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Ten Thousand Commandments: An Annual Policymaker’s Snapshot of the Federal Regulatory State (1999 Edition)

Issue Analysis

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Ten Thousand Commandments: An Annual Policymaker’s Snapshot of the Federal Regulatory State (1999 Edition)

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The federal government spent $1.65 trillion in 1998 to carry out its domestic discretionary, military, entitlement, debt service and other ends.1 Those costs encompass the entire on-budget scope of the federal government. But there is more to the reach of the federal government than the sum of the taxes we send to Washington. Compliance costs of environmental, safety and economic regulations imposed by Uncle Sam are known to total hundreds of billions of dollars every year. Yet since detailed, formal official accountings for regulatory costs rarely exist, these costs occur “off-budget” and largely escape even the arguably insufficient controls that the fiscal budget encounters. Thus it is unclear precisely what Americans pay, and what level of benefits they get in return for regulatory compliance costs. Too often, regulatory discipline relies on the good faith of agencies to voluntarily disclose the costs and benefits of their regulations rather than a requirement that they do so. Yet in the face of this uncertainty, the 1998 Federal Register contained the highest number of pages since the Carter presidency.

The precise price tag of federal regulations will always remain unknown. But compiling disparate government and independent data depicting regulatory costs and numbers of rules can help make the whole enterprise more comprehensible. Some of the highlights of this year’s edition of Ten Thousand Commandments follow.

  • The total costs of complying with off-budget social regulations total up to $230 billion according to the Office of Management and Budget. A more broadly constructed competing estimate that includes economic regulatory costs and paperwork costs pegs regulatory expenditures at $737 billion in 1998. This latter amount is equivalent to 44 percent the size of all federal outlays of $1.6 trillion. In other words, the off-budget government is approaching half the size of the budgeted one.
  • Regulatory costs of $737 billion exceed all U.S. corporate pretax profits, which stood at $640 billion in 1996.
  • Regulatory costs exceed the $542 billion gross national product of Canada.
  • The average family of four’s 1997 after-tax income of $36,423 contained $7,239 in hidden regulatory costs. Thus regulatory costs consume 20 percent of the after-tax family budget.
  • Regulatory costs absorb 9 percent of U.S. gross domestic product, $8,499 billion last year.
  • Agencies spent $17.5 billion to police the regulatory state in 1998. Counting the $737 billion in off-budget costs, that brings the total regulatory burden to $754 billion.
  • The 1998 Federal Register contained 68,571 pages, the highest level since Jimmy Carter’s presidency and a 6 percent jump over 1997.
  • Agencies issued 4,899 final rules in 1998’s Federal Register, a 7 percent jump over the year before, and the second-highest count since 1984.
  • Agencies have issued over 21,000 final rules over the past five years.
  • 4,560 regulations are now in the works throughout the 50-plus federal departments, agencies and commissions.
  • Seventy final “major” rules costing at least $100 million each were issued by agencies in 1998, a 17 percent increase over the year before.
  • Of the 4,560 regulations now in the works, 117 are “economically significant” rules that will cost at least $100 million apiece annually. That means new regulations to impose at least $11.7 billion yearly in future off-budget costs are in the pipeline.
  • The top five rule-producing agencies account for 47 percent of all rules under consideration.
  • Rules affecting small businesses have increased 37 percent over the past five years.
  • The Environmental Protection Agency (EPA) alone expects to issue 462 of the 4,560 planned rules.
  • The EPA’s rules now in the pipeline will cost at least $3.5 billion annually.
  • Fewer than half of the EPA’s prioritized $100 million rules are accompanied by benefit estimates.

If maintaining a balanced budget or surplus remains a priority, then controlling regulatory costs may assume an added importance. Any new government programs will require increasing spending or imposing new rules and regulations. That being the case, the balanced budget imperative may tilt Congress toward adopting new off-budget private-sector regulations rather than new spending that would whittle the federal surplus. Congress knows with certainty the size of the surplus and may grow nervous as it dwindles, but since regulatory costs are hidden, the fallout from regulating instead may be less.

The proper way to police the regulatory state is to treat it the same way the spending state is treated: Congress must be made directly accountable, to the greatest extent possible, for the costs that agency rules inflict on the public. Even if cost-benefit analysis — the typical remedy proposed to police excess regulation — is fully realized, congressional approval of regulations and regulatory costs remains vital. Cost-benefit analysis is merely a form of agency self-policing, and it is not enough, because agencies rarely will admit benefits of a rule do not justify the costs. Congressional, not agency, approval of agencies’ final rules would be the ultimate realization of accountability to the public. Maximizing congressional accountability by requiring Congress to vote on agency rules (in an expedited fashion, of course) would fulfill citizens’ rights to “No regulation without representation.” Disclosure is the pathway to full accountability, and there are numerous ways that even simple regulatory “report cards” could be produced by the federal government to distill the data that is available. Presentations like that those that appear in Ten Thousand Commandments can be done officially by the federal government as well.