Regulations 

Regulatory Spending

 
Introduction

 

Regulatory Spending is an important measure to study when examing regulations as it adds insight into its growth and composition. Furthermore, regulatory spending helps to provide perspective on the relationship between federal and state autonomy and power. The chart below demonstrates the first aspect (growth) of regulatory spending displaying a simple estimate of the direct cost of running regulatory agencies over time, from 1960 to 2019. It is interesting to note that the rate of growth in budgetary outlays slowed from 1979-2001. However, following 2001, there was a dramatic increase . While this elevated rate did not last long, the following growth levels still remained at an elevated rate compared to the period between 1979-2001.

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Regulations Dashboard

Social & Economic Regulatory Spending

Budgetary Costs Adjusted for Inflation

Public Laws vs. Agency Rules

Federalism Implications

Federal Outlays

Agency Outlays and Compositions

Regulatory and Agency Staffing & Regulation

Summary

Largest Decade Increase

Continuing with the data from the previous slide, this graph highlights the largest increase in dollar growth spending, which occurred from 2000-2010. Furthermore, it shows 1997 as a turning point in regulatory spending, with all subsequent years being above the average spending line.

 

Social & Economic Regulatory Spending

The following graphs divide federal regulatory activity into two main categories: social and economic regulation.

Economic regulation refers to activities using "economic controls such as price ceilings or floors, quantity restrictions, and service parameters. The Securities and Exchange Commission (SEC), the Federal Communications Commission (FCC), the Federal Energy Regulatory Commission (FERC), and the Consumer Financial Protection Bureau (CFPB) are examples of agencies that fall into the economic regulation category. It is divided into three subcategories: (1) finance and banking, (2) industry-specific regulation, and (3) general business.

Social Regulation includes "regulatory agencies that address issues related to health, safety, security, and the environment, such as the Environmental Protection Agency (EPA), the National Highway Traffic Safety Administration (NHTSA), the Food and Drug Administration (FDA), and DHS. The report further divides social regulation into five subcategories: (1) consumer safety and health, (2) homeland security, (3) transportation, (4) workplace, and (5) environment and energy."

The first graph compares social and economic budgets from 2008- 2019.* The second graph provides an overview of the spending and staffing of 77 federal departments and agencies from FY 1960 to FY 2020.**

 

Budgetary Costs Adjusted for Inflation

 

How can we best analyze the effects of regulation - costs and benefits - over time? This is an especially thorny issue, which cannot be addressed adequately here in this space. Regulatory Federalism also raises further questions about the Constitutional foundations of federal regulation itself. Let's ask a simple question to get started: is it possible to measure the constitutionality of regulations, over time?

 

To help answer this question, regulations Clyde Wayne Crews has created an Unconstitutionality Index. It measures the ratio of rules issued by agencies relative to laws passed by Congress and signed by the president. 

While Crews acknowledges that there are no clear trends in the data, and while he admits that there are "unavoidable complexities" in trying to measure the Unconstitutionality of rules, his work does provide empirical validation of the claim that there has been a significant shift in lawmaking from Congress to agencies.

 

Public Laws v. Agency Rules

A public law is defined as an enacted bill or joint resolution. Lists of public laws per year are available at the Public Laws page.* A Final Rule is defined as a regulatory document that has "general applicability and legal affect." A collection of final rules are available on the Federal Register**

The card below represents the share of rules created by Congress from 2003-2018, as a portion or by comparison to the number of rules issued by hundreds of federal agencies.

 

Federalism Implications

Another set of questions related to the effect of regulatory activity on American federalism - or the "balance" between federal and state governments. In 1999, President Clinton issued Executive Order 13132 on Federalism. The objective was to guarantee "the Constitution's division of governmental responsibilities between the federal government and the states." It did so by outlining nine "principles of federalism" (see section 2) and then providing a series of criteria for federalism policymaking (see section 3).

How successful were efforts in the late 1990s to limit policymaking that might have had federalism implications? The following chart provides one measure. It indicates modest improvement, both in the efforts to measure regulatory impact and in terms of limiting the upward trend in "regulatory federalism" since 2000.

Federal Outlays

The following graphs help to provide insight into regulatory costs and how they compare to other categories in the federal budget. The first graph compares regulatory costs to the national debt as well as federal outlays. The second compares GDP, outlays, and regulatory costs. The third breaks down regulatory costs for 2018 by category to highlight where the bulk of costs are directed.

A great deal of regulatory costs are directed towards economic regulation, the environment, and tax compliance. It is also interesting to note that while regulatory costs are a significant factor in the overall budget, it is much smaller than federal outlays or GDP.

 

Agency Outlays and Composition

Earlier we examined regulation divided into social and economic spending. Now we break it down even further by agency or subcategories (such as finance and banking). From the first graph we can see that Homeland security has had the most rapid growth and currently is the highest out of the other agencies. With economic regulations, financial business used to have the highest spending until recently when general business took the lead. Together these two series present an estimate of direct taxpayer costs through the administration and enforcement and development of social and economic rules and regulations.

The final graph is an interactive timeline that shows how outlays have changed from 1962-2018 based upon the selected agencies. Defined by the OMB an outlay is "a payment to liquidate an obligation...Outlays are generally equal to cash disbursements but also are recorded for cash-equivalent transactions, such as the issuance of debentures to pay insurance claims, and in a few cases are recorded on an accrual basis such as interest on public issues of the public debt. Outlays are the measure of Government spending."

 
 

Regulatory Staffing and Agency Staffing & Regulations

With data taken from the Regulatory Studies Center at the Columbian College of Arts and Sciences, this first graph measures the total number of regulatory agency-specific employees. Or in other words, it assesses the “agency staff devoted to regulatory activity” to track trends over time.

The OMB's historical tables provide details into agency composition staffing. The staff included in the second graph are "Full Time Equivalent" (FTE) which is defined as “the measure of total hours worked by an agency’s federal employees divided by the total number of one person’s compensable work hours in a fiscal year.”

Each year federal agencies submit budget proposals to cover various expenditures. One such expense is personnel compensation, which takes up a significant portion of the budget with over 2 million civilian onboard personnel across the various agencies.

 

This series seeks to measure employees (full-time equivalent) who are involved with regulatory activity. By limiting the series to this specific group of employees, the data is able to show a clearer and unique picture of regulatory trends and changes over these past several decades.

 

Key Takeaways

 
Highlights

1) In 1960, Total Spending on Federal Regulatory Activity amounted to $4,014 million in 2012 constant Dollars. In 2020, Total spending was estimated at $66,246 million in 2012 constant Dollars, representing a total estimated increase of 1,550% in outlays on regulatory activity. 

 

2) The regulatory burden in 2019 has been calculated to be as much as 40 percent of the level of federal spending (~ $4.4 trillion in 2019).

 

3) In 2018, Congress enacted 313 laws. Agencies issued 3,368 rules. In effect, agencies issued 11 rules for every law passed by Congress and signed by the President. 

 

4) More than 82% of proposed agency outlays focused on social regulation for 2020.

 

5) The Weidenbaum Center at Washington University and the George Washington University Regulatory Studies Center jointly estimate that agencies spent $71.4 billion (Fiscal Year 2018) to monitor and administer federal regulatory activities.

"If the on-budget regulatory costs of $1.9 trillion were a country, it would be the world's ninth-largest economy in 2018."

- Crews, Clyde Wayne, Jr.

Ten Thousand Commandments:

An Annual Snapshot of the Federal Regulatory State.

 
Sources 

 

Dudley, Susan, and Melinda Warren. Regulators’ Budget from Eisenhower to Obama An Analysis of the U.S. Budget for Fiscal Years 1960 through 2017. Regulatory Studies Center and Weidenbaum Center on the Economy, Government, and Public Policy, George Washington University and Washington University, no. 38 (2017): 1-29. 

https://regulatorystudies.columbian.gwu.edu/sites/g/files/zaxdzs1866/f/downloads/2017_Regulators_Budget_05-17-2016.pdf 

 

Historical Tables. Office of Management and Budget.

 

Crews, Clyde Wayne, Jr. Ten Thousand Commandments An Annual Snapshot of the Federal Regulatory State. Report. Competitive

Enterprise Institute. (2019): 4.  https://cei.org/sites/default/files/10KC2019.pdf.

 

Crews, Clyde Wayne, Jr. "The 2019 Unconstitutionality Index." Open Market (blog), December 31, 2018. https://cei.org/blog/2019-unconstitutionality-index.

 

Annual Estimated Cost 2018: data sourced from Crews, Clyde Wayne, Jr. "Tip of the Costberg: On the Invalidity of All Cost of Regulation Estimates and the Need to Compile Them Anyway, 2017 Edition." Working paper. Competitive Enterprise Institute.  (2017): 1-170. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2502883.

 

Recommended

 

"The Regulatory Budget Revisited." (Rosen and Callanan 2014, 835-860).

Annual reports with analysis are by the Regulatory Studies Center, in joint efforts with the Weidenbaum Center on the Economy, Government, and Public Policy at Washington University in St. Louis.

 

"Trends in Federal Regulatory Spending, 1960-2010,"(De Rugy and Warren 2009).

CCS Commentary​

 

For an overview of the difficulties of evaluating the regulatory budget, see "The Limits of Thinking of a Regulatory Budget like a Fiscal Budget," (Shapiro 2019).

 

For a helpful analysis of the potential for the creation of a national Regulatory Budget, see "Regulatory Budgeting: Not Ready for Prime Time," (Gattuso 2016).

 

For a gold-standard analysis of the U.S. Budget from 1960 to 2020, see "Regulators' Budget: Homeland Security Remains Key Administration Priority: An Analysis of the U.S. Budget for Fiscal years 1960 to 2020" (Febrizio, Warren and Dudley 2020).