Last Friday, I had a post on the “Cost of Government Day.” According to a piece by Grover Norquist and Patrick Gleason, “the Cost of Government Day arrived Aug. 12 — meaning that the average American toiled 224 days to foot the bill for this year’s total cost of government.”
One reader (Greg) questioned the numbers: “Wouldn’t that make the government 61% of the whole economy? … What am I missing?”
The piece in question went beyond the issue of taxation to include the costs imposed by regulations, claiming that (on average) Americans worked an additional 77 days to pay for the $1.8 trillion in regulatory burdens.
The Cost of Government Day Report (p. 18) provides a somewhat more expansive discussion of the costs of regulation (although one wishes for a bit more on the underlying methodology). It notes:
Our conservative estimate of total regulatory costs takes into account only the cost of complying with regulations: the material resources and labor needed to carry out compliance. For example, if a regulation requires new pollution control equipment for power plants, compliance costs include the costs of manufacturing, installing, operating and maintaining the equipment.
It does not include “the negative economic effects of regulatory requirements—the deadweight loss of these policies” (i.e., the value of “goods and services forgone due to government rules”). “These hidden costs stifle the growth of the economy because they introduce inefficiencies and distortions, while reducing the economic reward left over for productive activity.”
In an op-ed today, Senator Kay Bailey Hutchison quotes Investors Business Daily:
“If the federal government’s regulatory operation were a business,” Investors Business Daily reported, “it would be one of the 50 biggest in the country in terms of revenues, and the third-largest in terms of employees, with more people working for it than McDonald’s, Ford, Disney and Boeing combined.”
The op-ed makes the argument that the growth of the regulatory state in the past 3 years has played a central role in impeding job growth, particularly among small businesses. The senator is seeking support for the Regulation Moratorium and Job Preservation Act she co-sponsored which would “place a moratorium on burdensome federal regulations until the national unemployment rate falls to 7.7 percent — below where it was when Obama took office.”
One cannot deny that the introduction of new regulations—and the anticipated introduction of future regulations—creates additional uncertainty for businesses, thereby impeding recovery. Yet, I can’t imagine that President Obama’s much anticipated but yet-to-be delivered job speech will include support for something like the Regulation Moratorium and Job Preservation Act given that we have been told (repeatedly) that deregulation and the Bush administration’s commitment to laissez-faire (insert laugh line here) were the causes of the catastrophic financial crisis.