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Mercatus Study: Govt Regulations Have Cost US Economy $4 Trillion

Mercatus Study: Govt Regulations Have Cost US Economy $4 Trillion

By    |   Thursday, 28 April 2016 09:34 AM

The cost of U.S. regulations is larger than Germany’s economy, amounting to a $4 trillion loss to the American economy, the Free Beacon reported.

The study by the Mercatus Center at George Mason University found that regulations over the past several decades amount to a loss of $13,000 for each American worker, the Free Beacon reported.

“The impact of regulation on economic growth has been widely studied, but most research has focused on a narrow set of regulations, industries, or both,” the report stated. “These studies typically rely on regulatory indexes that measure subsets of all regulation, on country-to-country comparisons, on short time spans, or on surveys in which experts report how regulated they believe their country or industry is,” the report said.

Researchers at Mercatus studied data from 22 industries from 1977 to 2012, finding regulations have distorted “investments choices that lead to innovation” and have “created a considerable drag on the economy.” The result: an average shrinking of the economy by 0.8 percent a year.

“If regulations had been held constant at levels observed in 1980, the American economy would have been 25 percent larger than it was in 2012,” the report said. “This amounts to a $4 trillion loss in 2012 for the American economy or $13,000 loss per person, a significant amount of money for most American workers.”

The cost of federal regulations amounts to the fourth-largest GDP in the world, surpassing the economies of Germany, France, the United Kingdom, Brazil, Italy, Russia, and India.

And the flurry of regulations is expected to continue, The Wall Street Journal reported.

“The Obama administration is racing to make final a flurry of regulations affecting broad swaths of the economy, further riling U.S. businesses in an election season that has already been tough on corporate interests,” WSJ.com reported.

The expected burst of regulation follows an intense few weeks in which the administration has targeted corporate tax inversions, imposed new rules on brokers and advanced restrictions on company relations with union organizers.

The moves have drawn sharp reactions from business groups. After the tax rules, a top U.S. Chamber of Commerce official lamented “politicians bullying America’s job creators.” The head of the Business Roundtable, which represents big-company CEOs, criticized “unilateral action” by the administration.

Republican presidential candidate Ted Cruz has said he would make lifting tax and regulatory burdens a priority if elected president and protect the small banks he said were being hurt by stricter bank regulations.

Cruz, who is running to become the party's 2016 nominee in the Nov. 8 presidential election, targeted the Dodd-Frank regulatory reform law as enabling the nation's large banks, CNBC reported.

"We're seeing corporate inversions because of massive regulations and taxes are driving companies overseas," he said. "You can't force businesses to stay here, as the Obama Treasury Department is doing. You create an environment that businesses want to be here."

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The cost of U.S. regulations is larger than Germany's economy, amounting to a $4 trillion loss to the American economy, the Free Beacon reported.
regulations, economy, germany, Mercatus Center
Thursday, 28 April 2016 09:34 AM
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