Tax Day Report Sounds Alarm on the $1.75 Trillion “Hidden Tax” of Federal Regulation
Washington, D.C. April 18, 2011 – Federal regulations cost even more than the skyrocketing federal budget deficit, and help bring the federal government’s share of the economy to over 35 percent, a new report from the Competitive Enterprise Institute reveals.
Regulations cost $1.75 trillion in compliance costs according to the Small Business Administration. That’s greater than the record federal budget deficit---projected at $1.48 trillion for FY 2011---and greater even than all corporate pretax profits. This is only one of many findings of the new edition of Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State, a survey of the cost and compliance burden imposed by federal regulations.
“Trillion-dollar deficits and regulatory costs approaching $2 trillion annually are both unsettling new developments for America,” said report author, Wayne Crews, CEI Vice President for Policy. “Every year, the federal government blows past previous deficit, debt, and regulatory burdens with no end in sight. No wonder Americans are fed up with Washington.”
The costs of federal regulations often exceed the benefits, yet receive little official scrutiny from Congress. The report urges Congress to step up and take responsibility for the state of the nation by reviewing and rolling back economically-harmful regulations.
Among the report’s findings:
• The Federal Register stands at an all-time record-high 81,405 pages.
• In 2010, federal agencies issued 3,573 final rules.
• While agencies issued 3,573 final rules, Congress passed and the president signed into law a comparatively “few” 217 bills. Considerable lawmaking power is delegated to unelected bureaucrats at agencies, an abuse addressed recently in proposals such as the REINS Act.
• Alarmingly, proposed rules in the Federal Register have surged from 2,044 in 2009 to 2,439 in 2010, a jump of 19.3 percent.
• Of the 4,225 rules now in the regulatory pipeline, 224 are “economically significant” meaning they wield at least $100 million in economic impact—this is an increase of 22 percent over 2009’s 184 rules.
• Given 2010’s government spending (outlays) of $3.456 trillion, the regulatory “hidden tax” of $1.75 trillion stands at an unprecedented 50.7 percent of the level of federal spending itself.
• Regulatory costs exceed all 2008 corporate pretax profits of $1.463 trillion.
• Regulatory costs dwarf corporate income taxes of $157 billion.
• Regulatory costs tower over the estimated 2010 individual income taxes of $936 billion by 87 percent—nearly double the level.
• Regulatory costs of $1.75 trillion absorb 11.9 percent of the U.S. gross domestic product (GDP), estimated at $14.649 trillion in 2010.
• Combining regulatory costs with federal FY 2010 outlays of $3.456 trillion reveals a federal government whose share of the entire economy now reaches 35.5 percent.
The report urges reforms to make the regulatory costs more transparent and accountable to the people, including annual “report cards” on regulatory costs and benefits, and congressional votes on significant agency rules before they become binding.
See list of the nation’s worst federal regulations (letter to House Oversight Committee Chairman Darryl Issa).
View video: Wayne Crews on last year’s report.