Federal programs get funded either by taxes or by borrowing against a promise to repay with interest from future tax collections. When Congress spends, no one questions that disclosure is necessary for voters to hold representatives accountable. Taxpayers can observe those decisions during the authorization and appropriations processes (not that it is a simple thing to do). They can inspect the costs of programs and agencies in Congressional Budget Office publications and in the federal budget’s historical tables. The point is, disclosure for spending exists, however difficult it may be to access specific information.
Regulation and spending are both mechanisms by which governments act or compel. Rather than taxing and paying directly, Congress often “funds” objectives with federal regulation to compel the private sector, as well as state and local governments, to bear the costs of federal initiatives. Regulation in such instances functions as an off-budget form of taxation and spending. The costs and economic effects of regulatory compliance are not budgeted and disclosed the way that federal spending is, so regulatory initiatives can commandeer private-sector resources with relatively little public controversy.
Policy makers may find it easier to impose regulatory costs than to embark on government spending because of the former’s lack of disclosure and accountability. And when regulatory compliance costs prove burdensome, Congress can escape accountability by blaming an agency for issuing an unpopular rule.
Although disclosure of spending obviously does not stop deficits and debt, it is still vital for making progress toward those ends. Likewise, policy makers should disclose regulatory costs to the fullest extent possible so that the decision of whether to regulate can at least have an opportunity to get the full consideration it deserves.
Table 1 provides an overview of the 2021 federal regulatory enterprise to be discussed in the following pages.