The Cost Of Enforcing Government Regulation

Regulatory cost estimates of around $1.8 trillion encompass compliance costs paid by the public plus economic drag. But but those estimates do not include the costs of administering the regulatory state, that is, on-budget amounts spent by federal agencies to produce rules and to police regulatory compliance are not accounted for there.

For that part of the “regulatory budget,” the Weidenbaum Center at Washington University in St. Louis and the Regulatory Studies Center at George Washington University in Washington, D.C., regularly examine the federal budget to excerpt and compile the administrative costs of developing and enforcing regulations. Because those funds are amounts that taxpayers pay to support agencies’ administrative budgets, rather than compliance costs paid by the regulated parties, the amounts are disclosed in the federal budget.

The newest report, “Growth in Regulators’ Budget Slowed by Fiscal Stalemate: An Analysis of the U.S. Budget for Fiscal Years 2012 and 2013,” finds that fiscal year 2012 enforcement costs incurred by federal departments and agencies stood at an estimated $61 billion (in constant 2012 dollars; here I’ve adjusted the figures from the original 2005 dollars). That represents an 8.6-percent increase over the previous year’s $59 billion.

Of this $61 billion, $10.8 billion was spent administering economic regulations. The larger amount spent for writing and enforcing social and environmental regulations was $49.9 billion. The Environmental Protection Agency alone spent $5.6 billion in this latter category, accounting for 9.2 percent of the total expected to be spent by all regulatory agencies. EPA used to dominate, but now the far newer Department of Homeland Security at $26.8 billion, accounts for over half.

Here are figures for the past decade:

Year Social Regulations ($B) Economic Regulations ($B) Total ($B)
2002 $34.6 $6.4 $40.970
2003 $44.5 $6.3 $50.868
2004 $39.2 $6.9 $46.054
2005 $39.2 $6.9 $46.192
2006 $40.6 $7.2 $47.829
2007 $41.0 $7.5 $48.483
2008 $43.3 $7.8 $51.164
2009 $46.5 $8.4 $54.911
2010 $47.5 $9.5 $56.958
2011 $46.5 $9.3 $55.798
2012 $49.9 $10.8 $60.615

Those $61 billion in agency costs help complete the picture of the federal regulatory apparatus. Adding the $61 billion in administrative costs tabulated by the Weidenbaum Center and Mercatus Center to the $1.806 trillion from the Tip of the Costberg placeholder estimate for compliance and economic costs brings the total estimated 2012 regulatory burden to around $1.867 trillion.

Incidentally, estimated full-time-equivalent employment staffing reached 283,615 in FY 2012, according to the Weidenbaum and George Washington University report — nearly 100,000 more tan a decade ago (185,205 in 2002). Much of the post-2002 surge apparent in their data may be largely attributable to the newly created Transportation Security Administration’s hiring of thousands of airport personnel; this fits with the huge homeland security costs just noted. Over the past year, overall staffing is up by 2.5 percent.