in 2012. Regulatory costs of more than $1.14 trillion clearly dwarf that amount. Moreover, regulations and taxes can substitute for one another; a new government program requires increasing spending—or imposing new rules and regulations. Thus, without better regulatory monitoring, deficit control may invite congressional adoption of off-budget, private-sector regulations rather than new deficit spending. If regulatory costs remain largely hidden from public view, regulating remains attractive when compared with taxing and spending.
Regulations should be accounted for like federal spending: Whenever possible, Congress should answer for the compliance costs—as well as the benefits—of federal regulations. Cost-benefit analysis of rules is the typical remedy proposed to police excess regulation. The problem with cost-benefit analysis, however, is that it is largely a form of agency self-policing; agencies would perform “audits” of their own rules but would rarely admit that a rule’s benefits do not justify the costs involved. At the least, some third-party review would be needed.
A way to maximize congressional accountability is to require expedited congressional votes on agency rules before they become binding. This step would fulfill citizens’ expectation of “no regulation without representation.”
Disclosing rules’ costs would remain important, however, even if Congress approved rules; openness about regulatory facts and figures is critical, just as disclosure of program costs is critical in the federal budget. Rather, simple federal “regulatory report cards,” similar to the presentation in Ten Thousand Commandments, could be issued officially each year to distill regulatory data.