Out of Control Regulations Cost Businesses and You a Lot of Money

In a recent RetireSafe survey over 90% of you said that the number of Presidential mandates, executive orders and regulations had increased in the last few years.  In a recent email (click here to see it) I talked about some of those mandates, orders and regulations and how they are indications of a misuse of Presidential powers and a failure of the legislative and judicial branches of the government to reign in the President.  Today I want to discuss how these intrusions into our lives actually cost us and our economy money.  I will focus primarily on regulations since their impact is most easily tracked and quantified and, lucky for me, two recent articles have been written on the subject.

The forces that cause our government to grow are wide ranging and persistent.  It grows, not through selling more goods or services but, through broadening its sphere of control.  Government workers at all levels benefit from growth, it gives them more people to manage and there’s more opportunities for advancement.  Those we elect are motivated to grow our government.  The only way they can help their constituents is through the government which usually means passing more laws and condoning, and often recommending, more regulations and by getting their constituents more government benefits. Many of us our guilty of encouraging government growth, we want to reduce the size of the government until it affects us personally.  If something goes wrong, we either blame the government or look to it to solve the problem.  We’re upset when big brother is watching but immediately turn to him when we get in trouble. There’s a reason that the founding fathers chose a representative democracy . . . they wanted to save us from ourselves.

The fact of the matter is that regulations hurt our economy and hurt us.  All of these forces that are in play to grow our government hurt us all in the long run.  Lower, middle and upper classes all are hurt by regulations. The Senate Majority leader, Mitch McConnell, said, in a recent interview with Charlie Rose, that one of the three biggest things that government needs to fix is the runaway growth of regulations. Two studies show us just how much they hurt us.

The first study, done by the Heritage Foundation, calculates the cost of regulations.  The report figured that, “More than $22 billion per year in new regulatory costs were imposed on Americans last year, pushing the total burden for the Obama years to exceed $100 billion annually.”  Even these days that’s a lot of money, and if you think that doesn’t affect you because it’s regulations on businesses, think again.  The cost of these regulations are passed on to the consumer.

The second study, done by the Competitive Enterprise Institute, calculated that these regulations cost each U.S. household almost $15,000 a year.  Again we might say that some regulations are good so we should pay for those.  Even if 90% of them are good, and my gut tells me that’s very, very optimistic, that would mean each household had $1,500 more disposable income.  What a shot in the arm that would be for our economy and this money wouldn’t be a government handout, it would be in the form of lower prices for goods and services.

There have been varied solutions for this problem proposed but there are two that I think are key and doable.  They are; cost-benefit analysis and sunset rules.

If congress would pass a law that every proposed regulation must have a third party (someone outside of the agency that issued the regulation) preform a cost-benefit analysis it might slow down the creation of regulations for regulations sake.  Congress could also pass a law requiring every regulation to have a sunset provision that would cancel the law within a given period of time (some say no more than 25 years, I would say no more than 8 years) unless it went through a reauthorization process involving the Congress and a new cost-benefit study.  This would reduce the number of old out-of-date and money draining regulations.

These aren’t the only ways to stop this explosion of regulations but they would go a long way toward giving us a chance to reap the benefits of reducing the burden of regulations on America’s businesses. Ronald Reagan appointed Jim Miller to reduce the number of regulations and he was pretty successful.  We need to again get serious about reducing these damaging regulations and making it harder for new ones to be created.  It’s been one of the reasons our economy hasn’t recovered like it should.  Congress needs to get serious about this problem that, at least the Senate Majority Leader thinks, is one of the three biggest problems are country has.



Thair Phillips – President