If you fly across the country, it's easy to see signs of America's ingenuity and productivity -- skyscrapers in New York City, steel mills in Pennsylvania, factories in Chicago, farmland in the Great Plains, and the glittering technology of Silicon Valley. But what you can't see, though it's very real, is the invisible web of red tape crawling forth from Washington, crisscrossing the landscape, strangling job creators, tying down entrepreneurs, and tangling America's engine of innovation in a mess of regulations. Under the Obama Administration, those endless miles of government-imposed directives has kept getting longer, as The Heritage Foundation reveals in a new study released today.
In our "Red Tape Rising: Obama-Era Regulation at the Three Year Mark" report, James Gattuso and Diane Katz detail how the Obama Administration has imposed new regulations costing $46 billion annually, with nearly $11 billion more in one-time implementation costs. That is about five times the cost of regulations imposed during all eight years of President George W. Bush's administration, but the burden is even higher. The red tape of the past three years helps explain why the economic recovery has been so slow and job creation so anemic.
Don't take our word for it, but those of President Obama himself. In January 2011, he said that "rules have gotten out of balance" and "have a chilling effect on growth and jobs." And he's right. Where the President breaks with reality is his pledge for a get-tough policy on overregulation and a comprehensive review of regulations imposed by Washington. In fact, to hear President Obama tell the story, you would think he's a champion of slashing red tape and that his Administration has set its sights on slashing overregulation.
Just two months ago, in his 2012 State of the Union address, President Obama claimed that "I've approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his." But looking at the sheer number of regulations doesn't begin to tell the story. While it's true that the Obama Administration approved 10,215 regulations in its first three years, just slightly less than Bush's 10,674, it's important to look at what those regulations are and their impact on the American people and industry -- and how their costs have vastly overshadowed those of the prior administration.
Over just the last year, the Obama Administration has added 32 regulations that together impose more than $10 billion in annual costs and $6.6 billion in one-time implementation costs. Those regulations include mandates covering a broad range of activities and products, ranging from refrigerators and freezers to clothes driers to air conditioners, limits on automotive emissions, employer requirements for posting federal labor rules, product labeling, health plan eligibility under Obamacare, and higher minimum wages for foreign workers. The most expensive regulation came from the Environmental Protection Agency, which added five major rules at a cost of more than $4 billion annually.
Gattuso and Katz write that this tide of regulation isn't going to end any time soon thanks to the new regulations expected under the Dodd-Frank financial regulation law, Obamacare, and the EPA's carbon-emissions-cutting crusade. Unnecessary regulations, they write, are a threat to America's already-weak economy and much-needed job creation:
In much the same way that high taxes hamper investment and innovation, escalating regulatory costs undermine the American economy. Small businesses in particular are under siege. When surveyed in December 2011 about their single biggest problem, 19 percent of respondents cited regulations and red tape, up from 15 percent a year ago, and more than any other category except for "poor sales."
But regulations are not just a problem for entrepreneurs. American workers and their families have been hit hard by the persistent lack of job creation that results, in part, from regulatory excess. Meanwhile, regulatory costs are passed on to consumers in the form of higher prices and limited product choices.
What's to be done about the explosive growth of red tape?Gattuso and Katz call for additional congressional oversight, writing that it is necessary to protect Americans and the economy from overregulation. Congress should require congressional approval of new major rules promulgated by agencies, establish a congressional office of regulatory analysis in order to provide a non-partisan analysis of the cost and effectiveness of regulations, and establish a sunset date for federal regulations in order to ensure that substantive review of existing regulations continually occurs.
On top of the thousands of regulations the Obama Administration has already implemented -- costing America billions of dollars -- more are on the way, promising to continue to drag down the economy and hamper job growth. Congress can and should take action to get this regulatory burden under control so that Americans can be free to get the country's economic engine moving at full throttle once again.