RPC Reg Spotlight July 24, 2012

 

Regulatory Action in the Spotlight:

 

The cost of federal regulations

 

Adverse Effects:

 

  • Financial drain on the U.S. economy
  • Burdensome for businesses to implement 
  • Hurts job creation during a time of high unemployment

 

Response of the Obama Administration:

 

During the first three years of the Obama administration, 106 major regulations have been implemented with costs of $46 billion per year.   At of the end of 2010, the Federal Register, a document which informs the public of all of the new regulations issued by the government, stood at 82,590 pages, an increase over the 69,676 pages in 2009.  The Federal Register was 82,420 pages at the end of 2011.  Currently, the Federal Register stands at 42,620 pages for 2012 alone. 

 

 

Impact on the United States:

 

A study by Nicole and Mark Crain on behalf of the Small Business Administration in 2010, estimated the annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008.   This represents nearly twice the amount of individual income taxes collected in 2009.  

 

According to a Heritage Foundation publication, the Obama administration has implemented four times the number of regulations, at five times the cost, of major regulations introduced by President George W. Bush in the first three years of his administration.   From the start of the Obama administration to January 20, 2012, a total of 10,215 rulemaking actions were finished. 

 

The Dodd-Frank Act, passed two years ago, has added 9,000 pages of regulations to the Federal Register.  These regulations have cost more than $7 billion, have resulted in 53 million paperwork hours, and have required 26,000 full-time employees to fill out all the necessary paperwork.  Administrative agencies have finalized only one-third of the rulemakings mandated by the law, as fully 63% of deadlines set by Dodd-Frank have been missed.  Hundreds of millions of dollars have been shelled out by financial firms of all sizes in order to comply with the myriad new regulations contained in this law. 

 

The Affordable Care Act has been the most harmful law in terms of new regulations burdening the American economy.  According to the American Action Forum, to date, this law has imposed more than $24 billion in lifetime costs and 58 million paperwork burden hours.  This high cost does not even include those regulations that have not yet been put into effect.  An estimated $20 billion cost and 51 million paperwork hours will accompany these new regulations.  As of July 10, 2012, 47% of the regulations mandated by the Affordable Care Act have not yet been implemented. 

 

 

In Closing:

 

The high costs of federal regulations are a burden that weighs heavily on the American economy.  And, now is a particularly poor juncture to implement new, costly regulations during a time of high unemployment and poor economic growth.   Under this administration, the high cost of these regulations is not likely to slow down anytime soon, as hundreds of regulations from the Affordable Care and the Dodd-Frank laws still await implementation. 

 

 

Relevant Legislation:

 

In light of this information, House Republicans are working to bring accountability to the regulatory process:

 

H. Res. 72, sponsored by Rep. Pete Sessions and which passed the House of Representatives in February 2011, directed certain standing committees to inventory and review existing, pending, and proposed regulations and orders from agencies of the federal government, particularly with respect to their effect on jobs and economic growth.

 

Rep. Lamar Smith introduced H.R. 527, the Regulatory Flexibility Improvements Act, which would require federal agencies to identify and reduce the costs new regulations could impose on small businesses.  H.R. 527 passed the House of Representatives by a bipartisan vote of 263-159 on December 1, 2011. 

 

Rep. Tim Griffin introduced the Regulatory Freeze for Jobs Act of 2012 on February 17, 2012.   This legislation would freeze “economically significant” regulations (those regulations with a cost of $100 million or more) until unemployment drops below 6 percent.  The House is currently planning to vote on this bill the week of July 23, 2012.  In a report by the American Action Forum, it is estimated this bill would save $22 billion in costs, 2.6 million paperwork hours, and thousands of jobs.