Regulatory Studies

, James F. Davis, Leave a comment

Do you have any idea what government regulations cost the American consumer? According to the Competitive Enterprise Institute they cost more than $1.75 trillion in 2008 alone. That is more than the entire Federal government deficit this year.

Today there are more than 82,590 pages of regulations on businesses, state and local governments in the Federal Registry.  That translates into costing an average of $10,585 per employee for firms with less than 20 employees, according to a study done by Lafayette college economists Nicole and Mark Crain, published by the Small Business Administration.  Without these onerous costs, many small businesses could hire many more employees.

One of the reasons that there was such a huge increase in jobs and prosperity during the Reagan and Clinton years was that both administrations ordered Federal agencies to get rid of any proposed rules and regulations whose costs would exceed their benefits.

Unfortunately President Obama has created many new regulations by executive order and his cabinet appointed departments are increasing regulations at an alarming rate. Jobs losses are also increasing at an alarming rate.

In 2007, the last time Republicans controlled the House and Senate, the U. S.  Gross National Product (GNP) was $14 trillion. In 2010, it was $14.6 trillion. When one considers that the inflation rate was higher than the growth rate, our economic output decreased markedly. For example, if your salary went up by four percent and your cost of living went up by 30 percent, would you be better off?

When researchers from the Phoenix Center for Advanced Legal Economic Policy Studies analyzed the relationship between government spending on regulatory activity and economic growth they discovered that a two percent reduction in the regulatory budget (about $2.8 billion) resulted in about a $75 billion increase in private sector GNP growth each year. It also produced an average of 1.2 million new private sector jobs.

On average, each regulatory job that was eliminated resulted in an average increase of $6.2 million in economic growth and about 100 new jobs. And each $1 million dollar increase in regulatory budget expenditures cost about 420 private sector jobs.

When President Obama and the EPA Department shut down offshore drilling last year after the BP oil spill, it cost over 40,000 jobs in Louisiana alone and billions in royalty tax revenues.

Obama still refuses to lift the ban at great cost to the USA economy and jobs. Gas prices have more than doubled since he took office and restricted production.

When President Clinton raised taxes early in his first term, revenues were only half of what he projected. After he agreed not to veto the reduction of the capital gains tax, tax revenues exceeded expectations.

James F. Davis is the president of Accuracy in Academia.

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