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Obama vs. Reagan: Rising Costs of Regulations Crush Private Sector under Obama


Posted by Jeremy Sawyer on Monday, July 30th, 2012, 4:59 PM PERMALINK


This content is provided by Americans for Tax Reform Foundation.

 Rep. Mike Kelly (R-PA) recently delivered a rousing speech on the House floor decrying the job-killing burdens of regulation that the federal government places on private businesses. While the left dismisses this sort of rhetoric as overblown, the facts show that it is in fact accurate.

One of President Reagan’s highest priorities in office was the reduction of regulatory burdens. To this end, he created the Task Force on Regulatory Relief and wrote a memo during his first month in office freezing the end-of-term “midnight” regulations promulgated by the Carter administration. Most importantly, Reagan brought common sense to Washington when he issued an executive order requiring regulations to be subject to a cost-benefit analysis.

The Government Accountability Office (GAO) database does not have data on major regulations before 1995, so it is difficult to quantify regulatory costs under President Reagan. Yet the indicators that are available show that costs were reduced significantly.

The regulatory excess present prior to President Reagan’s inauguration was embodied in the length of the federal register. In 1980, the list of federal regulations totaled over 87,000 pages. Under Reagan, the federal register was cut to the more reasonable length of just below 51,000 pages by 1984.

The Department of Labor states that during the Reagan administration many regulations proposed by the Occupational Safety and Health Administration (OSHA) were frozen, and the agency focused on employers with a history of non-compliance while cutting its own budget and staff. The Department of Labor saw its discretionary spending cut by 60 percent by 1985.

The only president for whom regulatory data is available across his entire presidency is George W. Bush. An analysis by the Heritage Foundation found that 28 major regulations were issued during the first three years of the Bush administration. Major new regulations from 2001-2003 added $8.1 billion in annual costs to the private sector.

In sharp contrast to historical precedent, regulators have been unleashed on businesses during President Obama’s tenure. In the first three years of the Obama presidency, 106 major regulations adding annual costs of $46 billion were issued. The data show that more than three times the regulations have taken effect across the Obama administration’s first three years than over the same period in the Bush administration, and those regulations have extracted more than five times the amount of resources out of the economy's productive sector than those issued under Bush. Not coincidentally, the length of the federal register has increased to more than 82,000 pages in 2010 and 2011.

The increase in the cost of federal regulations has been large enough to significantly impact the total regulatory burden across all levels of government. The 2012 Cost of Government Report found that Americans will work 69 days in 2012 to pay for the cost of all regulations. In each year from 2009-2011 it took 72, 71, and 71 days of work to pay for regulatory costs; those figures are dramatically elevated from the 53-54 days of work it took annually to pay for the costs of regulation throughout the Bush administration.

Unfortunately, the worst period to be a business forced to comply with onerous regulations has not been the first three years of the Obama presidency but the fourth. In just over six months since President Obama began his fourth year in office, regulatory burdens have jumped. An examination of 2012 data using the methodology from the Heritage Foundation report reveals that 21 major regulations have been issued in barely more than half a year at a staggering annual cost of $16.6 billion. That figure is actually a conservative estimate because regulatory agencies often underestimate the cost of the regulations they issue. Indeed, many regulations are not given a price tag because the relevant agencies are unable to adequately quantify new costs.

A single regulation, the new restrictions on coal plants adopted by the Obama administration’s EPA, carries an annual cost of $9.6 billion. Unbelievably, that rule alone has a greater societal cost than the sum of all regulations issued during the George W. Bush administration’s first three years.   

With red tape stifling job creators every day, the Obama administration has been anxious to pile on more barriers for businesses to overcome. Without the return of Reagan-style reform, much-needed regulatory relief appears unlikely to arrive anytime soon.

This content is provided by Americans for Tax Reform Foundation. To donate to ATRF, click here.

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