Sam Batkins of the American Action Forum (AAF) has a new report about the rising paperwork burden imposed by the Environmental Protection Agency. So far, 2016 has been a relatively quiet year for big new regulations at the agency—but the EPA is still managing to make compliance more difficult. This year, Batkins writes, Americans will spend a record 188.6 million hours doing EPA paperwork. That’s an increase of one-quarter just since 2009.
Batkins reports that the typical salary of a compliance officer is $33.26, implying these requirements cost north of $6 billion. A skeptic might say that in a nation of 319 million people, we’re talking about maybe $20 per capita. But EPA paperwork is just one tiny part of the regulatory state—and Batkins’s new report is just one tiny part of a growing effort at conservative and libertarian think tanks to document the growth of regulation, quantify the toll it takes on the economy, and explore ways of addressing the problem.
The big picture is stupendous. The Obama administration alone has added more than $100 billion ($300 per person) to the annual cost of regulation, half of it through the EPA, as the Heritage Foundation noted in May using federal agencies’ own estimates. In total, each year regulations cost us nearly $1.9 trillion, according to the Competitive Enterprise Institute’s annual “Ten Thousand Commandments” report; that’s $6,000 per person and slightly more than is collected from personal and corporate income taxes. A recent study from the Mercatus Center said the economy would have been 25 percent bigger in 2012—a difference of $13,000 per capita—if we’d held regulations at their 1980 level, thanks to the snowballing effects of economic growth.
Want to dive into the nitty-gritty details of regulation? AAF has a tool called Regulation Rodeo that allows users to see the regulations passed each year and how much they cost, and to sort them by the agency that enacted them and the industry to which they apply. The Mercatus Center has a more academic database called RegData, with which its scholars have calculated the FRASE Index, an estimate of how regulation affects each state.
If there’s a problem with these efforts, it’s that they often give short shrift to whatever benefit regulations are supposed to harness. Those who defend these measures can simply say: sure, regulation is expensive, but it’s worth it. Would you really eliminate all regulations, even for $6,000 a year—or return to the level of regulation we had in 1980, when hardly anyone was even talking about global warming or climate change?
Indeed, many agencies themselves monetize the costs and benefits of regulations, naturally finding the benefits to outweigh the costs. A report from the Office of Management and Budget last year rounded up these estimates for “major” regulations over a ten-year period, finding that “In 2010 dollars, aggregate annual benefits are estimated to be between $261 and $981 billion and costs between $68 and $103 billion.”
$261 to $981 billion: that’s a huge range that betrays the inherent subjectivity of the process. To estimate a regulation’s benefits, bureaucrats have to not only predict how effective the rule will be, but then also attach a dollar value to that effect. The “social cost of carbon”—the damage we do by emitting one ton of carbon dioxide, and thus the value of a rule preventing one ton of carbon pollution—is a case in point. Government agencies went with $21 in 2010; that was soon dramatically hiked to $37. Some scientists would go as high as $220. That there is a social cost to carbon pollution, few would dispute, but it matters a lot who gets to decide what that cost is.
Therein lies the rub: our current system for making these decisions is dysfunctional. Part of the problem is that Congress has abrogated its lawmaking duty, deliberately empowering federal agencies to regulate as they see fit. And part of the problem is the Supreme Court, which has a policy of deferring to agencies’ own interpretations of the laws that authorize their actions, so long as those interpretations are at least plausible.
As a result, between 2003 and 2015, agencies created 21 rules for every law passed by Congress. And that’s not even counting the assorted “guidance” documents and memoranda that emanate from the White House.
At the very least, our regulatory system violates the spirit of the separation of powers, granting legislative abilities to the executive branch. It may be outright unconstitutional. But it’s hard to put the genie back in the bottle: the courts don’t seem inclined to do it, the efforts of one president can be undone by the next (and agencies finalized plenty of rules under our last conservative president anyway), and Congress—which created this mess to begin with—can take its power back only by overriding a veto or persuading a president to limit her own power.
Nonetheless, ideas abound. Congress could insist that all major regulations be put up for a vote, and that they automatically sunset unless they are renewed. It could tell agencies that for every new rule they enact, they must repeal regulations of equal (or even greater) cost. It could give the executive branch a “regulatory budget,” capping the total cost of these policies. It could insist on more intensive review of the costs and benefits of regulations. It could at least stop delegating even more authority to the executive branch. (The Affordable Care Act famously used the phrase “the Secretary shall,” referring to the secretary of health and human services, more than 700 times.)
There are clearly economic gains to be had from rolling back the regulatory state. Perhaps more important, though, is to assess costs and benefits through a process that reflects the will of the people, not the will of the bureaucracy.
Robert VerBruggen is managing editor of The American Conservative. Follow @RAVerBruggen