Regulations Are the Ties That Bind
Federal rules amount to the fourth largest economy in the world.
It might not have its own government, citizens or flag, but the world’s fourth largest economy has become a force — and a threat — to be reckoned with. What constitutes this mysterious economic might? None other than the $4 trillion in federal regulations imposed by the U.S. government. You read that correctly. If the cost of government regulations were its own country, it would boast the fourth-largest GDP in the world — bigger than the economies of Germany, France, Brazil, Russia, Italy, and the United Kingdom. And it’s just a couple of hundred billion away from matching the entire federal budget.
This bombshell comes courtesy of a new study by the Mercatus Center, which analyzed data from 1977 through 2012 to discover the cumulative costs of regulations (or, more accurately, taxes by a different name). While most studies of the economic impact of regulations have focused on select industries and/or specific regulations, the Mercatus study looked at data across 22 industries.
The picture ain’t pretty.
The study found that regulations, “by distorting the investment choices that lead to innovation, [have] created a considerable drag on the economy, amounting to an average reduction in the annual growth rate of the US gross domestic product (GDP) of 0.8 percent.”
In plain English, if regulations had remained steady at 1980 levels, our economy would have been 25% — or $4 trillion — larger in 2012 than it was. This represents a whopping $13,000 loss per person in just one year. All to ensure every aspect of our lives is compliant with Uncle Sam’s Big Government Guidebook.
Unfortunately, President Ronald Reagan wasn’t joking when he quipped, “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
Just how many regulations are we talking about? As of December 2015, more than 81,000 pages-worth of federal rules, proposed rules and notices. According to the Competitive Enterprise Institute (CEI), these pages included 3,378 final rules and regulations, of which 545 affect small businesses. And this didn’t count 2,334 proposed rules.
Regulations have become such a behemoth that CEI created tenthousandcommandments.com, which looks at “the other national debt — the cost of regulation.” (In case you’re wondering, as of last week, 2016 already has 1,001 new federal rules.)
Not surprisingly, the regulatory landscape only grew worse under Obama. As Investor’s Business Daily notes, Obama’s administration foisted 172 “economically significant” regulations on Americans in his first term, and 200 more since, thus far outpacing both George W. Bush and Bill Clinton. And Obama’s rules include things like, oh, the government takeover of the health care industry and the EPA’s coal-killing carbon emissions rules.
It’s little wonder our annual GDP growth has been sluggish at best. So sluggish that in 2013, the Bureau of Labor Statistics called slower GDP growth “the new normal.” GDP growth in the first quarter of 2016 was a woeful 0.5%, the weakest in two years. (It was an anemic 1.4% in the previous quarter.) And Obama is on track to be the only president in U.S. history without a single year of 3% growth on his watch — he’ll be doing well to average 1.55%.
Remember those wondrous numbers while Obama’s sycophants at The New York Times’ feature their puff piece in which he “weighs his economic legacy.”
“I actually compare our economic performance to how, historically, countries that have wrenching financial crises perform,” Obama mused. “By that measure, we probably managed this better than any large economy on Earth in modern history.” Go back and read the aforementioned numbers and see if you agree that he “managed this better.”
What’s the solution? For one thing, eliminating thousands of pages of federal regulations. It’s straightforward but hardly palatable to the government elites who believe they’re most qualified to run your life.
Frighteningly, the alternative is the continued growth of the regulatory nation that keeps our economy in chains.
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