By: H. Sterling Burnett, Ph.D.
Regulations are often intended to improve safety and welfare, but all too often they produce more harm than the problems they are intended to correct. Poorly conceived, designed, or executed regulations cost jobs, reduce income, and also—at least in some cases—result in premature death.
While federal agencies are supposed to carry out cost-benefit analyses to determine whether a proposed rule is justified, the government allows agencies to self-certify proposed regulations, so, unsurprisingly, many find the alleged benefits exceed their cost. As Clyde Wayne Crews, vice president for policy at the Competitive Enterprise Institute, points out in his always informative—and often depressing—annual publication 10,000 Commandments, “Having agencies audit their own rules is like asking students to grade their own exams.”
Much of the evidence showing regulators stack the deck in their favor in order to grow their budgets, staffing, and authority comes from audits of various agencies’ cost-benefit analyses and by reports conducted by the Congressional Budget Office, the Government Accountability Office, various agency inspector generals, the Office of Information and Regulatory Affairs, and non-government research institutes. All these watchdogs routinely find regulatory agencies grossly overstate benefits and underestimate—or ignore entirely—the significant costs of the rules they are proposing
In 2014, 224 laws were enacted by Congress, whereas, according to Crews’ report, 3,554 rules were issued by agencies. This means, on average, 16 rules were issued for every law enacted. The regulations resulted in an estimated annual regulatory compliance and economic cost of $1.88 trillion. If the costs of all federal regulations flowed all the way down to households, U.S. households would “pay” $14,976 every year in a hidden regulatory tax. That is more than the average household spends on virtually any other single item or service, other than housing.
More recently, a new study by the American Action Forum (AAF), titled “600 Major Regulations,” revealed in just six years in office, President Barack Obama had imposed more major regulations—regulations having an economic impact of $100 million or more on the economy— than President George W. Bush did in eight years. According to AAF, the Obama administration issued a record-breaking 600 major regulations, imposing a combined economic burden on the economy of at least $743 billion, which is larger than the gross domestic product (GDP) of Israel and Norway combined and amounts to $2,294 in regulatory costs on every person in the United States.
This is important, because poverty is by far the biggest killer of people. Nations and regions lacking inexpensive and reliable energy, readily available health care, and abundant, nutritious food suffer more premature deaths, have higher infant mortality, lower disease survival rates, and have shorter lifespans, compared to wealthier nations and people. This is an undisputed fact.
Federal regulations usually ignore the link between wealth and health. Environmental Protection Agency (EPA) regulations targeting carbon dioxide and mercury, for instance, have costs far exceeding any expected benefits. Carbon dioxide is a nontoxic, naturally occurring gas that poses no threat at all to human health at present levels or at the levels reasonably estimated for the foreseeable future. Mercury, while a potentially lethal toxin, poses no or minimal risk of harm at current levels in the United States.
EPA regulations limiting mercury were so unnecessary, they were tossed out by the U.S. Supreme Court in 2015. Writing for the majority, the now-deceased Justice Antonin Scalia wrote, “It is not rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.”
In early 2016, ignoring the Supreme Court’s ruling, EPA upheld the mercury regulation, saying its benefits exceeded its costs without providing any new evidence to support its claim. Various estimates show the mercury rule will produce just $4 million to $6 million in health benefits—at a cost of more than $9.6 billion.
Since, the U.S. Office of Management and Budget (OMB) has estimated every $7.5 million to $12 million in regulatory costs imposed on the economy results in a life lost, the mercury regulations could result in between 800 and 1,250 premature deaths, while failing to save even a single life.
EPA’s Clean Power Plan (CPP) could be even deadlier. It aims to cut emissions of carbon dioxide from the nation’s power sector by 32 percent below 2005 levels by 2030. EPA, with reason to paint the benefits of its plan in the best light possible, estimates CPP would result in avoidance of 21,000 total premature deaths through 2030. By comparison, the Energy Information Administration has pegged the cumulative costs of the rule through 2030 at $1.23 trillion in lost GDP (in 2014 dollars), thus the estimated 21,000 lives saved is dwarfed by the 102,500 to 164,000 early deaths CPP is expected to cause, if the OMB is right about the costs.
Government agencies should take a regulatory Hippocratic Oath that demands they first “do no harm” when proposing regulations, and they should not be allowed to enact any regulatory proposal until outside auditors determine the new regulations will prevent more harm than they will cause.
H. Sterling Burnett, Ph.D. ([email protected]) is a research fellow on energy and the environment at The Heartland Institute, a nonpartisan, nonprofit research center headquartered in Arlington Heights, Illinois.