The Administrative State Faces a Reckoning

Member Group : Jerry Shenk

“Government costs Americans far more than the taxes we pay, because direct taxes don’t include regulatory compliance costs.

“Compliance costs are built into the prices of goods and services purchased by American consumers, including by those who pay no income taxes. Regulatory costs are hidden “taxes” on consumers that strain family budgets and slow economies.”

Those two paragraphs first appeared in a 2014 column, then again in 2019. Five years later…nothing has changed.

Too many career bureaucrats – the administrative state – still justify their federal sinecures by writing/imposing often unnecessary, even frivolous regulations on American citizens, businesses and, ultimately, consumers. Far too often, it’s done extra-constitutionally.

Executive branch regulations have far outnumbered the laws passed by the Congress for years.

Former President Donald Trump attempted to rein in federal agencies by instructing them to eliminate two outdated regulations for every new one.

In 2018, the Trump administration issued 3,368 rules, in 2017, 3,281 – the lowest since record-keeping began in the 1970s. Accordingly, annual regulatory compliance costs were cut by roughly $50 billion. But, even so, by end-2019, new regulations still exceeded new congressional legislation by eighteen times.

President(ish) Joe Biden and his administration have spent three+ years making the regulatory environment far more intrusive and expensive.

Since 2021, Biden administration agencies have issued 46 regulations for every law passed by Congress, the highest since 1995.

According to the Competitive Enterprise Institute (CEI), “American households pay at least $14,000 in hidden regulatory costs every year. Instead of finding ways to cut those costs…, President Biden’s whole-of-government policymaking framework prioritizes political causes like climate change and equity in the regulatory process.”

“Federal environmental, safety and health, social, and economic regulations grip the economy, making it needlessly harder and more expensive to run a household or business in this country.” […]

“Many regulations have opportunity costs, which are invisible and impossible to calculate. They can affect households directly or indirectly, such as when businesses…pass…regulatory costs on to consumers, just as they do the corporate tax.”

Regulatory costs exceed every item in most household budgets except housing.

From CEI’s report:  “A typical American household spends more on embedded regulation than on health care, food, transportation, entertainment, apparel, services, or savings” – or about 17 percent of families’ 2022 average income of $87,434.00, before taxes.

Profligate Bidenomics fiscal policy has fueled brutal commodity price inflation, but overregulation has contributed as well.

Not only does overregulation create artificial inflation by increasing the costs of products Americans purchase, the business resources necessary for compliance displace actual production. Removing unnecessary government impediments to business and industry is essential to job creation, productivity, worker incomes and American competitiveness in global markets.

Furthermore, regulations limit personal liberties. Bureaucratic edicts create a maze of often-trivial, sometimes-frivolous government approvals, permits and oversights, thousands of which insult Americans by restricting their freedom to make informed, voluntary, personal decisions about food, energy, education, healthcare, and many others.

But that could change.

The United States Supreme Court recently heard arguments on Relentless, Inc. v. Department of Commerce, a case which has the potential to dramatically change the way the federal government issues regulations.

Without reviewing the litigants or case details, one need only understand that, in it, the Court will consider weakening the ability of executive branch agencies – the administrative state – to impose costly regulations without clear authorizations from elected members of Congress.

As importantly, the opinion has the chance to stop Congress from allowing unelected, unaccountable – faceless – federal bureaucrats to issue rules/regulations House and Senate majorities cannot pass, and force Congress to exercise its oversight responsibilities over bureaucrats’ regulatory regime.

It’s important that the Court decide “Relentless in favor of the plaintiffs, because, to improve our economy, America’s business regulatory burden must be continuously reassessed and the regulatory environment reformed. Currently, it is not.

In order to increase real income and living standards for lower and middle income Americans, strengthen the U.S. dollar, and improve trade balances, America must, among other priorities, get government out of the way, and ensure that the free-market private sector is the largest, fastest growing segment of the national economy.

Sensible regulations can – often do – protect consumers, investors, workers and the environment – and Americans should follow the rules.

But, first, binding rules should make sense – and, above all, be constitutional. Many fail on both counts.