Red Tape Rising

Heritage Foundation

Just three days after President Barack Obama's health plan was signed into law, AT&T announced that due to an obscure tax change in the bill, the nation's largest telephone company would take a $1 billion hit to its bottom line this quarter. According to health benefits analysts this tax law modification would shave as much as $14 billion from U.S. corporate profits. While it would have been better had these tax losses been made more public before Congress voted, at least these tax charges are transparent and easily quantifiable enough to get noticed by the American people. Unfortunately the same cannot be said of the hundreds of new regulations that the federal government will enforce as it tries to implement Obama's redistributionist health agenda.

In addition to the federal government's explicit taxes and spending, Americans are also burdened with a slew of hidden taxes imposed by an ever-increasing number of regulations. More than 50 agencies have a hand in federal regulatory policy, enforcing more than 150,000 pages of rules. Many of these regulations provide needed benefits. Most Americans would agree on the need for security regulations to protect citizens from terrorist attacks, although the extent and scope of those rules may be subject to debate. But each regulation comes at a cost--a "regulatory tax" imposed on all Americans. According to a 2005 study commissioned by the Small Business Administration, the cost of all regulations then on the books was some $1.1 trillion per year.

Worse than the existing size of our country's regulatory burden, is the pace at which it has been growing. Contrary to what most liberals and media elites would have you believe, President George Bush had a decidedly mixed record on regulation. While he should be praised for strengthening the role of the Office of Information and Regulatory Affairs (OIRA) in screening new regulations, by every objectively measurable metric the size and scope of the regulatory state grew significantly under his tenure. And President Bush's last years in office were his worst. In 2008 36 major regulations were enacted by the Bush administration, and in 2009 some $15 billion in new regulatory costs were imposed on the American people.

President Bush doesn't deserve all the blame for that $15 billion in new costs for 2009. About $4.4 billion is attributable to regulations approved by the Obama administration. While that may seem like a significant decrease, it is actually an ominous sign when put in context. Regulatory activity always increases near the end of a presidency and is slower at the beginning. So in President Bush's first year, he enacted only one major rule and he was in his third year in office before the new regulatory costs he inflicted on the American people hit President Obama's one-year $4 billion mark. And that $4 billion does not yet include all the regulations for Obamacare. Or all of the regulations Obama's EPA wants to pass under the Clean Air Act. Or any of the new financial regulations that Rep. Barney Frank (D-MA) and Sen. Chris Dodd (D-CT) want to inflict on the American people.

There are some things Congress can do now to help better manage the onslaught of federal regulations. First the authority and scope of OIRA should be protected. Establishing a sunset date for all new regulations would also help. But ultimately things will not change for the better until policymakers exercise the will and resolve to guard against the deluge. As Rep. Paul Ryan (R-WI) asked last week: "If Congress can't control what a few mortgage finance bureaucrats do with your dollars, why would anyone trust Congress to control what tens of thousands of bureaucrats will do with your health? ... Should unchecked centralized government be allowed to grow and grow in power ... or should its powers be limited and returned to the people?"