Federal red ink now costs businesses more than $2.1 trillion per year, report says
Escalating Cost of Federal Regulations
The financial burden of federal regulations on the economy has surged to a staggering $2.1 trillion annually, rivaling the total income tax revenue, as per a recent study by the Competitive Enterprise Institute. The study, named “Ten Thousand Commandments,” highlights the increasing costs incurred due to legislative and executive decisions that burden businesses with new mandates and extensive paperwork.
Accountability and Economic Impact
Clyde Wayne Crews Jr., the author of the report, criticizes the lack of accountability in Congress for these regulatory measures. He points out the absence of comprehensive cost-benefit analyses and criticizes the delegation of legislative power to unelected officials, which he argues allows Congress to evade responsibility for unpopular decisions.
The report details that the cost of regulations has risen to approximately $2.15 trillion, representing 7.3% of the U.S. GDP. This figure is alarmingly close to the $2.2 trillion generated from individual income taxes in 2023. Furthermore, a study by the National Association of Manufacturers suggests that regulatory compliance costs could be as high as $3 trillion annually.
The Burden on American Households
According to the report, American families are significantly impacted, spending an average of over $16,000 per year on what it terms as ‘hidden regulatory taxes’. This expense accounts for 16% of average income and 21% of household expenses, surpassing amounts spent on healthcare, food, and other vital services, only exceeded by housing costs.
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The report also makes a striking comparison, stating, “If it were a country, U.S. regulation would be the world’s 8th-largest economy, ranking behind the Russian federation and ahead of Canada.”
Regulatory Actions and Reforms
Despite President Trump’s commitment to slashing regulations, the report notes that the desire for new mandates in areas like energy, climate, and equity has persisted. In 2024 alone, federal agencies introduced 3,248 new regulations, with federal paperwork consuming over 10.5 billion hours in 2023.
The report also introduces the “Unconstitutionality Index”, which compares the number of agency-issued regulations to laws enacted by Congress, highlighting a shift from elected legislative actions to bureaucratic rulemaking.
Comparative Analysis of Presidential Administrations
Under former President Joseph R. Biden, the average number of finalized rules stood at 126 annually, significantly higher than during Trump’s first term and Obama’s administration. President Trump has actively sought to reverse many regulations from the Biden era, recently mandating a significant reduction by ordering the removal of three existing regulations for every new one implemented.
This action reflects a continuation of Trump’s first-term policy aimed at reducing regulatory burdens, famously dubbed the “One-In, Two-Out” rule. The Trump administration claims to have saved Americans over $180 billion by stopping various regulations initiated during the Biden administration.
Conclusion
The Competitive Enterprise Institute, a champion of free-market policies, continues to monitor and report on the expansive growth of federal regulations and their profound implications on both the economy and individual citizens, advocating for more transparency and accountability in government regulatory practices.
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