To those who are unfamiliar with it, the Federal Register is the record of all government agency public notices, regulations and proposed rules for the U.S. This large compendium measured a mind-numbing 79,435 pages before President Obama entered office in 2009. But as of November, the number of pages it contained grew to 81,640, an increase of 2.7 percent over a nearly eight-year period.
However, this jump was nothing compared to what was added in the following month as the Register swelled to 91,642 pages, a massive jump of over 12 percent in just four weeks. What was responsible for this tremendous increase? Let’s examine the history of this dubious yardstick of American government health.
The Federal Register was established by President Franklin D. Roosevelt in 1935 by consolidating the then-current 161 volumes of federal regulations. The Register’s first published edition in 1938 was a mere 18,193 pages.
After FDR’s death in 1944, President Harry Truman deregulated the economy by cutting the Registry’s size down to just 9,745 pages by 1950. Many economists refer to Truman’s actions as getting government “out of the way” — efforts which helped produce a long-lasting economic boom that endured for more than three decades.
During the period from 1946 to 1980, 60 percent of Americans who today we would call “the middle class” saw their wages grow annually by two percent more than the rate of inflation. During the same period, the number of Americans living in poverty fell from 19 percent to 13 percent.
Income inequality also fell, with the richest one percent of Americans’ share of income decreasing from 35 percent to 22 percent. Average GDP growth between the years 1950 and 1980 was a healthy 3.5 percent; even adjusted for population increases, the per capita rate of GDP growth was a strong 2.5 percent.
Unfortunately, starting in 1976, the administration of Jimmy Carter decided to grow the Federal Registry by 40 percent to a massive 173,258 pages. Some of this growth was characterized as an effort to stymie the economic initiatives of newly elected president Ronald Reagan in 1980. But much of it was due to an executive order signed by Carter in 1978.
Despite the order reading “Regulations shall be as simple and clear as possible; they shall achieve legislative goals effectively and efficiently,” bureaucrats took it as a license to expand and politicize the reach and scope of federal laws in an effort to achieve the administration’s numerous government “goals.”
A recent study conducted by George Mason University’s Mercatus Center showed that federal regulations produce a “drag” on the economy that they measured at a negative .8 percent growth per year since 1980. Essentially, since that time, this negative influence has reduced U.S. economic growth by roughly one-third.
The National Association of Manufacturers (NAM) has determined that government regulations have a disproportionate impact on smaller businesses as opposed to larger ones. Their data shows that the average cost per employee of a business to comply with an individual federal regulation is $19,564. But for companies with more than 100 employees, the cost only averages $13,750, whereas, for companies with less than 50 employees, it’s more than double that amount, at $34,671.
Given that nearly all employment gains annually are created by smaller businesses, this helps explain why inflation-adjusted hourly wages for middle-class workers hit a peak of $21.60 in 1978 and are today — 38 years later — unbelievably even lower at $21.45.
It also helps explain why since 1980, the nation’s top one percent of earners — many of whom are employed by the country’s largest corporations, which are affected less by regulatory drag — have more than doubled their inflation-adjusted income in the same timeframe.
In effect, federal regulations act as a tax on workers — a tax that’s both enormous and punitive. Independent estimates of the cost of this “tax” are approximately $2 trillion per year — more than the total amount collected in federal income taxes.
Based on this framing, it would appear that Obama’s latest additions to the Federal Register are an effort nearly identical to Carter’s efforts to gum up the works for then-incoming President Reagan.
Diane Katz, who publishes the blog “Red Tape Rising” for the conservative Heritage Foundation think tank, estimates that 229 of the major “economically significant” federal regulations that Obama’s administration has issued added $108 billion in real costs annually to the private sector.
Unmeasurable costs such as the loss of economic opportunity and business freedom were even higher. “Given the regulatory zeal of Team Obama, it should not be surprising that economic growth has averaged only 1.4 percent annually over the last seven years,” wrote Katz.
The sources of these regulations are many; there are higher energy rates defined in the Environmental Protection Agency (EPA) Clean Power Plan, higher food prices set by new Food and Drug Administration (FDA) regulations, higher costs for credit for consumers and businesses due to Dodd-Frank financial regulations and higher medical expenses because of Obamacare. There are even increased costs for the Internet due to reduced innovation and investment dictated by “Net Neutrality” rules as mandated by the Federal Communications Commission (FCC).
And of course, accompanying all of these rules is the responsibility for enforcing them. As the number of regulations on the books goes up, so do the related enforcement costs. In 2015, enforcement costs for federal regulations were $57 billion, which is 83 percent higher than the corresponding costs were in 2001. As of last year, there were 277,000 government employees assigned to the enforcement of these rules.
The economic impact of all these regulations has clearly been felt by many people in the country.
For author Katz, the prescriptions for this issue are manifold. She believes that all regulatory legislation should undergo a rigorous impact analysis before it’s voted on in Congress; she also believes that all regulations should obtain specific Congressional approval before they take effect.
Furthermore, Katz believes all regulations should be subject to “sunset” schedules pending their potential renewal and that independent government agencies should be subject to the identical White House regulatory reviews that executive branch agencies are subject to today.
How quickly President-Elect Donald Trump will be able to stem and reverse the tide of this extremely excessive government interference remains to be seen. But clearly, as Reagan had with Carter’s machinations in 1981, Trump has had his work cut out for him by Obama in 2017.
