Red Tape Rising: Six Years of Escalating Regulation Under ObamaPosted: September 24, 2015
The need for regulatory reform has never been greater.
The number and cost of government regulations continued to climb in 2014, intensifying Washington’s control over the economy and Americans’ lives. The addition of 27 new major rules last year pushed the tally for the Obama Administration’s first six years to 184, with scores of other rules in the pipeline. The cost of just these 184 rules is estimated by regulators to be nearly $80 billion annually, although the actual cost of this massive expansion of the administrative state is obscured by the large number of rules for which costs have not been fully quantified. Absent substantial reform, economic growth and individual freedom will continue to suffer….
In a new paper titled “Red Tape Rising: Six Years of Escalating Regulation Under Obama,” the Heritage Foundation’s Diane Katz and James Gattuso write that in 2014, the government issued 2,400 new regulations, including 27 major rules that may cost $80 billion or more annually. These rules range from forcing restaurants to list calorie counts — even though past experiments have revealed that such measures fail to change consumers’ behavior — to reducing consumer choices and increasing energy prices by imposing tighter energy-efficiency mandates on the plugs that we use to charge cell phones, laptops, and even electric toothbrushes.
Washington regulatory bureaucrats’ control over the economy and Americans’ lives is intensifying. According to Katz and Gattuso, during the first six years of the Obama administration, the number of new major rules reached 184, including 13 regulations of the financial system that saw the light of day in 2014. Another 126 are in the pipeline. That’s more than twice the number imposed by President George W. Bush, who himself wasn’t shy about regulating the economy.
And that’s only the tip of the iceberg. Official regulatory costs are vastly underestimated because of the large number of rules for which costs have not been fully quantified. More importantly, official costs never appropriately account for the businesses, innovations, and economic growth that will never exist because of the continued accumulation of regulations. Needless to say, the need for reform of the regulatory system has never been greater….(read more)
…President Barack Obama has repeatedly demonstrated his willingness to act by regulatory fiat instead of executing laws as passed by Congress. But regulatory overreach by the executive branch is only part of the problem. A great deal of the excessive regulation in the past six years is the result of Congress granting broad powers to agencies through passage of vast and vaguely worded legislation. The misnamed Affordable Care Act and the Dodd–Frank financial-regulation law top the list.
Many more regulations are on the way, with another 126 economically significant rules on the Administration’s agenda, such as directives to farmers for growing and harvesting fruits and vegetables; strict limits on credit access for service members; and, yet another redesign of light bulbs.
In many respects, the need for reform of the regulatory system has never been greater. The White House, Congress, and federal agencies routinely ignore regulatory costs, exaggerate benefits, and breach legislative and constitutional boundaries. They also increasingly dictate lifestyle choices rather than focusing on public health and safety.
Immediate reforms should include requiring legislation to undergo an analysis of regulatory impacts before a floor vote in Congress, and requiring every major regulation to obtain congressional approval before taking effect. Sunset deadlines should be set in law for all major rules, and independent agencies should be subject—as are executive branch agencies—to the White House regulatory review process.
Measuring the Red Tape
The federal government does not officially track total regulatory costs, as it does with taxation and spending. Estimates of these costs from various independent sources range from hundreds of billions of dollars to over $2 trillion annually. However, the number and cost of new regulations can be tracked, and both have grown relentlessly.
The most comprehensive source of data on new regulations is the Federal Rules Database maintained by the Government Accountability Office (GAO). According to this GAO database, federal regulators issued 2,400 new rules during the 2014 “presidential year” (January 21, 2014, to January 20, 2015). Of these, 77 were classified as “major.”
Forty-eight of the 77 major rules were budgetary or administrative in nature, such as Medicare payment rates and hunting limits on migratory birds. A total of 27 were “prescriptive” regulations, meaning that they increase burdens on individual or private-sector activity. (Two others were “deregulatory,” as explained below.) Altogether, during the six years of the Obama Administration, 184 prescriptive rules have been imposed. That compares to 76 such rules issued during the same period of the George W. Bush Administration.
Regulators reported new annual costs of $7.6 billion for the 2014 prescriptive rules based on the limited number of analyses performed by the agencies. This total cost is 15 percent less than the $8.9 billion in costs imposed during the sixth year of the Bush Administration. However, cost calculations were incomplete for 12 of the 27 Obama rules issued last year.
There was also $1.8 billion in reported one-time implementation costs for the 2014 rules, bringing the Administration’s six-year total for such costs to about $17 billion.
Only two of the 2014 rules decreased regulatory burdens, bringing the Administration’s six-year “deregulatory” total to just 17—despite a widely touted “retrospective review” initiative that President Obama claimed would take outdated rules off the books. This compares to four deregulatory actions during President Bush’s sixth year, and his Administration’s six-year total of 23.
Overall, the cost of new mandates and restrictions imposed by the Obama Administration now totals $78.9 billion annually. This is more than double the $30.7 billion in annual costs imposed at the same point in the George W. Bush Administration.
These figures are consistent with other measures of a growing regulatory burden. For instance, according to economists Susan Dudley and Melinda Warren, spending on federal regulatory agencies has increased from $20.7 billion in 1990, and $50.9 billion in 2009, to more than $53.6 billion in 2014 (in constant 2009 dollars). Similarly, total staffing at regulatory agencies has grown nearly 6.6 percent since 2009.
Dodd–Frank Dominates in 2014
Regulation of securities and the banking system dominated rulemaking in 2014, accounting for 13 of the 27 major rules issued during the Obama Administration’s sixth year. The Securities and Exchange Commission (SEC) imposed the largest number of rules (seven), while the Federal Reserve, the Federal Deposit Insurance Corporation, and the Treasury Department’s Office of the Comptroller of the Currency jointly promulgated five rules, and the Commodity Futures Trading Commission issued one.
Eight of the 13 financial regulations were prompted by Dodd–Frank. Indeed, virtually no aspect of the securities and banking system remains unaffected by the act, which encompassed 850 pages of legislative text, and has spawned 19,000 pages of regulations—so far.
But Dodd–Frank rulemaking remains incomplete. At the end of the fourth quarter of 2014, only 58.5 percent of the 395 required rulemakings were finalized, and 23 percent had yet to be proposed. The full effects of the act have yet to be felt, but many of the regulations have led to higher banking costs and fewer investment options….(read more)
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