'Hidden Tax': Govt Rules Cost Economy Nearly $2 Trillion

Tuesday, 19 Apr 2011 09:20 AM

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Even as politicians and pundits debate taxes and spending — and spar over the difference between debt and deficit — an economic bogeyman lurks in the closet: government regulations that cost the economy nearly $2 trillion a year.

That staggering figure comes courtesy of Wayne Crews, policy vice president at the Competitive Enterprise Institute, who scrutinized the 81,405 pages of the Federal Registry. That catalog chronicles the nation’s regulations on businesses and state and local governments.

Crews' report, titled Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State, contends that government regulations cost the economy $1.75 trillion in 2008.

Amid all the debates about the nation's economy, hardly anyone pays attention to the cost of the rules, which Crews describes as the "hidden tax." After all, such costs don't end up on people's pay stubs or tax bills from state and local governments.

Crews' report notes: “Because such regulatory costs are not budgeted and lack the formal public disclosure of federal spending, they may generate comparatively little public outcry."

That off-the-radar aspect of regulations makes them an inviting way for governments to raise Money, Crews contends.

“If regulatory costs remain largely hidden from public view, regulating will become increasingly attractive compared with increasingly unpopular taxing and spending,” Crews writes. “Rather than pay directly and book expenses for new initiatives, the federal government can require the private sector — as well as state and local governments — to pay for federal initiatives through compliance costs.”

Although Crews' report acknowledges that getting a precise tally of government regulation is impossible, he stresses that every new rule costs business owners and consumers more money.

The Daily Caller lists just some of the report's significant points, including the following:
  • In 2010, federal agencies issued 3,573 final rules.
  • Although 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.
  • Proposed rules in the Federal Register have surged from 2,044 in 2009 to 2,439 in 2010, a jump of 19.3 percent.
  • Almost 225 of the 4,225 rules now in the regulatory pipeline are “economically significant” meaning they wield at least $100 million in economic impact, an increase of 22 percent over 2009’s 184 rules.
  • Given 2010’s government spending 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.

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