Red tape reaches record levels in U.S.

Jul 04 2005 by Brian Amble Print This Article

It is not just Europe that is throttling its economy with red tape. Regulation is costing the US economy a record $877bn (£482.3bn) a year, according to a critical new report.

According to the Competitive Enterprise Institute, a Washington-based think-tank, regulatory costs exceed all pre-tax corporate profits ($745 billion) and all personal income taxes ($765 billion).

They also represent more than twice the $412 billion budget deficit.

The number of pages in the Federal Register, where new regulations are published, has increased 6.2 per cent to 75,676 pages, an all-time record.

The cost of this amounts to some 7.6 per cent of US gross domestic product (GDP), the report estimates. On top of that, agencies spent $36.3bn merely to administer and police the regulatory state in 2004, taking the total burden to $913bn.

Clyde Wayne Crews, Jr., author of the report "Ten Thousand Commandments", said that regulatory costs were equivalent to 38 per cent of all 2004 financial year federal spending. Taking all spending and regulatory costs into account would take the federal government's share of the economy to around 27 per cent of GDP, he claimed.

"In the republic's early days the kind of intrusive, detailed rules so prevalent today simply didn't exist," he said.

"In the years since, the creep of new regulations has resulted in an unwieldy mass of expensive rules that attempt to control things which would have shocked the Founding Fathers."

The five most active rule-producing agencies are the departments of Treasury, Homeland Security, Transportation, and Interior and the Environmental Protection Agency, the report found, with 1,850 rules among them, account for 45 per cent of all rules in the Agenda pipeline

Of the 4,266 regulations now in the regulatory pipeline, 135 are "economically significant" rules that will have at least $100 million in economic impact. Those rules will impose at least $13.5 billion yearly in future off-budget costs.

"At the very least, future federal budgets need to acknowledge and document the 'off-budget' costs of regulation," Crews said.

"Only then will Americans have the real truth about the federal government's reach in their lives."