Bush's Regulatory Kiss-Off

Obama's assertions to the contrary, the 43rd president was the biggest regulator since Nixon.


When Barack Obama was running for president, he made no secret about his plan to "restore common-sense regulation"—read: increase regulation—by closing the regulatory loopholes he thought the Republicans had opened. Deregulation, he argued repeatedly, is the source of evil. Much like Franklin Delano Roosevelt during the Great Depression, Obama offered a sweeping, ambitious agenda: new financial regulations, new labor regulations, new energy regulations, and more.

Today Obama is the president-elect of the United States. With Democratic majorities in Congress, he will have tremendous power to push his "reforms." And unlike FDR before him, President Obama won't have to create a regulatory system from scratch in order to increase government control of people's lives. His groundwork was laid by George W. Bush.

Some people still seem to think Republicans take a hands-off approach to regulation, probably because the party is always quick to criticize the burdens regulations place on businesses. But Republican rhetoric doesn't always match Republican policy. In 2007, according to Wayne Crews of the Competitive Enterprise Institute, roughly 50 regulatory agencies issued 3,595 final rules, ranging from boosting fuel economy standards for light trucks to continuing a ban on bringing torch lighters into airplane cabins. Five departments (Commerce, Agriculture, Homeland Security, Treasury, and the Environmental Protection Agency) accounted for 45 percent of the new regulations.

Since Bush took office in 2001, there has been a 13 percent decrease in the annual number of new rules. But the new regulations' cost to the economy will be much higher than it was before 2001. Of the new rules, 159 are "economically significant," meaning they will cost at least $100 million a year. That's a 10 percent increase in the number of high-cost rules since 2006, and a 70 percent increase since 2001. And at the end of 2007, another 3,882 rules were already at different stages of implementation, 757 of them targeting small businesses.

Overall, the final outcome of this Republican regulation has been a significant increase in regulatory activity and cost since 2001. The number of pages added to the Federal Register, which lists all new regulations, reached an all-time high of 78,090 in 2007, up from 64,438 in 2001.

Even more worrisome is how agencies implement these rules. In a recent study titled "Homeland Security and Regulatory Analysis: Are We Safer Yet?," Jerry Ellig and Jamie Belcore of George Mason University's Mercatus Center (where I work) looked at the regulatory analysis behind the Department of Homeland Security's regulations. They found that the agency conducted shoddy, incomplete regulatory analysis; never tried to find regulatory alternatives; and didn't bother arguing that there was a market failure or a systemic problem that might warrant government intervention. According to Homeland Security's own estimate, its rules cost the economy more than $4 billion a year; the actual cost is likely to be much higher.

President Bush deserves most of the blame for this regulatory expansion. While the president does not have to sign new rules before they're implemented, he does implicitly approve them. In addition, he signed hundreds of laws commanding federal agencies to produce new regulations. One is the Sarbanes-Oxley Act of 2002, which established new or enhanced standards for all publicly held companies and accounting firms in the United States. Another is the McCain-Feingold campaign finance reform law, which imposed new restrictions on campaign spending and prohibited unregulated contributions ("soft money") to national political parties.

The Bush team has spent more taxpayer money on issuing and enforcing regulations than any previous administration in U.S. history. Between fiscal year 2001 and fiscal year 2009, outlays on regulatory activities, adjusted for inflation, increased from $26.4 billion to an estimated $42.7 billion, or 62 percent. By contrast, President Clinton increased real spending on regulatory activities by 31 percent, from $20.1 billion in 1993 to $26.4 billion in 2001.

The sad implication of these data is that today it costs more to produce each rule than it cost eight years ago. If the regulator's budget is going up while the number of final rules is decreasing, and yet the number of pages in the Federal Register is growing, then the regulatory process is becoming increasingly inefficient. And since the regulations are becoming more expensive, taxpayers are losing on all fronts.

Figure 1 shows the real increase in regulatory spending by full presidential term between 1960 and 2009. During both his terms, President Bush outspent every one of his recent predecessors. In his first term, he increased spending on regulatory agencies by $8.3 billion, almost doubling what President Clinton—the second biggest spender—spent during his second term.

The data also show that, adjusted for inflation, expenditures for the category of finance and banking were cut by 3 percent during the Clinton years and rose 29 percent from 2001 to 2009, making it hard to argue that Bush deregulated the financial sector.

Figure 2 shows the 10 largest annual percentage increases in total real regulatory outlays in the last 50 years. The Bush administration's performances in 2002 and 2003 made the top five, with its 2003 budget leading the pack.

It takes a lot of bureaucrats to create and enforce all those regulations. In eight years, Bush increased the federal government's regulatory staff by 91,196 employees. Clinton cut it by 969. This is why Business Week recently designated Washington as one of the top places to ride out the recession: The government is hiring.

Many of Bush's hires have been in the ranks of the Transportation Security Administration, making the skies safer by confiscating lighters and requiring that nursing mothers declare their breast milk at checkpoints. Never mind that the probability of 9/11-style attacks dropped to near zero in the months after September 11 when airlines installed, at relatively low cost, simple cockpit barricades.

Franklin Roosevelt expanded government power from a relatively small base. Today the Securities and Exchange Commission, the Environmental Protection Agency, and myriad other federal agencies are not only well established but have more power and more staff than ever. Increasing their reach should be easy. President Obama has President Bush to thank.

Contributing Editor Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

NEXT: I Learned It From Watching You, Dad!

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  1. Saw that in the magazine, great piece, Veronique.

  2. Oh, and the cover was awesome.

    Exit, Stage left.

  3. Damn you GWB!!!

  4. Many of Bush's hires have been in the ranks of the Transportation Security Administration...

    So, what does the picture look like when we remove increases related to the War?

    I'm not really surprised given Bush's track record in Texas. I wonder if Republican increase regulation more than expected because (1) they feel they have to so the media and leftist won't accuse them of being evil and (2) people who oppose regulation don't watch Republicans as closely as they do Democrats (3) there is no political opposition from Democrats when Republicans increase regulation as there is when situations are reversed.

    We should also remember that the President can't actually increase regulation and regulation related spending. Congress actually does that, especially the house. The low increases during the Clinton years probably has more to do with the Republican house than anything else.

  5. George W. Bush - Small government conservative.

    J sub D - Socialist, collectivist, communist.

    Both descriptions are equally accurate.

  6. Errrrrr . . . . you may have flipped the descriptions. Either that or you are Trotskyite plant.

  7. We should also remember that the President can't actually increase regulation and regulation related spending.

    Agree on the latter, but not on the former. Regulation is law promulgated by administrative agencies that are part of the Executive branch. Congress (technically) has to authorize regulation in a given area, but its up to the Executive to write the regulation or not.

    Its not at all uncommon, here it Texas, for a department directed by the legislature to write rules, to publish a rule that merely copies the statute itself. Even when the legislature calls for regulation, that doesn't mean you have to write 500 pages of 8 pt. Times New Roman.

  8. Naga! Quick! The icepick!

  9. SugarFree,

    That is profiling!!! Not all Marxists use icepicks to the skull to silence blasphemers. Sometimes they use umbrellas tipped with insanely rare poisons.

  10. Naga! Quick! The polonium!

  11. We should also remember that the President can't actually increase regulation and regulation related spending.

    Color me confused. What are all these regulatory agencies doing outside of the sphere of congress? OSHA, EPA, etc.? And the "czars" (if you will) are appointed by the President. This, in my opinion gives the President a very direct line in the course of new non-legislative regulatory power.

  12. SugarFree,

    Well I'm outta ideas to kill people unless you've heard of someone using the "American Dad" innovation: A midget in your airbag who pops out and chokes you to death.

  13. Bush's regulations. . .yada, yada, yada. . .how do I turn off autoplay in an embedded Flash video? There's no parameter for autoplay in the embedding code, though I tried to insert one set to false. I'm growing annoyed.

    I was at OMB for a fellowship, and I learned much about its inner workings. It gives the president a surprising amount of control over agency rulemaking (and, of course, budgeting). Congress cedes far too much rulemaking power to the agencies, anyway, so the president's role in this is quite important.

  14. Wow, I go away for a few months to concentrate on school, and guess what, politics still sucks!

    I guess I can just continue to assume we're all doomed and try to finish my degree before the apocalypse. 🙂

  15. Pro Lib-

    Plus,the courts have consistently held that regulators are entitled to great deference in their interpretation of existing regulations and their rule making.

  16. Great deference. Like "Counsel, I'm going to break your kneecaps for insulting the integrity of the FTC" deference.

  17. Let me guess. This means that Bush is not a "real conservative", thereby distancing Bush from conservatism and those who voted for him, because they didn't know he wasn't a "real conservative" when they voted for him.

    1. I distinctly remember Bush saying that we should not use military for nation building. I agree. Then, he betrayed us in Iraq, Afghan.

  18. KT,
    Bush is still a "real Republican". Whether or not he is or ever was a "real conservative" is irrelevant.

  19. To really understand this, you need to look at specific regulations. GWB has massively increased regulations in some areas (for example the new "freedom of conscience" rule for health care providers), while slashing them in others (see just about anything relating to environmental protection, mining, pollution control...).

    Just looking at a few big numbers and saying Bush is a regulator or deregulator says almost nothing of importance. This is just another attempt to cut the ropes tying the GOP and conservatism to the USS Bush.

  20. This article, along with John Judis of The New Republic who proclaims that Obama will essentially continue Pres. Bush's foreign policy, plus watching the current adminstration undertake socialist-like policies of nationalizing the banks and bailing out everyone and his brother (except me!) with money it does not have, such policies which Obama seems more than happy to continue and build upon, only leaves me to conclude that on Janaury 20th we'll be embarking upon George Bush's third term. And I was told that 53% of those who voted voted for change they could believe in. This gives new meaning to the old adage: the more things change, the more they stay the same!

  21. Just looking at a few big numbers and saying Bush is a regulator or deregulator says almost nothing of importance.

    Amen. I would argue that anyone, including Obama, talking about Bush and regulations recently, is talking about just one thing, regulations for the finance industry.

    Measuring regulations by quantity alone is a silly metric.

  22. Measuring regulations by quantity alone is a silly metric.

    If you can't find a lack of regulations, and the specific 'deregulations' you point to happened under Clinton, then you can't blame what happened to "massive deregulation under anti-government Republicans".

  23. ...then you can't blame what happened to "massive deregulation under anti-government Republicans".

    Agreed. You could blame it on specific deregulation under anti-government Republicans. That would be less than charitable, however. Gramm-Leach-Bliley, while voted against by all but one Democrat in Congress, was ultimately approved by Clinton.

    The common libertarian view, that I agree with, is that the finance industry meltdown was a bipartisan screw-up. And it's not like the GLB act was the root or only cause. Lack of regulation over the securities rating system, and the recent trend towards "rating shopping" was a big part of the problem.

    What I disagree with is notion, fostered here, that regulation isn't the answer. That since Bush was such a regulator, and the crisis still happened, regulations are somehow useless against this problem.

    It's as if one looked at the Challenger space shuttle explosion and concluded that engineering rules and guidelines aren't the answer, because look at the million things that did work. Regardless of how many things worked on Challenger, at least one more thing needed to work correctly.

    Regardless of how many regulations Bush created, he needed to create at least one more.

    Shorter response: It's quality, not quantity, that was needed. 🙂

  24. Jasa,

    The "regulation" that would have been needed here already exists in the form of fraud protection.

    What we have with the financial crisis is a situation where the major players are taking enormous risks which are entirely mitigated by years of government guarantees that nothing they could ever do would be irreversible. That combined with a number of other policy & regulatory bungles, creates an environment where ordinary investors are having their money unknowingly funneled into a ponzy scheme and then to add insult to injury - after their entire portfolios are drained, they are asked to pay even more to these companies in the form of forced taxation.

    I heartily disagree that "one more" regulation was necessary... What *was*, and *is* necessary is a complete separation of powers, positive or negative, that removes government force from the economic equation... these companies need to be allowed to fail, and people need to learn from their mistakes. And if there is legitimate fraud - government is actually already set up (ostensibly) to handle those cases... and frankly, that's what we need to be looking into right now anyway.

  25. I did not read this article because of that ridiculous flash advertisement I could not get rid of. I was too annoyed by the time it finally went away. If these are regular now on Reason articles you can be sure I won't be coming here anymore.

  26. Measuring the amount and quality of regulation by the amount spent is like measuring safety by the amount spent on war. If you don't recall the specifics of a whole host of deregulatory policies, orders, signing statements, acts and failures to implement with enthusiasm which were constantly reported as "accomplishments" by that administration, you are deliberately naive or consciously ignorant. Disingenuous also comes to mind.

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