President Obama’s $488 Billion Regulatory Burden

The Administration has created $70 Billion in Regulations in 2012 Alone

As the mountain of regulations has grown so has the focus on the regulatory state, its impact on employment, investment, and “uncertainty.”  President Obama and his former regulatory advisor, Cass Sunstein, have of course defended the Administration’s record.  The President has even authored four executive orders on regulatory reform and retrospective review.  After nearly four years in office, the President’s record on regulations is up for review.

Based on data from the Government Accountability Office (GAO) and regulations published in the Federal Register, the Administration has published more than $488 billion in regulatory costs since January 20, 2009 – $70 billion in 2012 alone. 

AAF began tracking every proposed and final rule in 2011.  That year alone the Administration published more than $231 billion in regulatory costs.  AAF reviewed 6,705 regulations in 2011 and has tracked more than 4,700 regulations to date in 2012.   

For each entry, AAF determined if a proposal contained a private-sector cost, a burden on state or local governments, or paperwork reporting requirements.  Generally, Federal Register entries contain annualized or one-time compliance costs.  For larger regulatory overhauls, however, where compliance takes several years, AAF recorded the total programmatic costs, if the agency provided those figures.

For example, the Regulatory Impact Analysis for EPA’s model year 2017 to 2025 fuel efficiency standards stated that the lifetime costs of the regulation would eclipse $156 billion.  

The White House routinely responds to charges of “overregulation” by touting its efforts to reduce regulatory burdens and produce net benefits.  There are 59 executive-level and independent agencies that submit regulatory plans to the White House.  Many of the costs and benefits are never quantified – in other words, the full impact of the Administration’s regulatory burden is not yet fully appreciated.

For example, the Consumer Financial Protection Bureau’s (CFPB) first rule established new requirements under Dodd-Frank for remittance transfers.  CFPB estimated that the rule would impose more than 7.6 million paperwork burden hours, affecting banks large and small.  The stated costs for these burdens: $0.  As an independent agency, CFPB is not legally required to monetize all possible burdens on private entities and states, but it is safe to say that there will be a cost greater than $0.

These paperwork burdens are real, often ignored, and continue to grow.  According to White House data, there were 8.8 billion hours of federal paperwork in FY 2010.  The implementation of Dodd-Frank and the Affordable Care Act has driven this figure to 10.38 billion, an increase of 1.5 billion hours.  To put this increase in perspective, assuming a 2,000-hour work year it, would take 771,999 full-time equivalent employees simply to fill out red tape.  Or, during the same amount of time, workers could construct 220 Empire State Buildings.

This quantifiable spike in regulatory burdens is likely one reason that the White House has issued four executive orders on regulatory reform.  In 2012, agencies followed through on the orders and rescinded $2.4 billion in regulatory costs.

Unfortunately new policy initiatives have largely erased these savings.  The Affordable Care Act has already imposed $27.9 billion in lifetime burdens, and the law won’t be fully implemented until 2014.  Dodd-Frank has imposed more than $14.2 billion in costs, with countless regulations evading quantified cost-benefit analyses. 

Conclusion

The estimated $488 billion is not a ceiling, but a floor of the Administration’s regulatory record.  Independent cost estimates routinely report higher figures than initial government estimates.  All of these numbers are from the government’s own estimates and the 2009 and 2010 numbers exclude non-“major” rules.  As a cost floor, $488 billion is still a tremendous burden on private entities and local governments.  It is more than U.S. GDP growth from the past three quarters ($442 billion).

Based on this data, the current regulatory burden is undoubtedly higher than it was in 2009.  If this were untrue, there would be little need for executive orders and countless informal memos begging agencies to cut burdens.  The Administration admits reform is needed, but after $488 billion in new costs, the results have been entirely illusory. 

Methodology

AAF derived these figures from GAO “Major Rule Reports” and the Federal Register.  Under the Congressional Review Act, all departments, including independent agencies, must submit reports to GAO and Congress if a rule is “major,” defined as a regulation likely to result in: “an annual effect on the economy of $100 million or more; a major increase in costs or prices for consumers … or significant adverse effects on competition, employment, investment, productivity, [or] innovation.”