$1.9 trillion: The cost of regulation in 2015

posted at 6:41 pm on January 13, 2015 by Kevin Glass

President Obama hasn’t given much credence to the idea that America is suffering from overregulation, and his policies have proven that. Late last year, he debuted a new EPA rule that has been called “the most expensive regulation ever.” “Economically significant” regulations have exploded in the Obama era. The Competitive Enterprise Institute’s Wayne Crews has done exhaustive work cataloging regulation in America, and his new report on regulation for 2015, Tip of the Costberg, is an eye-opener.

Crews estimates that regulation will cost the American economy $1.882 trillion in 2015. This is a staggering figure and, as you might have guessed, more expensive than 2014. It’s larger than the entire GDP of all but 11 countries in the entire world – ahead of major developed nations like Australia and South Korea. Official government estimates, like those done by the Office of Management and Budget, only come out in the hundreds-of-billions range, which Crews says is an exercise in disastrous undercounting. Those official government statistics are, unsurprisingly, very friendly to government policy.

Crews breaks it down here – the largest costs belong to economic regulation, tax compliance, and environmental regulations:

annualcostofregulation

 

As Crews writes:

OMB’s annual review increasingly encompasses an even smaller fraction of intervention than realized. Regulation today is a hidden tax equivalent to at least half the amount of the fiscal budget itself… our current regulatory oversight procedures, which omit independent agency rules and important interventions like guidance documents and the number of them, are inadequate.

Some of these numbers are so large that they become nearly meaningless. There are over one million federal regulation restrictions. There are over 175,000 pages in the Code of Federal regulations. As Scott Lincicome documented at The Federalist, we’re in an age of economic stagnation where it’s worth re-evaluating our regulatory state to try to find some way, any way, to give economic growth a kick-start.

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Comments

Does that include the $220 per ton of CO2 (social cost) of enforcing them?

WryTrvllr on January 13, 2015 at 6:44 PM

aw nuts, societal

WryTrvllr on January 13, 2015 at 6:45 PM

That’s nothing — DogEater and The Mooche spend more than that annually on vacations, kickbacks, and fundraising …

ShainS on January 13, 2015 at 6:46 PM

This is obviously the work of Shape Shifters.

ToddPA on January 13, 2015 at 6:51 PM

Democrats’ response: The EPA existed under George Bush, ya know!

chris0christies0donut on January 13, 2015 at 6:53 PM

Why not deregulate immigration, then? It’d be so much cheaper if you just let everyone in.

NorthernCross on January 13, 2015 at 6:58 PM

In many cases regulation inhibits innovation by enforcing the use of existing technology in the “normal” way. There’s often no reward, and sometimes a punishment for leapfrogging to a new and better more-efficient way of doing things.

RBMN on January 13, 2015 at 7:00 PM

$1.9 Trillion – out of a GDP just over $16 Trillion.

Oh yeah, and that $1.9 Trillion is on top of the nearly $3 Trillion the Federal Government sucks out of the economy in one year from Taxes.

Imagine where our economy would be if the regulatory overhead was half of what it really is….

Athos on January 13, 2015 at 7:02 PM

You didn’t build that …SO HAND IT OVER !!

PilotInCommand on January 13, 2015 at 7:12 PM

What is the cost in economic disincentive?

It is incalculable.

hillbillyjim on January 13, 2015 at 7:27 PM

That’s $1.88 trillion for federal regulations per year. We can make a wild guess that state and local regulations cost another $1 trillion per year. The total of $3 trillion is about 17% of GDP, just for regulations. Add it to the total government spending of $6.1 trillion, or 35% of GDP, and the total cost is $9.1 trillion, or 52% of GDP.

The tail is wagging the dog. Government is no longer our servant, it is our master.

In 1900 total government was less than 10% of GDP. By 1950 it was about 30% of GDP.

I think its time to cut the total cost of government back down to 30% of GDP, and then gradually shrink it from there.

RedBaker on January 13, 2015 at 7:51 PM

It’d be so much cheaper if you just let everyone in.

NorthernCross on January 13, 2015 at 6:58 PM

How so?

Mimzey on January 13, 2015 at 9:34 PM

Some of these numbers are so large that they become nearly meaningless.

Okay, so let’s put it back into real world terms.

According to these guys,

http://www.brillig.com/debt_clock/

We go further into debt by $2.42 billion per day. 40% of what the government spends is borrowed, so what they’re actually spending is 2 1/2 times that figure.

Okay, so 24 hours in a day, 60 minutes in an hour…
…is $1,680,555.56 per minute.

Hmmm… Still pretty meaningless.

Okay… median US household income is $51,939. So every minute, the US government goes further into debt by median household income for 32 years, 4 months and 8 days. What they actually spend is that same income for a bit over 80 years.

So in the 10 minutes or so it took me to write this, we have gone farther into debt by the money value of 5 average families’ entire lives.

Somebody check my math and tell me if I’m blowing this out of proportion. I’ll be really depressed if I’m not wildly wrong.

GrumpyOldFart on January 13, 2015 at 9:39 PM

Those official government statistics are, unsurprisingly, very friendly to government policy.

Aren’t they all?

Dr. ZhivBlago on January 13, 2015 at 11:21 PM

So in the 10 minutes or so it took me to write this, we have gone farther into debt by the money value of 5 average families’ entire lives.

Somebody check my math and tell me if I’m blowing this out of proportion. I’ll be really depressed if I’m not wildly wrong.

GrumpyOldFart on January 13, 2015 at 9:39 PM

Well, if I needed a reason to crawl back into bed and hide under the covers …

Lance Corvette on January 14, 2015 at 9:08 AM

Trivia… that’s more than $10.8 million per regulation.

Gotta love that big government./

piratesockpuppet on January 14, 2015 at 11:58 AM

Maybe if the constipated regulators were more ‘regular’, they’d loosen up in other areas. Naw.

vnvet on January 14, 2015 at 1:25 PM