Monday, February 21, 2005


What would you do with an extra $8,000 this year? Pay off your credit card debt? Fully fund your 2004 and 2005 I.R.A.? Make a down payment on a new car? On the other hand, if the government announced plans to increase your taxes by the same amount, you'd certainly raise a ruckus. That's probably why the government keeps quiet about exactly how much its regulations cost.

Economists Mark Crain and Thomas Hopkins did a study for the Small Business Administration and found that in the year 2000, federal regulations cost us $843 billion. That's $8,000 per household -- almost half the amount collected in federal taxes that year. In other words, Washington didn't overtly increase your tax burden last year. However, its policies cost each American household more than $8,000 in hidden regulatory expenses.

That's unfortunate, because while some federal regulations are justified, even critical, many aren't necessary. And Congress needs to identify which are which. ... The Bush administration can help out, too. The president should let all federal agencies know that reining in regulations is a priority. He also ought to continue strengthening the Office of Information and Regulatory Affairs (OIRA) at the Office of Management and Budget. Again, before a new regulation is put into place, the government should have to explain what it will accomplish and how much it will cost.....

Things have only gotten worse in recent years. Because of the Sarbanes-Oxley accounting reform law, businesses spend more than ever to comply with federal regulations. In fact, some firms have gone so far as to buy back their stock and retreat from public markets. That won't help the United States remain the world leader in capital markets. Simply put, our economy is over-regulated. There's a saying, "Thank goodness we're not getting all the government we're paying for." Well, if we reduce the burden of unnecessary regulations, we'll have less government -- and pay less for it.

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