Report: Current, future federal regulations costing businesses $1.8 trillion annually

Why would someone want to become an entrepreneur in today’s United States?

Mark Cuban, owner of the Dallas Mavericks and chairman of the HDTV cable network AXS TV, has gone on record by stating that it would be extremely difficult to start a business today because of the overwhelming hindrance placed on business owners.

‘Tip of the Costberg’

The Competitive Enterprise Institute (CEI) is verifying Cuban’s notions.  The libertarian free-market organization published a report titled “Tip of the Costberg” for its upcoming fall edition and it found that American taxpayers and businesses are facing tremendous costs just to be able to abide by federal regulations and stay open.

It revealed that present federal regulations and future rules to be imposed under Obamacare will cost businesses and taxpayers more than $1.8 trillion per year, which is actually more than 20 times the estimated $88 billion put forth by the Obama administration.  Unfortunately for enterprises, Clyde Wayne Crews, a CEI vice president, warned that the figure could grow substantially.

“While OMB officially reports amounts of only up to $88.6 billion in 2010 dollars, the non-tax cost of government intervention in the economy, without performing a sweeping survey, appears to total up to $1.806 trillion annually,” said Crews in the report.

“According to back of the envelope surveys and roundups, with gaps big enough to fit the beltway through, that up to $1.806 trillion annually and in many categories perhaps even considerably more, is a defensible assessment of the annual impact on the economy.”

The high costs come from the numerous federal agencies, departments and commissions that have been installed over the years.  The report highlights some of the estimated costs from each bureaucracy:

  • Consumer Product Safety Commission: $193 million
  • Department of Labor: $121.987 billion
  • Independent Agencies’ Annual Regulatory Costs: $4.58 billion
  • Environmental Protection Agency (EPA): $352.997 billion
  •  Social Security Administration paperwork: $1.06 billion

Businesses have to spend money on lawyers, accountants, administrative clerks, compliance officers and others to make sure they are following the requirements of the regulations from these government departments.

CEI stated in the report that a regulation is a hidden tax and that there are two proposals to solve this issue: create a reduction commission for existing regulations and disclose new regulations in an annual report that includes costs, require approval from the Congress and maintain sunset dates.

In a time of astronomical debt levels, a high unemployment rate and a dwindling middle class, these directives could bring about unintended consequences that economists, like Walter Williams, Thomas Sowell and Milton Friedman, have discussed for decades.

The Congressional Budget Office (CBO) reported that the healthcare reform legislation would actually reduce the amount of employment in the country by half of one percent “primarily by reducing the amount of labor that workers choose to supply.”

Realities of Regulations

Public leaders have long argued over the years that these regulations will protect the consumer and worker and implement a stable economy.  Even much of the public is calling for regulations of many facets of the economy, especially the financial sector.

In a CATO Institute article by Timothy P. Carney, it was explained that regulations help corporations because the endless regulations will drive its small- to medium-sized competitors out of business.

“Enron was a tireless advocate of strict global energy regulations supported by environmentalists. Enron also used its influence in Washington to keep laissez-faire bureaucrats off the federal commissions that regulate the energy industry,” wrote Carney.  “A recent tax increase in Virginia passed because of the tireless support of the state’s business leaders, and big business has a long history of supporting tax hikes.”

John Stossel has studied the topic for many years on both ABC and Fox.  One of his segments showed that there are more than 160,000 pages of federal regulations (not including state and local) for businesses to follow.

Meanwhile, another segment looked at the case of Shelly Goodman, who purchased an Arizona mansion that would be used to as a bed-and-breakfast and wedding reception center.  The local government forced Goodman to spend thousands of dollars on studies to prove that her business won’t create traffic and noise.  She followed the order and the studies said it won’t, but it remains empty because she is not allowed to operate it.

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  1. No longer land of the free when with all these regulations to comply with. Time to abolish them all.

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