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Ed Feulner

Ruled by Rules: The Hidden Costs of Over-Regulation
By Ed Feulner
May 15, 2015 - 6:29:50 AM

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Say you got a recall notice for your car. You'd naturally be alarmed, especially after reading that the problem involved Federal Motor Vehicle Safety Standard No. 208 -- "Occupant Crash Protection."

Is something wrong with the brakes? The air bags? The seat belts?

Nope. You know the air-bag warning label on the sun visor? It might peel. That's why you have to bring your vehicle in.

You may scoff, but this hypothetical is something that actually happened to tens of thousands of owners of Chevy Camaros (model years 2013 and 2014).

General Motors also had to issue a stop delivery order to dealers, notes Diane Katz, a research fellow at The Heritage Foundation, and instruct them to inspect the label on each sun visor. If the label was prone to peeling, the entire visor had to be replaced.

I bring this up as an example of the real-world impact of regulations. We don't always see it, but they exact a cost. And according to a new report from Heritage, that cost is growing, along with the number of regulations themselves.

Katz and James Gattuso, a Heritage senior research fellow, found that 27 new major rules were added last year, for a total of 184 over the first six years of the Obama administration. Total cost, as estimated by the regulators themselves: $80 billion annually.

That's "billion" with a "b." Twelve zeros. To count from one to one billion by ones would take 95 years. With $1 billion, you could buy more than 32 million new cars. A "human tower" of one billion kids could reach past the moon.

Now multiply that amount times 80. That's the cost, in one year alone, of the Obama-era regulations we're discussing here.

And that doesn't even come close to summing up the full regulatory reach from Washington. Because the cost above, as I noted, is for "major rules," or ones that are expected to cost the economy $100 million annually. Many other rules fall below that threshold ... but that doesn't mean they don't cost a lot, especially when added up.

Moreover, Gattuso and Katz say, there are "scores of other rules in the pipeline." These include "directives to farmers for growing and harvesting fruits and vegetables; strict limits on credit access for service members; and yet another redesign of light bulbs."

Ah, good. Because those expensive, mercury-filled CFL bulbs have worked out so well, haven't they?

Unfortunately, the regulators don't stop at meddling with your light sources. The Department of Energy ranked second in the number of major rules issued in 2014, all of which restrict energy use by various appliances and other electrical gadgets, including adaptors for cellphones and laptops, and coolers in ice-cream parlors and grocery stores.

When you pay top dollar for a new refrigerator, for example, don't assume it's simply that you're being gouged by the manufacturer. The companies that make refrigerators are operating under stricter energy-conservation standards issued by the government last year for commercial refrigeration equipment -- and it's costly to do so.

Regulations are also making it more expensive to use your bank. Rules are still being issued under the Dodd-Frank financial-reform legislation of 2010. It's at 19,000 pages of regulations so far, and counting. Only a little over half of the expected Dodd-Frank rules are out so far, and they've already created higher banking costs and fewer investment options.

This regulatory tide will keep surging unless Congress does something about it. Among the common-sense solutions Gattuso and Katz propose: requiring congressional approval of any new major regulations that agencies promulgate, stipulating that all major regulations have an expiration ("sunset") date, and mandating "impact assessments" of proposed laws before they're passed.

After all, the economic damage inflicted by the flood of regulation coming out of Washington dwarfs the danger of a peeling air-bag warning sticker.

Ed Feulner is founder of The Heritage Foundation (www.heritage.org).

The Heritage Foundation
214 Massachusetts Avenue, NE
Washington, D.C.


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