While anyone who runs a business knows intrinsically that government regulation costs time and money and is a drag on the whole economy, thorough research on the costs to the entire economy has not been well known.
But Clyde Wayne Crews, Jr. of the Competitive Enterprise Institute this spring issued the 2014 edition of "Ten Thousand Commandments,"(TTC) his "Annual Snapshot of the Federal Regulatory State."
By way of perspective, the federal government spent $3.45 trillion in FY 2013. President Obama's FY 2015 budget calls for $3.9 trillion. Only four other nations on the planet collect more than $1 trillion and we are the only one over $2 trillion.
Yet that spending is before the cost of regulations. Companies pay the costs of regulation, pass some on to consumers and some affects wages workers earn. It is impossible to precisely pin down regulatory costs because they are not budgeted by agencies and often are indirect costs, the report notes. "Ten Thousand Commandments" combs through government and private data and estimates to compile the numbers.
Just the bottom line numbers are staggering. Regulatory compliance and economic impact cost is estimated at $1.863 trillion annually. U.S. households annually "pay" regulatory hidden taxes of $14,974. That means the cost of regulations comes to 23 percent of the average household income of $65,596. That is on top of the 29 percent of the average income that households pay to cover the regular budgeted federal expenditures. Put them together and the average household pays 52 percent of its income for regulatory taxes and federal spending.
The regulatory tax exceeds every item in the household budget except housing, more than is spent on health care, food, transportation, entertainment, apparel and services and savings [savings?].
Using that perspective noted above, the estimated cost of regulation exceeds half the level of the federal budget itself, TTC noted. In fact, the $1.8 trillion amounts to 11.1 percent of the entire U.S. GDP. Add the regulatory costs to federal spending, and the federal governments share of the GDP is 31 percent. Incredibly, the cost of regulation actually exceeds individual income tax revenues of $1.234 trillion (2013).
Is that all? Well, not exactly. Agencies show budgeted expenses of $57.3 billion to administer and enforce the regulatory complex, according to a joint project of Washington University at St. Louis and the Regulatory Studies Center at George Washington University in D.C.. Add the hidden costs to the budgeted costs and the grand total cost of federal regulation tops $1.9 trillion.
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