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Bureaucracy vs. Economy, elected Government

There may be no area where President Trump’s battle against what some refer to as “The Swamp,” Washington’s administrative agencies, is more pronounced than in his effort to reduce the overwhelming amount of regulations imposed not by the elected government, but by an unresponsive, permanent class of bureaucrats.

The current White House initiated a policy of abolishing two regulations for every new one implemented, as mandated by Executive order 13771.

Estimates are that regulations cost the U.S. economy almost $2 trillion.  But the harm done even by that extraordinary figure is surpassed by the damage done to the American soul.  The concept of government being open, transparent and accountable, the very basis of the nation, has been eclipsed.  In terms of impact on the daily lives of the citizenry, Congress, the White House and the Supreme Court combined all play second fiddle to the bureaucracy.

In 2018, the American Action Forum (AAF)   outlined how the Trump Administration was slashing regulations at a record pace. The study found that the approximately $16.4 billion in regulations emanating from 70 agencies were cut. Despite that, only the surface of the problem has been scratched.

The Competitive Enterprise Institute (CEI)   notes that “…the cost of government extends even beyond what Washington collects in taxes and the far greater amount it spends. Federal environmental, safety and health, and economic regulations and interventions affect the economy by hundreds of billions—even trillions—of dollars annually. Regulatory burdens can operate as a hidden tax. Unlike on-budget spending, regulatory costs are largely obscured from public view. They are the least disciplined aspects of government activity, which can make regulation overly appealing to lawmakers. Budgetary pressures can incentivize lawmakers to impose off-budget regulations on the private sector rather than add to unpopular deficit spending…”

In its 2019 “10,000 Commandments”  report, CEI’s Wayne Crews  presents these key facts:

  • The estimated $1.9 trillion “hidden tax” of regulation is greater than the corporate and personal income taxes combined. If the cost of federal regulations were a country, it would be the 9th largest, behind India and just ahead of Canada.
  • Each U.S. household’s estimated regulatory burden is at least $14,615 annually on average. That amounts to 20 percent of the average pre-tax household budget and exceeds every item in that budget, except housing.
  • In 2018, the Trump administration issued 3,368 rules. That’s more than the 3,281 final rules in 2017, which was the lowest number of regulations coming out of federal agencies in a single year since the National Archives began publishing rule counts in 1976.
  • The estimated regulatory cost burden is equivalent to more than 40 percent of the level of total federal spending, projected to be $4.4 trillion in 2019.
  • In 2018, Washington bureaucrats issued regulations at a rate of 11 for every one law Congress enacted. The average for this “Unconstitutionality Index” for the past decade has been 28 to one. The five agencies issuing the most rules are the Departments of Commerce, Defense, Health and Human Services, Transportation, and the Treasury.
  • In 207, President Trump’s first year, the Federal Register finished at 61,308 pages, the lowest count since 1993 and a 36 percent drop from former President Barack Obama’s 95,894 pages, which had been the highest level in history. The 2018 Federal Register rose to 68,082 pages (however Trump’s rollback of rules can add to rather than subtract from the Register).
  • In the pipeline now, 67 federal departments, agencies, and commissions have 3,534 regulatory actions at various stages of implementation(recently “Completed,” “Active,” and “Long-term” stages), according to the fall 2018 “Regulatory Plan and the Unified Agenda of Federal Regulatory and Deregulatory Actions.”
  • Of the 3,534 regulations in the Agenda’s pipeline, 174 are “economically significant” rules, which the federal government describes as having annual economic effects of $100 million or more. Of those 174, 38 are deemed “deregulatory” for purposes of E.O. 13,771.
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CEI reported that “In 2017, Trump’s first year, the Federal Register finished 2017 at 61,308 pages, the lowest count since 1993 and a 36 percent drop from President Barack Obama’s 95,894 pages in 2016, which had been the highest level in history.”

The American Legislative Exchange Council (ALEC) notes that there continue to be roadblocks to this effort, citing a recent U.S. Supreme Court case as an example. “In Kisor v. Wilkie, the Supreme Court squanders a prime opportunity to take back its job to interpret the law by upholding the Auer deference while also recognizing some of the concerns excessive deference presents. Auer holds that federal courts must yield to an agency’s interpretation of ambiguous regulations produced by that agency when all other tools of interpretation have been exhausted.”

Wayne Crews will appear on this week’s Vernuccio-Novak Report

Illustration: Pixabay

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Rise of the Administrative State

America’s entire way of government—with laws passed by legislators elected by the citizenry—has become increasingly jeopardized as the administrative state has grown to nearly uncontrollable levels.

Joseph Postell, writing for Libertylawsite, notes that “Multiple scandals involving myriad federal agencies have placed the administrative state front-and-center in many Americans’ minds. Though the scandals involve overreach by specific agencies, they raise broader and more profound questions that extend to the entire federal bureaucracy because the institutional problems are systemic…Astonishingly, we still don’t fully understand how responsible the President is for the actions of administrative agencies (such as the IRS…) Simply put, if the administrative state is really accountable, legally and practically, to the President, then it is not a “fourth branch” of government but merely part of the executive branch, accountable to the public… Today’s administrative state, therefore, makes a mess of the constitutional separation of powers and its careful adjustment of incentives, checks and balances. In such a system, what role can and should the courts play in reviewing agency decision-making? Here is where a deeper understanding of the courts’ historical role in administration is most needed.”

Roger Pilon, writing in CATO, asks “…Is there anything today that is not fit for government’s attention? Large sodas and restaurant menus have lately garnered notice. Retirement, health care, day care, wages, rents, prices, charity, even public radio and television—all that and so much more is the regular business of modern American government …late 19th and early 20th century Progressives. … believed they knew better than the rest of us what our true interests were. …Progressive social engineering took many forms, but its efforts to change the world focused mainly on the political branches. Its aim was to replace judge-made common law, which established the legal framework within which individuals and organizations pursued their interests, with statutory law, enacted by legislatures and, in time, by the administrative agencies in the executive branch…Thus the shift from law grounded in principle to law as policy, from reason to will, and to the politicization of law—precisely what the Constitution sought to avoid. When all is politics, nothing is law.”

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In many cases, agencies’ budgets are also self-determined…The courts have… diminished their own authority to check the executive agencies by making it difficult for citizens to challenge agency actions in court…We need to stop kidding ourselves. Despite what is taught in our schools, we are not governed under the political structure envisioned by our founders. We are ruled by an imperious bureaucracy that creates vague rules, funds itself with fees that is sets at will, and controls the adjudication of disputes when citizens complain about its actions.”

Philip Hamburger, in the Hillsdale College publication Imprimis, warns: “[The] danger is absolutism: extra-legal, supra-legal, and consolidated power…we should demand rule through law and rule under law. Even more fundamentally, we need to reclaim the vocabulary of law: Rather than speak of administrative law, we should speak of administrative power—indeed, of absolute power…then we can at least begin to recognize the danger.”

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America’s Declining Entrepeneurial Spirit

Is the continuous growth of government destroying America’s entrepreneurial spirit? Physicists inform us that for every action, there is an equal but opposite reaction.

Over the past several decades, the federal government has grown increasing large.  During that same time period, according to a study by the Brookings Institute, the number of new business enterprises getting started has declined, and the number of businesses going out of existence has risen.

According to the vital but worrisome study, “declines in business dynamism in the U.S. overall are a pervasive force throughout the country geographically…”  The Brookings study notes that this decline is seen “in all fifty states and in all but a handful of the more than three hundred and sixty U.S. metropolitan areas during the last three decades.”

The Brookings study does not provide a specific reason for this unwanted trend, but the New York Analysis believes that the growth of government has clearly absorbed funds and energy away from the private sector.

According to a study by usagovpending.com,“Government spending at the start of the 20th century was less than 7 percent of GDP… The 1950s began a steady spending increase to about 36 percent of GDP by 1982. In the 1990s and 2000s government spending stayed about constant at 33-35 percent of GDP, but in the aftermath of the Crash of 2008 spending has jogged up to 40 percent of GDP.”
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There have been some government expenditures that are laudatory and absolutely necessary.  Defending the nation from foreign threats is vital, and Washington has done a commendable job in fighting wars. The development of the interstate highway system was essential for the growth of the economy, and funds spent on advanced scientific research are the groundwork for future economic success.

But far less successful have been the many expenditures on areas not traditionally under federal jurisdiction.  There is no indication, to cite one example,  that the numerous anti-poverty programs developed since the 1960s have noticeably decreased the poverty rate, but they have cost the taxpayers vast sums, draining cash that could have been used more productively by the private sector to increase employment, which would have achieved a more salutary effect on poverty.

The vast increase in Washington’s regulatory role, and those of states and municipalities as well,  can reasonably be noted as a disincentive to the creation of small businesses.  The creation of a new enterprise can be daunting and costly enough, but when an array of bureaucratic hurdles are added to the challenge, the effort my appear sufficiently daunting to discourage would-be entrepreneurs, and provide an obstacle to the continued existence of current firms.

Unfortunately, the increased regulatory trend appears to have accelerated during the past five years.

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Excess Regulations Harm Economy and Households

The Federal government set a new record in red tape in 2013, printing 26,417 pages in the Federal register containing new 3,659 final rules and 2,594 proposed rules.  Altogether, 79,311 pages were printed in the Federal Register.  Four of the five highest page counts in the history of that bible of bureaucracy occurred during the Obama Administration.

The information was compiled by the Competitive Enterprise Institute’s  (CEI) Wayne Crews, who is preparing a study entitled “The Ten Thousand Commandments.” Crews estimates that the cost to the public of complying with Washington’s red tape is about $1.9 trillion annually, “roughly the annual GDP of Australia, Canada, or Italy.”

According to the CEI study, regulations not only make American business less competitive, they cost each US household “$14,974 annually in regulatory hidden tax, or 23% of the average income of $65,596.” A substantial part of the explosive growth in regulations during the Obama Administration has been due to the combined effects of Obamacare and the Dodd-Frank financial controls.

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According to Heritage, part of the reason for the regulatory explosion is the President’s push to control the government without the consent of Congress.  The think tank notes that in his 2014 State of the Union address, the President disturbingly pledged to take steps “whenever and wherever I can without legislation.”

Both Heritage and CEI note that hundreds of new regulations are in the pipeline.