President Joe Biden delivers remarks at the Metro D Line (Purple) Extension Transit Project–Section 3 in Los Angeles on Oct. 13, 2022. Apu Gomes/Getty Images
A book of federal rules and regulations was expanded by 45 percent in 2021, according to a new report from the Competitive Enterprise Institute (CEI).
Last year, the Biden administration added 4,429 new rules (pdf) to the Federal Register, a public record containing regulatory documents for general applicability and legal effect. The last time this figure exceeded 4,400 was in 1999, when the Clinton administration introduced 4,684 federal rules and regulations.
The CEI, a libertarian-leaning think tank, noted that it had been challenging to understand President Joe Biden’s rule-making efforts, mainly because of his campaign to shut down Trump-era transparency programs and slow the accounting process in the Federal Register.
“The implications of all this are that the spending and intervention embodied in Biden’s American Rescue Plan ‘infrastructure,’ ‘innovation,’ and ‘inflation’ mega-bills will translate into greater rule counts in the coming months and years,” Clyde Wayne Crews Jr., the CEI vice president for policy and a senior fellow, wrote in a blog post about the report.
“If the federal government expands by a large percentage, more rules and sub-regulatory guidance documents and other regulatory dark matter are imminent.”
By comparison, then-President Donald Trump contributed a little more than 3,000 rules to the official journal of the federal government in his final year in office. However, Trump’s Federal Register page count totaled 86,356 in 2020, down just 10 percent from President Barack Obama’s record in 2016 and the second highest on record.
As part of one of his first acts in the White House, Trump signed an executive order that would require agencies to revoke two regulations for every new rule they wanted.
Former President Donald Trump speaks at a Save America Rally to support Republican candidates running for state and federal offices in the state at the Covelli Centre in Youngstown, Ohio, on Sept. 17, 2022. Jeff Swensen/Getty Images
Crews said the Federal Register database shows there are 2,580 new rules listed this year to date, but that “tally may be understated” at this point. If the final number comes in at less than 3,000, this would only be the second time since records began being kept in 1976.
The Brookings Institution maintains a detailed regulatory tracker that includes a catalog of standard rules, guidance documents, executive orders, and other actions in several critical policy areas such as the environment, immigration, and health care. Some of the latest decisions include introducing new rules, overturning Trump’s measures, and offering guidance.
The Cost of Regulations
Businesses, large and small, are forced to comply with rules and regulations at all three levels of government. These regulatory burdens include direct and indirect costs of paperwork, testing procedures, equipment modifications, redirecting research and development efforts, and navigating through conflicting rules.
Companies also endure the hidden costs of regulations. This is when regulatory expenses, whether purchased materials or misallocated labor, don’t appear on an organization’s balance sheet.
According to a 2016 Small Business Regulation Study by the U.S. Chamber of Commerce Foundation, it was estimated that federal regulations alone cost the U.S. economy as much as $1.9 trillion in direct costs, higher prices, and lost productivity. These burdens disproportionately impact small businesses, as “every $1 increase in per capita regulatory expenditures [is] directly correlated with decreases in the smallest firms (those employing between one and four persons) by 0.0156 percent.”
The 2020 edition of the CEI’s “Ten Thousand Commandments” report also projected that the “hidden tax” of regulations is approximately $1.9 trillion. This doesn’t include state and local regulations.
The report noted that if the costs of federal regulations were equated with the economy of a country, it would be the eighth-largest economy in the world, right behind Italy and ahead of Brazil.
A 2017 study by Dustin Chambers, Courtney A. Collins, and Alan Krause found that more regulations lead to higher consumer prices. The researchers noted that a 10 percent jump in total regulation leads to a roughly 1 percent boost in prices, which has a greater impact on low-income households.
“We determine that regulations promote higher consumer prices, and that these price increases have a disproportionately negative effect on low-income households,” the research stated. “Specifically, we find that the poorest households spend larger proportions of their incomes on heavily regulated goods and services prone to sharp price increases.”
A similar study by Dustin Chambers, Patrick McLaughlin, and Laura Stanley in 2018 found a correlation between more regulation and greater poverty rates at the state level. The authors noted that a 10 percent increase in regulations led to a 2 1/2 percent increase in the state’s poverty rate.
“Overregulation imposes enormous hidden costs on our economy,” FreedomWorks stated in a 2011 report. “It creates huge compliance costs on businesses, which in turn slows economic growth and constrains job creation. As America’s mountain of federal rules and regulations continues to grow, the cost on the economy increases.”
Andrew Moran
Author
Andrew Moran has been writing about business, economics, and finance for more than a decade. He is the author of "The War on Cash."
