You call this 'regulatory reform'?

James W. Lucas

Professor Cass Sunstein has announced the first results of the regulatory review the President ordered at the beginning of the year.  Sunstein is the regulatory czar to the czar of all the czars -- his former University of Chicagolaw school colleague Barack Obama. All federal regulatory bodies were to eliminate regulations that were unduly burdensome to small businesses. 

Private sector critics promptly called the reforms a drop in the bucket.  Republicans in Congress have several legislative proposals to alleviate the federal regulatory burden on small business.  However, all this begs a deeper question: why is the national government regulating small businesses in the first place? 

Let us quickly try to quantify the size of Professor Sunstein and Obama's drop in the bucket.  Sunstein claims that the reforms could save businesses over $10 billion in compliance costs over the next five years.  The Small Business Administration reports that the total cost of regulation to American business is $1.7 trillion annually.  If we assume that Professor Sunstein's savings estimate is reasonable, and that regulatory costs will not increase over the same time period (a very unreasonable assumption), that makes the total savings from the regulatory review equal to 0.001% of the costs of regulatory compliance.  That's one-thousandth of one percent for those who like their numbers spelled out.  "Drop in the bucket" overstates the impact.

Another way to measure the gross impact of federal regulation is to count the pages in the official publication of all federal regulations, the Federal Register.  This is a bit crude as a measure, because a very long regulation may be fairly innocuous whereas a short one could have a massive cost imprint, but it is a decent rough gauge of the extent of the totality of federal regulation.  The Federal Register for 2010 is over 81,000 pages long, a 19% increase in one year.  We do not have a page count on the regulations to be repealed, perhaps because many of the revisions have yet to actually go into effect, but it is safe to assume that they will come nowhere near to matching the voluminous regulations still to be issued under the new Obamacare and Dodd-Frank laws.  And there are also the numerous ongoing rule-makings by President Obama's hyperactive regulators at the EPA, NLRB, and the rest of the seemingly endless alphabet soup of federal regulatory bodies. 

Now let's put this in some perspective.  The Federal Register was first issued in 1936.  At that time it was 2,600 pages long (and that was after four years of the New Deal).  The left will argue that growth in federal regulation is inevitable as our nation grows.  So, let's look at that.  From 1936 to 2010 the population of the United States grew by 240% (128 million to 308 million).  Over the same time period the Federal Register grew by over 3131%.  That means that the page count of federal regulations has grown at over 13 times the rate of population growth since the middle of the New Deal.  And again, as noted, Professors Sunstein and Obama still have much, much more regulation to come.