Obama’s Hidden Tax Hikes
Annual cost of regulations imposed under this president amounts to $100 billion burden for taxpayers
As it reaches the home stretch, the Obama administration is racing to finish writing new rules and regulations, adding to a record number of what amounts to tens of billions of dollars in hidden taxes.
Already, the total annual cost of complying with Washington mandates exceeds $2 trillion a year — greater than what the government collects in income taxes each year.
Away from the spotlight of high-profile legislation and controversial executive orders, thousands of regulators spin red tape that critics contend often stifles the economy with dubious justification of public safety or health. The regulations cost state and local governments, businesses, and — often without consumers realizing it — raise the prices of products.
Red tape is as old as the government itself. And like federal spending, the number and the cost of regulations tend to rise over time regardless of which party controls the White House. But critics contend that Obama has taken it to a new level.
“It does go up almost every year,” said James Gattuso, senior research fellow for regulatory policy at The Heritage Foundation. “But this is different, the last few years, in terms of scale.”
The Obama administration added 43 new major regulations — defined as having an annul cost of at least $100 million — totaling $22.9 billion, a report co-authored by Gattuso last month for the Washington-based think tank calculated. The total number of new rules imposed in 2015 was 2,353, raising the count to 20,642 since 2009. The annual cost of all those regulations is $112 billion. At the same time, relatively few regulations produced savings. The Heritage report puts the figure at 26, for a total saving of $3.4 billion. That makes the net cost of Obama’s regulations $107.7 billion.
By contrast, regulators during the entire George W. Bush administration finalized 126 major rules increasing costs — 103 fewer than those that have been finalized since 2009.
Obama’s final tally is likely to be much higher. According to the Heritage report, 144 additional rules are in the pipeline. Already, the total annual cost of complying with Washington mandates exceeds $2 trillion a year — greater than what the government collects in income taxes each year.
“Eventually, someone has to pay the price for regulation,” said Sam Batkins, director of regulatory policy at the center-right American Action Forum.
Regulation increases the cost of a broad range of products and services but does not show up on a sales receipt. To take one example, the Department of Transportation finalized a rule last summer regulating the electronic stability control systems for heavy vehicles. The annual cost is projected at $46.8 million and will add about $600 to the price of a new truck.
[lz_table title=”Red Tape Rising” source=”Heritage Foundation”]|,Since 2009,2001-2009
|Cost of major regs (2015 dollars)
“Most of regulation is unseen,” Batkins said. “Most people have this vague notion of regulation.”
Batkins said he recently bought a heating, ventilating, and air conditioning unit. “It was the cost of a small car,” he said, noting that part of that cost is due to regulations imposed on businesses.
The figures are even more staggering when calculating costs of regulations over the entire projected life of the rule. The American Action Forum estimates that the total cost of rules finalized since 2009 is $796.6 billion and will add 508.5 million hours to the time Americans spend filling out paperwork.
The costliest of those regulations has not yet even taken effect — the fuel-efficiency standards for vehicles that will be built from 2017 through 2025. Finalized in 2012, the regulation will cost a total of $156 billion — with an annual cost of $10.8 billion.
The next-most expensive regulation was the fuel-efficiency standards that expire at the end of this year. The total cost was $51.8 billion, according to the think tank.
Batkins said some regulation springs automatically from laws Congress passes. In other cases, he added, the Obama administration has taken an aggressive posture. He pointed to the Department of Energy, which issued three or four major regulations during the Clinton administration and another three or four during George W. Bush’s eight years in office. By contrast, the Obama administration has issued two dozen major regulations, mostly in an attempt to combat climate change.
Gattuso, the Heritage Foundation expert, said the Clean Power Plan was the costliest regulation imposed in 2015, with annual costs totaling $7.2 billion. He said it is a steep prices for a plan projected to cut the global increased of carbon dioxide emissions by .01 percent.
“It’s almost a symbolic gesture next to a very real cost,” he said.
Energy-efficient appliances mandated by regulations raise the cost of purchase — but might save consumers in the long run by cutting energy bills. But Gattuso said that only is true if people keep the appliances for their entire life. A one-size-fits-all approach does not work for everyone, he said.
“The Department of Energy is taking consumers’ choice away from them,” he said.
Then there are regulations that are difficult or impossible to put a price tag on. Gattuso pointed to so-called “network neutrality” rules on the internet imposed last year by the Federal Communications Commission. He said those rules will sap innovation in ways that are hard to calculate.
“There may be no ways to capture those,” he said.