When talking about the economy, it’s easy to overlook a major drag on growth — regulations.
Late last month, the Competitive Enterprise Institute released its annual review of federal regulations. It’s appropriately titled “Ten Thousand Commandments 2022.” Regulations are rules and requirements that the government places on businesses. Some are big (think: tariffs). Others are small, such as imposing training requirements on certain enterprises. Those are largely unknown to the public, but they impose costs nonetheless.
The price of those burdensome rules adds up. The report estimates that regulations handcuff the economy by $1.93 trillion annually. That’s equivalent to 8% of GDP.
It’s hard to fathom an amount that massive, but the report offers a few ways to put it in context. If it represented a country’s GDP, it would be the ninth-largest economy in the world. The cost of regulations is greater than the amount the government collects in individual income taxes, which was $1.71 trillion in 2021. Per household, the regulatory burden equates to $14,700 annually.
Many of these edicts may indeed be grounded in public safety and consumer welfare. But many others are based on little more than arbitrary bureaucratic muscle-flexing, protectionism and overreach.
Unfortunately, things are getting worse. As president, Donald Trump had a mixed record on regulations. His tariff policy was a regulatory expansion. But he worked to limit rules in other areas. In 2019, there were fewer than 3,000 new final rules. That’s a lot, but it was also the lowest number since record-keeping began in the 1970s. His administration also worked to implement a “one-in, two-out” goal for new regulations. President Joe Biden isn’t interested in continuing that effort.
Instead, Biden expanded “federal support of unionization and collective bargaining and reinstatement of Obama-era housing and science policies.” Another change is Biden’s embrace of “equity” policies. That could open up a Pandora’s box of new restrictions and micromanagement by government bureaucrats.
It wasn’t supposed to be this way. The Constitution directs Congress to make the laws, not delegate that authority to the president and unelected executive branch functionaries.
“For the economic health and stability of a nation confronting inflation, supply-chain disruptions, debt and other self-inflicted wounds, the regulatory process should be made as transparent as possible and should be brought under greater democratic accountability and constitutional norms,” the report recommends.
Doing so would help unshackle the American economy at a time when economic growth is desperately needed.
