Business

Regulations Cost U.S. Businesses $1.88 Trillion A Year: CEI

Just about everybody agrees that businesses need some degree of regulation to assure public safety, but people with different political perspectives often vehemently disagree on how much regulation there should be, the form of the regulation and who should be doing the regulating.

A recent report from the Competitive Enterprise Institute, authored by Clyde Wayne Crews Jr., points out the huge growth in regulations and the dollars spent on regulatory activities over the last couple of decades, and highlights that federal regulatory compliance cost businesses $1.88 billion in 2014.

Regulations

While the report lays out a convincing case that the regulatory burden faced by U.S. businesses is high and still growing, it neglects to mention that the many billions businesses have had to spent to comply with federal regulations has bought all Americans something of great value…a relatively clean and safe environment to live and work in — two things we would unquestionably not be enjoying without reasonable restraints on the activities of businesses.

Regulations

Overdelegation of rulemaking power to agencies

Crews argues that one “major source of over regulation is the systematic overdelegation of rulemaking power to agencies.” He suggests that requiring expedited congressional votes on economically significant or controversial agency regulations before they are adopted would help establish congressional accountability and reaffirm the principle of “no regulation without representation.”

Regulations

Regulations

Statistics on federal regulations from CEI

Regulations

Using the latest federal government data, reports and recent academic studies, Crews estimates that U.S. businesses see close to $1.88 trillion annually in regulatory compliance and economic costs.

He also points out that 224 federal laws were enacted last calendar year, compared to 3,554 rules issued by agencies. That means that 16 rules were issued for every law enacted in 2014. The ratio of regulations issued by agencies to laws officially enacted was 16 for 2014 and 51 for 2013. Of note, the average ratio for the decade has been 26.

Regulations

Regulations

Assuming that all costs of federal regulation trickled down to individual households, American households “pay” $14,976 annually on average in regulatory costs. This comes to 23% of the average income of $63,784 and 29% of the spendable budget of $51,100.

Also of note, the $1.88 trillion total estimated cost of regulation is more than half of total federal spending, which came to just over $3.5 trillion in 2014.

Moreover, regulatory costs of $1.88 trillion amount to 11% of the U.S. GDP in 2014 (estimated at $17.4 trillion by the Commerce Department’s Bureau of Economic Analysis).

But the big question is, what are the costs of non regulation?