GOP rep: Regulations cost Americans almost $2 trillion in compliance costs every year

posted at 3:21 pm on August 20, 2013 by Erika Johnsen

As I mentioned last night, President Obama is looking to start cracking that whip on getting some major Dodd-Frank action from his financial regulatory squad in short order — which is only going to quicken the pace of his administration’s already frenetic rulemaking record (one wonders how they’ve somehow neglected to realize that their enthusiastic introductions of new regulations could perhaps correlate with our stubbornly stagnating economy, ahem). The Hill piece that I referenced points to a study done by George Mason University’s Mercatus Center that says that the Code of Federal Regulations has grown from 71,224 pages in 1975 to 174,545 pages as of last year, and Rep. Tom Price (R-GA) has some numbers on exactly what that means in terms of dollars:


Here’s an unpleasant reminder of what that looks like in terms of opportunity costs. Ouch.

Given the expansion of ‘economically significant’ regulations, i.e. regulations that are estimated to cost more than $100 million total, the House has been supporting legislation that would make such regulations subject to a little Congressional review before they’re enacted. The White House, weirdly, has so far been unreceptive. Go figure.


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With dozens of scandals out there, this is what gets the electorate excited?

The GOP corpse is smelling up the place.

faraway on August 20, 2013 at 3:25 PM

Obama’s doing the best he can…to collapse the economy and render the USA fiscally insolvent.

Bruce MacMahon on August 20, 2013 at 3:31 PM

Unfortunately the average Dem voter/Lefty gets that glassy-eyed blank stare when something like “compliance costs” are mentioned. That’s because their entire world view is based on one thing: economic illiteracy.

Everything they dominate slowly (but surely) will turn to crap. The “compliance costs” are always eventually passed on to the consumer. Why do Obama and his Cultists hate lower and middle-income families and their children?

visions on August 20, 2013 at 3:34 PM

Why do Obama and his Cultists hate lower and middle-income families and their children?

It isn’t so much hate, as the desire to make sure that lower income Americans “know their place”.

IF they mattered, like the people Obama hob nobs with they wouldn’t care about the costs anyway…right?

18-1 on August 20, 2013 at 3:39 PM

Why do Obama and his Cultists hate lower and middle-income families and their children?

visions on August 20, 2013 at 3:34 PM

The beatings will continue until the stupid is cured.

nobar on August 20, 2013 at 3:52 PM

Since we know that employers have no incentive to lower prices if regulations are rolled back or hire more workers if their current labor and pay scale is producing a profit, why does it matter if regulations are there or not? This is just capitalists wanting more profit, there’s no evidence that they would pass on their savings to workers or consumers.

libfreeordie on August 20, 2013 at 3:57 PM

Obama’s doing the best he can…to collapse the economy and render the USA fiscally insolvent.

Cloward / Piven + Alinsky = Obama Administration

Athos on August 20, 2013 at 4:00 PM

Six comments and only one of them is brain dead. That must be some sort of record – one dumbazz lib versus everybody else.

BTW, this is only news to those who have no contact with the working world; i.e., basement dwellers, union staff members, gubmint drones, etc.

platypus on August 20, 2013 at 4:04 PM

…why does it matter if regulations are there or not?

Translation: the cost of doing business has no impact on the consumer.

I’m not sure I can imagine more economic ignorance than this.

WitchDoctor on August 20, 2013 at 4:05 PM

Why do I think that money actually goes to lawyers and bankers? These government clowns aren’t going to do anything that doesn’t line the pockets of them and their pals in some way shape or form.

Dr. ZhivBlago on August 20, 2013 at 4:09 PM

No worries – the costs of complying with our sister departments’ regulations will soon be added to the GDP as a positive, just like we did for Hollywood.

/s/BEA

Steve Eggleston on August 20, 2013 at 4:18 PM

This is just capitalists wanting more profit, there’s no evidence that they would pass on their savings to workers or consumers.

libfreeordie on August 20, 2013 at 3:57 PM

More liberal static analysis. Where do you think that profit goes? I’m sure right now you’re envisioning fat cats sitting around the clubhouse lighting cigars with $20 bills, but you’d be wrong. That money will go one of two places: 1) to expand the business thus hiring more workers or 2) into the hands of shareholders as dividends. That dividend money in turn will be spent by the shareholders which will increase the size of other businesses, also resulting in more employment. This is how the pie grows.

Kafir on August 20, 2013 at 4:18 PM

On waste, this, and liblikeaslave.

Schadenfreude on August 20, 2013 at 4:18 PM

Since we know that employers have no incentive to lower prices if regulations are rolled back or hire more workers if their current labor and pay scale is producing a profit, why does it matter if regulations are there or not? This is just capitalists wanting more profit, there’s no evidence that they would pass on their savings to workers or consumers.

libfreeordie on August 20, 2013 at 3:57 PM

Did you notice any retail prices dropping after your hero Dick Durbin ordered the banks to drop their debit card interchange fees? Banks lost $40 billion in revenue and the retailers put it all in their pockets. Didn’t pass a penny on to consumers. And then they went to court to get the rate cap reduced even more!

Most regulations benefit one industry at the expense of another, while consumers get screwed. And the economy is weakened by so much activity, time, and money being spent on all the rent-seeking rather than on production or real goods and services. Not to mention the waste of money on all the regulators.

rockmom on August 20, 2013 at 4:19 PM

Why do I think that money actually goes to lawyers and bankers? These government clowns aren’t going to do anything that doesn’t line the pockets of them and their pals in some way shape or form.

Dr. ZhivBlago on August 20, 2013 at 4:09 PM

The Boston Globe just did a story on the hottest jobs in the next ten years. One of the top 5 was “compliance professional.” That is just wrong.

rockmom on August 20, 2013 at 4:21 PM

Since we know that employers have no incentive to lower prices if regulations are rolled back or hire more workers if their current labor and pay scale is producing a profit, why does it matter if regulations are there or not?

Really? You ‘know’ employers will have no incentive to lower prices – and therefore none of the employers will not lower prices if their regulatory costs are reduced?

How about abandoning the ideological and taking a realistic look at human nature and the principles of economics including markets?

In the real world, with lower regulatory costs, a company has numerous beneficial options beyond your assumption that they will just greedily pocket the difference.

With lower costs, the company now has more capital to invest in new products or increasing their productivity / efficiency of producing their current products – raising their profits even higher.

A company could also look to use the savings to lower the final costs of their product to make their product more competitive and affordable. This will increase the volume of their sales – and likely generating more profits than they could have achieved if they remained pat.

Oh, and to fill that higher demand for goods, the company will increase their capability to produce their goods – adding labor and making new capital investments.

You seem to look at business / economy as if it operates in a theoretical world where everything can be defined and modeled….but where human nature is never defined, understood, or predicted.

Athos on August 20, 2013 at 4:37 PM

What would complete deregulation of the financial sector cost society?

rickyricardo on August 20, 2013 at 4:49 PM

This is just capitalists wanting more profit, there’s no evidence that they would pass on their savings to workers or consumers.

libfreeordie on August 20, 2013 at 3:57 PM

Marxist socialist troll.

farsighted on August 20, 2013 at 5:05 PM

The Boston Globe just did a story on the hottest jobs in the next ten years. One of the top 5 was “compliance professional.” That is just wrong.

rockmom on August 20, 2013 at 4:21 PM

Is that like a “navigator”?

de rigueur on August 20, 2013 at 5:08 PM

Since we know that employers have no incentive to lower prices if regulations are rolled back

libfreeordie on August 20, 2013 at 3:57 PM

Do they always raise prices after new regulations are added?

(Starts the world’s slowest sundial)

Del Dolemonte on August 20, 2013 at 5:15 PM

Two trillion a year?

That’s a nice opportunity for graft on a massive scale.

No wonder Dims never met a regulation they didn’t like.

AZCoyote on August 20, 2013 at 5:16 PM

Destroying wealth and opportunity one regulation at a time.

Come, worship at the alter of liberalism, it isn’t coherent, intelligent, intelligible, beneficent, or sane. All are welcome and will be treated as inhumanly as possible.

Murphy9 on August 20, 2013 at 5:18 PM

Since we know that employers have no incentive to lower prices if regulations are rolled back or hire more workers if their current labor and pay scale is producing a profit, why does it matter if regulations are there or not? This is just capitalists wanting more profit, there’s no evidence that they would pass on their savings to workers or consumers.

libfreeordie on August 20, 2013 at 3:57 PM

Your reasoning is plausible. And dead wrong.

Businesses that cut prices sell more products and services. They don’t “pass on the savings” as such. But they do lower prices when they perceive a chance to sell more merchandise or services.

By your reasoning above, businesses would never have cut prices on computers, because it wasn’t in their interest to cut their profits.

And yet, somehow, those computer prices just kept dropping. We now have $400 laptops for sale. 10 years ago, they would have been over $1000.

There Goes the Neighborhood on August 20, 2013 at 6:46 PM

Here’s how regulations and restrictions kill enterprise: my grandfather has patented a process to deal with a certain product that the government regulates the storage of. So companies are paying fines to keep the stuff and my grandfather has a way to take it off the companies’ hands and use it, but the EPA won’t approve it because then they WON’T COLLECT THE FINES from the companies they are regulating and charging to keep it.
IT IS INSANE.

americanmama on August 20, 2013 at 7:12 PM

Author James L Payne goes into extensive detail to prove its much worse than mentioned in the HA post above.

Total non-core spending for federal, state, and local governments combined was $4.9 trillion in 2009–10. Applying the 116 percent factor to this number gives us a waste figure of $5.7 trillion. That is the yearly economic loss the country suffers owing to its decision to supply consumer goods and services through government.

Just the tax side of extracting money from people’s income (remember the really weathy have tax-exempt interest-bearing government bonds, royal trusts exclusions and other vehicles not available to your average “Joe” taxpayer) includes these burdens.
1. Disincentive costs. A fine—for speeding, say—is a monetary penalty intended to discourage the activity that triggers the fine. In economic terms a tax is just like a fine: It discourages the economic activity that triggers the tax. A tax on wages is like a fine on working: It is a monetary penalty that discourages work. A tax on income from opening a new business is like a fine on opening new businesses, and so on.
Because of its discouraging effect on work, savings, and investment, taxation depresses production and therefore makes everyone poorer. Economists have made estimates of this cost (which they call “excess burden” or “deadweight loss”). Their figures for different taxes range from 28.7 percent to 139 percent of the taxes collected.
2. Compliance costs. The tax system compels businesses and individuals to engage in a huge amount of work to learn about the tax code and grapple with tax returns, tax reporting, and tax depositing. One study of this burden found that tax compliance labor absorbed 10.2 billion hours a year, equivalent to the entire labor force of Indiana, Iowa, and Maine put together.
3. The disincentive cost of tax uncertainty. Because taxes are an uncertain and changing future cost, firms and individuals cannot plan efficiently.
4. Enforcement costs. This is the burden on citizens of grappling with IRS accusations, including dealing with audits, tax litigation, tax liens, and forced collections.
5. Evasion and avoidance costs. This is the work and expense involved in structuring lives and businesses to minimize tax burdens, including arranging tax shelters of many kinds.
6. Governmental costs. This is the cost of running the IRS, as well as the fractional use the tax system makes of other governmental units, including the Treasury, courts, and prisons.

See:
The Unnoticed Deficit That Makes Us $6 Trillion Poorer

Falcon46 on August 20, 2013 at 8:54 PM

GOP rep: Regulations cost Americans almost $2 trillion in compliance costs every year

…yep!…and the GOP is right on it!

KOOLAID2 on August 20, 2013 at 10:41 PM