Italians and Brazilians earn and spend roughly as much each year as the “Land of the Free” spends just following rules.
BY KEN BRAUN
Each April on “Tax Day” the media fixates on the dollars Americans fork over to the IRS. The nearly $1.884 trillion the IRS took for 2017 from corporate and individual taxpayers works out to $14,548 per household if the cost were divided evenly among the nation’s 129.5 million households.
A big number, to be sure. But according to a report put out each spring by the Competitive Enterprise Institute, the media is forever missing most of the story.
Ten Thousand Commandments 2018: An Annual Snapshot of the Federal Regulatory State, released on April 19, tabulates the cost of federal regulations to be another $1.9 trillion ripped out of the US economy in 2017 ‒ slightly more than the IRS haul for last year, and pushing close to another $15,000 per household.
Just how big is the regulatory state?
By way of comparison, using the most recent World Bank estimates the CEI report notes the entire annual GDP of India for 2016, the world’s seventh-largest economy, was just $2.2 trillion.
Do we need a regulatory state this monstrous?
It means fewer than 330 million Americans are collectively paying just for federal regulations that cost almost as much as everything produced and consumed each year by an economy that has one billion more people than we do.
Similarly, despite having two of the 10 largest economies on the planet, Italians and Brazilians earn and spend roughly as much each year as the “Land of the Free” spends just following rules.
What’s worse, CEI notes that its estimate is likely a pitifully safe and conservative take on the true regulatory cost. They cite several reputable sources with much higher estimates.
The U.S. government’s own attempt to calculate the cost of the federal regulatory burden nearly a decade ago, conducted by the Small Business Administration, projected that federal regulatory compliance costs had already hit $1.75 trillion back in 2008. A National Association of Manufacturers estimate for 2012 was already showing the annual regulatory drag on the economy at more than $2 trillion.
And CEI states the most alarming estimates occur when researchers try to measure the lost economic growth inflicted on Americans because of our massive regulatory burden:
“A 2016 report by the Mercatus Center at George Mason University employs a microeconomic model to attempt to determine ‘how much regulation distorts the investment decisions of firms and thus hampers long-run economic growth.’ According to this analysis, had regulatory burdens remained constant since 1980, the 2012 U.S. economy would have been 25 percent larger. Put another way, during that time, the economy grew by at least $4 trillion less each year than it could have.”
If even remotely true, this is a terrifying and depressing destruction of American prosperity, simply because of the growth of regulations since 1980. Hypothetically dividing that additional $4 trillion per year by 129.5 million U.S. households would mean an additional $31,000 annually for each of them. It would be enough to for every American to enjoy no worse than a middle-class lifestyle.
But CEI states even $4 trillion of lost economic output each year may be just a tiny fraction of the damage:
“Still another report, by economists John W. Dawson of Appalachian State University and John J. Seater of North Carolina State University, pushes regulatory costs into the stratosphere by counting the long-term growth reduction caused by decades of increased opportunity costs imposed by economic regulation. Their report counts dozens of trillions of dollars in lost gross domestic product (GDP) annually.” [Emphasis added].
Ten Thousand Commandments does offer a few slivers of optimism. After a sustained period of regulatory growth during the Obama Administration, the Trump White House has made a concerted effort to arrest the growth of federal rules.
The Federal Register, a publication of federal rules, had been growing steadily over many years, reaching 96,894 pages in 2016, the last year of the Obama Administration. Remarkably, in just one year, the Trump team slashed it back to 61,308 pages, a 36 percent reduction. Rather than taking up 54 linear feet of shelf space, federal rule books would now fill up just 35 feet.
CEI credits the White House for doing as it much as it could on its own to slash red tape in 2017. But the caveat is a big one because significant and lasting progress will require help from the other end of Pennsylvania Avenue. To get at the real root of the regulatory growth, CEI calls on today’s Congress to send the president new legislation that will legally limit the power of the administrative state, aggressively undoing what prior Congresses have done over many decades.
Still, CEI hints that perhaps this year’s report could have been charitably renamed “9,999 Commandments.”
Ken Braun is the director of policy and communications for Think Freely Media. He has served as a public policy and communications professional for four different free market policy organizations, and as a chief of staff in the Michigan Legislature. He has also been a freelance political columnist for one of Michigan’s largest newspaper chains. Ken can be followed on Facebook, and when he has something really clever to say he will even use Twitter.
What Should Be Said shows effective ways of communicating freedom principles by using a storytelling approach, taking the moral high ground, and staying hopeful and aspirational. Media, politicians and thought leaders often fail to include the freedom perspective at all by omitting critical facts. Alternatively, when they do make a sincere attempt to sell the freedom philosophy, they often do so with a stale and defensive approach that is missing stories that humanize the dry facts and figures. Here we show examples of how storytelling and emotionally compelling changes in message will make all the difference for those trying to advocate for liberty.