Here's What Deregulation Looks Like in the Obama Administration: $2.5 Billion in Rules Wiped From the Books, $236 Billion Added
Over the last four years, President Obama has occasionally tried to cast himself as a deregulator, or at least as someone interested in slimming down and streamlining federal regulations. In 2011, for example, he orderd an administration-wide regulatory review intended to rid the books of "outmoded regulations." Goals included "reducing costs and simplifying and harmonizing rules" through regulatory harmonization, as well as achieving regulatory goals in a way that's "more effective or less burdensome." In 2012, Cass Sunstein, Obama's former Office of Information and Regulatory Affairs administrator touted another executive order intended to "eliminate unjustified regulatory costs and to reduce burdens" through international regulatory coordination.
Here's what that looks like in practice: Last year, Sunstein's office wiped $2.5 billion in regulations from agency books. And the administration added $236 billion in new regulations.
A new report from the American Action Forum, a conservative policy shop led by former Congressional Budget Office director Douglas Holtz-Eakin, tallies the cost of last year's new federal regulations, and finds that despite early talk of a deregulatory push, regulators had a banner year: The cost of last year's new regulations came in substantially higher than any of the past dozen years. In terms of costs, the Environmental Protection Agency led the charge with $172 billion in new regulations. In terms of paperwork, ObamaCare took the gold, with Dodd-Frank financial regulation close behind. The report says that the health law resulted in the publication of paperwork requirements that will chew up about 44 million hours. The report estimates that Dodd-Frank will result a little more than 32 million hours of new paperwork.
As The Washington Post notes in a story on the report, there are clear winners and losers here. Big businesses, which can more easily afford the compliance costs associated with these rules, have a relatively easier time. But their smaller competitors often end up struggling:
Regulations appear to drag more on the bottom line of smaller firms than of larger ones, the study concluded after comparing compliance costs to the firms' total stock market capitalization. As the report notes, "regulatory costs consumed 6.7 percent of Honeywell's market cap ($50 billion), compared to just 1.6 percent for General Electric ($221 billion), even though GE reported higher regulatory spending. The same was true for energy, where ExxonMobil had the lowest share of costs/market cap, after reporting the highest regulatory burdens, $2.7 billion."
That disparity can give big firms an advantage in the marketplace, says Sam Batkins, the Forum's director of regulatory policy. "Sometimes a big company might want a big regulatory overhaul because they know they can absorb those new costs better than their competitors can."
Remember this the next time Obama touts his commitment to a less burdensome, less complicated, less costly government: Despite promises to simplify the books, the Obama administration hasn't gotten rid of burdens. It's created them.