Congress is currently considering the president's proposed $2.9 trillion federal budget. While federal spending consumes an awesome 20% of nation's GDP, the budget process at least allows taxpayers to know on what Washington is spending.
But there is much more to government's reach in the economy than direct spending. The costs to the public of complying with federal health, safety, environmental and economic regulations appear nowhere in the federal budget.
Economist Mark Crain's research for the U.S. Small Business Administration finds that in 2006 regulatory compliance cost Americans $1.14 trillion. Astoundingly, that approaches half of last year's total federal spending of $2.6 trillion, and exceeds 9% of U.S. GDP — and tops Canada's $1 trillion GDP.
Combining regulation and spending, the federal government's share of the economy is a whopping 29%.
Recent regulatory proposals cover everything from Occupational Safety and Health Administration slip-and-fall hazard rulings, Consumer Product Safety Commission bedding and furniture flammability standards and FDA trans-fat labeling rules to the Department of Homeland Security's controversial airline passenger-screening system, Labor Department rules concerning construction worker hearing, Department of Transportation auto fuel economy and safety standards and Department of Energy efficiency standards for seemingly anything with an exhaust.
Agencies publish regulations in the Federal Register, the daily depository of all federal rules and regulations. In 2006, the Register swelled to 74,937 pages, the second-highest level in history (the highest was 2004). Within those pages, agencies issued 3,718 final rules.
Leading the pack for most new rules are the departments of Treasury, Agriculture, Interior and Commerce and the Environmental Protection Agency. These five account for 44% of all rules under consideration. The Federal Communications Commission and Department of Homeland Security are also prodigious rule makers.
It is interesting to ponder: Congress passed and the president signed into law 321 bills in 2006, while agencies issued several thousand rules. No one elected the agency lawmakers, however. The result has been over 48,000 agency rules during the era of Republican control of Congress, 1995-2006.
As of now, the 60-plus federal departments, agencies, and commissions are at work on 4,052 more rules. Of these, agencies report 139 are “economically significant,” which means they will cost at least $100 million — often far, far beyond — while 787 are expected to affect small businesses.
How to rein in such regulatory excess? Certainly not by expecting unelected agency personnel to better police themselves.
Rather, policing requires (a) making regulation more transparent through greater disclosure of costs and trends, and (b) holding Congress accountable for both the good and bad that agency rules do.
Congress itself, rather than agencies, is the prime mover behind regulatory growth — policy should reflect that. Rather than blame agencies for the regulating that Congress appointed them to do, Congress should explicitly affirm its intent to impose new costs. Congress should approve and the president sign off on agencies' significant final rules before they are binding.
There's a reason why the Constitution says that, “All legislative powers herein granted shall be vested in a Congress.” Only elected representatives answer to us.
A good start would be to summarize regulatory data. Such a summary should include such data as the Federal Register's number of pages; number of proposed and final rules, listed by agency; numerical cost estimates of major rules, and of minor rules where possible; tallies of cost estimates, with subtotals by agencies and a grand total; a list of the most active rule-making agencies; and numbers and percentages of mandates impacting small businesses and state and local governments.
(If costs and benefits have not been assessed for a rule, that in itself is important information; it shows what we know and do not know about a regulation's impact.)
Almost 4,000 new rules every year is a lot of “regulation without representation.”
Congress should not saddle the American people with this without taking the time to affirm it with at least a voice vote. Explicit accountability to voters is necessary to give us better control over the federal regulatory behemoth.
To close on a frightening note, consider: The federal budget didn't even hit a trillion dollars — what regulations now cost — until 1987 under President Reagan. Look at us now, only 20 years later.