Obama's Half-Trillion in Regulations? Sam Batkins Explains

Sam Batkins has published a new study for the American Action Forum in which he finds that the Obama administration has racked up at least $488 billion in regulatory costs, including $70 billion in 2012. RealClearPolicy asked Batkins to put this huge number in context:

RealClearPolicy: Could you explain how you arrived at that headline number: $488 billion? And can you put it in the context of what other presidents have done? Is it really that big a deal?

Sam Batkins: To provide some context on how this figure compares with other presidents, below is a chart comparing the first four years of President Bush 43 with President Obama’s first four years.

All figures used in our calculations come from agency estimates published in the Federal Register. For example, CMS estimates that some Medicare and Medicaid changes from the ACA would cost $30.32 million. This is exactly how the figure was recorded in our database, which currently has 612 entries for 2012 alone. We record the total regulatory price tag for each regulation that imposes a private-sector or intergovernmental burden. This standard is almost identical to CBO’s legal standard under UMRA to examine legislation that might “impose an intergovernmental and private-sector mandate.” We do not count expenditures by government agencies to implement regulations or transfers (e.g. a transfer of money from the federal government to states or to Medicare providers).

Also, providing context for the $488 billion figure, the cumulative paperwork burden is 10.38 billion hours. The average wage in the U.S. is $23.52, which means the cost of simply filling out paperwork is roughly $244 billion. That excludes all capital costs of regulation and other macroeconomic burdens that new rules can add.

RealClearPolicy: How harmful is $488 billion worth of regulation, really? How much of that pays for itself?

Sam Batkins: The administration will tell you that the benefits outweigh the costs, but their analysis considers less than 1 percent of total federal rules issued in a year (Table 1-1). The effects of some recent regulations are already starting to make headlines. For example, AAF has tracked power plant closings that cite EPA rules as a chief reason for the closure. The extraction of coal took a hit this week when Alpha announced 1,200 layoffs and cited EPA regulations. In total, there are more than 10,000 energy jobs directly affected by recent rules. These aren’t models; these are company press releases.

The intersection of regulation and employment is a topic even EPA considers when it issues regulations. For example, EPA noted in its Cross-State Air Pollution regulation, which a court struck down last month, that the rule could eliminate 3,000 jobs, drive up utility rates by $700 million, and increase the amount of electricity the U.S. imports.

Beyond employment, consumers often bear the impact of specific regulatory overhauls. Many small banks and credit unions are considering the elimination of their remittance bank transfers as a result of a Dodd-Frank rule. The government even admitted that some entities would rather give up this business product than comply with the regulatory environment. From the rule: “The proposed rule could have a significant economic impact on small financial institutions that are remittance transfer providers for consumer international wire transfers…As a result, some financial institutions may decide to stop offering international wire transfers to consumer customers.” (The estimated cost for this rule was $0, and we recorded it as $0).

The menu labeling rule under the Affordable Care Act could have a similar impact on grocery stores. Designed for restaurants to increase consumer awareness about calories, the proposed rule was expanded to include grocery stores. Although many of their products are labeled with nutritional information, the regulation would also apply to in-house bakeries and delis. Rather than spending thousands of dollars for nutritional information for each item that groceries stores produce, many will simply stop offering in-store food options