The Competitive Enterprise Institute has issued its 2011 report, Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State, which examines the growth and effect of regulations on the economy. The administrative state and its many bureaucracies has grown tremendously since the beginning of the 20th century, which has contributed to the federal government becoming the leviathan it is today.
Clyde Wayne Crews Jr., who serves as vice president for policy and director of technology studies, and is the author of Ten Thousand Commandments, describes regulation as an additional hidden tax on the economy. “Federal environmental, safety and health, and economic regulations cost hundreds of billions — perhaps trillions — of dollars every year over and above the costs of the official federal outlays that now dominate the policy debate,” Crews wrote.
The current expansion of the regulatory state by President Barack Obama and the Democrats in Congress has caused much uncertainty over the economy. Growing concern over financial regulations and the effect of the Patient Protection and Affordable Care Act (health-care reform) has caused business uncertainty. The Business Roundtable argues that “the costs of regulation stifle productivity, wages, and economic growth.” In other words, businesses say that excessive regulation will not help in reducing the 9.1 percent unemployment rate.
The recent increase in regulatory activity by the federal government is also combined with the massive increase in government spending. The federal government has been running trillion-dollar deficits, which will continue in the future unless spending is reduced, and the national debt is more than $14 trillion. “The dramatic reality that regulations and deficits now each greatly exceed $1 trillion a year is an unsettling new development for the United States,” noted Crews. In addition, “of the 4,225 regulations now in the pipeline, 224 are ‘economically significant’ rules wielding at least $100 million in economic impact.”
Regulation is not just an economic issue, but also a constitutional issue. Congress, especially in the post-New Deal era, has increasingly abdicated more of its authority to the Executive Branch and administrative agencies. Congress must reassert more of its constitutional authority, while pursuing an agenda that will restore the federal government back to its traditional bounds.
Regulation does have a purpose, but regulations must be clearly defined and not burdensome. The best path to economic prosperity is to eliminate unnecessary regulations, while cutting tax rates and reducing spending. This is a formula that is rooted in constitutional limited government, which is needed today to not only create economic growth, lower unemployment, but begin the process of lowering our national debt.
Perhaps it is time to follow the advice of President Warren G. Harding who stated, “We need vastly more freedom than we do regulation,” and that “a closer understanding between American government and America’s businesses” is especially needed in today’s economy.
John Hendrickson is a research analyst for the Public Interest Institute, a Mount Pleasant-based nonprofit research group. The views expressed in this column are those of the author and not necessarily those of the Public Interest Institute.
