Our economy, and personal liberty, are under assault in America, The threat to the country is much more stealthy and incremental than that faced by our nation’s founders two centuries ago. According to a Gallup poll this past week, 72% of Americans see the burgeoning power of the federal government as our greatest threat. This should serve as a wakeup call to the statists in Washington who are continuously expanding the role of government in micromanaging our lives.
Much of this expanded control comes in the form of regulation. Since 1993, over 1.43 million pages have been added to the Federal Register that includes all new regulations, regulatory revisions, and presidential documents. The passage and implementation of the “Affordable Care Act” alone has added 10,516 pages to the Federal Register; that’s more than eight times the length of the Bible.
The Competitive Enterprise Institute’s (CEI) 20th edition of “Ten Thousand Commandments,” which explicates the impact of the mountainous stacks of regulation on the country, estimates the cost burden of all this regulation at $1.8 trillion per year. To put that figure in perspective, that’s more than half the size of the federal budget, and nearly 12% of the entire U.S. economy.
The cost to the government in enforcing regulation is not that great, a relatively paltry $55.4 billion in 2010, according to the CEI. That allocation of the federal budget covers most of the cost of federal agencies and regulatory enforcement. By far, the greater cost is to the economy, and in abrogated liberty, whittling incrementally away at our individual freedom.
Critics of “big business” should take note that total business profits last year were just over $1.5 trillion, yet the $1.8 trillion in costs for regulatory compliance eclipses that figure. The cost of that regulation is not paid by “big business.” Technically, corporations don’t pay taxes, they just collect revenue from consumers and turn it over to the government. We pay those taxes to the corporations voluntarily in the form of higher prices for goods and services. Consequently, we, as consumers, paid $1.8 trillion more for our goods and services last year to companies just to cover the cost of federal regulation!
According to the House Committee on Small Business, the impact on small business is staggering, and the impact on the economy is perhaps incalculable. Small businesses don’t enjoy the luxury of simply passing on the cost of regulation to their customers, like big business does, but bear a disproportionate share of the costs themselves.
The SBA Office of Advocacy defines small business as independent firms that have fewer than 500 employees, of which there are an estimated 29.6 million in the country. These firms create seven of every ten new jobs, and they employ just over half of the nation’s private sector workforce. The Office of Advocacy calculates that small businesses create more than half of the nonfarm private gross domestic product, and have created over 64% of net new jobs over the past 15 years.
According to the SBA, small firms shoulder a regulatory cost of $10,585 per employee. This is 36% higher than the cost of regulatory compliance for large businesses. And since 89% of firms in the country employ fewer than 20 employees, the smallest businesses are bearing a disproportionate share of the regulatory burden.
The cost of Environmental Protection Agency (EPA) regulatory compliance affects small businesses four times more than larger firms, according to the National Federation of Independent Business (NFIB) Research Foundation. They also indicate that the complexity of the tax code, and concomitant costs, disproportionately harms small businesses four times more than large firms.
At a House Small Business Committee hearing, National Taxpayer Advocate Nina E. Olson said, “Tax code complexity has a direct impact on small business viability and job growth. The more time and resources a small business spends on tax compliance, the less time it will have to grow and hire employees.”
Government, and its hoard of agencies and bureaucracies, was not created by divine unction, and are not infallible. They are to serve the people, not rule over us in totalitarian fashion. The tsunami of governmental regulation is debilitating to the economy and job growth, as well as to individual freedom. And much of the regulatory expansion comes not from congressional acts, but by government agencies expanding and rewriting regulation.
Americans have just cause to perceive expanding government control as our greatest threat, and we’ve not even touched on the privacy and Fourth Amendment infractions posed by the domestic spying programs.
237 years ago our forebears retaliated against a perceived threat to personal liberty and “taxation without representation” by initiating a revolution against a monarchical power; one that was arguably the greatest power in the world at the time. It’s time for that same American spirit to rise again, this time against a domestic threat, in defense of liberty, and begin scaling back our onerous regulatory burden.
Associated Press award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho and is a graduate of Idaho State University with degrees in Political Science and History and coursework completed toward a Master’s in Public Administration. He can be reached at [email protected].