In President Obama’s recent state of the union speech, he claimed that his administration imposed fewer new regulation in the first three years of his presidency than did his predecessor over the comparable period. Posing as a champion of regulatory reform, the President noted that : “There’s no question that some regulations are outdated, unnecessary, or too costly. In fact, I’ve approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his.” If true, this is quite a surprise in an administration broadly characterized as on a “regulatory spree unprecedented in U.S. history.” Is the President’s boast true?
If the measure of the regulatory burden is the sheer number of new regulations, President Obama’s claim is accurate. According to the Federal Register’s online data base, the current administration adopted 10, 810 new regulations from 2009 through 2011. During the first three years of the George W. Bush presidency, federal agencies added a whopping 12,587 new regulations.
President Obama’s claim that he imposed fewer regulations is technically correct. It is also misleading, and obfuscates the vast expansion of the regulatory state under his watch. As a measure of the regulatory burden on economic activity, the sheer number of any and all regulations is highly deceptive. The better measure is the number of regulations with significant economic impact and the magnitude of that impact. (The federal government labels a regulation “major” or “economically significant,” when the issuing agencies’ (invariably low-ball) estimate of annual cost of compliance is $100 million or more.)
Now compare the tally of economically significant regulations adopted in the first three years of the Obama and G.W. Bush administrations. President Bush approved 30 economically significant regulations in his first three years as chief executive. In the same period, President Obama has approved 953 such regulations. And the Obamanauts issued 257 economically significant regulations on small business while the federal agencies under the Bush team issued only 16 during the first three years in office.
Thanks to Wayne Crews of the Competitive Enterprise Institute for highlighting these numbers in the Daily Caller and for posting the data (shown below) on his Ten Thousand Commandments site. No further comment is needed to determine which president imposed the greatest shackle on the private economy and individual liberty.
The current administration’s aggressive expansion of regulatory control can be measured in any number of ways. Not only has the volume of major regulations increased but the compliance costs have grown exponentially. Most of EPA’s new rules carry costs far exceeding the $100 million threshold for classification, and supposedly for increased procedural scrutiny, as an economically significant regulation. Federal rules promulgated over the last three years typically carry compliance costs in the billions. Of the total $26 billion cost of federal rules in 2010, new EPA regulation amounted to $23 billion.
A few examples. EPA estimates that the proposed new federal ozone standard will cost approximately $90 billion to implement. Adoption of a new national ambient air quality standard (NAAQS) is not considered a regulatory action so estimation of economic impact is not required. And the national standard must be formulated to protect public health without any consideration of the cost. Then there is the mercury finalized mercury rule. EPA acknowledges that the regulation – with a cost of $11 billion -is the most expensive in the agency’s history. The Edison Electric Institute concludes the compliance cost is more like $100 billion. Regulators devise innumerable ways to elude full accounting of the direct and indirect costs to the private sector.
EPA’s non-regulatory Endangerment Finding that greenhouse gases are subject to regulation under the existing Clean Air Act has far greater economic implications than all previous EPA regulations combined. EPA, however, devised a way to get around any economic impact analyses of the initial ghg rules! The agency classified its first regulation of greenhouse gases from private business -called the Tailoring Rule- as a “deregulatory action” and thus exempt from estimation of costs. How in the world could any exercise of this all-encompassing regulatory federal authority to control carbon dioxide- the most ubiquitous by product of all natural and human activity- be construed as deregulatory?
In EPA’s view, because the Tailoring Rule reduced the number of industries which would be subject to regulation by law, the action was deregulatory in that it could have been a lot worse. EPA did reveal the absurdly staggering costs of regulating carbon dioxide in its justification for tailoring -or re-writing – the law. EPA noted that regulation under the literal terms of the law would increase a current permitting universe of now 12,000 businesses to over six million, add purely administrative costs of over $20 billion and require 230,000 additional EPA employees. This “Tailoring Rule,” however, is not among those new federal regulations listed as “economically significant.”
The numbers, scope and economic burden of federal regulations have been steadily growing for decades under chief executives from both parties. The first three years of the Obama administration, however, has unquestionably been a period of dramatic escalation of the regulatory drag on the private economy. Unless restrained by Congress, the courts or the national elections, the worst is yet to come.
-Kathleen Hartnett White