Federal Burden of Regulation to Increase

Next week, Joe Biden will be sworn in as the next President of the United States. With the Congress narrowly divided, his supporters don’t expect much of his policy agenda to gain traction. But he can follow the example of President Obama, who used his pen and phone to bypass the Congress and put many of his policies into effect.

For Obama, that meant using federal regulations to achieve in fact what he could not achieve through legislation. That is unfortunate for American businesses and for citizens, because federal regulations impose a heavy burden.

How heavy that burden is can be measured by the American Action Forum’s Regulation Rodeo resource. This application taps a database of federal regulations to count their number and estimate their cost in both dollars and paperwork hours. AAF’s Douglas Holtz-Eakin taps that database to consider how President Biden will apply the federal government’s regulatory power:

As Vice President, Biden oversaw a very rapid and costly expansion of the regulatory state. In 2009, AAF’s Regulation Rodeo indicates that 339 rules were finalized at a burden of $47 billion, followed by 417 in 2010 at a cost of $169.2 billion. This was the leading edge of averaging over $100 billion a year in regulatory burdens imposed on the private sector. Many on the left remember the post-2009 period as one starved for fiscal stimulus. Maybe, but the regulatory burden was a headwind that practically guaranteed slow growth. Will the Biden Administration avoid this policy error?

Finally, the way the Trump Administration was able to control the growth of the cost of the regulatory state was its imposition of regulatory budgets. Under an executive order, the Office of Management and Budget each year assigned to each agency a regulatory budget – the amount by which the agency can increase the cost of regulation during the fiscal year. This gives the agency an incentive to do its rulemaking at the lowest possible cost, an incentive that was previously missing from the rulemaking process. Will the Biden Administration continue the practice of regulatory budgets?

How will the incoming Biden Administration handle regulation? Will it rely heavily on bloated executive rulemakings that threaten the recovery? Will it rely on legislation to impose its policies, retaining a cost-minimizing regulatory framework for those rules needed? Or will it land somewhere in between?

The smart money is on President Biden taking a ham-fisted approach to regulation. Americans can expect to have a much heavier burden of federal regulations put on their backs.

Craig Eyermann is a Research Fellow at the Independent Institute.
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