Toward a Regulatory Budget
How much should the U.S. government spend on defense? How much on health care? Or energy, or technology? Every year, the U.S. federal government is supposed to publish a spending budget to answer these sorts of questions. But there is no equivalent budget for regulations. Why not? My colleague Wayne Crews’ newest study asks exactly that question.
Why is this a problem? Suppose the Labor Department doesn’t have the money in its budget for some job-training program it has in mind. It can get around the problem by simply issuing a regulation requiring private companies to run the same program, at their expense. People have to pay for it either way. But the regulatory way doesn’t show up on the federal spending ledger.
A regulatory budget, on the other hand, would prevent regulatory agencies from doing darn near anything they want. People like you and me have to prioritize our spending. If I buy a new television, that’s money I can’t put into my child’s college fund. Money you spend on a new car is money you can’t put into your retirement account.
Regulatory agencies, with their multi-billion dollar budgets, do not face the same tradeoffs that people like you and I do. A regulatory budget would help agencies behave more like people.
As it is now, if the Environmental Protection Agency issues a new power plant regulation adding $9.6 billion to people’s electricity bills every year, so what? It can, and will, pass additional regulations affecting everything from air conditioners to refrigerators, further adding to the damage. Federal regulations make it harder for people to pay their mortgages, student loans, and other bills.
The EPA hurts people, to the tune of at least $353 billion per year, on just an $8 billion budget. A regulatory budget would force the agency to publicly recognize that nearly 40-fold difference. Not to pick on the EPA specifically, but they do have a transparency problem. So do most of the 60-plus other rulemaking agencies that issue more than 3,400 new regulations every year. Their combined efforts cost consumers and entrepreneurs about $1.88 trillion every year.
A regulatory budget, similar to the spending requests agencies make every year, would go a long way toward making the public more aware of how much agencies like the EPA, FCC, SEC, and others actually cost. A regulatory budget is not be a panacea, but it would be better than what we have now.
For more see Wayne’s regulatory budget paper here.