The Small Business Administration released a new study today. “The Impact of Regulatory Costs on Small Firms,” by Nicole V. Crain and W. Mark Crain, updates previous studies of the same title from 2005 and 2001.
From the introduction (p. 6):
The findings in this report indicate that in 2008, U.S. federal government regulations cost an estimated $1.75 trillion, an amount equal to 14 percent of U.S. national income. When combined with U.S. federal tax receipts, which equaled 21 percent of national income in 2008, these two costs of federal government programs in 2008 consumed 35 percent of national income.
And keep in mind that those numbers are for 2008. With government spending now closer to 24 percent of GDP, the federal government’s current share of the economy is around 38 percent.
State and local spending and regulations, of course, cost extra.
Posted in Economics, regulation
Tagged crain, deregulate to stimulate, federal regulations, liberate to stimulate, mark crain, nicole crain, nicole v. crain, over-regulation, regulation, sba, studies, trillions, w. mark crain
The House passed a budget enforcement resolution yesterday. It sets 2011’s discretionary spending $7 billion below what President Obama has requested.
Next year’s discretionary spending target is $1.12 trillion for next year. The $7 billion difference represents savings of 0.625 percent. Barely a rounding error. If total spending (including mandatory and defense spending) ends up at $3.5 trillion next year, the savings becomes 0.2 percent.
Of course, 2010 discretionary spending was $1.39 trillion. 2011 spending will very likely end up much closer to that than the targeted $1.12 trillion. The appropriations process is not kind to non-binding resolutions, however well-intentioned. Especially when the resolution “doesn’t detail how Congress should reach that [deficit reduction] goal.”
Congress lacks the will to cut $270 billion of spending. The interests benefitting from that spending will scream bloody murder the second their programs are put on the chopping block. In an election year when incumbents are more fearful than usual, no politician worth his salt wants to cause an uproar.
Congress need not worry too much, though. Even in anti-incumbent years, re-election are almost always above 90 percent. The vast majority of congressional turnover happens through retirement, running for other office, or death.
The pattern is holding this year, so far. The University of Virginia’s Larry Sabato recently pointed out that 5 incumbents have lost their state primary elections this year, while 240 were re-nominated. That’s a 98 percent success rate. There will be a few more casualties, especially in the November general elections.
Most members are safe. They can, and should, rock the boat by cutting unnecessary spending. If anything, the most aggressive cutters might become folk heroes like Chris Christie in New Jersey. They just don’t have the guts.
I will be more than happy if Congress proves me wrong. We’ll find out over the next few months.
Posted in Economics, Elections, Political Animals, Spending
Tagged budget enforcement resolution, chris christie, congress, deficits, election 2010, incumbents, larry sabato, nonbinding resolution, obama, president obama, Public Choice, spending, spending cuts, trillions, university of virginia
Today’s Washington Times briefly quotes me making that point:
“A regulatory monster is eating America’s economy. Not only do federal regulations cost Americans more than the income tax, they cost about as much as the entire GDP of Canada,” analyst Ryan Young tells Beltway. “Since regulatory costs don’t show up in the budget, more than a trillion dollars of government’s cost go largely unnoticed. The burden of government is actually about a third larger than most people think.”
For more, see Wayne Crews’ forthcoming 2010 edition of Ten Thousand Commandments.
Posted in regulation
Tagged beltway, big government, canada, federal regulations, federal rules, gdp, regulation, regulations, trillion, trillions, washington times
The budget for the federal government is currently over $2.5 trillion. Just think about that for a second.
Now it gets worse.
Not too long ago, I attended a meeting on the Hill with several Republicans. They were very proud that they had proposed over $40 billion in budget cuts for FY 2006.
Then someone else at the meeting reminded them of two things. First, increases elsewhere more than negated their proposed cuts. Government was still going to grow. Second, $40 billion isn’t even a rounding error when you’re talking $2.5 trillion.
The Republicans were very offended when this was pointed out.
Then within two weeks, almost all of the proposed spending cuts were eliminated.
Now with the current round of hurricane relief spending, history is repeating itself almost exactly with the RSC’s “Operation Offset.”
So it goes.