source: CEI Report at 8 via SBA Report
Indeed, government spending plus the costs of regulatory compliance total 35.5 percent of our economy.
How much does regulation drain compared to other expenses? A lot:
source: CEI Report at 11
As CATO's Doug Bandow says:
Regulation is one of the most important economic battlegrounds. Unreasonable federal mandates do as much as high taxes to strangle the economy.(via Daily Caller via reader Warren)
Naturally, President Obama wants to deflect blame for his policies. He recently penned an article proclaiming his determination "to strike the right balance" between "placing unreasonable burdens on business -- burdens that have stifled innovation and have had a chilling effect on growth and jobs" and protecting "our safety, health and environment." . . .
Economists Nicole V. Crain and W. Mark Crain figured that total regulatory costs ran about $1.8 trillion in 2008. Most are for compliance, about $1.752 trillion. Federal enforcement budgets are tiny in comparison, "only" $56 billion.
Unfortunately, compliance costs are even higher today, given the flood of Bush-Obama regulations. Notes Crews: "the current tabulation doesn't include recent regulatory interventions related to the various stimulus and bailout programs and regulatory costs associated with the recent health care and financial reform legislation. Given that indirect costs -- such as the effects of lost innovation or productivity -- are notoriously difficult to determine, such figures can further understate the total regulatory burden."
Of course, federal rules create benefits as well as costs. A basic legal framework is necessary for markets to operate. But issuing agencies have an incentive to inflate the claimed pluses. Moreover, many of the purported advantages, such as creating "green" jobs, remain inefficient and artificial creations of government. The new financial regulations actually reinforce existing problems such as "too big to fail." Thus, the benefits are limited, and only ameliorate the economic harm resulting from regulation.
The losses are enormous. Regulation accounts for roughly 12% of the GDP, about half of total federal spending, more than this year's record deficit, and twice total individual income tax collections. Add regulatory costs to spending and the federal government is absorbing 36% of our economy. Wonder why the economy isn't growing faster? The real question should be: why is it growing at all?