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Government regulation -- whose purpose is to create social or economic benefits that presumably would not occur naturally in a pure market economy -- has a profound effect on the American economy. According to the Institute for Research on the Economics of Taxation (IRET), the "[b]enefits of regulation may be real, as with the prevention of accident, injury, or disease, or the reduction of damage from pollution." But those benefits "are not without costs." For example, says IRET, "Regulation of drugs may prevent the introduction of products with harmful side effects, but it may also delay the release of lifesaving products. Inspection of food may prevent disease, and safety features on cars may prevent injury, but they also raise the price of food and transportation."

Federal environmental, safety and health, and economic regulations cost hundreds of billions—perhaps trillions—of dollars each year over and above the costs of official federal outlays. Such regulatory costs cannot be measured precisely because, unlike taxes, they are unbudgeted and often indirect. But as the Competitive Enterprise Institute (CEI) points out, "scattered government and private data exist on scores of regulations and on the agencies that issue them, as well as on regulatory costs and benefits." CEI has painstakingly analyzed these data in an effort to quanitify, as accurately as possible, the total costs that government regulation imposes on the American economy. Among CEI's findings, published in 2011, were the following:

  • "An evaluation of the U.S. federal regulatory enterprise by economists Nicole V. Crain and W. Mark Crain finds annual regulatory compliance costs hit $1.752 trillion in 2008. Given 2010’s actual government spending or outlays of $3.456 trillion, the regulatory 'hidden tax' stands at an unprecedented 50.7 percent of the level of federal spending itself."
  • "In 2008, regulatory costs were more than double that year’s $459 billion budget deficit."
  • "Regulatory costs exceed all 2008 corpo- rate pretax profits of $1.463 trillion."
  • "Regulatory costs tower over the estimat- ed 2010 individual income taxes of $936 billion by 87 percent—nearly double the level."
  • "Regulatory costs of $1.752 trillion absorb 11.9 percent of the U.S. gross domestic product (GDP), estimated at $14.649 trillion in 2010. Combining regulatory costs with federal FY 2010 outlays of $3.456 trillion reveals a federal government whose share of the entire economy now reaches 35.5 percent."
  • "The Weidenbaum Center at Washington University in St. Louis and the Regulatory Studies Center at George Washington University in Washington, D.C., jointly estimate that agencies spent $55.4 billion (on budget) to administer and police the regulatory enterprise. Adding the $1.752 trillion in off-budget compliance costs brings the total regulatory burden to $1.8 trillion."
  • "The 2010 Federal Register stands at an all-time record-high 81,405 pages. Federal Register pages devoted specifically to final rules rose by 20 percent, from 20,782 in 2009 to 24,914."
  • "In 2010, agencies issued 3,573 final rules, compared with 3,503 in 2009. Notably, the number of proposed rules increased even more than the number of final rules, from 2,044 in 2009 to 2,439 in 2010, an increase of 19.3 percent. The annual outflow of roughly 4,000 final rules has meant that nearly 38,700 rules have been issued since 2001.... Considerable law-making power is delegated to unelected bureaucrats at agencies."
  • "According to the 2010 'Regulatory Plan and the Unified Agenda of Federal Regulatory and Deregulatory Actions' in the Federal Register, which lists federal regulatory actions at various stages of implementation, 58 federal departments, agencies, and commissions have 4,225 regulations in play at various stages of implementation, an increase of 4.5 percent. Of the 4,225 regulations now in the pipeline, 224 are 'economically significant' rules wielding at least $100 million in economic impact."
  • "Of the 4,226 regulations now in the works, 845 affect small business, an 11.5-increase over 758 in 2009."
  • "The number of final “major rule” reports issued by agencies and reviewed by the Government Accountability Office (GAO) has surged. The 99 rules of 2010 represent the highest number since this tabulation began. Five years ago, there were 56 such reports."
  • "The five most active rule-producing agencies—the departments of the Treasury, Health and Human Services, Commerce, and Agriculture, along with the Environmental Protection Agency— account for 1,820 rules, or 43 percent of all rules in the Unified Agenda pipeline."

Mostly adapted from "Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State," by The Competitive Enterprise Institute (2011).



Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State
By The Competitive Enterprise Institute

Red Tape Rising: A 2011 Mid-Year Report [on Government Regulation]
By James Gattuso and Diane Katz
July 25, 2011

The ‘Hidden Tax’: Report Estimates Regulation Costs Economy $1.75 Trillion
By Chris Moody
April 19, 2011

The Cost of Government Regulation: Beyond the Initial Impact
By The Institute for Research on the Economics of Taxation
March 9, 2005

Monetary Policy and Financial Regulation
By The Cato Institute

Health Insurance Regulation
By The Cato Institute

Health Care Regulation: A $169 Billion Hidden Tax
by Christopher J. Conover
October 4, 2004
"Cost of Government" Day Has Arrived (See section titled "The Regulatory Burden")
By Americans for Tax Reform
August 12, 2011

How Government Regulation Affects the Price of a New Home
By Paul Emrath
July 5, 2011

Rolling Back Red Tape: 20 Regulations to Eliminate
By Diane Katz
January 26, 2011


Regulatory Studies
By The Cato Institute
Tales of the Red Tape
By The Heritage Foundation
Regulation Magazine
By The Cato Institute



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