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On the Invalidity of All Cost of Regulation Estimates

And the Need to Compile Them Anyway

2016 Edition
A Working Paper
Clyde Wayne Crews Jr.

Text copyright 2012-16 Clyde Wayne Crews Jr.

All Rights Reserved
Competitive Enterprise Institute: Washington, D.C.

To Clyde Sr.;
And to Fred L. Smith Jr. and Edward H. Crane for their devotion to advancing Classical
Liberalism, for their dedication in creating institutions that influence ideas and policy to make
the world a freer, fairer, more prosperous place; and for letting me try to help them a little bit.

Keep up to date on Costberg and Ten Thousand Commandments data at:

If you are a non-journalistic American and dont want to read this book because its about
government, just buy it and let it lie around your house like A Brief History of Time.
P. J. ORourke
Parliament of Whores
It is hardly too strong to say that the Constitution was made to guard the people against the dangers of
good intentions. There are men in all ages who mean to govern well, but they mean to govern. They
promise to be good masters, but they mean to be masters.
Daniel Webster
Good government; Good government. Sit! Stay!
Winning entry in an essay contest on the theme of good government (OK, an old joke.)



On the Invalidity of All Cost of Regulation Estimates
And the Need to Compile Them Anyway
2016 Edition
Clyde Wayne Crews Jr.

Table of Contents
1. Introduction: The $1.885 Trillion Annual Cost of Regulation
2. Tip of the Costbergs Simple Framework
3. The Costs of Benefits
4. Cost In Dollars, Cost in Common Sense
Costs are Subjective
Incentives to Understate Costs Match Incentives to Overstate Costs
On the Hotheadedness and Partisanship Over Efforts to Calculate Regulatory Costs; Or, More
Reasons Official Disclosure Needs Amplification
A Note On The Administrative and Enforcement Costs of Regulation
5. Regulatory Costs In the Days Before Trillion: Or, Estimated Regulatory Costs at the Turn of
the Century (Give or Take)
6. A Sense of Proportion: What Is Not Reviewed Annually by OMB
7. A Baseline for Aggregate Annual Economic Regulation Costs: $402 Billion
8. A Baseline for Aggregate Annual Social/Safety Regulation Costs: $473 Billion
9. Additional Executive Agency Major Rule Costs Presented by OMB: $35.8 Billion
10. Executive Agency Major Rules Lacking Cost Information: $20 Billion
11. Independent Agencies Annual Regulatory Costs: $9.5 Billion

Policy director at Competitive Enterprise Institute (; bio at . If youre aware of a better estimate for any given component than
Ive been able to secure, contact me at While bloopers are my fault alone and I dont ascribe
agreement with my approach to others, I thank many individuals for comments and/or inspiration for the subject matter;
among them Daniel Riviera, Christopher Conover, Richard Williams, Jerry Ellig, David Bier, Vincent Vernuccio, Sam
Kazman, Marlo Lewis, Iain Murray, Fred Smith, Susan Dudley, William Yeatman, Ryan Young and Ivan Osorio.

12. Paperwork & Information Collection Costs

Paperwork Hours and Hourly Costs
Tax Compliance Costs
Other Independent Agency Paperwork Costs
13. Tip of the Costberg? Regulatory Cost Estimates Beyond the OMB and SBA Tallies
14. Executive Agency Regulatory Costs
U.S. Department of Agriculture Regulation: $8.506 Billion
Department of Commerce: $1.179 billion
Department of Defense
Department of Education: $3.09 billion
Department of Energy and Energy Access: $12.62 Billion
Department of Health and Human Services: $194.37 billion
Department of Homeland Security: $56.65 billion
Department of Housing and Urban Development: $1.953 billion
Department of the Interior: $4.259 billion
Department of Justice: $1.901 billion
Department of Labor: $126.62 billion
Department of State
Department of Transportation: $80.395 billion
Department of the Treasury: $1.411 billion
Environmental Regulation: $386.36 billion
U.S. Access Board (ATBCB): $909 million
Federal Acquisition Regulation: $1.427 billion
15. Independent Agency and Certain Sectoral Regulatory Costs
Antitrust Regulation: $2.34 billion
Federal Communications Commission and Telecommunications Regulation; Plus Infrastructure
Regulation Placeholder: $131.58 billion
Financial Regulation: $80.21 billion
Federal Energy Regulatory Commission: $377 million
Federal Trade Commission: $2.633 billion
Consumer Product Safety Commission: $454 million
Equal Employment Opportunity Commission: $385 million
Nuclear Regulatory Commission: $440 million
Other Independent Agency Paperwork
Privacy Regulations and Loss of Privacy: $1 billion placeholder
Foreign Worker Mobility Restrictions: $12 billion
16. Unfathomed, Unmeasured Omissions: On Regulatory Costs Absent From Tip of the Costberg
Loss of Liberty Costs
Economic Cost and Interference Omissions
The Costs of Benefits
Costs of Poor Regulatory Processes and Regulatory Dark Matter
Job Costs of Regulations
17. Conclusion: Measure It, Control It

1. Introduction: The $1.885 Trillion Annual Cost of Regulation

After having thus successively taken each member of the community in its powerful grasp and
fashioned him at will, the supreme power then extends its arm over the whole community. It covers the
surface of society with a network of small complicated rules, minute and uniform, through which the
most original minds and the most energetic characters cannot penetrate, to rise above the crowd.
The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act,
but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence;
it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation
is reduced to nothing better than a flock of timid and industrious animals, of which the government is
the shepherd.1
Alexis de Tocqueville
Democracy in America, Book Four, Chapter VI.
[S]imply an idiosyncratic guesstimate.
Reaction to Costberg from Washington Post Fact Checker Glenn Kessler.2
I don't know anything about music. In my line you don't have to.3
Elvis Presley
Some argue federal regulations cost boatloads. Others insist instead that whats notable about
regulatory costs is their unbearable lightness.4
Whether regarded as high or not, and regardless of subjective views on the impact and incidence
of regulatory burdens, regulatory compliance costs shouldered by citizens and the enterprises they
create deserve better measurement and explicit expression in official documentation.5 But
disclosure is the exception rather than the rule. Thats why part of the purpose of Tip of the
Costberg is to measure how much were not measuring regulation.
A national government the magnitude of that operative in the United States must quantify the
costs of its regulatory interventions for purposes of public openness, transparency and democratic
accountability. Regulations arguably rival on-budget spending levels of only a decade or so ago. It
matters also because we tend to think of regulations applying within the context of the generation
of our $18 trillion annual GDP, but regulations also apply to the countrys abundant capital stock,6
not just that flow. 7 I suspect the matter of unmeasured government is far more extensive than
many imagine when the flow of agency guidance, bulletins, letters, circulars and the like are taken
into account.
Regulatory cost disclosure should compare to what we see for government spending in the annual
fiscal budget and in Congressional Budget Office analyses. This subject matter ought to be part of
annual metrics in the federal budget, enhanced Office of Management and Budget (OMB)
reporting to Congress, the Economic Report of the President, CBO-style roundups and other forms.8
Congress also should oversee and streamline the regulatory enterprise via a Regulatory Reduction
Commission or other review entity for the existing body of regulation; and for new rules,

experiment with regulatory budgeting, review schedules, expiration dates and congressional
The federal government seems busy fighting internally over regulatory costs magnitude. Former
OMB Office of Information and Regulatory Affairs (OIRA) director Cass Sunstein told a
congressional committee that the $1.75 trillion regulatory cost figures released in 2010 by the
Small Business Administrations (SBA) Office of Advocacy have become a bit of an urban
legend.10 But as well see, OMBs own estimates used to be in the same ballpark, and many
categories of cost once examined are now neglected by the bureau. Moreover, while OMB
officially reports amounts of only up to $133 billion in 2013 dollars based on data since the turn of
the century, the non-tax cost of government regulation of and intervention in the economy,
without performing a sweeping survey, appears to total up to $1.885 trillion annually. Give or
take.11 But probably give; See the pie below: Here are some numbers, but many interesting ones
are probably missing.

Annual Cost of Federal Regulation and Intervention

2016 Placeholder
$1.885 Trillion
USDA, $9

Financial, $80

All other,

DoE, $13


regulation, $399


Environment, $386
Tax compliance,

DOL, $127

Health, $194

DHS, $57

Wayne Crews, Tip of the Costberg: On the Invalidity of All Cost of Regulation Estimates and
the Need to Compile Them Anyway, 2016 Edition. Available at Social Science Research Network
(SSRN) at and at

See also Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention for a
detailed summary chart.
CHART: Principia Bureaucratica: The Total Annual Cost of Federal Regulation and
Too often, regulatory impacts dont get measured. But further, the disruption of market processes
and the derailment of wealth, safety and health creating processes themselves are for the most part
wholly neglected. We can say, circa 2016, according to back of the envelope surveys, roundups
and placeholders, with gaps big enough to fit the beltway through, that up to $1.885 trillion
annuallyand in many categories perhaps considerably moreis a defensible assessment of the
annual impact on the economy of regulation and intervention. While there is much detail
contained here, this is not a top-down econometric analysis. There are no sigmas and epsilons to
be found; this isnt time travel. Im more apt to call the figures I assemble placeholders for a
subset of costs than concretely known costs, and in most instances the reader can interpret them
that way. After all, we measure GDP, and thats not measurable either; one cannot presume to
sum up the values of human interactions in such a manner (more about this later). So this is a
reckoning rather than a formal calculation, an assessment based on a subset of existing federal
regulations, mandates, transfers, bans, prohibitions and interventions of all kinds. Also impacting
costs, yet not tallied here, are the unfathomable costs of the unmeasured, the unmeasurable, and
the ignored and unacknowledged; more will be said about these at the conclusion.
My approach is to over time is to compile a series of markers for the costs of regulation and
intervention in society to converge on rather than calculate a baseline to which each years new
official governmental cost estimates may be added, and to anticipate the day when those annual
estimates are improved substantially. Still, since regulatory costs cannot be precisely measured,
elected members of Congress rather than bureau personal must approve every significant and
controversial rule and regulation.
As of now, officially reported regulatory costs (as will be seen) total up to $133 billion based on
OMBs annually reported information. The question for decision makers is whether such costs are
actually representative of the sweep of regulatory costs and thus of little concern, or whether real
regulatory costs lie beneath the surface, increasingly rendering federal spending ($3.504 trillion in
fiscal year 2014) the real tip of the costberg while the regulatory enterprise exists out of plain
view, unacknowledged. This exercise is about the need to establish baselines, and to address the
inappropriateness of acting as if regulatory costs dont matter. There is far more to the picture
than OMBs annual reports capture, and it must be disclosed.

Our $1.885 Trillion Federal Government

Is Federal Regulation the Unimportant Tip of the CostbergOr Mostly Submerged?
OMB-reported regulatory costs, 2001present: up to $133 billion annually

Federal Spending: $3.504 trillion

Unreported Regulatory Costs (so far): up to est. $1.752 trillion

Hardly to scale.

Again it is important to clarify that these regulatory compliance costs and costs of intervention are
non-budgetary; that is, they are not what the federal government spends, or its outlays; they are an
amalgam of what the private sector spends on regulatory compliance, estimated economic
impacts of rules, some indirect costs (not much here), as well as some undifferentiated component
that consists of unfunded mandates on states and lower level governments
While this report contains much detail on the top and bottom components of this costberg, the
theme it highlights is how remarkably little is truly known, exemplified by the many glaring gaps
in what can be said about the cost of regulation, for example the relatively few costs quantified for
areas like electricity, telecommunications, transportation, and for categories of economic
intervention such as antitrust and trade barriers. Given uncertainties about regulatory costs and
the absence of infrastructure to tabulate them, the regulatory enterprisewhose compliance costs
rival taxation itselfis far more unmapped than many may suspect.
Best wishes to all pouring disdain on the Small Business Administrations assessment of the
regulatory enterprise, as Sunstein and several policy groups did; but even using OMBs own
numbers and acknowledgements from the recent past, the regulatory enterprise is considerably
larger than assumed at and reflected by todays Office of Management and Budget in its annual
reports to Congress on the benefits and costs of federal regulation (the $133 billion above). Tip of
the Costberg cannot give a perfect estimate, but it presents a defensible, and in the main, understated
estimate given omissions and areas where future researchers and the affected must fill in the gaps
that this report (partially) uncovers.
A wave of assumptions and guesses without scholarly pretension underlie this tally, and all data
and sources are subject to change at this authors discretion.12 Estimates for existing and pending
regulatory costs in future editions of Tip of the Costberg or in the annual Ten Thousand
Commandments13 arent merely subject to change, they are guaranteed to change at the discretion of
the author and upon receipt of new information.
In between annual reports, figures and data may be periodically updated at the Ten Thousand
Commandments web page (see, or the code below), and
readers possessing knowledge and insight about regulatory costs in various sectors, businesses and

walks of life are encouraged to contact me at or submit links via the
Contact field at to include in future editions.

The policy circus of an executive office and even a Congressional Research Service study14 taking
taxpayer time and dollars to refute the federal governments sole comprehensive regulatory cost
study rather than compile its own alternative superior estimate is indicative of the state of affairs.
Over the years, whatever their flaws, the SBA has produced three of perhaps the most
comprehensive regulatory cost and incidence surveys in existence in the United States. These
reports were actually by law geared toward examining the incidence of regulations on small
businesses, with the aggregate cost number an incidental calculation. Disdain for taking regulatory
costs seriously and venom over the issue prompted me to pull together what I can find in a manner
that will allow building upon a baseline, to which official annual data will be appended annually.
Policymakers need not care about the tribes and partisans here, but they do need to book things, as
federal expenditures and deficits get booked. If citizens are to be subject to mandates, there exists
an absolute obligation on the governments part to catalog regulatory compliance burdens, just as
we know what taxes we pay as a result of government requirements. We must reiterate that
congressional accountability for whatever regulatory costs may be also matters, because in a
fundamental sense costs are not actually measurable by third parties and so accountability to
voters for impacts is a necessary but not sufficient check-and-balance.

2. Tip of the Costbergs Simple Framework

I have tried to present a factualdata-filled, at any rateaccount of how this government works.
Which is complicated by the fact that it doesnt.
P. J. ORourke
Parliament of Whores
They had a professor on Gilligans Island, too.
This is not science. But since the government doesnt measure itself, were reduced to piecing
together the costs of federal regulation like Lego blocks, an approach that answers the purpose
given the circumstances. For bookending, well use in this iteration elements of the Office of
Management and Budgets annual Report to Congress on the Benefits and Costs of Federal Regulations
and Unfunded Mandates on State, Local, and Tribal Entities mandated by the 2000 Regulatory Rightto-Know Act,15 the federal Information Collection Budget, certain Government Accounting Office
(GAO) data and other sources.
We may drop some official assumptions and keep others, and will incorporate whatever
independent cost assessments can be found to help round out the picture. These may include
Federal Register figures, academic and industry reports on costs, placeholders when the federal
government is mute on some obvious cost, and the occasional seat of the pants guesses.
Some entries will be comprised of costs for industry, some for a sector, some for a category of
regulation. But for comparison and to remain parallel with the annual Ten Thousand
Commandments survey, I try to head each of the cost categories with the agency overseeing it (but
not always). I do not include regulatory cost estimates for every industry and sector, but seek them
from readers aware of relevant information. In a single report there is no possible way to give the
appropriate treatment to such massive regulatory seismic shifts as the rules flowing from DoddFrank financial legislation, for one example, so generally the following treatments are abbreviated.
Tip of the Costberg first assembled a base-cost number of $1.806 trillion annually in 2012, to which
subsequent years the updated official OMB-revealed subset of health and safety regulatory costs
have been and will be added (as well as adjustments to the base at my discretion). I will be mixing
apples, oranges and plantains occasionally. Given the data scarcity, Ill operate in a mode of
splitting the difference and noting whats questionable on an otherwise plausible cost assessment
that names assumptions, always ready to replace it with something better if convinced. Im
delighted to hear of cost estimates that may be overstated or differently assessed, and may even
include and cite such downward adjustments in future tabulations, but please accompany such
complaints with estimates of overstated benefits elsewhere to balance it, and also provide estimates
of costs in some of the areas in which gaps remain (for example the many North American
Industry Classification System16 elements for which regulatory cost estimates are not apparent).
Great gains in government growth can be had by speculating that great benefits are at hand if only
we regulate more. But from my perspective pointing only to benefits and net benefits is not
acceptable and is rejected out of hand.
WARNING: Estimates herein will exhibit laissez-faire bias, adding of apples and oranges, use of

both compliance and economic cost, haphazard distinctions between consumer and employer impacts,
consideration of economic transfers as well as compliance and efficiency costs, use of both high-end
estimates and best-estimates, old data set syndrome, and a disdain for general equilibrium analysis.
OK, Im exaggerating a little. But perhaps most damning, the author embraces a philosophical
stance holding that actual regulation and discipline require a different governmental posture than the
administrative-state model, one involving continually replacing government intervention (and
cronyism) with the evolution of private risk management and disciplinary institutions that surpass
government standards. The good things we wantfood safety, cybersecurity, financial stability,
environmental amenities and so onare forms of wealth and require competitive markets to
advance them. Actual regulation can be undermined by federal edict, good intentions of the
regulator notwithstanding. One rarely hears of tainted meat thats not USDA approved. A
regulatory agency isnt necessarily a regulatory agency if it replaces or interferes with what would
have been a better disciplinary regime.
On the use of general equilibrium models to quantify regulation, NERA Economic Consulting
notes that When evaluating policies that have significant impacts on the entire economy, one
needs to use a model that captures the effects as they ripple through all sectors of the economy
and the associated feedback effects.17
Elegance aside, unfortunately modeling never seems to convince critics even though the attempt to
gauge increases in costs of production that ripple through the economy is vitally important.
Researchers must continue to try however, despite the fundamental unquantifiable essence of
regulatory costs. An alternate approach for future researchers might be to better assess individual
agency costs instead, and direct the general equilibrium energy to specifying any cost overlap
across agencies that needs netting out, but that is a call others can make. It would also be useful to
indicate which rules no longer impose the same magnitude of costs.
The components of The Total Annual Cost of Federal Regulation chart include, generally:

OMBs pre-turn of the century baseline cost estimates for annual economic, social and
process regulations, but scaled down
Annual OMB compilations of a subset of executive agency major rules sporting both
annual costs and benefit estimates, since 2001
Rules featuring OMB-reviewed cost but not benefit estimates, compiled since 2001
Other executive agency major rules reviewed at OMB, but entirely non-quantified and
included as a placeholder
Independent agency costs (from the Government Accountability Office) where available
Paperwork cost estimates, based on hours reported by the federal Information Collection
Certain sector estimates and industry estimates to supplement governmental estimates

The final section of Tip of the Costberg notes numerous additional categories of costs left out of the
tabulation. For example, federal agencies do not generally consider job impacts as costs in their
regulatory analyses, a great national wonder that contributes to the consternation of many. Lost
liberties of the populace also do not register.
Alas, our descendants may learn that it is spending, not regulation, that is the tip of the costberg.

3. The Costs of Benefits

The bureaucrat begins, perhaps, by doing only what he conceives to be his sworn duty, but unless there
are very efficient four-wheel brakes upon him he soon adds a multitude of inventions of his own, all of
them born of his professional virtuosity and designed to lather and caress his sense of power.18
H.L. Mencken
On Politics: A Carnival of Buncombe
Life is sexually transmitted and always fatal
Most observers want agencies to measure benefits. I prefer shifting their emphasis.
Policymakers lack full understandings of the big picture ways in which various economic
regulatory agencies hampered the growth of the industries they oversee. They rarely recognize
such an issue, but it matters. So too does recognizing when health and safety ends can be adversely
affected by the bureaucratic regulatory model as well.
Common practice in assessing regulation emphasizes not so much the magnitude of costs, but
whether or not benefits sufficiently outweigh or offset those costs. But since benefits come in both
objective and subjective flavors, where agencies freely offset costs of a regulation with benefits to
create an agency-determined net benefit, rarely will any regulation fail to qualify in the agencies
eyes. Like taxes, regulatory costs are a consequence of a government program;19 yet they are held
to a different standard than other heavily documented government spending. For regulation,
casual offsets are more than just permissible, they foster a tendency to disregard costs altogether.
Net-benefit analysis is oxygen for a philosophy of ever expanding government; concerns that may
not necessarily even properly be regarded as public policy questions resolve in favor of expanded
state action. And when they do, they may ignore tradeoff questions regarding the accepted role of
government, the extent of other risks created by the regulation, alternatives the resources could
have been used for, the wealth of the nation, the means of financing the reduction in risk, costeffectiveness, the source of the hazard and countless other factors. Agencies now over-reach and
justify intervention citing ancillary co-benefits as noted by George Washington University
Regulatory Studies Center Director (and former OIRA director) Susan Dudley, conjuring
benefits too good to be true.20 But there is no parallel enthusiasm for acknowledging co-costs
in the bureaucracies. Agencies inevitably take credit, but benefits claimed for many rules are
actually costs if they undermine what insurance and other mechanisms would have done with
more heft.
Then again, benefit calculations often dont appear at all. In its recent annual reports to Congress
on the benefits and costs of regulations, OMB presents benefits for a tiny portion of the universe
of rules coming into effect. If a different set of rules with benefits and costs were to be presented
in any given year, the net benefit figure would be completely different.21
Cost-benefit analysis is a private sector tool. It is primarily an internal evaluation device rather

than one attuned to the context of agency decision-making when others pay the costs. There is no
single end of the political process: rather, there are conflicting goals.22 The private sector asks,
what is the impact on our bottom line if we do X? But such constraints are alien to agencies,
and discrete cost-benefit analyses are inapplicable tools. Even assuming agencies would not
overstate benefits, cost-benefit analysis has nothing to say about superior benefits that may have
accrued if an agencys budgetary allocation had belonged instead to another agency. (Conceivably
Congress, in a budgetary oversight capacity, can attempt to incorporate societal opportunity costs,
but accountability for significant or controversial regulations would be a better approach.)
The fact that costs of health and safety regulations are measured in dollars while benefits are often
presented as health effects when estimates are quantified, that ismakes objective benefit-cost
analysis satisfactory to all difficult. Do benefits outweigh costs if a rule costing $1 billion will save
1,000 lives? How about if the rule saves 75 lives, or only one life? No one argues that life is
priceless either way, but what if the resources could have saved even more or done more good
deployed otherwise. Even benefits of federal budgetary activities are difficult to compare, let alone
regulatory benefits. How does one for example, trade off benefits of federal outlays on air traffic
control versus money spent on welfare? Along with benefit estimates being possibly inflated,23
such ambiguities become greatly magnified in regulatory regimes that leave benefit assessments up
to separate agencies.
A benevolent dictator might save more lives and prevent more injuries by banning stairs and
requiring elevators in all homes (costly); painting white lines on rural roads (not costly), requiring
helmets in cars; or requiring, as one of my professors liked to note, a protruding dagger to replace
auto airbags to encourage safe driving and protect pedestrians (illustrative of risk tradeoffs).
The situation can deteriorate such that benefits become untethered from the alleged goal of the
regulation or agencys reason for being, as noted in new findings on the benefits of energy
efficiency standards by researchers from the Brookings Institution and Villanova University.24 In
Overriding Consumer Preferences With Energy Regulations, the bulk of benefits justifying
recent energy efficiency standards do not come from greenhouse gas reduction emissionswhich
are negligible and (in yet another departure) even ascribed as benefits to the world rather than
American citizens. Instead, the benefits derive from agencies correcting consumers irrational
behavior by forcing them to buy allegedly more energy efficient vehicles, lighting, washing and
cooling apparatus. This is abhorrent, and policymakers should discipline agencies to recognize
that compulsory reductions in consumer choices are costs, not benefits. Otherwise the potential
for abuse is strong; as the authors note, the burden of proof for any BCA conducted as part of a
review of regulatory proposals should be placed heavily on justifying any presumption of a
deviation from consumer sovereignty. To hold otherwise is to hold that regulators may
legitimately override any choices by individuals or firms that move them.
Moreover, persons enjoying the benefits of regulations and persons paying for those benefits are
not always, or perhaps rarely, the same people. Thus from the standpoint of society, the net-publicbenefit standard is not obviously fair. An agencys claim that a regulation produces net benefits
can skirt the question of whose benefits are promoted, and whose resources were used to achieve
those benefits, regardless of how benefits quantitatively exceed cost, and will likely ignore actions
of other agencies. Regulation can be made to appear cheap relative to everything else in the social
choice set, in economics jargon, and society induced to buy too much. Modern regulatory
control ought not entrench the ability for those who gain from regulation (including regulatory

bodies and rent-seeking businesses) to force a few to shoulder regulatory costs. As Wendy L.
Gramm, former administrator of OMBs Office of Information and Regulatory Affairs (again,
OIRA) noted in the Administrative Law Review:25
Enduring lessons from executive oversight over regulations are those we learn from economics: the
relatively few who derive large benefits from government actions have greater incentives to act to
influence policies than the many individuals who each pay small amounts for them. The voice of the
average consumer or taxpayer is not always heard or represented in the regulatory debate.
Regulation machinery can enable cronyism when it comes to liberalization, or removal of poor or
outdated rules. Economist Richard Williams writes: Most of the interest in any existing rules will
be by those who must directly comply with the rules and their incentives are usually to keep the
rules. Many of the rules, or at least a portion of them, were put into place at the behest of the
regulated industry in the first place, to raise the cost of rival firms.26 That creates pressures toward
regulation as an end in itself rather than for the benefit of society in general, and can render the
net-benefit discussion a phony one at the outset.
Regulatory benefits themselves can have opportunity costs. One could call it The Costs of
Benefits, and they can be wide-ranging. There are problems with priestly agency attitudes, the
costs of closing doors, distortions of industry structure (like antitrust, telecommunications,
electrical grid or cybersecurity regulation) and interference with normal market trajectories and
pricing experimentation. Such regulation can prevent superior pro-consumer, competitive
responses to alleged bad behavior, since companies dont operate in a vacuum. Supposedly
beneficial regulation can introduce consequences such that the private firms expected to carry out
the regulators decrees exit altogether (like small firms dropping health insurance). As weve noted
and will again, regulations can undermine institutions of liberty and principles of self-reliance, as
if these were non-benefits.
Many have stressed that regulation of the governmental kind can undermine real regulation. In a
1998 Cato Institute Policy Analysis, the author noted:27
But it is a mistake to assume that regulation necessarily involves the government. Much regulation in
the American economy is private, produced and enforced by independent parties or trade associations.
These private organizations can oversee market participants actions by different processes, such as
standard setting, certification, monitoring, brand approval, warranties, product evaluations, and
arbitration. ...The federal government should consider transferring regulatory functions such as
certification, inspection, monitoring, and product testing to independent parties; it should also consider
allowing independent parties to compete with federal agencies in setting standards.
None of this is to say that securing government-wide recognition of the significance of benefitcost tradeoffs (not just for a lone agency) and of the need to communicate benefits and costs in
common terminology wouldnt be an advance. It would be, but primarily because many
policymakers see no urgency for balancing rules against those of other agencies. Agencies think and
operate within their particular box; there is little means or inclination for agencies to assist with
government-wide priorities. The agency regulating one-wheeled SegWays or zip stix or motorized
unicycles may pay no heed to the one regulating bioengineered gills or five-foot squish-foam car

It took the rise of generally accepted accounting principles for large scale human free enterprise to
arise in the 19th century.28 The public sector is decades behind in conveying true costs for
endeavors that are compulsion rather than trade-based. Whether such initiatives as the
Department of Energys costly appliance energy efficiency requirements are net-beneficial will
never be agreed upon. Agreement doesnt even exist over whether house attic fans are an efficiency
net plus on balance, let alone complicated and highly regulatory green energy and conservation
proposals. So it makes more public policy sense for an agency cost focus.
Federal spending presumably generates benefits, but unlike regulation, the taxes individuals pay are
not offset by the benefits those taxes provide: No one speaks of a net tax benefit with the implication
that taxation costs nothing or that measurement is somehow secondary, and that we can increase
tax collection ad infinitum. Only grateful recipients would tolerate that, and only so long as the
plunder lasted. Similarly, regulations transfer wealth, benefits from those transfers do not accrue
equally to all, and costs do matter. Such fundamental disagreements argue for congressional
approval of regulations.
A technocratic pseudo-virtuous cost benefit approach neglects when command and control
undermines actual elevation of safety and health features as forms of wealth.
So here the emphasis will be costs.

4. Cost In Dollars, Cost in Common Sense

I cannot help fearing that men may reach a point where they look on every new theory as a danger,
every innovation as a toilsome trouble, every social advance as a first step toward revolution, and that
they may absolutely refuse to move at all.29
Alexis de Tocqueville,
Democracy in America, Book Three, Chapter XXI
Benefits are hard, costs are supposed to be easier. If only it were so simple.
Anyone may look up for themselves what taxes, the deficit and the debt cost. One cant do that as
easily for regulatory costs, yet much, perhaps most (time will tell), of what government does is
interventionist and regulatory in nature. Even direct compliance costs are profoundly indirect,
in comparison to direct taxation and spending; so policymakers have their hands full detailing
costs alone, let alone benefits.
Even seemingly obviously measurable spending presents challenges when it comes to measuring
the growth of government, as Robert Higgs notes; if Washington adds a billion to judiciary and
enforcement, but cuts a billion in farm subsidies, is government bigger or smaller? One cant really
tell. What about the reverse? It isnt obvious. You can measure people and dollars, sure; but theres
no common unit of account [to] scale the underlying reality satisfactorily.30 Even concrete
budgetary numbers cant be used from one time period to another to satisfactorily conclude
whether government has grown or not. Problems likewise haunt intertemporal and international
GDP comparisons despite their prevalence (and use by this author as well).
We need ways of assessing regulations quantity and impact, whether rules are beneficial, unwise,
crony-beholden or even vindictive. And institutions are needed for relieving society of both the
rules that prove unworthy and those responsible for promulgating them.

Costs are Subjective

There is always an easy solution to every human problemneat, plausible, and wrong.31
Henry Louis Mencken
Alas, assessing the costs of all regulators do is conveniently impossible. Cost measurement is
complex. The abstract notion that actual costs are experienced primarily internallyas a mental
evaluationby each affected individual and are therefore fundamentally not subject to measurement
by an external decisionmaker, and the facts that certain costs are experienced prior to the passage
of a regulation while other costs are created by the decision, are impossible to communicate let
alone translate into coherent policy.
Attempts to approach adequate precision will not be highly regarded by regulators, who usually
regard engineering or compliance costs as sufficiently descriptive of the burdens imposed. But as
economist James Buchanan (the 1986 recipient of the Nobel Memorial Prize in Economic
Sciences) put it, Cost cannot be measured by someone other than the decision-maker because
there is no way that subjective experience can be directly observed.32 The difficulty of regulatory

cost measurement is inherent, stemming from basic subjectivity and the slipperiness of measuring
costs and the more profound reality that no objectively identifiable magnitudes are available to
the third-party regulator.
This is why regulatory reform actually requires congressional reform rather than exaltation of
cost-benefit analysis; somebody has to answer to voters because cost tabulations, let alone benefit,
will never be adequate enough or sufficient to validate the regulatory enterprise and legitimize
social choice tradeoffs on public policy concerns.

Incentives to Understate Costs Match Incentives to Overstate Costs

Shut up, he explained.33
Ring Lardner
Civilization, in fact, grows more and more maudlin and hysterical; especially under democracy it tends
to degenerate into a mere combat of crazes; the whole aim of practical politics is to keep the populace
alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins,
most of them imaginary.34
H. L. Mencken In Defense of Women, 1918. p. 38.
Proponents of regulation claim, sometimes correctly and sometimes not, that regulated parties
overstate costs.
For example, the Pew Environment Group, in Industry Opposition to Government Regulation,
maintains that When regulations have been implemented, however, the compliance costs have
proved to be less and the benefits greater than industry officials predicted.35 The Economic Policy
Institute in Falling Prices: Cost of Complying With Environmental Regulations Almost Always
Less Than Advertised, says the same.36 Such claims abound, and no doubt are true sometimes.37
But it doesnt change the reality that costs still have to be measured and answered for with respect
to less glamorous rules too, yet are not.
Unseen costs get neglected. These advocates assume the existence of a free enterprise that does
not characterize our political and economic system; our mixed economy hosts widespread rentseeking and pursuit of government favors at best and cronyism at worst. Companies seek to
collude with government, a relationship Charles Murray called collusive capitalism,38 at which
point they are no longer properly regarded as industry or part of a free enterprise economy.
When administrative regulation and steering replaces competitive discipline as accepted public
policy, regulated industries seek regulation; they arent trying to avoid it, and they often established
it in the first place. In such a world as we have, regulated parties partner with regulatory agencies
to draft and then to keep rules, which lessens competition and can serve as protectionism. The
inclination for long stretches in a heavily regulated state isnt to deregulate, but to maintain
regulation, and in turn to imply that costs in the main, the regulatory enterprise as such are bearable
or rational, whatever complaints arise about the latest discrete rule. One could then expect new
and dubious categories of benefits to emerge to justify needless or cynical rulemaking. 39 In our
mixed, partial free enterprise economy, the federal government allocates over 20 percent of GDP
and heavily regulates that and much of the rest; the excess costs indict the regulatory state as such,

not just the particular air bag or catalytic converter rule.

On the complaint that agencies overstate costs because technology ends up changing the picture of
compliance and making it lower than expected, any such thing happening systematically could be
and should be built into agency Regulatory Impact Analyses, particularly where agencies describe
(or should describe) the regulatory alternatives under consideration that could achieve the same
end and why they select the alternative that they chose.
It is not controversial that costs will change over time or that new technology can lower future
compliance costs compared to early estimates; but like confusing overall costs of regulation with
the high profile debates surrounding this or that discrete rule, theres a deeper problem with
technological cost reductions being automatically a net plus. In classic seen versus the unseen
fashion,40 technology and society also would have improved had the resources been deployed elsewhere,
perhaps to far greater benefit. Relatedly, an overload of safety regulations can overwhelm, and
generate less safety.41
These are unmeasured costs well note again at the conclusion of Costberg.
Some regard the system of agency self-evaluation of regulation as broken, and emphasize agency
incentives to understate costs. As Randall Lutter and Richard B. Belzer write in Regulation
[G]overnment studies of regulations designed to protect health, safety, and the environment are
inherently self serving. The same agencies that evaluate performance also design and administer the
very regulatory programs that they are evaluating. It is hard to understand why anyone should expect
self-examinations to be objective and informative. Investors want businesses to be audited by analysts
without nancial conicts of interest. Scientists reject research that cannot be replicated independently.
Consumers flock to independent testing organizations rather than rely exclusively on sellers claims.
Only in the public sector, where bureaucracies are protected from the discipline of market forces, do we
rely on self-evaluations of performance.
Disclosure of regulatory costs get neglected by other means too. A July 2012 U.S. House
Committee on Oversight and Government Reform noted (bullets added):43
Agencies have also skirted the regulatory process through sue and settle agreements, misuse of
guidance documents, and abuse of emergency rulemaking process.

Sue and settle agreements are legal settlements, often the result of a lawsuit brought by
special interest groups that mandate subsequent regulatory action under a compressed timeline.
Rules issued in this manner are often unfair to job creators because they force specific agency
action often desired by environmental groups, while denying other stakeholders a seat at the
Guidance documents, while not legally binding or technically enforceable, are supposed to be
issued only to clarify regulations already on the books. However they are increasingly used to
effect policy changes, and they often are as effective as regulations in changing behavior due to
the weight agencies and the courts give them. Accordingly, job creators feel forced to comply.
Finally, agencies often abuse the emergency rulemaking procedures provided for in the
Administrative Procedures Act (APA). The APA authorizes agencies to issue interim final and

direct final rules under emergency conditions. These rules are issued without the benefit of
initial public comment, yet they are legally binding as of the date of publication. Often times
the emergency is a merely an unrealistic deadline in a statute. Abuse of the emergency
procedures completely deprives the public and job creators of their right to provide the agency
with feedback on the expected impact of the regulation before that regulation takes legal effect.
Relatedly agencies can overstate some public harm or social cost, implicitly reducing the cost
of their regulatory interventions. A prominent 2013 example occurred with respect to a new
concept of the social cost of carbon incorporated in a Department of Energy rule on microwave
oven energy efficiency without congressional approval. As the Wall Street Journal put it:44
[T]he Administration slipped this mickey into a new rule about efficiency standards for microwaves,
significantly raising what it calls the social cost of carbon. Team Obama made no public notice and
invited no comment on this change that will further tilt rule-making against products and industries
that use carbon energy.
Federal law requires the government to calculate the costs and benefits of its rules and projects. The
regulatory agencies are expert at rigging these calculations, but even they havent been able to hide the
enormous costs of President Obamas regulations under traditional economic measurement. The
Administrations solution? Simply redefine the economic and social benefits of reducing carbon.
In essence, the administrations estimate of the social benefit of reducing carbon has gone from
zero to $21 to $36 per metric ton over the past few years;45 fuel efficiency standards were net losers
until these changes were made, and the changes will be used to justify aggressive energy rationing,
regulation, and project delays in the future.
There are separate unmeasured costs at hand when a government agency like the Energy
Department elevates one feature of a product, here its efficiency, so-called, above all other
concerns like affordability and future production and access to the necessity of energy. The
problem of misrepresentation of benefits and intervention biases is a multi-agency one. As the
Competitive Enterprise Institute (this authors organization) has noted, the Environmental
Protection Agency: 46
[H]as refused to share with Congress the data upon which the EPA bases its highly implausible claims
of hundreds of billions of dollars in health benefits from recent regulations.
And that:47
CEI has had to take EPA to court over seven different Freedom of Information Act requests to force
release of public records of conversations among top agency staffers and outside groups on the
administrations war on coal and its attempts to build support for a carbon tax.
Clearly, coping adequately with regulatory costs and honesty regarding benefits presents
substantial challenges. They are insurmountable if outright avoidance of cost analysis and an
inclination to overstate harms (and in turn overstate the benefits of regulation) dominates. But as
long as preemptive regulation dominates economic and social regulatory policy, one can do worse
than rough estimates that nonetheless help allocate regulatory dollars in loose correspondence to
relative hazards or inefficiencies if were explicitly naming the assumption that regulators believe
they know best (addressed already and elsewhere herein), and if elected representatives are

required to approve major and controversial agency lawmaking rather than sit idly by. Imperfect
cost estimates can still help directing policy to where an accountable Congress believes benefits to
lie, and internalize the need to answer for the adequacy of cost analysis. In fact this later detail is
one of the necessary but not sufficient steps to improve regulatory cost analysis.
In the final analysis, given entrenched incentives to overstate and understate (or given the
incompatible philosophies regarding the question), accuracy of initial cost calculations may not be
as important as requiring agencies to compete for the right to regulate under the supervision of a
Congress accountable to voters for costs and for the benefits those costs fund. That changes the
calculus. Congress can choose to experiment with regulatory budget48 constraints based on the
potential benefits that an agency provides relative to other agencies that, say, save more or fewer
lives. It can shift regulatory cost-imposing authority to agencies to maximize benefits within that
appropriate constraint. At some point, such institutional accountability mechanisms help make it
apparent when it becomes better for policymakers to step off of social engineering and
paternalism, and to instead trust (voting) individuals to allocate their own resources to medical
care, smoke detectors, fire extinguishers and safer cars etc. than for regulators to be making
inferior choices via top-down allocation of those same resources.

On the Hotheadedness and Partisanship Over Efforts to Calculate Regulatory Costs; Or,
More Reasons Official Disclosure Needs Amplification
Now the sole remedy for the abuse of political power is to limit it; but when politics corrupt business,
modern reformers invariably demand the enlargement of the political power.49
Isabel Paterson
The God of the Machine
We dispute their numbers. We dont have hard, concrete numbers, but we dispute them.50
Former White House press secretary Jay Carney addressing criticism
of administration claims regarding paid enrollments in Obamacare.
The two enemies of the people are criminals and government, so let us tie the second down with the
chains of the constitution so the second will not become the legalized version of the first.
Thomas Jefferson
The uncertainty over the aggregate costs of regulations despite over a decade of OMB reports to
Congress on the benefits and costs of the regulatory enterprise provides some backdrop for
reflecting on one of the days heavily cited comprehensive regulatory cost surveys, that prepared
by Nicole V. Crain and Mark Crain.
The newest edition of the report, with updated economic modeling, was published by the
National Association of Manufacturers, and the overall cost to the economy is estimated as $2.028
trillion annually.51 Crain and Crain break costs up into four main categories:

Occupational Safety/Heath & Homeland Security:
Tax Compliance:

$1,448 billion
$330 billion
$92 billion
$159 million

The version of the report prior to the NAM publication had been prepared for the Small Business
Administrations Office of Advocacy. That report came under heavy attack for its $1.752 trillion
annual cost figure, 52 particularly for its employment of a general equilibrium model using World
Bank data to estimate the costs of economic regulation, the largest component.
Whatever flaws exist (and Crain and Crain responded in great detail to those), it was
inappropriate for the administration to distance itself in such dismissive fashion from the Small
Business Administrations overall effort to establish and clarify regulatory impacts. The SBA, after all, is
a part of the same executive branch of government (although it is technically an independent
agency), and OMBs duty is to strive to reconcile data differences and unify around some
defensible narrative regarding the aggregate scope of regulation. Instead, we had Mr. Sunstein
demeaning cost estimates not far out of line with what OMB itself once embraced back in an era
when costs were surely lower than today. An official White House blog post even lamented that
One group is even claiming that the regulations currently on the books cost the U.S. economy
$1.75 trillion in 2008.53 Note that dismissive one group? It was Obamas own SBA.
This official attack on the SBA by the very administration under which the report appeared was
inconsistent with Obamas Executive Order on Improving Regulation and Regulatory Review54
and with the reality that we know very little about the regulatory states impacts and we fail to
account for much of it, as well see in future sections. The SBA reports scope is not duplicated by
critics or by any other government department.
The latest SBA report broke regulatory costs into five components totaling $1.752 trillion annually.
For context and reference, this breakdown may be seen alongside several other turn-of-thecentury-era cost estimates in the chart Estimates of the Cost of Regulation: Late 20th Century, Early
21st Century. OMB formerly relied on similar SBA regulatory cost surveys, and although those
earlier SBA report iterations did not use the World Bank data, the OMB-tolerated overall cost
figure still exceeded $1 trillion over a decade ago, regarded in todays dollars. The Government
Accountabilty Office (GAO) weighed in during the 1990s as can be seen; and notably OMBs 2002
estimates exceeded those of SBA during that era.
CHART: Estimates of the Cost of Regulation: Late 20th Century, Early 21st Century
The 2010 SBA reports findings were in line with the findings of its earlier compilations that
employed somewhat different approaches. The 2010 SBA report updated a 2005 report by Mark
Crain, which did not include the regression model based on World Bank survey data, and found
2004 regulatory costs of $1.1 trillion.55 All else equal, adjusting those various cost estimates would
put them in the ballpark of the more recent number not even including the cost of new rulemaking
regimes such as the Department of Homeland Security and the Dodd-Frank financial rules that
are seemingly included by implication in the new 2014 Crain and Crain report. In a still earlier
October 2001 report by Mark Crain and Thomas D. Hopkins, the authors noted regulatory costs
of $843 billion,56 which would be $1.1 billion in 2013 dollars, as Estimates of the Cost of Regulation:
Late 20th Century, Early 21st Century shows.
That report, in turn, had updated still earlier analyses, such as Thomas Hopkins original 1995
analysis for SBA57 that OMB employed in the mid-90s to early 2000s.

Thus recent criticisms of the current Crain and Crain report would also apply to some legacy and
modern OMB estimates, although, alas, critics do not present alternative defensible total cost
estimates that recognize the magnitude of federal economic and social intervention. For example,
a Congressional Research Service report entitled Analysis of an Estimate of the Total Costs of
Federal Regulations,58 which, rather than finally tabulating regulatory costs in an authoritative
fashion after all these years, shrugs over complexity and demeans the SBA effort. The
congressman who solicited the study was clearly not motivated by trying to find out what the cost
of regulations are. Again, Crain and Crain responded in detail to the criticism.59
Regulatory cost measurement is problematic, but much of the outrage seems geared toward
rationalizing agency regulatory intervention and diverting attention from over-reach. But there
exist 20 years of regulatory costs roundups; where OMB or lawmakers objected to findings,
demands for the creation of alternatives would have been an actual contribution compared to their
current behavior.
Much of the problem appears not to be with SBA/Crain and Crain but with the idea of
measurement as such. For some critics, the impulse seems to be to condemn the conservativeness
of those who called for disclosure and accountability. For example, a report called Setting the
Record Straight, editorialized, we concluded that the Crain and Crain report is sufficiently
flawed that it does not come close to justifying regulatory reform efforts, such as the REINS Act,
which seek to limit protection of people and the environment.60 No one wants to limit protection
of people and the environment, so the comment is belligerent. Rather, some disagree that
command and control regulation always best secures those values, and believe instead that top
down regulation can harm those values. There is a substantial body of research on that notion,
and most policy analysis of the laissez-faire persuasion routinely enough condemns crony
capitalism and various offshoots such that the absence of any recognition of regulatory abuse in
Setting the Record Straight make it a bad polemic. Crain and Crain responded to the Setting
the Record Straight critique also, including to questions about access to their data.61
There at least needs to be a balancing of concern with agencies self-calculating burdens of their
own rules, and business capability in exploiting the regulatory process. But there is none.
SBA should continue future editions of its regulatory costs studies. The universe of regulations
subject to review by the OMB is now far more limited compared to what SBA attempted to
encompass, as well see. Even the Crain and Crain report did not cover everything; the authors
noted that [T]he report does not account for a number of indirect or second-order costs of
regulations.62 That is, ripple effects of regulatory cost increases that flow from one sector to
another are not captured. Further, the report did not measure reduction in dynamic efficiency,
such as slowing innovations that would lead to productivity gains and therefore general economic
expansions over time.63
The magnitude of what can be assembled, plus that of the unmeasured, indicate substantial
unappreciated costs. Job number one is to measure better and build better tools to begin
supervision of an unsupervised regulatory process. Criticism would be more valuable if directed at
the fact that be that the U.S. Government doesnt have its own comprehensive data. Rather than
criticize the SBA use of a World Bank index, the criticism should have been, What? The United

States Small Business Administration was forced to resort to World Bank data to measure United
States regulation?

A Note On The Administrative and Enforcement Costs of Regulation

Do you not know, my son, with what little understanding the world is ruled?
Pope Julius III (1487-1555)
Spending by federal agencies to enforce regulations does not show up in either SBA reporting or
the OMBs annual benefits and costs reports. That is appropriate, since these are budgetary costs
that already appear in each years fiscal budget; theyre paid for by our taxes. In the Regulators
Budget for estimated fiscal year 2016 outlays, the Regulatory Studies Center at George Washington
University and the Weidenbaum Center of Washington University in St. Louis find the portion of
the U.S. Budget devoted to regulatory activities to be $66.8 billion.64
Something big gets administered via this spending; that is the subject matter of Tip of the Costberg.

5. Regulatory Costs In the Days Before Trillion: Or, Estimated

Regulatory Costs at the Turn of the Century (Give or Take)
A billion here, a billion there, and pretty soon youre talking real money.65
Quote attributed to Sen. Everett Dirksen that he probably never said.
Overall regulatory direct and indirect compliance costs and secondary and ripple effects are
subject to overwhelming uncertainty no matter who performs the estimate.
The basic framework for aggregate costs presented in Tip of the Costberg starts with what OMB
during one extended era disclosed about the estimated annual costs of pre-turn of the century
rules. OMBs aggregate regulatory cost tallies once incorporated aggregate cost surveys like those
of Thomas Hopkins, and of Hahn and Hird,66 but these ended with a thud after 2001; OMB
jettisoned aggregate estimates and switched to 10-year lookbacks, as if the sweep of the entire 20th
century had little bearing. OMB invoked alleged shortcomings in the Hahn/Hird study brought up
by two commenters on its 2000 benefits and costs report, but nonetheless noted that At the same
time, it is the only study available that offers a comprehensive estimate of the benefits and costs of
environmental, health, and safety regulation.67
By the time of the final 2002 report, the aggregate estimates were gone altogether and the ten-year
lookbacks reigned: 68
In our future annual reports, we plan to improve the estimates by focusing on the last ten years of
major Federal regulations.We do not believe that the estimates of the costs and benefits of
regulations issued over ten years ago are reliable or very useful for informing current policy decisions.
Thats great for OMB and its workload, but compliance remains an issue for those subject to older
regulations; they dont get to comply solely with the most recent 10 years of rules, they must obey them all. Its
a rather large shirking. There is still nothing to officially replace the numbers, except SBAs
Therefore, at the middle of the second decade of the new century, its a good time to reflect on
aggregate costs, as they were once estimated at OMB, how they might be adjusted, and how they
compare to other estimates.
Back in 1992, an influential study by Thomas Hopkinswhose 2000 studies and later
collaborations with Crain were noted above and served as the basis for much OMB estimation and
reflectionpegged the then-cost of regulation at $400 billion in 1988 dollars over and above
those costs of government that show up in the budget.69 Another report that same year for the
Regulatory Information Service Center put regulatory costs at $473 billion in 1988 and $542
billion in 1991 dollars.70
A 1995 General Accounting Office (now Government Accountability) report reviewed
Hopkins and other research and updated the Hopkins figures for inflation, and put 1994
regulatory costs at $647 billion (in 1995 dollars),71 an amount that would be a near urban
legendary $992 billion in 2013 dollars even assuming no new regulation in 20 years.

Because they were derived from pre-1990 programs, the GAO figures left out big-ticket regulations
flowing and yet to flow from such contemporary laws as the Clean Air Act Amendments of 1990,
the Americans with Disabilities Act, the Family and Medical Leave Act, a 27 percent hike in the
minimum wage, and the FDAs Nutrition and Food Labeling Amendments. (These were 20 years
ago; new regulations in homeland security, health care, environment and finance characterize the
current centurys great unknowns.)
It was in this post-GAO environment that, a little over a decade ago, before OMB management
took to calling SBA regulatory cost estimates an urban legend, OMBs own figures were within a
stones throw of the trillion-plus magnitude now reported by SBA. OMBs own regulatory cost
estimates for social, economic and process regulation in its Draft Report to Congress on the Benefits
and Costs of Federal Regulations in the March 28, 2002 Federal Register added up to $954 billion in
2001 dollars,72 or $1.255 trillion in todays dollars, without including the past decades new
mandates. Thats comparable to the current controversial Crain and Crain and to the earlier SBA
iterations, and even to the new NAM study finding $2 trillion in costs. A few more details on some
of the cost breakdowns will appear shortly, but OMBs aggregate estimates by category for the
handful of rules reviewed or surveyed as of 2001 appear in Total Annual Costs of Regulations as of
Sept 30, 2001 According to OMB.
CHART: Total Annual Costs of Regulations as of Sept 30, 2001 According to OMB
Note again in this more detailed breakdown of costs by environmental, economic and other
categories that OMBs official roundup for regulatory costs was $954 billion, in 2001 dollars and
well before the legislative/regulatory initiatives of the last decade and a half under Presidents
Bush and Obama. In 2013 dollars, the figure is $1.255 trillion.
Just for reference with respect to OMBs $954 billion turn of the century figures, in its subsequent
final 2002 Report to Congress on Benefits and Costs, by which time OMB had set out on its path of
disavowal of aggregate cost estimates, OMB presented a separate tally of costs of a set of selected
rules reviewed between April 1995 and September 2001 (a 6 year period) of $53.4 billion in
2001 dollars ($70 billion in 2013 dollars); see Estimates of Annual Costs of Major Federal Rules - 19952001).73
CHART: Estimates of Annual Costs of Major Federal Rules - 1995-2001
What is interesting here is that OMB allowed that Based on the information released in previous
reports, the total costs and benefits of all Federal rules now in effect (major and non-major,
including those adopted more than 10 years ago) could easily be a factor of ten or more larger than
the sum of the costs and benefits reported.74 (Italics added.) This is an acknowledgement of the
inherent incompleteness of OMB reports, and that the aggregate number jettisoned since the 2002
draft report wasnt necessarily off base. Again, there is still nothing official to replace the numbers
apart from SBAs reports.
OIRA Administrator John Graham, under President George W. Bush, captured the tenor of the
times when aggregate estimates were downplayed:75

Although the Crain and Hopkins estimate is the best available for its purpose, it is a rough indicator of
regulatory activity, best viewed as an overall measure of the magnitude of the overall impact of
regulatory activity on the macro economy.The underlying studies were mainly done by academics
using a variety of techniques, some peer reviewed and some not. Most importantly, they were based on
data collected ten, twenty, and even thirty years ago. Much has changed in those years and those
estimates may no longer be sufficiently accurate or appropriate for an official accounting statement.
The factor of ten or more was repeated subsequently, for example in a February 3, 2003 OMB
memo, With New Information on Federal Regulations, OMB Releases Draft Cost-Benefit
Report76 as well as in the 2004 final report (but with ten year lookbacks rather than six year).77
The explicit emphasis that costs could be substantial was downplayed in future reports, replaced
by insistence that reported monetized benefits continue to be significantly higher than the
monetized costs.78
The disclosure ethic at OMB has weakened, where a relative handful of new regulations are
assumed to average a few billion in new costs annually, and where the prior 10 years has become
acceptable to the bureau as adequately capturing aggregate impacts. Alongside the loss of
aggregate estimates, a regular chart containing a lookback to 1981 of rules OMB reviewed under
E.O.s 12866 and 12291 no longer appears (the last time it did was in the 2009 annual report).79
So the 10 year focus characterizes all regulatory review now. For example, the Draft 2015 Report to
Congress on the Benefits and Costs of Federal Regulations from the OMB pegs the cumulative costs of
120 selected major regulations during the decade 2004-2014 at between $68.4 and $102.9 billion,
in 2010 dollars; Meanwhile, the estimated range for benefits spanned $260.9 billion to $981.0
billion.80 OMBs chart for the (only) 13 rules sporting both benefit and cost analysis added during
the fiscal year ended September 2014 shows costs of from $3.0 to $4.4 billion were added (2010
OMB had noted in the 2011 edition that On average, roughly $5 billion in annual costs have been
added each year to the total regulatory burden.82 Now OMB says $10 billion "As the figures
show, the monetized additional costs of private mandates tend to be around or below $10 billion
per year.83
Hahn and Hird and others deserve enormous credit for the groundwork they did, making the early
Hopkins, Crain and Hopkins, GAO and OMB reports possible in the first place. In my opinion
their analysisand the spirit of it and the urgency of preparing similar analysisdid not deserve
to be cast off by OMB, and left unreplaced. Moreover my reading of the Regulatory Right to
Know Act (the decrees of which OMB prefaces in its reports) requires OMB to prepare actual
aggregate regulatory cost estimates, not merely the 10-year roundup:84
[T]he Director of the Office of Management and Budget shall prepare and submit to Congressan
accounting statement and associated report containingan estimate of the total annual costs and
benefits (including quantifiable and nonquantifiable effects) of Federal rules and paperwork, to the
extent feasible(A) in the aggregate; (B) by agency and agency program; and (C) by major rule.
But it is more convenient to interpret aggregate as referring solely to the current year or decade.
The problem with that concession over a decade ago is weve got no OMB-sanctioned picture of
the cost of regulation for anything but a relative few rules of the first few years of the 21st century.

Thus, a report like Tip of the Costberg.

Again, for summary purposes, for context, and because the information needs to not be forgotten,
the chart Estimates of the Cost of Regulation: Late 20th Century, Early 21st Century, summarizes some
of the many urbanly legendary reports on regulatory costs from OMB, SBA, GAO, Hopkins
and Crain in their original dollars and in updated 2013 figures.
CHART: Estimates of the Cost of Regulation: Late 20th Century, Early 21st Century

6. A Sense of Proportion: What Is Not Reviewed Annually by OMB

I once sent a dozen of my friends a telegram saying flee at once all is discovered. They all left town
Mark Twain (Or, so the Internet says)
Humor me with specifics.
Michael Douglas as Nicholas Van Orton in The Game (1997)
The champions of socialism call themselves progressives, but they recommend a system which is
characterized by rigid observance of routine and by a resistance to every kind of improvement. They
call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but
they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government
omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world
into a gigantic post office. Every man but one a subordinate clerk in a bureau.
Ludwig von Mises, Bureaucracy (1944)
The body of rules getting officially reviewed has never been the majority. As of year-end 2014,
according to the Regulatory Plan and the Unified Agenda of Federal Regulations, 60 federal
departments, agencies and commissions had just completed or were at work on 3,415 rules and
regulations at various stages of planning and implementation (pre-rule, proposed, final,
completed); of these, 200 were acknowledged to be economically significant.85 Meanwhile, by
calendar year end 2014, 3,554 rules had been finalized.86
Todays stock presentation holds that such economically significant rules (those agencies
anticipate will have an economic impact of $100 million or more) account for the bulk of
regulatory costs. The OMB intones that the benefits and costs of major rules, which have the
largest economic effects, account for the majority of the total benefits and costs of all rules subject
to OMB review.87
Subject to OMB review is a necessary qualifier with economically significant implications,
one might say. The unreviewed status of most rules small and large, such as controversial
independent agency rules like the Federal Communications Commissions net neutrality order,
cast doubt on the implied assertion that the annual benefits and costs report is somehow inclusive
and comprehensive. OMBs once-common recognition that costs could be significantly more than
made explicit in its annual reports was more helpful. The Estimates of Annual Costs of Major Federal
Rules - 1995-2001 table presented earlier that acknowledged all rules, not just rules subject to OMB
review, could greatly increase cost was important information, but has vanished a generation
In essence, OMBs cost-benefit breakdowns incorporate only benefits and costs of major rules
that agencies or OMB have expressed in quantitative, monetary terms, omitting numerous
categories and cost levels of rules altogether.
For fiscal year 2014 for example (October 1, 2013 September 30, 2014), OMB reviewed 18
executive agency major rules with some combination of cost and benefit estimates,88 compared to,

for example, the 3,554 rules finalized in calendar year 2014. Of these, only 14 featured both cost
and benefit calculations expressed in dollar terms. This is the block that OMB features
prominently in its annual expositions of net benefits of the regulatory enterprise. OMB estimates
that this subset of rules sports anticipated costs of between $3.0 billion to $4.4 billion in 2010
dollars.89 Thirty-three others implemented budgetary spending programs; such budget rules are
officially considered transfers rather than regulations.
Plenty gets left out. As Crain and Crain noted in 2010, [R]egulations implemented directly
through the legislative process are outside the OMB review process. Furthermore, the totality of
rules, both existing and new, with anticipated impacts below $100 million, and not subject to the
Paperwork Reduction Act, are also outside the OMB review process.90
Still further, OMBs cost-benefit roundup leaves out independent agencies compliance costs,
something well review later. As indicated over a decade ago in its 2002 Report to Congress, OMB
does not review regulations of the independent agencies or any regulations that are not
determined to be significant under the E.O. 12866 definition.91
OMB does acknowledge the non-triviality of the matter. Heres an OMB disclaimer from 2011:92
It is important to emphasize that the figures here have significant limitations. When agencies subject
to Executive Orders 13563 and 12866 have not quantified or monetized the benefits or costs of
regulations, or have not quantified or monetized important variables, it is because of an absence of
relevant information. Many rules have benefits or costs that cannot be quantified or monetized in light
of existing information, and the aggregate estimates presented here do not capture those non-monetized
benefits and costs. In fulfilling their statutory mandates, agencies must often act in the face of
substantial uncertainty about the likely consequences. In some cases, quantification of various effects
is highly speculative. In addition, and significantly, prospective estimates may contain erroneous
assumptions, producing inaccurate predictions... While the estimates in this Report provide valuable
information about the effects of regulations, they should not be taken to be either precise or complete.
The upshot is that measured and reviewed major, significant or economically significant rules at
any given time are a fraction of the total number of rules in the pipeline or finalized; and the
number with cost-benefit analysis an even smaller proportion despite repeated official emphasis on
official claims of regulatory benefits exceeding costs. Both benefit calculations and cost
calculations for the regulatory enterprise seem glaringly inadequate.
In a 2012 report Searching for a Regulatory Tsunami in Calm Seas, an unconcerned OMB
Watch (now Center for Effective Government), says of the $100 million threshold for
economically significant rules that: This number has not been adjusted for inflation since
centralized review by OIRA began in 1980, even though the costs of goods and services have
increased over the past 30 years.93 In their view, the rise in economically significant rules in recent
years is due to inflation rather than rules being more burdensome. Perhaps, but binding rules that
were never classified as economically significant rules years ago now may be significant.
So how much review happens? We require a sense of proportion. In its latest 2015 Draft Benefits
and Costs report, OMB tells us that From fiscal year 2005 (FY 2005) through FY 2014, Federal
agencies published 36,457 final rules in the Federal Register. OMB reviewed 2,851 of these final
rules under Executive Orders 12866 and 13563.94

OMB reviews significant rules, not just economically significant or major rules; nonetheless, still
fewer than 10 percent of all rules are reviewed whether or not costs and benefits enter into the
picture in any way. As for costs, we can also say a bit about claims that the overall regulatory state
provides more benefit than cost by looking at how many and what proportion of rules whose costs
we know anything about whatsoever.
The table The Funnel of Gov -- On the Depth of Regulatory Cost Review, 2001-Present, shows that of the
flow of several thousand rules issued by agencies, just a relative handful get OMB-reviewed cost
analysis, let alone cost-benefit analysis. The chart depicts major rules reviewed during the fiscal
years 2001 to the present, and shows the smaller proportion of rules that have any cost analysis
whatsoever. The proportion of major rules with cost analysis averages around 35 percent; the
proportion of all rules with any reviewed cost analysis at all as a percentage of the annual flow of
final rules in the Federal Register has averaged just .46 percent. In any given year, the percentage of
all rules that have cost analyses reviewed by OMB has never reached one percent; the highest was
.8 percent. Benefits fare even more poorly.
CHART: The Funnel of GovOn the Depth of Regulatory Cost Review, 2001-Present
But the absence of relevant information does not discourage the passion for regulating. Even
agencies officially subject to the relevant orders may not supply cost estimates when they ought.
Nobodys head rolls if they dont.
Furthermore, as the Federal Register has noted:
The Regulatory Plan and the Unified Agenda do not create a legal obligation on agencies to adhere to
schedules in this publication or to confine their regulatory activities to those regulations that appear
within it.95
So if an agency prefers not to quantify costs of a rule, it simply may not, and it doesnt appear.
(This is why points of order for Congress to object to any rule need consideration, rather than
merely objections to major or economically significant rules tied to cost estimates). A related
concern is the imposition of federal mandates on states; agencies are interpreting their own quality
of adherence to mandate relief efforts, and may acknowledge too few of their rules that trigger
a mandate. While policymakers wouldnt dream of doing away with the fiscal budget that tracks
government spending, a lack of transparency and accountability for regulatory costs prevails
despite ever prominent regulatory intervention.96
Benefit analyses are highly sensitive to basic assumptions about how regulations translate into
benefits and whose opinions carry the day. Both there and on the cost side, vast gaps rule. The
bottom line here is the charge of urban mythology appears unwarranted, and even if it were valid,
its not obvious how OMB would know.

7. A Baseline for Aggregate Annual Economic Regulation Costs: $402

Economic control is not merely control of a sector of human life which can be separated from the rest; it
is the control of the means for all our ends. And whoever has sole control of the means must also
determine which ends are to be served, which values are to be rated higher and which lower-in short,
what men should believe and strive for.97
Friedrich A. Von Hayek
Economic Control and Totalitarianism,
The Road to Serfdom
When we must wait for Washington to tell us when to sow and when to reap, we shall soon want
Thomas Jefferson
I cannot help fearing that men may reach a point where they look on every new theory as a danger,
every innovation as a toilsome trouble, every social advance as a first step toward revolution, and that
they may absolutely refuse to move at all.
Alexis de Tocqueville
A 2013 study called Federal Regulation and Aggregate Growth by two North Carolina
economics professors reckons that the United States $15 trillion GDP could be almost $54 trillion
Regulations overall effect on outputs growth rate is negative and substantial. Federal regulations
added over the past fifty years have reduced real output growth by about two percentage points on
average over the period 1949-2005. That reduction in the growth rate has led to an accumulated
reduction in GDP of about $38.8 trillion as of the end of 2011. That is, GDP at the end of 2011 would
have been $53.9 trillion instead of $15.1 trillion if regulation had remained at its 1949 level. One
channel through which regulation has reduced output is TFP. We find that federal regulation can
explain much of the famous and famously puzzling productivity slowdown of the 1970s.
As Ron Bailey at Reason magazine summed it up in Federal Regulations Have Made You 75
percent Poorer, the two percent reduction in annual economic growth implies that the average
American household receives about $277,000 less annually than it would have gotten in the
absence of six decades of accumulated regulationsa median household income of $330,000
instead of the $53,000 we get now.100
Using numbers of pages in the Code of Federal Regulations as an independent variable in creating
a proxy for regulatory costs may be problematic, but even if this study over-shoots, such numbers
are gargantuan. I will not contend in this report that regulations costs tens of trillions of dollars a
year, although, as the final chapter in Costberg shows, there are numerous categories of
governmental costs that do not get counted in any way whatsoever. I wish this number from
Federal Regulation and Aggregate Growth, however, to provide some context for the
placeholder of roughly $400 billion in economic baseline costs the reader will see employed here,

and into which future official OMB and other federal data on regulatory costs will be
So lets step back a bit. The United States has a GDP of over $17 trillion, and a capital stock of
wealth vastly larger.
Yet the last time OMB had anything quantitative to say on the matter of the aggregate cost of
economic regulation (that is, not solely the health- and safety-oriented social regulation
emphasized by OMB today in its annual benefits and costs reports covering only executive branch
agencies) was in Appendix C of its 2002 draft, not final, Report to Congress on Estimates of the
Aggregate Costs and Benefits of Regulation.101 Economic regulation, as defined by OMB in that
era, restricts the price or quantity of a product or service that firms produce including whether
firms can enter or exit specific industries.102
This category was real mess, given the lack of formal estimation and the assumptions and guesses
that necessarily went into establishing aggregate estimates. Today, given the fact that much
economic regulation is issued by independent agencies that escape even OMB review, the lack of
transparency remains.
In any event, OMB used to catalog economic efficiency costs and transfer costs. Referencing prior
research in the appendix of the 2002 draft report, OMB noted that the efficiency costs of
[domestic] economic regulation amounted to $80 billion.103 In support of a figure of an overall
$150 billion for efficiency costs of rules covering both domestic commerce and international trade,
OMB then referenced two studies of the time, one by the Organization for Economic Cooperation
and Development104 and one by the Council of Economic Advisers. OMB noted that the
contemporary Hopkins estimate of a trade barrier component of these economic efficiency costs
may be too low.105 OMB then invoked the 2001 Small Business Administration report by Mark
Crain and Thomas Hopkins in support of a larger estimate.106
Note those are efficiency costs, and may be seen in Total Annual Costs of Regulations as of Sept 30,
2001 According to OMB, a chart we also referenced earlier.
Also included in Total Annual Costs of Regulations as of Sept 30, 2001 According to OMB is $337
billion in transfer costs (shifts from one pocket to another). This is derived from Table 13 in OMBs
2002 Draft Report to Congress. Recognizing such costs is worthwhile given the analogy to income
transfers in the fiscal debate, and given that nowhere else are such economic interference costs
acknowledged. OMBs estimate of economic efficiency and transfer regulatory costs totaled $487
billion in 2001 dollars, or $641 billion if regarded in 2013 dollars. Meanwhile for comparison, the
economic regulatory cost component of Crain and Hopkins was $435 billion, as compared to their
total regulatory cost at the time of $843 billion.107 OMB at the time, then, reckoned higher costs
than Crain and Hopkins; for line-by-line comparisons in categories, refer back to Cost of Federal
Regulation: Late 20th Century, Early 21st Century.
Well adjust OMBs $641 down considerably, even though comparable cost magnitudes would
hold for 2001 to the present, making todays economic costs arguably considerably higher.
However were not making that assumption, merely noting that we could, especially since OMBs
yearlies only encompass a few dozen rules and leave out the most relevant independent agencies.

Beginning with the 2005 Crain report on regulatory costs, regression estimates were used in part
to assess economic costs, and some costs that herein I will refer to as social rather than
economic were merged into Crains economic category. Therefore, here I employ a fusion of
the OMB 2002 and the Crain & Hopkins 2001 report to SBA108 to designate a rough pre-turn of
the century annual cost of economic regulation. This helps to keep economic and social regulatory
costs segregated here and in future updates. It also helps with presenting ongoing departmental,
agency and sectoral estimates, with our turn of the century number occupying a sort of anchor
Since newer figures for international trade impacts exist, here I subtract trade regulation cost
figures entirely from these earlier just-noted aggregates and instead include a placeholder for the
new. In 2013s eighth update (the ninth is tentatively promised for December 2015) of the U.S.
International Trade Commissions Economic Effects of Significant U.S. Import Restraints, the
Commission found that the simultaneous liberalization of all significant import restraints
quantified in this report would increase annual U.S. welfare by $1.1 billion per year by 2017.109
That is down from 2.6 billion in the 2011 update, and down from $4.6 billion in the 2009
Since, as Crain noted in the 2005 SBA report, The ITCs methodology takes into consideration
the direct efficiency losses associated with international trade restriction,111 the multiplier of two
that had also been employed in earlier reports including OMBs 2000 Costs and Benefits to estimate
transfer costs was employed. Here, that same approach would imply approximately $2.2 billion in
transfer costs from trade restrictions, for a total cost of international trade regulation of (only) $3.3
billion compared to $132 billion in Crain and Hopkins 2001.
As noted, the $435 billion Crain and Hopkins overall 2001 estimate of aggregate economic costs,
was less than OMBs estimate then of $487 billion, urban legends notwithstanding. Starting with
the lower Crain and Hopkins figure and subtracting the entire then-far-larger-estimate of
international trade restrictions of $132 billion (which they had apportioned within their estimates
of efficiency and transfer costs112) yields a rough $303 billion placeholder for general turn of the
century economic regulation, or $399 billion in 2013 dollars. This may be seen in Principia
Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention, as may be the mere $3.3
billion just noted for international trade regulation, understated though it may be.
By summing these estimates and then folding them in N-dimensional hyperspace, blowing on
them twice and taking the non-derivative, we arrive at an estimate of economic regulatory costs of
$402.05. Well, OK, we merely added them. Economic regulations and trade restrictions appear in
separate rows in Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention,
to enable regular updating of the latter and improvement of the former should it become possible.
Our $402 billion placeholder is considerably below OMBs $487 billion in original 2001 dollars, over
a decade later, let alone OMBs $641 billion in current dollars. It is also below the Crain and
Hopkins estimate at the time of $435 billion in the original 2001 dollars. Note that this
placeholder for economic regulations does not include environmental or workplace regulations.
An additional economic cost is generated by policy uncertaintyover regulations, monetary
policy, foreign policy, and fiscal policy and the national debt. A Vanguard study put this
cumulative drag on the economy at $261 billion just since 2011, noting that without this

uncertainty tax, real U.S. GDP could have grown an average 3% per year since 2011, instead of
the recorded 2% average in fiscal years 2011-12.113 These additional costs of government are
noted for context, but are not added to economic costs, since I will here regard such costs as captured
in the overall estimate we have, unlikely as that may be.
Note that here Ive not assumed any additional economic regulatory costs in the entire sweep of
time since the 1990s. Well look at such new policies as the Dodd-Frank financial reform and the
Patient Protection and Affordable Care Act later; well also note the relative paucity of
information on economic regulatory costs in sectors generally, such as railroads, the airline
industry, housing and elsewhere.

8. A Baseline for Aggregate Annual Social/Safety Regulation Costs:

$473 Billion
Wherever we look, the work of the chemist has raised the level of our civilization and has increased the
productive capacity of the nation.114
John Calvin Coolidge
The inhabitant of the United States learns from birth that he must rely on himself to struggle against
the evils and obstacles of life; he has only a defiant and restive regard for social authority and he
appeals to its power only when he cannot do without it.115
Alexis de Tocqueville
Democracy in America, Chapter Four, On Political Association In the United States.
OMBs data on economic regulatory costs (of the efficiency and transfer cost varieties) were
covered above, and a new for-the-time-being baseline of $399 billion presented ($402 billion when
trade restrictions are included).
Now, lets look at OMBs estimates of aggregate cost of social (health and safety) regulation. These
are the rules OMB now emphasizes in its annual Report to Congress on the Benefits and Costs of
Federal Regulations (where it examines executive agency rules, not independent agency rules).
OMBs four categories of social regulation at the turn of the century were environmental (EPA),
transportation, labor and other social. OMBs aggregate estimate for these categories of social
costs at the turn of the century stood at $277 billion in 2001 dollars, or $364 billion in 2013
dollars. This may be observed in the above-noted chart Total Annual Costs of Regulations as of Sept
30, 2001 According to OMB.
Since that time, OMB has supplemented those basic divisions with certain annual costs for the
Departments of Agriculture, Energy, Justice, Health and Human Services, Housing and Urban
Development, and Homeland Security.
The chart OMB Regulatory Cost Roundup, Original 2001 Dollars, is my roundup of all OMB cost
figures from the past decade. Its first line and second line, totaling $269 billion annually, are close
to the turn of the century $277 billion level of social costs just noted. (Summing to less, thus a
tad more conservative). The total cost, in 2001 dollars, of these OMB-recognized regulations up to
the present time is $359.6 billion.
CHART: OMB Regulatory Cost Roundup, Original 2001 Dollars
Now lets bring these costs up to 2013 dollars. The chart OMB-Tallied Social Regulation Subset Costs
Up to $473 Billion Annually presents the same OMB annual Report to Congress cost breakdowns for
the past decade-plus using the high-end of the cost estimate range for each category.
CHART: OMB-Tallied Social Regulation Subset Costs Up to $473 Billion Annually
The first line, the pre-2002 figures, includes the compliance cost figures from the very first OMB
annual reports on aggregate regulatory costs and benefits, for which OMB acknowledges
substitutes still do not exist.116 The estimates are rooted in the same research noted above
underlying economic costs of that turn-of-the-century era. The $354 billion (in 2013 dollars) for
the first two rows is slightly less than the corresponding Total Social $364 billion figure in Total
Annual Costs of Regulations as of Sept 30, 2001 According to OMB and thus a tad more conservative,117
just as my placeholder for economic regulatory costs is lower than OMBs one-upon-a-time
estimates. The large EPA component will be discussed a little further later.
In any event, by this tally, the current annual cost of social regulation reaches up to $473 billion
annually in 2013 dollars, as detailed in the chart OMB-Tallied Social Regulation Subset Costs Up to
$473 Billion Annually. In addition to the turn of the century estimate, the figures represent
estimates of annual compliance costs created by 151 finalized major rules (see column one in the
chart), derived directly or indirectly by OMB from agencies Regulatory Impact Analyses and
other means. It must be stressed that these are solely rules for which OMB presents both cost and
benefit estimates. Multitudes of other rules exist so actual costs are higher; but these are the only
ones OMB quantified and itemized.
OMB presents an interval for costs, and I noted that here I use the high-end figure. The reason for
using the high end is because it is an acknowledged possibility, because of chronic underestimate
of costs otherwise, because most regulatory costs are off the books, because startup costs for
meeting a regulations requirements are omitted, because most rules arent reviewed or costed at
all, and because many rules cost-benefit ranges show the benefits could be negative. Apart from
the 20th century legacy placeholder, only 151 rules are incorporated during an interval in which
agencies issued many tens of thousands of rules. Ive preached the controversy. Moreover Ive
already made concessions toward conservatism on both economic and social legacy costs, which
is plenty, and justifies using OMBs own numbers to partly capture a piece of the far greater
components left out.
The table Major Rule Annual Cost Detail, OMB Costs and Benefits Reports, FY 2002-Present provides
detail on exactly what these 151 rules are, depicting both OMBs original 2001 numbers and 2013
figures for benefits and costs. One can readily see that federal regulations impacting entire
industries and sectors simply do not appear.
In later specific sector/industry sections in Tip of the Costberg that attempt to provide additional
regulatory cost detail, these figures will reappear as baseline placeholders, depicted in the 2013
dollars that, behind the scenes, will sum to the referenced $473 billion aggregate. These detailed
costs are summarized, by regulating entity and in the aggregate, in the Principia Bureaucratica:The
Total Annual Cost of Federal Regulation and Intervention.
CHART: Major Rule Annual Cost Detail, OMB Costs and Benefits Reports, FY 2002Present
The upshot is that a certain subset of pre-21st century and to-the-present social cost categories
which leaves out substantial componentstotal up to $473 billion annually in 2013 dollars using

the only numbers made officially available.

Of that amount, $133 billion has been introduced since the turn of the century (see bottom row of
OMB-Tallied Social Regulation Subset Costs Up to $473 Billion Annually).
Alas, the United States of America was not founded in 2001. If $133 billion in costs now
acknowledged by OMB were added only since the 2000s began, it is reasonable to think that the
$340 billion dollars representing the prior 212 years (see first row named 1789 thru 2000) is not
a stretch. This distribution across eras also lends extra credence to the economic cost estimate of
the previous chapter. This is the case particularly since the Progressive Era, antitrust, federal
control of lands, the Federal Reserve System, the New Deal, Medicare, Medicaid, Social Security
and numerous other interventions, regulations and takeovers of private sector activity happened
prior to the 21st Century.
Combined with the $399 billion in economic regulatory costs covered in the previous chapter,
OMB-noted costs so far tally up to an estimated at $872 billion by this reckoning, not yet counting
process/paperwork costs noted in Total Annual Costs of Regulations as of Sept 30, 2001 According to
OMB. We will get to that later.
To better establish a more up to date regulatory cost estimate, we have to look at costs OMB had
on hand but nonetheless didnt tally in its annual Reports to Congress, and at paperwork costs
beyond what appear in regulatory analyses. We also have to compile the handful of independent
agency rule cost estimates that are available (since the turn of century, that is: well assume for
conservatisms sake that the earlier economic cost studies captured them all, although that is not
Because of the inherent incompleteness, we need (and hereby yet again solicit from readers) other
sectoral and industry annual cost estimates existing outside the OMBs roundup. One template for
firm and trade association level reporting is the Mercatus Center Regulatory Regulatory Cost
Calculator118; another more industry-specific (but adaptable) one appears in a National
Automobile Dealers Association questionnaire directed at its members.119

9. Additional Executive Agency Major Rule Costs Presented by OMB:

$35.8 Billion
[G]overnments view of the economy could be summed up in a few short phrases: If it moves, tax it. If
it keeps moving, regulate it. And if it stops moving, subsidize it.120
Ronald Reagan
Incorporating costs of rules for which costs but not monetized benefits are available adds another
dimension, and several billions of dollars, to OMBs standard annual cost roundup. OMBs
roundup that it reports annually as a consolidated net benefit is somewhat arbitrary in that it
relies upon the happenstance that those particular rules have both benefits and costs quantified.
Some rules in OMBs reports have cost estimates available, but not benefits. In the 2015 OMB
Draft Report on Benefits and Costs report, and in reports going back to the 2002 report, an additional
86 (in addition to the 160 for which we have already noted both costs and benefits) executive
agency major rules were accompanied by costs, but not by benefit estimates). These were presented
in various formats over the years but never tallied until now. The table Annual Costs of Untabulated
Major Rules Reviewed at OMB by Fiscal Year presents these additional executive agency major
rules, in full detail, for which costs were presented, and they total up to $35.8 billion in 2013
dollars. Substantial startup compliance costs imposed by many of these rules were omitted here,
as were the unreported costs of other rules present, making the estimate conservative. Credit was
given for claimed reductions in costs.
CHART: Annual Costs of Untabulated Major Rules Reviewed at OMB by Fiscal Year
Further, to aid comparisons with later Costberg sections and in future years, this same information
is organized by department or agency (rather than fiscal year) in the table Annual Costs of
Untabulated Major Rules Reviewed at OMB By Department and Agency.
CHART: Annual Costs of Untabulated Major Rules Reviewed at OMB By Department
and Agency

10. Executive Agency Major Rules Lacking Cost Information: $20

I never determined how many sections there really are to the federal system. It probably cant be done.
Government is not a machine with parts: its an organism. When does an intestine quit being an
intestine and start becoming an asshole?
P. J. ORourke
Parliament of Whores
I was never molested by any person but those who represented the state.121
Also, incidentally, 63 additional major rules were reviewed during the FY 2002-14 reporting
period for which costs were not presented at all (benefits might or might not have been presented
in these instances), according to the presentation in OMBs annual reports (See the Costs
Absent column in The Funnel -- On the Depth of Regulatory Cost Review, 2001-Present). Three of
them appeared in the 2015 OMB Draft Report.
For such major rules, theres no obvious way to deal with their costs, but they presumably arent
all free. One could take the average cost of the other two categories (major rules with costs and
benefits, major rules with costs only) on a proportional basis, on the assumption that their costs
are representative. Its not a correct answer by any stretch of the imagination, but neither is
presenting no official cost estimate whatsoever a correct approach, particularly when legacy 20th
century costs are now ignored altogether by the federal government.
We know so far that OMB says some 151 major rules cost up to $133 billion (thats the Post-20th
Century Component that appears at the bottom row of OMB-Tallied Social Regulation Subset Costs
Up to $473 Billion Annually). We also know 86 rules cost up to $35.8 billion, according to OMBprovided estimates compiled in the preceding section. So on average these 237 rules cost up to
$.712 billion ($712 million) each.
Thats the average for the rules whose costs we think we know. On an average basis the 63
uncosted major rules from OMBs reports would cost up to $44.8 billion. Here I take under half
for a placeholder of $20 billion, and include it in Principia Bureaucratica: The Total Annual Cost of
Federal Regulation and Intervention.
Here is yet another reason for affected parties to weigh in; annual OMB reports details what this
subset of rules consist of, but omits costs. If readers and observers can fill in these cost gaps,
please contact the author for possible inclusion of the cost data in future editions of Tip of the

11. Independent Agencies Annual Regulatory Costs: $9.5 Billion

Lets be independent together!
Herbie the Dentist Elf to Rudolph in Rudolph the Red-Nosed Reindeer
Independent agencies are not subject to OMB review and their rules costs are not included in
OMB estimates covered above (confounding as that may be), so costs again are understated to this
degree. OMB noted serious implications of this shortcoming in the 2011 report (not for the first
nor last time):122
We emphasize that for the purposes of informing the public and obtaining a full accounting, it would
be desirable to obtain better information on the benefits and costs of the rules issued by independent
regulatory agencies. The absence of such information is a continued obstacle to transparency, and it
might also have adverse effects on public policy.
Technically, a portion of independent agency cost information is available in Regulatory Impact
Analyses and the Governmental Accountability Offices (GAO) database compiled per the
Congressional Review Act.123 But once again it is highly incomplete. Of the independent agencies
rules issued during FY 2014, for example, the GAO reported that 9 agencies issued 17 rules, of
which only six provided monetized cost estimates (OMB listed these rules in a table, but did not
provide any of the numerical costs for readers).124
Referring to whatever cost estimates independent agencies may perform on their own, OMB
stated that it does not know whether the rigor of the analysis conducted by these agencies is
similar to that of the analyses performed by agencies subject to OMB review (taking rigor of
executive agency reviews for granted). How OMB couldnt know, even just for the sake of
curiousity, whether comparable rigor exists after all these years is hard to fathom, but there you
have it. And the implied praise of executive agency tabulations bears notice.
Over the entire decade of 2005-2014 and according to OMB, the total number of major rules
issued during this period by independent agencies was 141.125 Among them, the total number of
independent agency major rules with some information on benefits or costs is 83 (italics
So, the cumulative annual cost of these independent agency rules? Nobody really knows; its the
same story as that of executive agency rules of the past decade, and as that of legacy regulatory
We need to know independent agency costs; new ones emanating from the Consumer Financial
Protection Bureau, Securities and Exchange Commission, the Federal Reserve and the
Commodity Futures Trading Commission in response to the Dodd-Frank legislation are highly
significant, among much else.
The GAO links to reports on agencies major rules, and for the past several years, since 2009, the
Heritage Foundation has prepared a Red Tape Rising report series127 featuring incremental rule
costs, including independent agencies rather than just the executive agency compilations that
OMB emphasizes.

The chart Annual Costs of Independent Agency Final Major Rules presents these excerpted
independent agency costs for the past five years, which add up to $9.51 billion; I omit executive
agency costs included in the Heritage reports to avoid double counting of those where overlap
might exist (and in turn miss costs where there is no overlap). This also allows me to preserve an
emphasis on the OMB reports as primary documentation for incremental executive agency
regulatory costs as the basis for future editions of Tip of the Costberg and Ten Thousand
Commandments. Im also leaving out start-up costs of independent agency rules that Heritage
reportswhich add up into many tens of billionsreferencing only their annual costs in yet another
bow to conservatism and to offset the use of high-end executive agency estimates above given
that theyre some of the only numbers that exist. Finally Im using Heritages 2010 dollars rather
than 2013.
CHART: Annual Costs of Independent Agency Final Major Rules
In addition to leaving out start-up costs, which would otherwise increase totals here substantially,
the mid-point cost is used where a range existed, by a Heritage Foundation more tolerant than me.
Also, an obvious next step would be to tally the independent agency costs from the GAO database
from years prior to fiscal year 2009 since theres no indication that GAO, OMB or any other office
is interested in doing it. I consider it highly significant that we do not have official aggregate cost
estimates for decades of independent agency rulesmerely these few years partial numbers (most
rule costs are not quantified, as noted). It is more than a glaring gap in the discussion to follow
that, apart from the most recent rules, we have no real officially acknowledged estimate of the
costs of independent agency rules right through the turn of the century to the present, with the
exception of what may have been indirectly captured in the aforementioned Hahn & Hird,
Hopkins and OMB-aggregate compilations. Its another reason a placeholder for economic
regulation like that noted earlier must be maintained.
In any event, note we get a substantial increment over what OMB reports as its annual regulatory
cost tally when we recognize independent agency costs: as noted, OMB until very recently liked to
emphasize that executive agency regulations it reviews each year tend to average around $5 billion
annually by its reckoning,128 and has recently noted a change to $10 billion annually. Yet, these few
years of a few independent agency rules for which cost tallies were given or available add up to
another $9.51 billion annuallyequivalent to what OMB makes explicit as a total annual cost. In
the chart Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention and in
the relevant sections forthcoming in this report, these amounts will be disaggregated in the broad
transportation, energy and finance categories where they seem to best fit. Still, one may read the
$9.51 figure at the bottom of Principia Bureaucratica: The Total Annual Cost of Federal Regulation and
Intervention in the relevant column. While I include there the OMB Major rules with unavailable
costs placeholder of $20 billion, note that I do not do the same for the numerous uncosted
independent agency rules.
Whatever the shortcomings of efforts such as the SBA report series, which can be readily
improved upon even though tabulating regulations is not entirely germane to the legislative
mandate that particular report was designed to fill, no further critiques of it from other quarters of
the federal government can be seriously entertained. OMB examines a fraction of agencies actual
workloads and private sector compliance burdens.

We dont know how much regulations cost, nor do we have any idea, really, what their benefits
are. OMBs assumptions are not obviously materially much more justifiable than SBAs once were,
nor will knowledge of costs ever be fully available to us as a cognitive matter. We have to use
whats within the limits of the possible, and not systematically or deliberately understate. Thats
about it.

12. Paperwork & Information Collection Costs

The more restrictions and prohibitions are in the Empire, the poorer grow the people.
Paperwork is the embalming fluid of bureaucracy, maintaining an appearance of life where none
Robert Meltzer
Regulations notwithstanding, the off-budget costs of tax compliance for individuals and businesses
are said to account for most of the federal paperwork burden, although there might increasingly be
cause to question that assumption given growing paperwork-heavy regulation in areas like health,
finance and labor.
In any event, for present purposes, government paperwork costs associated with regulation are
presumably (but in actual fact perhaps not likely) accounted for in the Regulatory Impact Analyses
for particular executive agency rules, and thus already reflected in OMB benefits and costs reports;
however, again, here only major or economically significant rules and those cited as having a
notable impact on small business get counted in the first place. So the paperwork associated with
the bulk of rules is likely not well tabulated. Regrettably even the paperwork we do know about is
duplicative to the tune of tens of billions of dollars annually.130
A managerial accounting journal referenced the complex issues involved in simply determining
how to allocate the many varieties of regulatory compliance costs as an accounting matter:131
As companies feel pressure from consumers and competitors to lower cost while maintaining profits they
have found a greater need to accurately allocate environmental cost. There also has been a growing need
to trace compliance cost that governmental regulations have caused. These costs, including such items
as permit fees, compliance and filing cost, training of personal, and others has been so large in recent
years that they can make up a significant cost in some industries. As these environmental and
compliance cost rise comparative to other cost, accurate assignment of them will become even more
It is doubtful that the full range of such costs get accurately reflected in agency RIAs, which are
prepared worlds away from those actually grappling with the eye-level effects of regulation.
Meanwhile, regulation alters the very nature of the workforce, swelling the number of compliance
officers that firms must hire to keep up. An ominous 2014 Wall Street Journal called Compliance
Officer: Dream Career?132 pointed to the $162,000 to $232,000 salaries for large firms
compliance officers, and rising employment in the category overall compared to the actual
productive economy, driven by complicated new laws, regulations and fines, particularly in
financial services. A decrease in paperwork seems not to be on the horizon.
Today, in a sense, the bureaucrats must be employed by the firms directly. One observer has
concluded that The West has killed its entrepreneurs and replaced them with bureaucrats.133
Naturally some disagree; a representative of liberal group Public Citizen declared such complaints
with respect to banking regulation just hype of the banking industry that doesnt like the law.

And frankly its not even the law; they dont like the law being enforced.134
Paperwork generated by independent agencies does not appear in the OMB annual report to
Congress, so we take a look at it here.

Paperwork Hours and Hourly Costs

Whoever makes two ears of corn, or two blades of grass to grow where only one grew before, deserves
better of mankind, and does more essential service to his country than the whole race of politicians put
Jonathan Swift
The Office of Management and Budget, in its 2014 Information Collection Budget of the U.S.
Government, estimates that 9.453 billion hours was required in FY 2013 to complete the paperwork
requirements from 22 executive departments and six independent agencies that have been
historically subject to survey, down a bit from the 9.467 billion hours in 2012 (and up from 7.4
billion in 2000).135 The vast bulk of this, seven billion hours, is attributable to the Treasury
Department, about which more will be said shortly. Many compliance hours attributable to the
Dodd-Frank law and its affiliated agency paperwork are not included in the official tally, but are
rather exiled to an appendix on the last page of the Information Collection Budget along with a
few other agencies whose compliance-hours exceed one million hours.136 If we include these eight
agencies, another, 94.55 million hours are added to the tally.
The OMB doesnt focus on the projecting of cost estimates for all these hours, but did allow in the
prior edition of the Information Collection Budget that if each hour [then 8.783 billion] is valued
at $20, the monetary equivalent would be $176 billion.137 The Progressive Policy Institute
reiterated this same figure in When Paperwork Attacks! Five Ideas for Smarter Government, noting that
the figure would position paperwork as number five in the Fortune 500 based on revenues
equivalence.138 A corresponding figure for the newer report would be $189 billion (9.453 billion
hours times $20).
With respect to OMBs dollar cost number, one must wonder when was the last time a lawyer or
compliance officer was hired for $20 per hour. If one assumes $40 an hour, were looking at over
$378 billion in paper-shuffling costs alone, let alone compliance with the underlying rules and
regulations generating the paper.
Other hourly labor cost estimates abound. The National Federation of Independent Business
conducts a survey of members with respect to paperwork compliance costs. The numbers vary
depending upon the type of requirement.139
Meanwhile, the Bureau of Labor Statistics (BLS) notes the following hourly wages for basic
categories one might regard as relevant in keeping up with complex federal paperwork. All exceed
the $20 allowed by OMB.
Business Human Resources professionals: $52.21.140
Accountants and auditors, $33.15.141
Compliance officers, $29.88142

We noted that tax compliance accounts for most paperwork. We also noted that executive
agencies presumably already tallied paperwork cost sin the regulatory impact analyses that weve
covered already, so that leaves us (primarily) independent agency paperwork to examine.

Tax Compliance Costs

The hardest thing in the world to understand is income taxes.143
Albert Einstein
The cost of tax compliance is not accounted for in the economic and social categories reviewed so
far. However, in Total Annual Costs of Regulations as of Sept 30, 2001 According to OMB, they were
captured in the Process/Paperwork row formerly incorporated by OMB in addition to
economic and social costs. Note that OMB pegged paperwork at up to $190 billion in 2001, or
around $250 billion in todays dollars, nearly 20 percent of the total $1.255 trillion in regulatory
costs in that chart.
Lets bring tax compliance figures up to date a little. The assorted wage estimates noted above give
some idea of hourly paperwork compliance costs. With respect to estimating costs of compliance
with the federal tax code, the Crain and Crain report for SBA divided costs between businesses
and individuals/nonprofits, using (also BLS) figures of $49.77 and $31.53, respectively.144 Their
report for SBA relies primarily on 2008 Internal Revenue Service data regarding paperwork hours
for businesses and individuals/non-profits. They employ an overall burden of 4.3 billion hours
(2.3 billion for businesses and two billion for individuals and non-profits). Using BLS data on
hourly wage rate for tax form preparation, they compute $159.6 billion for compliance in 2009
Note that the Crain and Crain report was conservative in this respect compared to governmental
estimates. In a 2005 report, the Government Accountability Office had noted low-end estimates of
tax compliance costs at $107 billion, or one percent of GDP at the time.146 Taking into account
efficiency costs in the economy, GAO further cited reports assessing mid-1990s tax compliance
costs at two to five percent of GDP annually, and even these still were not comprehensive
estimates of the efficiency costs of the current federal tax system.147 Today, the Commerce
Departments Bureau of Economic Analysis current-dollar advance estimate 2015 GDP is $18.035
trillion.148 All else equal, two to five percent of that now would mean a range of $361 billion to
$902 billion.
Those are big numbers. In a 2006 report, the Tax Foundation projected 2010 overall tax
compliance costs would amount to $368 billion (at a time when 2004 costs were $244 billion). 149
Earlier studies by the University of Michigan Business School found business tax compliance
costs at $102.3 billion in 1993, and $141.1 billion in 1995.150 As for direct compliance, the
National Taxpayers Union in 2014 found federal tax compliance to cost $226 billion, with the
labor required for tax compliance to amount to $192.6 billion and tax software at $31.7 billion. 151
The Department of the Treasury (and therefore tax compliance) accounts for most of the
paperwork burden in the Information Collection Budget. Yet its costs do not appear in the OMBs
annual benefits and costs reports. In the FY 2013 Burden Changes by Agency chart on page 9
of the Information Collection Budget, Treasury accounts for 7.007 billion of the total 9.453 billion

hours, or 74 percent.
With respect to lost efficiencies generated by taxation, an OMB guideline reckons an excess
burden or deadweight loss associated with federal taxation equals 25 percent of revenues:152
Unless a tax is imposed in the form of a lump sum unrelated to economic activity, such as a head tax, it
will affect economic decisions on the margin. Departures from economic efficiency resulting from the
distorting effect of taxes are called excess burdens because they disadvantage society without adding to
Treasury receipts. This concept is also sometimes referred to as deadweight loss.
And thus:
The presentation of results for public investments that are not justified on cost-saving grounds should
include a supplementary analysis with a 25 percent excess burden. Thus, in such analyses, costs in the
form of public expenditures should be multiplied by a factor of 1.25 and net present value recomputed.
Both the GAO and the Tax Foundation approaches noted above include some efficiency or
deadweight costs (in addition to basic compliance and software such as that highlighted in the
$226 billion estimate from the National Taxpayers Union). GAO and the Tax Foundation each
reckon tax compliance and efficiency costs of well over $300 billion at minimum ($336 billion and
at least $368 billion, respectively). These estimates could have been, but were not, selected here,
nor were the still higher numbers that these entities studies could justify. Instead, with no way of
knowing actual indirect costs of taxation, and uncertainty with respect to hourly wage costs, we
may note here that assuming $47 an hour on the paperwork cost spectrum (less than the 2008 IRS
data regarding business paperwork hours costs) yields us a back-of-the-envelope placeholder for
Treasury paperwork costs (primarily but not exclusively tax compliance) of $316 billion. This
could be increased to match the GAO or Tax Foundation lower bounds in 2013 dollars, but I have
elected to not do so. Salaries do not encompass all the costs of paperwork, of course; pointing to
$47 here is a convenience, even though other costs exist.
The Patient Protection and Affordable Care Act, or Obamacare, will add significant complexity
to tax preparation, ending shortcuts like the 1040-EZ form for many who get subsidies among
other details.153 Tax preparation firm H&R Block alone has annual revenues of nearly $3 billion
already, pre-Obamacare.154 Some investors bank on H&R Block gaining new business, benefitting
from the cost imposed on others.155

Other Independent Agency Paperwork Costs

Tell the truth and run.
Other notable independent agency paperwork burdens that do not get accounted for in OMBs
annual benefits and costs roundup of executive agency rules, and thus cant accidentally be double
counted here, would include the Securities and Exchange Commission with its 234 million
reported hours, and the Federal Communications Commissions 82 million. Some of these, like
contracting regulations and Social Security amount to costs of doing business with the
government and administration of economic benefits like Social Security payments.

Be that as it may, as Independent Agency Paperwork Burdens shows, these hours add up to 596.33
million, and at $35 (note Im not using the $47 used immediately above with respect to
tax/Treasury compliance), add another $20.871 billion in compliance costs.
CHART: Independent Agency Paperwork Burdens
So, leaving aside paperwork presumably accounted for in executive agency Regulatory Impact
Analyses, total costs for paperwork burdens associated primarily with taxation of $316 billion and
independent agency paperwork of $20.871 billion amount to $336.87 billion. Therefore, the
baseline current, to-date cost of tax and independent agency paperwork to which I will add future
costs, while reserving the right to incorporate future information that convinces me to increase or
decrease the base, is up to $337 billion.
This figure is reflected in Treasury/taxation paperwork costs at the top of Principia
Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention as well as dispersed among
the respective independent agencies in that table. If better data appears on the regulatory
paperwork costs of financial services, health care, consumer safety rules, I might lower this some,
but my figure is lower than other governmental ones that could have been employed here.

13. Tip of the Costberg? Regulatory Cost Estimates Beyond the OMB
and SBA Tallies
He has erected a Multitude of new Offices, and sent hither Swarms of Officers to harass our People,
and eat out their Substance.
Declaration of Independence
The share of all employment in young firms has declined in all three sectors [Manufacturing, Retail,
Services], suggesting that factors that are not sector-specific are causing the decline in entrepreneurial
One possibility is that the business climate, broadly defined, has changed in ways that imped job
reallocationthat is today, by impeding entry, exit, expansion and contraction.
The loss in welfare and productivity arises because the increase in adjustment frictions reduces the
pace at which resources move away from less-productive to more-productive businesses. The same logic
applies to changes in regulations or institutions that affect the costs of starting up or expanding a
business, including regulations that raise the costs associated with expanding.156
Decker, et. al., The Role of Entrepreneurship
in U.S. Job Creation and Economic Dynamism,
Journal of Economic Perspectives, 2014
Having built a small business into a big one, I can tell you that today the impediments that the
government imposes are impossible to deal with. Home Depot would never have succeeded if wed
tried to start it today. Every day you see rules and regulations from a group of Washington
bureaucrats who know nothing about running a business. And I mean every day. Its become
Home Depot co-founder Bernie Marcus to Investors Business Daily
Now its time to pin a tail on this donkey.
OMBs tallies need supplementation given their incompleteness, and the SBA effort needs to be
resurrected, this time with support rather than interagency hostility and criticism not accompanied
by equally rigorous or serious official comprehensive estimates. All cost estimates have a
fundamental, irretrievable invalidity to them. But they can and should be upgraded over time, and
they should fill gaps and include more rules and types of rules.
The idea here is to start fresh with a new sheet of paper, and break up these aggregate estimates
gathered so far, where possible, into sectoral or department/agency estimates, and then to
supplement them with other available information on regulatory and paperwork costs. We seek a
total defensible but not precise regulatory cost estimate, including estimates for individual sectors
or pursuits. We wont separate every aggregate presented above into components, but we will try
here and in future editions of Tip of the Costberg as well as Ten Thousand Commandments to create a
more complete picture of the regulatory state.
The question is, in going beyond todays official reports, will future researchers be pinning a

modest tail on the pre-existing OMB/SBA donkey, or, to shift to another bad metaphor, will they
find a great regulatory tail wagging the federal dog (the OMB one in particular given its
constricted scope compared to SBA). Research like the Dawson and Seater Federal Regulation
and Aggregate Growth report mentioned earlier in A Baseline for Aggregate Economic
Regulation Costs would imply the latter, that regulation has a far greater importance than
presumed. This report, though biased toward suspecting high costs, wont fully answer the
question but begins the pursuit.
The already referenced aggregation table Principia Bureaucratica: The Total Annual Cost of Federal
Regulation and Intervention breaks rules up into executive and independent agency components. But
within those, I use categories that somewhat echo the OMB and SBA report breakdowns, loosely
based upon the governmental sector and sometimes specifically on the department doing the
regulating (Economic, Workplace, Homeland Security, Environmental, Health and Safety,
Paperwork and Information Collection). Again, for reference, the SBAs and others figures appear
separately in Estimates of the Cost of Regulation: Late 20th Century, Early 21st Century, but it will be
the OMB tallies incorporated as the base here. Since only OMB remains in the business of
presenting a portion of regulatory costs each year, that is the way it must be. We will incorporate
more ground-level or bottom-up cost figures as it becomes possible, subject to supplementation
and revision.
What follows will be a preliminary tally of regulatory costs, subject to perpetual future
adjustment, to supplement what we have assembled thus far from OMB, SBA and GAO. Some of
the detail behind the OMB numbers shown above (principally Major Rule Annual Cost Detail, OMB
Costs and Benefits Reports, FY 2002-present) will be directly referenced so that we might eyeball it and
look for future double-counting on the one hand and omissions on the other with respect to rules
with which the public contends but whose costs may not be acknowledged. A bottom-up approach
stays useful because, given the inappropriate silent treatment afforded the only 20th century studies
on comprehensive regulatory costs in existence, we need more information via a combination of
aggregate and yearly estimates alongside industry-specific information. Self-reported regulatory
costs should be sought by policymakers and should be increasingly useful. Firm level data is
important: for example an American Action Forum analysis of corporate annual report (10-k)
filings to the Securities and Exchange Commission by 30 large firms found $30 billion in
compliance costs for 2013.158
Generally, policymakers goal should be to develop much greater detail at the industry level,
perhaps using some of the North American Industry Classification System categories. 159 The
extraordinary complexity of the manufacturing and commercial sectors and the reality that
regulatory costs for the myriad components simply arent tallied may be observed with respect to
the huge range of entities that would be affected by (just for example) carbon dioxide
Some sectors do manage to self-evaluate. For example, construction industry data, with respect to
planning times for new buildings, show much longer planning times are associated with more
stringent regulations at the federal, state and local levels. A UCLA study finds average planning
time across 82,000 projects of 17 months (median 1 story) cost of $1.5 million; when weighted,
planning time rises to 28 months and is growing.161

A trade group for the industry, the Construction Industry Round Table, prepared a 2011 letter to
Rep. Darrell Issa (R-California) to identify existing and proposed regulations that have or may
negatively impact job growth. The CIRT highlighted streamlining that could save tens of billions
of dollars, and presented the following formula for regulatory costs for their industry:162
Regulatory Costs = 10% of the Annual $1.0 trillion in U.S. Construction or $100 Billion in costs
This sole industrys situation can be observed in the context of the several hundred billion Ive
noted so far with respect to economic, social/environmental and paperwork costs. More such
firm, industry and sectoral studies are needed, as is analysis of regulations impact on startup
rates, and on small businesses and their growth. It would be a breakthrough if results could be
portrayed in common, comparable terms across time and industries.
Another industry, U.S. automobile dealers, also contends with over 60 regulatory burdens across
the health, safety, environmental, consumer protection and financial spectrum that impact the
economy by nearly $8 billion annually in compliance, lost revenues and lost consumer surplus. 163
The National Automobile Dealers Association notes that this does not include upstream
product regulations, such as federal fuel economy mandates imposed on vehicle manufacturers.164
Nor (as in Costberg) are state and local regulations included. (On the other hand, auto dealers do
not recognize as a cost the franchising laws that prevent automakers and upstarts like Tesla from
selling directly to consumers.)
Thats a couple industries relating impacts across the regulatory spectrum. Another study of
global regulations called Speed of Business by an international law firm estimated $1.2 trillion
in compliance cost for 250 businesses in six sectors in 10 countries.165 Another recent large-scale
study of the manufacturing sector provides another frame of reference and bridge to where we are
now. A comprehensive report prepared by National Economic Research Associates (NERA) for
the Manufacturers Alliance for Productivity and Innovation (MAPI) examined Macroeconomic
Impacts of Federal Regulation of the Manufacturing Sector. This report also used data from major
rules compiled by OMB, an OIRA dataset and industry surveys.
In their detailed report, MAPI concludes:166
Based on the data of cost and number of regulations, we estimate the current direct cost of compliance
with major regulations (those with an estimated cost greater than $100 million) issued between 1993
and 2011 to be between $265 billion and $726 billion (in constant 2010 dollars) a year for the economy
as a whole.
Direct cost of compliance means MAPI is not incorporating indirect costs of compliance, and
major means they are leaving out non-major. They elaborate:167
Note that these totals represent only rules with cost estimates from the OMB Reports to Congress. To the
extent these reports do not contain cost estimates for all regulations over the 1993 though 2012 time
period, the totals shown below understate the total cost of all regulations.
Weve recognized this situation earlier. MAPI notes that cumulative costs of regulations are
greater than the sum of individual regulations in isolation,168 and point to consequences of
layering an environmental regulation on top of a financial and an energy regulation.169

These interactive effects of increasing regulation imply that the total burden of major and non-major
regulations could be considerably greater than the sum of the individual regulations. Unless a lower
threshold for requiring cost estimates is set, the total cost of all regulation will continue to be
Super-additive is their helpful term for the phenomenon.170
MAPIs estimates primarily consist of what was once known as the social regulation category
identified by OMB, omitting components of economic regulation formerly categorized by OMB.
The MAPI estimate presumably could be used to enlarge components of my Costberg placeholders
of $398.75 billion in economic regulation and $473 billion for social regulation, particularly since
MAPI contends that:
[T]he costs of non-major regulations are not estimated, but comparing the number of non-major to
major regulations suggests that the aggregate burden of non-major regulations could well be as large as
the cost of major regulations.
Were that non-major equivalence to hold, and double the major rule estimate, it implies a range of
$530 billion to $1.452 trillion; plus, the MAPI report leaves out the independent agency,
paperwork and other costs that I attempt to incorporate here. So combined with extra material
compiled here and yet to be compiled, MAPI might have ended up with a larger overall number
than Costberg.
Let me emphasize that Costberg does not benefit from the econometric modeling sophistication
and technical rigor of the MAPI reports underlying economic framework (using instead the Legoblock approach to enable yearly updating). However the estimates from major rules since 1993
noted are of comparable magnitude with estimates described up to this point. This would seem to
hold particularly taking into account non-major regulations.
And to reiterate, as we noted before that the United States was not founded in 2002, nor was it
founded in 1993, the starting point for the MAPI results.
For the sake of not going overboard and for retaining comparability with annual OMB reports, Ill
not adopt MAPIs generous assumption regarding non-major rules, which would push the Tip of
the Costberg figure well over $2 trillion. Rather than enlarge, Costberg will for the time being
maintain the more conservative OMB baseline on which to incorporate future annual cost data.

14. Executive Agency Regulatory Costs

...But if Congress wont act soon to protect future generations, I will. I will direct my cabinet to come
up with executive actions we can take, now and in the future.171
President Barack Obama
February 2013
It is legal because I wish it.172
King Louis XIV, before the Parlement de Paris, 1655
Is not your indignation roused at this absolute, imperious style? For what did you open the veins of
your citizens and expend their treasure? For what did you throw off the yoke of Britain and call
yourselves independent? Was it from a disposition fond of change, or to procure new masters?173
NY Governor George Clinton, appealing to the public as Cato on
October 11, 1787, in opposition to Alexander Hamiltons vision of
centralized government and the arrogance of the Federalists.
So far, we have compiled a basic picture of federal economic and social regulations, and
paperwork costs. Now we will briefly visit the departments, agencies and commissions to see what
else might be appraised.
In the section just above on Paperwork and Information Collection Burdens, we noted 9.45 billion
hours of paperwork among 28 executive and independent departments and agencies, the bulk of
which was Treasury Department (largely tax related) paperwork burdens of 7.001 billion hours. I
noted a presumption here in Tip of the Costberg that executive agency paperwork costs will have
already been captured in regulatory impact analyses and in OMB reporting on these agencies,
whether the legacy estimates or the more detailed annual tallies. Such may or may not be the case;
probably not given the plethora of non-major rules that nonetheless generate paperwork, but I
bluntly avoid possible double counting even when it understates cost.
What I will do, however, is specify an excess of official paperwork cost estimates (to which I apply
a $35 hourly rate) when paperwork hours-times-wage registers as greater than the costs of
regulations of which OMB has otherwise informed us (remember, however, we are only talking
about a few of such rules, so in that sense were letting agencies off easy in this respect). For
reference, as the chart Executive Agency Paperwork Burdens shows, the amount of annual executive
agency paperwork costs, employing the $35 figure and using the latest OMB Information
Collection Budget (precisely as above with respect to independent agency paperwork), is $312.82
billion. Removing the 600 pound gorilla of the Treasury Department (largely taxation, treated
separately earlier) costs of $245.24 billion, we are left with $67.58 billion in annual executive
agency paperwork costs.
However, in all that follows in this and future editions of Costberg, only those amounts that exceed
what OMB already discloses for a given department or agency in its annual Report to Congress (as
detailed earlier in this report) will be considered for supplementing other cost information. In this
years compilation, there are four agencies (not counting the Department of Defense, which in am

not treating as a regulatory agency herein) for which such conditions hold. These are the
Departments of Agriculture, Commerce, Education, Health and Human Services (Housing and
Urban Developmenet also has a slight overage omitted here). The total amount exceeding what
OMB reports in the annual benefits and costs Report to Congress report is $8.6 billion overall for
those five (see Executive Agency Paperwork Burdens). Where non-governmental estimates exist
instead of or supplemental to OMB estimates, in this and future editions of Costberg I may or may
not add or subtract this Information Collection Budget-derived element of regulatory burdens;
they are presented here for reference and framing. Paperwork costs, incidentally, may also include
the myriad forms of guidance documents that agencies issue rather than just the regulations
primarily at issue here, so costs can be higher than what this report captures in that sense as well.
CHART: Executive Agency Paperwork Burdens
That noted, we may now survey executive agency annual regulatory costs.

U.S. Department of Agriculture Regulation: $8.506 Billion

My farmer died. 174
Punchline to a joke about why a USDA employee is weeping at his desk
He who helps destroy the boll-weevil has done as constructive work as he who plants the seed.
Rupert Hughes
I therefore hold the regulation of genetic engineering responsible for the death and blindness of
thousands of children and young mothers.175
Ingo Potrykus, Nature, 2010
The ratio of number of farmers to number of USDA employees is forever the butt of jokes like the
one above. The picture isnt quite that extreme when Forest Service employees and those involved
in food aid programs are omitted,176 but many agencies cant quite seem to figure out how many
employees they have or, as the infamous government shutdown of October 2013 implied, how
many are essential. Even the number of agencies is debatable.
The OMBs tally for United States Department of Agriculture (USDA) major finalized regulations
up to the present is $1.353 billion (in 2001 dollars), or $1.78 billion in 2013 dollars as may be seen
in OMB-Tallied Social Regulation Subset Costs Up to $473 Billion Yearly. The detail of those rules
appears in Major Rule Annual Cost Detail, OMB Costs and Benefits Reports, FY 2002-Present.
Note that this entire $1.78 billion is a scattering of just six rules reviewed by OMB compared to a
total of 2,866 rules issued by USDA over the past 113 years, among which 384 were deemed
significant under E.O. 12866 according to the Federal Register database.177
To these six official rules, we can add the costs of USDA rules which OMB compiled but did not
sum. These costs, some $1.025 billion, and the six other rules making them up, appear in the chart
Annual Costs of Untabulated Major Rules Reviewed at OMB By Department or Agency.
This means that for all USDA, we have only 12 rules with cost data from the federal government.
And the USDA isnt the only agency whose rules impact agriculture. A U.S. Farm Bureau chapter
fretting over regulations impact on food prices marveled that A few years ago, we laughed when
we heard that EPA wanted to regulate cow gas. EPA wants to regulate farm dust, regulate milk
tanks and require spill prevention plans, classify spray nozzles as point source pollution, threaten
to penalize farmers for feeding hay in a pasture hay ring, and so on.178 EPA costs will be
addressed later, however.
USDAs paperwork burden of 128.7 hours annual estimated costs of $4.5 billion (see Executive
Agency Paperwork Burdens) happens to exceed the major rule cost estimates of $2.81 billion from
OMB (by $1.7 billion: $4.5059 minus $2.81). This figure is also reflected in Principia Bureaucratica:
The Total Annual Cost of Federal Regulation and Intervention.
The noted tally of a dozen out of thousands of agricultural regulations by OMB and the capture
of some of the paperwork burden obviously leaves out much regulation and activity. We wont
(nobody really can) yet cover the sweep of these rules, but a recent coalition roundup of the
Terrible 12 distortionary farm policies highlights the severe, yet often unquantified, nature of

sweeping intervention in agriculture markets. These anti-market interventions consist of:179

1. Direct Payments to farmers
2. Federal Crop Insurance
3. Shallow Loss Programs
4. USDA Trade Promotion Programs
5. Sugar Program
6. Dairy Market Stabilization Program (DMSP)
7. Target Prices
8. Rural Broadband
9. Mandatory Assessments
10. Cotton Program
11. Ethanol Programs
12. Biomass Program
For the moment, we will go beyond OMBs acknowledged 12 rules to consider price regulations
impact in just a couple additional areas. Chris Edwards of the Cato Institute noted the following
about agricultural rules regarding milk prices which dont appear among the rules noted so far.180
Because of the controls placed on the dairy industry, milk prices are substantially higher than they
would be otherwise, which penalizes millions of American families. The Organization for Economic
Cooperation and Development found that U.S. dairy policies push up the price of milk to consumers by
about 26 percent. The U.S. International Trade Commission found that federal dairy policies push up
the U.S. price of dry milk by 23 percent, the price of cheese by 37 percent, and the price of butter by
more than 100 percent above world prices.
With respect to plain old sugar (incidentally, number five in the Terrible 12 list noted above),
Edwards explained that The federal government guarantees a minimum price for sugar in the
domestic market by maintaining a system of preferential loan agreements, domestic marketing
quotas, and import barriers. These policies impose a burden on consumers through higher prices.
In recent years, USDA data show that U.S. sugar prices have been more than twice world market
Quantifying at least a piece of the sugar-regulation picture, food and agriculture consulting firm
Promar International finds that The overall impact of these policies is to force consumers to pay
more for sugar than is necessary about $1.00 for every 5-pound bag. The extra expense to
consumers and other sugar users amounts to more than $4 billion a year.181 Similarly economist
Mark Perry estimated that the cost of the sugar program in 2010 was $4.5 billion.182
A range of indirect, unquantified distortions also affects the sugar market. Catos Edwards,
referencing a federal study: noted that The U.S. Department of Commerce released a damning
report on the economic effects of U.S. sugar policies in 2006. The report had five key findings:183
These are as follows:

U.S. employment in industries that use sugar, such as confectionery manufacturing, is

For each sugar growing and harvesting job saved through high U.S. sugar prices, nearly
three confectionery manufacturing jobs are lost.

Sugar costs are a major reason U.S. sugar-using companies have relocated their factories
Numerous U.S. food manufacturers have relocated to Canada where sugar prices are less
than half of U.S. prices and to Mexico where prices are two-thirds of U.S. levels.
Imports of food products that use sugar as an input are growing rapidly.

At this point, the baseline current, to-date cost of agricultural regulation to which I will add future
costs, while reserving the right to incorporate future information that convinces me to increase or
decrease the base, is $8.506 billion as reflected in Principia Bureaucratica: The Total Annual Cost of
Federal Regulation and Intervention. This figure consists of OMBs $1.781, its untabulated $1.025
billion from Annual Costs of Untabulated Major Rules Reviewed at OMB By Department and Agency,
the $1.7 billion paperwork overage, plus a $4 billion placeholder for the sugar program and its
Note that costs and distortions of substantial USDA programs like milk and butter and other price
restrictions and the rest of the Terrible 12 items are omitted but ought to be included.
Still other omissions for the moment include rules on biotechnology regulation such as genetically
modified crops and organisms (these are regulated by several agencies along with USDA, such as
the FDA and the EPA). Certain firm-level data for categories such as development of insect
resistant corn total in the millions but are also omitted at this stage until more information is
gathered.184 For example, certain costs of compliance with biosafety regulations in the U.S., not
including R&D, product development, or commercialization and marketing costs, are estimated at
between $3,180,000 and $12,550,000.185
Regulatory concerns are global, and go beyond the scope of Costberg: The Secretary General of
EuropaBio in Brussels, Belgium, Willy De Greef, wrote more than a decade ago that for GM
crops the regulatory environment is far more complex and hostile, and that a rule of thumb is
that regulatory clearance of GM crops absorbs about half of the total product development

Department of Commerce: $1.179 billion

Annual costs of Department of Commerce rules do not appear in OMB tallies apart from a single
$138 million rule on Right Whale Ship Strike Reduction, which appears in Annual Costs of
Untabulated Major Rules Reviewed at OMB By Department and Agency. The sum is reflected in
Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention.
The DoC also happens to be one of the agencies whose paperwork burden of 33.68 hours annual
estimated costs of $1.179 billion (see Executive Agency Paperwork Burdens) does exceed the major
rule cost estimates from OMB (by $1.041 billion: $1.179 billion minus $138 million). This figure is
also reflected in Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention,
where DoC is credited with the total of $1.179 billion. We note one rule here plus paperwork
here, but between 2002 and 2014, the Department of Commerce has issued 4,472 rules.

Department of Defense

The Constitution supposes what history demonstrates, that the Executive is the branch most prone to
war and most interested in it, therefore the Constitution has with studied care vested that power in the
James Madison (letter to Thomas Jefferson, April 2, 1798)
Ive not at this point added any DoD elements as regulatory or economic-impact costs; those who
would will not find any OMB cost data, but could use paperwork costs of $2 billion that appear in
Executive Agency Paperwork Burdens. The broader questions of the waging of war are beyond the
scope of this work, best thought of as captured in the loss of liberty section in the final chapter
on unmeasured costs if one is so inclined.
Within the DoD is the National Security Agency, a black agency whose budget we do not know
for sure but is reckoned at around $10 billion annually.188
The post-9/11 surveillance state most emphatically affects the American economy, and while
Costberg leaves it out as a government-interference cost the moment, that likely will not continue. It
is reported by the New America Foundation that economic costs could be staggering, and that,
for example, the NSAs PRISM program is predicted to cost the cloud computing industry from
$22 to $180 billion over the next three years and result in a widespread loss of trust in American
data firms and contribute to cybersecurity vulnerabilities.189 To some extent, this cost is captured in
a privacy regulation placeholder we recognize later.

Department of Education: $3.09 billion

The public school system, on the other hand, although founded with the highest and most altruistic
goals in mind, remains in a state of chronic failure because it violates the human principle of
spontaneity. It goes against the grain, and therefore it does not ever really succeed.190
John Gall
Systemantics: How Systems Work and Especially How They Fail
Q: Whats 12 x 12?
A: A math question?!?191
Disneys Suite Life of Zach & Cody
There have been great men with little of what we call education. There have been many small men
with a great deal of learning. There has never been a great people who did not possess great learning.192
John Calvin Coolidge
I dont feel tardy.
Van Halen, Hot for Teacher, 1984
There are a substantial number of Department of Education rules that need quantification, and
numerous guidance documents from the agency on top of that. College administrators, for
example, vent considerable frustration over federal red tape.193 However the only Department of
Education non-budgetary costs that have been assembled by the government is a controversial rule
on gainful employment requirements with respect to for-profit institutions194 and one on
institutional eligibility for student assistance. These total $263.2 million in Annual Costs of

Untabulated Major Rules Reviewed at OMB By Department and Agency. Another $3.087 billion in
paperwork costs appears in Executive Agency Paperwork Burdens, based, again, on the departments
hours as depicted in the Information Collection Budget. The excess paperwork cost over the explicit
rules cost amounts to $2.824 billion. The total of $3.087 billion is broken down and in Principia
Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention.
The unmeasured costs here are substantial; customization and freedom of choice is a crucial part
of every aspect of life, with certain glaring exceptions like education. Why 12 years, why
compulsory, why tolerate unions, why No Child Left Behind, why Common Core, why the
disconnect between supply and demand, why the denial of attending a school of ones choice.
There are at least 200 federal rules, and much with which to reckon at both the federal and state
level.195 One large scale study looking at federal legislations impact on the cost of higher
education on representative midsize private institutions encompassed over 200 laws, and
reckoned the impact was around 6.5 percent of operating budget (2000-01 fiscal year).196

Department of Energy and Energy Access: $12.62 Billion

Government mandates for higher efficiency are almost always accompanied by claims that the higher
prices they cause will be more than offset by their alleged savings from lower energy costs. But that
raises a fundamental questionif these new technologies are so good, then why do we need laws to
force consumers to buy them?197
Send Your Underwear to the Undersecretary
Press release protesting inefficient top-loader washing machine mandates.
We have the technology available to eliminate efficiency!
Fred L. Smith Jr. on the never-ending overselling of compulsory renewable energy.
The costs of energy regulations are administered by many federal agencies and are considerably
beyond the scope of what this report can cover. Debates over access and non-access to energy
dominate modern politics. They include conflicts over:
Leases on federal lands (administered by the Interior Departments Bureau of Land
Executive moratoria on offshore oil and gas exploration;
Dampened arctic drilling and denied pipeline construction;
The Environmental Protections Agencys emissions regulations and impending cross-agency
regulation of hydraulic fracturing for natural gas;
Steering of scarce economic resources into allegedly but not demonstrably green energy
Billions upon billions of dollars of wealth are at stake. I say billions; one of the most prominent
figures, in a Wall Street Journal interview that touched on blockage of access to oil fields, says its
trillions just in terms of liberalizations potential gains to the treasury, let alone the private
Mr. [Harold] Hamm calculates that if Washington would allow more drilling permits for oil and
natural gas on federal lands and federal waters, I truly believe the federal government could over time

raise $18 trillion in royalties. Thats more than the U.S. national debt, I say. He smiles.
By saying a certain now-restricted action will gain money for the Treasury, it implies a cost to the
broader industry/economy of current restrictions. $18 trillion seems wildly ambitious, but
whether it is or isnt, one could assume a fifth, or a tenth, or a thousandth, and recognize that the
implied costs of regulatory blockage of access to resources and the building of new wealth is not
something to ignore.
If access gains the U.S. Treasury $18 trillion (or instead some far more conservative amount) from
royalties, consider the amounts the treasury doesnt get; that is, the resources the economy keeps to
invest and expand. That loss is an implied cost of regulatory blockage now. (Dollarizing jobs to
be added from opening up access to energyis another flip-side approach to putting a cost on
current energy-access denial.) Hamms proclamation is particularly interesting and policymakers
should pursue and dollarize the implications more formally. Hamm is clearly talking about
multipliers down the line. But it would be nice to be able to articulate some number quantifying an
official observation that The (regulatory) cost to the economy of denial of access to energy/lands
is at least on the order of such-and-so billions of dollars.
For a more down-to-earth example, the opportunity costs of a moratorium on hydraulic fracturing
(fracking) just in New York State for example, can add into the billions of dollars under different
But lets move along to what OMB has presented. Remarkably, for over a decade, there are only 23
rules for which the OMB reports costs (and accompanying benefits), all of them on energy
efficiency standards for this or that device, motor, boiler, washer, etc. See Major Rule Annual Cost
Detail, OMB Costs and Benefits Reports, FY 2002-present, which tallies OMBs figure for these rules in
2013 dollars at $12.62 billion. This figure is also carried over to Principia Bureaucratica: The Total
Annual Cost of Federal Regulation and Intervention. Meanwhile, again, the number of rules is far
greater than those for which calculations are presented: There have been 657 Dept. of Energy
rules since 2002, 74 of them rated as significant.
This report and future ones necessarily must expand on this, not at all representative of the cost of
federal intervention in the production of energy. A 2010 report on the Gulf Region moratorium
on offshore oil and gas exploration found costs of over $2 billion for a six month period.201 Still
another report put costs of lost Gulf production at over $18 billion combined for the years 201011.202
In any event, if we were to use Harold Hamms figure on gains to the treasury as a proxy for cost
to the economy as a whole, but use only one ten thousandth of his claim on an annual basis, we
arrive at $1.8 billion. Thats a national figure falling between the just noted impacts in the Gulf
region alone, and one even less than losses to fracking moratoria in New York. It compares well to
a CBO estimate of $7 billion in gains to the treasury over the coming decade,203 and is a pittance
compared to a Wood Mackenzie estimate of $800 billion to government by 2030.204 Ive placed this
$1.8 billion placeholder for Restrictions on Energy Access and Permitting under the
Department of the Interior (not here in Department of Energy) section in Principia Bureaucratica:
The Total Annual Cost of Federal Regulation and Intervention, where, as is becoming a pattern, little
else in costs from the Department of the Interior is revealed (as will be seen shortly).
Note that figures on savings and vast gains from the privatization of federal resources and the

wealth-enhancing impacts of that is not yet examined here. The federal government owns most
land west of the Mississippi, and seeks to own still more.

Department of Health and Human Services: $194.37 billion

If a drug that has just been approved by FDA will start saving lives tomorrow, then how many people
died yesterday waiting for the agency to act?205
Sam Kazman
Deadly Overcaution: FDAs Drug Approval Process,
Journal of Regulation and Social Costs
If you think health care is expensive now, wait until you see what it costs when its free.206
P.J. ORourke
Obamacare is not just another costly, bureaucratic, top-down, regulatory scheme, of which we have,
alas, so many. There is something genuinely tyrannical about Obamacare. It threatens not only to
ruin our medical care system, but indirectly and directlyand sooner as well as laterto subvert our
form of government and our way of life, fundamentally changing the relation between citizens and
Charles R. Kesler
Health care mandates and governance were not included in the Crain and Crain estimates of costs
of regulation, nor did the earlier Hopkins and OMB surveys with the possible exception of
elements embedded within the magnitude categorized as Other Social (refer to Estimates of the
Cost of Regulation: Late 20th Century, Early 21st Century). Much like the disinterest in the costs of
energy market interventions, proponents of regulation only complain that cost estimates others
present are too high.
In the OMBs annual reports, a total of 23 HHS rules costing up to $7.925 billion are noted in
Major Rule Annual Cost Detail, OMB Costs and Benefits Reports, FY 2002-Present. However, another 27
rules with costs estimates that OMB did not tally add another $11.727 billion, as shown in Annual
Costs of Untabulated Major Rules Reviewed at OMB By Department and Agency. This however
accounts for only 60 rules out of 2,296 issued by HHS since 2001, 543 of them significant.
In reading the detail in these two charts on what these HHS rules are, one can see that much of
what HHS oversees is not accounted for. Note also that these HHS costs of $19.7 billion are
exceeded by the $22.68 billion paperwork burden for HHS as reflected in Executive Agency
Paperwork Burdens; The excess is $3.028 billion.
To build upon these costs I supplement OMBs numbers with a detailed 2004 report written by
Christopher J. Conover for the Cato Institute. Conovers report on costs of health services
regulation found federal and state costs of $339 billion (in 2002 dollars), as presented in Estimated
Costs of Health Services Regulation, State and Federal Aggregate.
CHART: Estimated Costs of Health Services Regulation, State and Federal Aggregate

The Cato report noted that federal and state costs of regulation of health facilities, health
practitioners, health insurance, drugs and medical devices (the Food and Drug Administration
portfolio), and the medical tort system, could be as low as $174 billion, or as high as $921 billion.
The expected value by Conover is presented here. (As far as net benefits are concerned, Conover
finds health rules to have a net cost rather than net benefit, of $169 billion.)
Keep in mind that Conovers estimates all predate passage of President Obamas Patient Protection
and Affordable Care Act.
Conovers report covers state and federal costs. In Estimated Annual Costs of Health Services
Regulation, Federal and State Detail, we segregatevery imperfectlythe components of the
detailed costs he provides into relative state and federal categories and count only the federal
component of (around) $167 billion. (It is merely coincidence that its nearly the same as
Conovers net-cost figure.)
CHART: Estimated Annual Costs of Health Services Regulation, Federal and State
As for the torts component (torts are primarily a state-level concern), despite documented cases of
tort abuse and defensive medicine, medical torts are controversial to advocates of deregulation. In
the absence of regulation, torts play an important free market disciplinary role. In fact, a newer
paper from Cato examines existing research to conclude (for a variety of controversial reasons not
the subject here) that caps on malpractice damages could cause some consumer harm by
protecting practitioners from discipline by medical malpractice insurers.208
Because of the role of the discipline of lawsuits in free markets, but given abuses in the current
system, I wish to ignore torts but leave a bit for defensive medicine, and so use only half the
medical malpractice number employed in the Conover study. Since medical torts are almost
entirely a state concern, the federal component in Conover is small to begin with.
Some costs embedded are likely to be updated and change over time. For example the Conover
report notes HIPAA (Health Insurance Portability and Accountability Act) costs. HIPAA is the
federal governments health privacy statute. For context, other researchers have noted how
HIPAA compliance can be a costly, Herculean taskThe average cost of $3.1 million from
surveyed firms is considerably more expensive than the projected average estimate of $450,000
that was done prior to implementation.209 An earlier 2000 American Hospital Association (AHA)
study found that hospitals, in the aggregate, could spend as much as $22.5 billion in the next five
years complying with just three of the privacy provisions of HIPAA, far exceeding the
governments original estimate of $3.8 million in costs for compliance with the entire privacy rule
across all healthcare entities.210
Some revisions of HIPAA do appear in the OMB annual roundups, but such estimates are
incomplete in that they do not address drawbacks to the law such as Death by HIPAA, which is
a potential consequence of the overcautious privacy rules of HIPAA.211
Technology is a blessing. It ought to be so in health care too, rather than create problems and

higher costs for consumers. The Wall Street Journal lamented that, Another big driver of healthcare costs is technology. In almost every other industry, innovation generally makes things more
efficient and less costly. But in health care, it often brings higher costs with little added value.212
Free markets are not the reason for this state of affairs. Technology should lower costs in medicine
as in other areas, as the well-to-do adopt technologies and help make it affordable for everyone
else. Indeed, the rich and well-informed can be the white mice of the medical profession, 213
helping bring down costs for all and expanding availability. Market competition can bring devices
and personal health information to individuals, but regulatory impulses loom.
Partial Costs of the Patient Protection and Affordable Care Act: A $5 Billion Placeholder
If youre interested in this bill and youre not fully hired up, youre stupid.214
a K Street consultant on the Affordable Care Act health reform law
[M]oving from 49 to 50 workers can cost an employer $40,000 a year. No wonder that many small
businesses are opting to stay at 49 workersCompanies can get around the penalty by hiring part-time
workers, because they do not owe the $2,000 penalty on those who work fewer than 30 hours a week.215
Diana Furtchgott-Roth
I have created an account on the site. I have not tried signing up, because I have insurance.216
Kathleen Sebelius
Former Secretary of Health and Human Services
during initial implementation of Obamacare
Since Im in charge, obviously we screwed it up.217
President Barack Obama on widespread cancellations
of individuals insurance policies.
ObamaCare has been an absolute boon for my business.Im making a lot of money thanks to that
law. Were up 8% this year. But its just terrible for the country. I see that firsthand every day.218
Businessman Bob Funk, interviewed in Wall Street Journal, 2013.
Reporter: Madam Speaker, where specifically does the Constitution grant Congress the authority to
enact an individual health insurance mandate?
Pelosi: Are you serious? Are you serious?
Its too early to lay down anything approaching a comprehensive cost number for the impacts of
the Patient Protection and Affordable Care Act, or Obamacare, but its too late to ignore it
particularly given the Supreme Courts upholding of the constitutionality of the individual
mandate as a tax and all exchange subsidies. Designating regulatory mandates as taxes has
implications for the entire regulatory state, but that is well beyond the scope of this edition of Tip
of the Costberg.
Complexity and cost is inevitable when 18 pages of regulation were needed just to define the term
Full-time employee.219 But there is so much more; regulations, at over 11 million words as of
October 2013, exceeded words in the law itself by a multiple of 30.220

Various estimates exist of fiscal and economic impact of the law. On the fiscal/spending rather
than regulatory side of things at issue in Costberg, the Affordable Care Act has been projected to
cost over $2 trillion over 10 years, rather than the $900 billion originally claimed during proposal
of the law.221
Thats the fiscal impact; the regulatory compliance cost side is less certain. A 2014 Congressional
Budget Office report finds additional costs such that the nation will lose the equivalent of 2.5
million workers by 2024, as people give up jobs they once held to maintain insurancewhich the
White House perversely attempted to spin as a positive.222 The departure of physicians from the
field of medicine, or disinclination of new talent to enter it, is a classic uncalculated cost as
reflected in one physician groups itemization of unintended consequences and costs such as
paper shuffling, fraud and government interference with decisions.223
News stories have shown widespread impacts from Obamacare, from rate shocks on health
insurance policies,224 to the seven foot stack of regulations as of 2013,225 to a survey finding 74
percent of small businesses claim the law will result in layoffs and reduced hours for workers.226
One Wall Street Journal article advised job seekers to learn the health care act, in order to help
others navigate it, and noted the billions in legal costs involved.227
One new trend to watch is that of restaurants adding surcharges to bills to cover employee
healthcare, such as the three percent add-on to upscale diner bills in Los Angeles.228 Thats one of
the obvious and forseeable effects that got ignored, other ramifications are more obscure and lead
to perhaps unexpected items cropping up now and in the future, such as how firms may be unable
to engage in stop-loss activities, making self-insurance almost unattainable.229
Indeed too many commentators to name have referred to the dozens of regulations and thousands
of pages of rules in the Federal Register just since passage on March 23, 2010, and to the 150-plus
agencies and commissions and other bodies required to be created if the law is fully implemented.
The thousands upon thousands of pages of regulations will dwarf the length of the law itself,
which was little read (one commentary noted the two relevant statutes consisted of 425,116
words230) but now binding nonetheless. The requirement that insurance companies, rather than,
say, 7-Eleven or Home Depot or eBay or ones mother-in-law, provide contraception without copayment became effective in August 2012; that one was set aside by the Supreme Court. Like
always, contraception remains available.
A speculative report by Benjamin Zycher on opportunity costs of expansion of comparative
effectiveness rules (part of the emerging ACA rules) suggests R&D investment in new and
improved pharmaceuticals and devices and equipment would be reduced by about $10 billion per
year over the period 2014 through 2025, or about 10-12 percent, and suggests $500 billion in
human life-year losses.231 Senators John McCain (R-AZ), Rand Paul (R-KY), and Rob Portman
(R-OH) in their Jobs thru Growth Act, during the 112th Congress held that the law imposes
over $300 billion in higher health care costs, and $2,100 in increased family insurance premiums
from employers and workers232 Similarly a report from the House of Representatives found a
range of cost impacts.233 Indeed, there are numerous analyses of the seemingly countless
budgetary, regulatory and family costs of Obamacare.234
Quantitatively significant in advance of Obamacare with respect to annual impacts was a 2009
National Federation of Independent Business report on the impact of the employer mandate on

small business that estimated economic contraction of $200 billion of real GDP between 2009 and
2013.235 Thats a $40 billion annual impact over the period. The study also estimated 1.6 million
job losses over the period. An anticipatory report by the Urban Institute, which defends the Act,
found that Large businesses costs increase 4.3 percent, overwhelmingly attributable to increases
in worker take-up of offered coverage, while costs for mid-sized businesses rise over nine
percent.236 The Institute claimed that for small businesses, reductions in per capita costs more
than offset coverage increases to slightly reduce spending overall.237
More recently a 2014 American Health Policy Institute conducted their own detailed survey of
large companies (10,000-plus employees), finding, over the next decade:238
Large firms costs would increase $4,800 to $5,900 per employee.
ACA-related incremental costs of between $163 million and $200 million per employer
Overall costs over 10 years of $151 to $186 billion.
The AHPI study pointed to the implied $11.8 billion increase in annual cost of the Urban Institute
report. Their own report implies annual costs of between $15.1 to $18.6 billion (on average) over
the next ten years. Note that these figures do not include costs to small- and medium-size firms.
Components of these costs include:239
Direct Costs
Patient Centered Outcomes Research Institute fee.
Temporary Reinsurance Fee.
General ACA implementation and administrative costs.
Excise tax on high-cost plans.
Mandate to cover adult-children up to age 26 as dependents.
Other benefit mandates including covering 100 percent of preventive care services.
Indirect Costs
New supply-chain taxes passed onto employers (e.g., medical device tax).
Increased take-up rates of employer offered coverage resulting from the individual mandate.
Increased cost-shifting from the expanded Medicaid coverage.
Costs of final rules issued related to the Affordable Care Act primarily issuing from HHS will
increasingly appear in Tip of the Costberg. So far, surprisingly and implausibly, none of the costs
show up in the OMB annual report survey of rules with both benefit and cost analysis. However,
ACA-related rules without benefit assessments are beginning to appear (and are included in
Annual Costs of Untabulated Major Rules Reviewed at OMB By Department and Agency).
Weve to this point reviewed OMBs cost roundups ($19.7 billion: $7.925 billion of which stems
from rules with both cost and benefit estimates, and $11.727 billion from rules with cost
assessments only, ), HHS paperwork costs as derived from the Information Collection Budget in
excess of OMB costs ($3.03 billion), the (estimated) federal component of the Conover study on
health services regulation ($167 billion). As for the impacts of the Affordable Care Act, the lower
figure from the AHPI study is $15.1 billion annually. Here I will use only $5 billion of that, or
one-third, as a placeholder for ACA in Costberg, and alter that accordingly as more major rules are
reported on by OMB, supplemented by future studies.

So, the baseline current, cost of health services regulation to which I will add future costs, while
reserving the right to incorporate future information that convinces me to increase or decrease the
base, is $194.37 billion annually, as may be seen in Principia Bureaucratica: The Total Annual Cost of
Federal Regulation and Intervention.
A Note on Future HHS-Related Regulatory Costs
The yet unrevealed and to-be-implemented costs of Obamacare will constitute perhaps the bulk of
future non-budgetary impacts on the private sector and lower-level governments.
Other campaigns are notable, such as proposed Food and Drug Administration menu labeling
rules would require nutritional information disclosure for chain restaurants with at least 20
locations and vending machine operators boasting 20 or more machines. FDAs regulatory
analysis estimates $44 million in annual costs for the chains ($1,100 per establishment), and $24
million in ongoing costs for vending operators ($2,400 per operator).240 Note these impact small
business significantly, yet do not count as significant rules to the federal government, a
phenomenon that holds widely across government. These will be added to the tally when final if it
is possible to do so.241 Not surprisingly, the Food Marketing Institute anticipates costs will be far
higher, such as over $1 billion in startup costs, and $300 million annually for restaurant chains to
comply with recordkeeping.242
The appropriateness of federal efforts to influence what others eat concerns citizens. Sometimes
those targeted by regulations such as the federal school snack food program championed by First
Lady Michelle Obama, are reluctant to criticize them. A revealing sentence in a Politico article
reflects intimidation felt by the private sector:243
I dont think anyone is going to be foolish enough to attack the first lady thats just stupid, said
one longtime food company consultant, who noted that the industry would likely be measured in its
public response, even if there are lots of things companies dont like about it. Its sort of a laundry list
of everything the industry didnt want.
Regulators, planners and elites who know best what others should do rarely care what companies
dont like, of course. In the case of school snacks, however, some school districts have rebelled
against the Obama menu proposals. While one never need look hard to find proponents of food
regulation,244 some humility is in order given such developments as the recent scientific pushback
against the decades-long anti-fat crusade that in certain respects has backfired and led to poor
dietary substitutes, and the human toll of such regulatory crusades as ethanol mandates.245 What a
shame that it is not enough to allow people to recognize that a pound of butter, about the densest
food available, contains 3,200 calories and have Washington leave us alone.

Department of Homeland Security: $56.65 billion

The only useful airport security measures since 9/11 were locking and reinforcing the cockpit doors so
terrorists cant break in, positive baggage matching and teaching the passengers to fight back. The rest is
security theater.246
Cryptographer and Security Technologist Bruce Schneier
Counterpane Internet Security
The spending budget of the Department of Homeland Security is enormousthe fiscal year 2015
net budget request was $38 billion.247
The creation of this agency was not a given; alternatives existed after the U.S. was attacked in
2001. Before the Departments formation back in 2002, President George W. Bushs spokesman
Ari Fleischer was asked in a press briefing, But if were talking about consolidating all of these
agencies, why not create a Department of Homeland Security, as many lawmakers have
suggested? Fleischer responded, in part:248
[C]reating a Cabinet office doesnt solve the problem. You still will have agencies within the federal
government that have to be coordinated. So the answer is, creating a Cabinet post doesnt solve
A decade later, the DHS is entrenched, as are its costs. One could argue that the very creation of it
is a cost to our liberty (see Loss of Liberty Costs in the last chapter). Regulatory Impact Analyses
arent particularly adept at capturing the costs of lost liberty in the aftermath of the USAPATRIOT Act (Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism) and the Homeland Security Act. Nor to RIAs capture the
economic effects of the related NSA surveillance noted above in the Department of Defense
section, which Ive still not incorporated into Costberg. The United States government-contractor
culture saturating so much economic activity may undermine possibly superior security
adaptations, such as markets in security technologies, products and services that regard safety and
security as forms of wealth to produce and expand rather than circumstances to regulate.
Similarly, the federal government has expanded the concept of cybersecurity to apply to
anything and everything it regards as critical infrastructure, maintaining for itself the option to
regulate now or in the future everything from chemical plants to the Internet. In other walks of
life, the word cyber is out of fashion; so those averse to developments such as a TSA for the
Internet or any other major American assets had best assure that they take steps to avoid finding
themselves officially designated critical infrastructure.
Compliance costs generated by the concept of homeland security include the social costs of
sub-agencies like the Transportation Security Administration that could have employed pilot
biometrics instead of creating the uniformed army of thousands, thereby preventing planes from
ever being used as guided missiles again. The choice made cant derive from a desire to save
passengers on a hijacked plane, because the government conceivably would shoot down a hijacked
airliner with menacing intent, civilian passengers notwithstanding249 and a hijacking would be
less likely with pilot biometrics in the first place. Culture and reinforced cockpit doors may do
more than the TSA on balance. TSA seems adversarial and a threat to citizens internally with
respect to dignity and privacy when nudie scanners are euphemized as advanced imaging

technology.250 TSAs safety monopoly is dangerous, appropriately referred to as distracting

security theater. Some argue its role in monitoring in airline safety should be harnessed or
abolished, or at the very least, that the uniforms should go.
Yet, even with the immensity of the Department of Homeland Security, the only rules for which
OMB notes costs in its annual Costs and Benefits compilation (again, those rules for which both
costs and benefits are presented) is one regarding additional changes to the Visa Waiver Program
to Implement the Electronic System for Travel Authorization (or ESTA), and one involving living
organisms contained in discharged ship ballast water. These rule costs up to $330 million annually
in 2013 dollars, as seen in Major Rule Annual Cost Detail, OMB Costs and Benefits Reports, FY 2002Present.
Back in its 2008 benefits and costs report, OMB included a brief sectiondistinct from its normal
cross-agency roundupillustrating costs of four major Department of Homeland Security rules at
a range of between $1.149 and $2.748 billion annually in 2001 dollars.251 OMB further noted that
since DHS was created, agencies have finalized 14 major homeland security regulations that
impose a total cost on the economy of between $3.4 billion to $6.9 billion a year.252 However
OMB did not in that particular setting itemize these other 10 rules, and it noted that these also
include regulations by other agencies such as FDA that have improving homeland security as a
primary benefit.253 An additional three homeland security rules costing up to $1.7 billion
appeared in the 2009 OMB Report to Congress,254 but after that point the separate OMB narrative on
homeland security rules ended.
The table Annual Costs of Untabulated Major Rules Reviewed at OMB By Department and Agency
gives a more thorough look at homeland security costs by compiling all reported-on major rules,
(including those described in the previous paragraph) up to the present. As can be seen, 18 rules
cost up to $15.32 billion. These acknowledged costs of DHS rules well exceed the estimated
paperwork burden in Executive Agency Paperwork Burdens, so there is no excess to report in that
respect. This $15.32 billion along with the $330 million noted above appear in Principia
Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention.
The notion that $15 billion captures the bulk of costs associated with the homeland security
enterprise seems doubtful. Without considering the broad sweep of homeland security, just
applying a moderate distress and aggravation factor of a couple bucks for each of the 458 million
person trips made for business travel255 hits the billion-dollar mark pretty quickly, let alone the
resignation to the little things, like the fact that family members cant come to the airline gate to
say goodbye or to meet loved ones anymore.
Referencing OMBs cost estimates on homeland security, a report by Scott Farrow and Stuart
Shapiro on The Benefit-Cost Analysis of Security Focused Regulations maintained that OMBs
cost estimates are likely to be an understatement.256 Emphasizing the lack of inclusion by OMB
of non-economically significant rules (a phenomenon that applies to all agencies, not just DHS)
they note that (at the time of their writing), Forty-nine other final security rules have been
promulgated by agencies between 2002 and 2008 in addition to the [then] 10 economically
significant and that there is good reason to think that for these rules in particular the costs may
be large (perhaps even greater than the $100 million/year threshold).257 Their study also
acknowledged unquantified costs owing to restrict[ions] on individual liberty and privacy.258

In another working paper on homeland securitys economic impacts, George Washington Institute
of Public Policy researchers itemized the kinds of costs at issue in homeland security rules, both
quantified and unquantified. They identified government expenditures, private expenditures, and
such burdens as time and delay costs of airport screening and more, as presented here:259
Measured Costs:
Increased City Security Presence
Police Presence Increased
Screening of People and Vehicles
Increased Wait Times At Airports
Increased Wait Times on Highways
Unmeasured Costs:
Increased Security for Private Industry
Decreased Tourism
Crisis Fatigue
Effects on Financial Markets
This report also references a prominent New York Federal Reserve study which, while regarding
homeland security costs a bargain relative to the size of the economy, allowed that the added
hour [of waiting time] translates into a monetary cost equivalent of approximately $11.8 billion.260
One cant blame it all on homeland security, but frustration with air travel leading to avoiding trips
is also a cost, pegged at $26 billion by the U.S. Travel Association at in 2008:261
A June 2008 study by the U.S. Travel Association revealed a deep frustration among air travelers that
caused them to avoid an estimated 41 million trips over the past 12 months at a cost of more than $26
billion to the U.S. economy. Air travelers expressed little optimism for positive change, with nearly 50
percent saying that the air travel system is not likely to improve in the near future. The effect of avoided
trips cost airlines more than $9 billion in revenue; hotels nearly $6 billion and restaurants more than $3
billion. Federal, state and local governments lost more than $4 billion in tax revenue because of
reduced spending by travelers.
In the 2005 report A Framework for Evaluating Couunterterrorism Regulations,262 Jerry Ellig,
Amos Guiora and Kyle McKenzie acknowledge benefits of security regulation, and present a
framework by which to judge rationality of rules that bears close reading. They examine direct
compliance costs, hidden/indirect costs and price distortions caused by regulatory interventions.
They warn of perverse effects of regulation: The Transportation Security Administrations (TSA)
provision of passenger and baggage screening has similarly diminished the incentives of airlines,
airports, and the insurance industry to reduce terrorism risks, because the federal takeover shields
these parties from liability for terrorist acts and thus private parties may underprovide
security.263 The security wealth not created is a cost beyond quantification.
Ellig, Guiora and McKenzie identify a deadweight loss associated with taxation that is not
included here (on the assumption that it might be captured in the cost of taxation section earlier).
But as for other deadweight costs of regulation: 264

The deadweight loss associated with some security related regulations, such as those affecting air travel,
is likely much higher than the [25 percent associated with federal tax collection] would imply, for two
reasons. First, specific taxes on airline tickets fund some federal expenditures on airline security. Second,
passengers ultimately pay the private expenditures on security in the form of higher ticket prices. Since
much air travel is price-sensitive, a small increase in the price can create a big drop in ticket sales.
Passengers forego the value that this air travel would have provided, and the aviation industry forgoes
the contribution to fixed costs that these passengers would have made if they had purchased tickets.
One rule these authors highlight: advance electronic presentation of cargo information on any
shipment arriving or departing the US by air, truck, rail, or sea costs an estimated $2.5 billion.
Certain specific rules like this one are already captured in my breakdown of OMB costs for DHS
noted above.
But as for costs not captured by OMB, the authors also expose the deadweight losses associated
with two per-flight fees collected by the TSA that totaled plus $1.75 billion in 2005 (here Im not
including the $600 million deadweight loss they associate with federal taxation to fund TSA).265
Service degradation, waits and travel delays are estimated to tack on another $2.76 billion in 2005,
but this figure uses TSAs own estimate of 10 minutes of added wait time. Ellig et. al. note that In
the US, an additional hour of time per passenger would entail a cost of $16.6 billion, assuming
454 million trips.266 Here Ill split the difference and settle on $10 billion for the time being,
reinforced by the New York Federal Reserves estimate cited above of $11.8 billion.
The situation could be worse than these authors presume. Some regard virtually all of the airline
security enterprise as worthless. A 2011 holiday season article in Vanity Fair captured the
enormitya word that does not merely mean bigof the problem; As you stand in endless
lines this holiday season, heres a comforting thought: all those security measures accomplish
nothing, at enormous cost.267
This article, incorporating insights of security expert Bruce Schneier, contends that the game has
changed with respect to attacks on airlines, and the two things that did have the greatest positive
impact are the change in culture among passengers and reinforcing cockpit doors. Bag matching
gets some credit too, but that doesnt require a new governmental agency. Future attacks will
involve targets other than airlines, and the waste and distraction (and cost) could be colossal. The
screen-the-passengers emphasis also ignores the multitudes with access to planes within the airport
(as well as the fact that terrorists can integrate and obtain jobs in these areas). And thats ignoring
how boarding passes can be faked with little effort undermining the entire Were on the job!
circus of TSA. Moreover, and as noted, using biometrics to identify a live pilot/copilot team in
order for a plane to fly at all would prevent the use of planes as guided weapons even if terrorists
were given first-class tickets as deliberate public policy. But bureaucracys tendency is never to
walk through a door when theres a wall to break down. On top of this came the revelation that
TSA allowed 25 illegals to attend a flight school owned by an illegal.268 Local police rather than
the TSA uncovered the matter.
Another indirect cost, of the type agencies would note when it works in their favor but would
ignore here, is the estimates of deaths from increased driving instead of flying owing to
burdensome security checks and inconvenience. Statistically, auto travel is much more dangerous
than air travel; per mile, the risk of fatality is 8.9 times greater, Ellig et al declare, and cite studies

noting that TSA rules lead to an additional 66.2 highway deaths per year, and another finding
Such fatalities arguably attributable to regulation are not systematically included in the Tip of the
Costberg report, but they are here; assume callously that each life is worth $5 million and the 100
is ballpark, thats another half a billion in cost of DHS. This demonstrates that, just as regulatory
advocates points to lives affected, lives are also affected by regulatory activism, even that
specifically directed at saving lives. Future iterations of the report may cost in more such factors.
In their 2011 book Terror, Security, and Money: Balancing the Risks, Benefits, and Costs of
Homeland Security (as well as in an article270 and a discussion paper on the matter271) John
Mueller and Mark G. Stewart assess the public and private costs of homeland security spending,
which they peg at a trillion dollars over the decade after September 11, 2001, and $132 billion in
2009. Of this latter amount, note that $75 billion is direct governmental expenditures (which are
not counted here); the remaining amount of $57 billion, relevant to this report, consists of the $10
billion in private Enhanced Direct expenditures and the $47 billion they compile in
Opportunity Costs.
Enhanced Costs of Homeland Security in 2009, in billions of 2010 dollars
Enhanced Direct Expenditures
Federal homeland security expenditures
Federal intelligence expenditures
Local and state expenditures
Private-sector spending
Opportunity Costs
Terrorism risk insurance premiums
Passenger delays caused by airport screening
Increase in short-haul traffic fatalities
for people avoiding airport delays
Deadweight and consumer welfare losses


Mueller and Stewart point to substantial additional costs that they do not include in their tally,
perhaps making the estimate conservative.272
In Placeholder for Annual Cost of Homeland Security Regulation, I incorporate OMBs figures
supplemented by elements of the various categories of costs from the studies noted above as a
placeholder for homeland securitys regulatory impact. The baseline current, to-date annual cost
of homeland security regulation to which I will add future costs, while reserving the right to
incorporate future information that convinces me to increase or decrease the base, $56.65 billion.
These costs are also included in the table Principia Bureaucratica: The Total Annual Cost of Federal
Regulation and Intervention.
CHART: Placeholder for Annual Cost of Homeland Security Regulation
Additional homeland security costs loom. As one example, costs of a couple hundred million
annually have been noted in Annual Costs of Untabulated Major Rules Reviewed at OMB By
Department and Agency regarding air cargo screening for shipments placed on passenger airlines.
But the aim of the TSAs Certified Cargo Screening Program is 100 percent physical air cargo
screening, on transport aircraft, not merely passenger airlines. Thus estimated costs here cover
only a fraction of whats likely to come. The Congressional Research Service notes that Given
that estimates cover only shipments placed on passenger aircraft, which make up about 10% of
all cargo shipped to and within the United States by air, the projected cost of physically screening
all air cargo could conceivably total several billion dollars annually.273 Weve acknowledged ten
percent so far, not the looming 90 percent that will add billions more to annual regulatory costs.

Department of Housing and Urban Development: $1.953 billion

But because of HMDA [Home Mortgage Disclosure Act] and RESPA [Real Estate Settlement
Procedures Act], we have checkers who check the checkers. Okay, thats fine. Then we actually have
another third layer of checkers who check the checkers who check the checkers. Then we literally have
two outside consulting firms that check again. Thats a lot of layering and a lot of expense.274
Executive quoted in American Banker, October 2013.
About 78 percent of the earth is covered with water. The rest is covered with mortgages.
Motivational Enterprises
The Dotted Line.
The federal governments involvement in housing regulation, not least of all its contribution to the
housing overextension and the subsequent meltdown in the first decade of the 2000s for which it
deflects responsibility, is yet another instance of billions of untabulated costs and suffering created
by government policies. Its the sort of crucial, elephant-in-the-room item that managed to escape
discussion amid charges that the Small Business Administrations assessment of economic
regulatory costs overstates impacts.
The sole element of HUD costs that appeared in all the OMB data is $1.163 billion annually with
respect to the Real Estate Settlement Procedures Act (RESPA), regarding simplification in
mortgage processing and reducing consumer costs; and a rule on SAFE Mortgage Licensing Act
of $789.6 million. (The industry claims that implementation cost of the RESPA regulation exceed
HUD estimates, undercutting potential savings from the reform.275)
These rules appear in Major Rule Annual Cost Detail, OMB Costs and Benefits Reports, FY 2002-Present
and Annual Costs of Untabulated Major Rules Reviewed at OMB By Department and Agency,
respectively. As far as the government is concerned and as far as anyone would know, these
represent the entirely of the costs of housing regulation.
HUD related paperwork costs in Executive Agency Paperwork Burdens total $1.96 billion, and does
very slightly exceed OMBs total cost figure of $1.953 billion, but is not added here. The $1.953
billion appears in The Total Annual Cost of Federal Regulation.

Its noteworthy that non-HUD-based federal and state regulations contribution to the cost of
housing are said by the National Association of Home Builders to be substantial: 276
[O]n average, regulations imposed by government at all levels account for 25.0 percent of the final price
of a new single-family home built for sale. Nearly two-thirds of this16.4 percent of the final house
priceis due to a higher price for finished lot resulting from regulations imposed during the lots
development. A little over one third8.6 percent of the house priceis the result of costs incurred by
the builder after purchasing the finished lot.
State regulations make up a substantial portion of these costs, while others may originate from
many governmental bodies such as the Environmental Protection Agency (stormwater regulations
for instance). These are not added in here but for the time being assumed included in other cost
aggregates herein such as EPAs total and the overall economic regulatory cost placeholder.

Department of the Interior: $4.259 billion

Shoot, Shovel, and Shut Up: Celebrating 30 Years of Failing to Save Endangered Species277
Ronald Bailey
Reason headline, December 31, 2003
Comedians occasionally wonder why the department in charge of everything outside is called the
Department of the Interior. While several hundred rules annually issue from the department, none
of them have been designated as major with both benefits and costs provided. The only rules for
which OMB presented costs is a $196 million rule regarding mining claims, and two totaling $264
million for oil and gas safety measures for operations on the outer continental shelf.
Meanwhile, DoI paperwork is reported in Executive Agency Paperwork Burdens as $397.2 million
annually; it doesnt exceed OMBs costs so is not included here. However the placeholder of $1.8
billion for restrictions on mining claims (discussed above in the Energy section) does appear in
Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention.
Also appearing in Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention
is a $2 billion placeholder for the cost of Endangered Species Act (ESA) regulations, which after
40 years still makes enemies out of landowners who would otherwise increase habitat and ensures
continued endangerment and species loss. The placeholder is based on a scaledown of a figure in
the study Accounting for Species278 as well as other indicators.
From 1989 to 2000, the FWS reported spending a total of $3.5 billion to protect species.279 The authors
note that We recognize today that the actual cost of protecting species, including private costs as well
as government expenditures, may easily reach or exceed that figure per year.280 They also note that
Other costs absorbed by state and local governments and private parties are not reported at all. These
costs are in the billions of dollars for the period during which the property remains under regulation.281
That $3.5 billion over 11 years is an old figure, presumably higher now, and it includes
governmental costs rather than private compliance (which are counted in the federal budget and
thus omitted here) and opportunity cost such as forgone power generation or interrupted logging
and job displacement. Using $2 billion serves as a private compliance placeholder for now, a figure

representing less than budgetary costs of a decade. This cost ignores such concerns as catastrophic
wildfires exacerbated by the Endangered Species Act and other Interior Department programs.
High costs of Interior Department ESA rules are invoked by affected parties. For example, a May
2011 press release from Rep. Cathy McMorris Rodgers (R-Wash) in support of legislation
requiring the Bonneville Power Administration to assess ESA costs for consumers, claimed that
the benefits of hydropower arent fully tapped because of billions of dollars in excessive
regulatory costs to mitigate unproven environmental effects.282
A survey of ideas for reforming, improving and adapting the Endangered Species Act appears in
the book Rebuilding the Ark, edited by Jonathan Adler.283 In the introduction Adler notes, The
Supreme Court, in Tennessee Valley Authority v. Hill, declared that the ESA sought to prevent
species extinction whatever the cost, and costs rarely come into play under the Act. Fittingly,
then, there is no comprehensive study of the ESAs economic costs or its benefits.284
Further, an article cited therein noted that (surprise): While there is data on governmental
spending on endangered species, there is no data on the costs that the ESA imposes on society at
large.285 While an April 2006 GAO report intones: Endangered Species: Time and Costs
Required to Recover Species Are Largely Unknown,286 other surveys hint at costs in the millions,
even potentially billions in GDP impact, from certain species recovery plans.287
Among many commentators on the matter, a group called Abundant Wildlife Society of North
America noted kinds of costs associated with the Endangered Species Act of the sort simply not
fully captured anywhere; they include the locking up vast areas of land from commodity use,
depriving individuals of their constitutional right of protection of private property, and
deprivation of their property without just compensation.288 The overcriminialization created by
the regulatory state is apparent with the forty-year old ESA.289 The same mentality that destroys
species is also reflected in the federal ivory ban that aggravates poaching rather than fosters
Other DOI proposals including one with respect to disclosure of chemicals used in hydraulic
fracturing do not register as major rules for the Interior Department at this point,291 but that
technique will be coping with additional pressures from Washington that will likely be included in
future Tip of the Costberg reports.
So, the baseline current, cost of Interior Department regulation to which I will add future costs,
while reserving the right to incorporate future information that convinces me to increase or
decrease the base, stands at a low $4.259 billion as described above and as presented in Principia
Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention.

Department of Justice: $1.901 billion

A handful of major Department of Justice rules affecting electronic prescriptions, paperwork for
handlers of controlled substances, disability accommodation and prevention of prison rape appear
in Major Rule Annual Cost Detail, OMB Costs and Benefits Reports, FY 2002-Present and in The Total
Annual Cost of Federal Regulation. The total is $1.901 billion.
On the most expensive element, the Americans With Disabilities Act accommodation rules

component, the Heritage Foundation noted a $1 billion-plus annual price tag.292 The Costberg
figure based on OMB data is comparable to Heritages, and the DoJs final regulatory impact
analysis of the ADA accessibility rules is available for reference.293 Beyond these, unmeasured
interference from the Department of Justice includes imposition of university speech codes
prohibiting unwelcome speech.294

Department of Labor: $126.62 billion

I think that is really where the thrill comes from. And it is a thrill; its a high. I was born to regulate.
I dont know why, but thats very true. So long as I am regulating, Im happy.295
OSHA safety standards program director Marthe Kent in 2001.
And what politician, when he incites the masses to envy, asks himself whether his object is power and
its concomitant privileges, or whether his aim is to eliminate the injustice suffered by others?296
Helmut Schoeck
Envy: A Theory of Social Behaviour
The OMBs turn of the century figure for Department of Labor costs up to the year 2000 was $22
billion annually in 2001 dollars, or $28.95 billion in 2013 dollars, as shown in Total Annual Costs of
Regulations as of Sept 30, 2001 According to OMB.
In the top line of OMB-Tallied Social Regulation Subset Costs Up to $473 Billion Annually, the
comparable turn of the century figure Im employing is a tad lower, $28.22 billion in 2013 dollars.
As for post-2000 workplace and labor regulation costs, OMBs annual benefits and costs reports
have itemized (only) 11 rules for which both costs and benefits are present, totaling $6.926 billion
annually; details of these rules appear in Major Rule Annual Cost Detail, OMB Costs and Benefits
Reports, FY2002-present.
Another nine rules noted by OMB for which costs were presented but not tallied by OMB appear
in Annual Costs of Untabulated Major Rules Reviewed at OMB - by Department or Agency, total $1.59
billion annually. The $5.35 billion in DoL paperwork costs appearing in Executive Agency Paperwork
Burdens is assumed to be subsumed among these totals so is not added. The OMB-derived majorrule total of $36.736 billion is reflected in Principia Bureaucratica: The Total Annual Cost of Federal
Regulation and Intervention.
The cost of a handful of labor rules during the past decade marks the limit of what critics of
Crain and Crain and other researchers (to be seen shortly) wish to acknowledge.297 Critics even
disregard OMBs own $28.22 billion turn-of-century cost noted above.
Like other sectors, most regulatory costs remain unaccounted for by officials. The costs just
presented encompass only 20 rules from 2002-present, a period during which the Labor
Department finalized 477 rules, 274 of those deemed significant under E.O. 12866 according to
the Federal Register database.298 Labor-related guidance documents are not counted either.
Some additional analysis and research is available regarding costs of labor regulations, however. In

2001, Joseph M. Johnson, in a detailed bottom-up review of available literature on the costs
associated with 25 major statutory and executive provisions, estimated that workplace regulations
cost $91 billion annually in 2000 dollars.299 The categories of regulations Johnson reviewed
encompass labor standards, employee benefits, labor/management relations, occupational safety
and health, civil rights, and employment decision laws. Each one taken by itself represents a major
modern category of public policy.
The chart Cost of Workplace Regulation Through 2001 breaks out elements of Johnsons turn of the
century report and updates the original 2000 dollars to 2012 dollars to arrive at an overall figure of
$118.1 billion annually. This tally uses Johnsons best estimate category, not his high estimates.
CHART: Cost of Workplace Regulation Through 2001
Counting fines against employers, as Johnson does, may be arguable from some perspectives,
while not from others. It is unclear how far critics want to go for example in defending the
National Labor Relations Boards actions with respect to the Boeing aerospace corporation and
workers in South Carolina.300 Over-criminalization has become an important issue well beyond
labor rules. One could justify adding costs here for loss of liberty and the interference with the
ability of firms to decide where to locate production facilities, but we havent done so yet.
Much like the indignation heaped upon the 2010 Crain and Crain report for the Small Business
Administration, opponents made clear their disdain for the Johnson labor study. The Crain and
Crain report made use of Johnsons OSHA (Occupational Safety and Health Act) sub-component.
OMB Watch and other groups protested a multiplier employed by researcher Harvey S. James in a
much earlier study (upon which Johnson relied) in examining the OSHA Act.301 I wont go into
the Economic Policy Institute criticism of Crain and Crain with respect to the labor estimate here
(such as the protests that the regulations are old and that compliance costs will have declined,
which is suspect since compounding matters), but rather urge readers to read the EPI article, note
its tone and focus, and decide for themselves whether that entitys goal is to acknowledge any
reality of regulatory costs whatsoever and contribute to the derivation of better estimates, or rather
to be dismissive at best and to intimidate researchers from pursuit of openness about cost at
With respect to Johnsons OHSA component, a multipliers use seems a reasonable stance
certainly more reasonable than ignoring costs altogether, and since we havent generally employed
such multipliers elsewhere. As in most regulatory compliance compilations, Johnson already
focuses on first-order direct cost and doesnt emphasize second-order indirect costs, a more
conservative approach that, while it cannot satisfy critics of a certain political persuasion,
nonetheless results in a lower cost estimate than might be arguable.303 We already know noneconomically significant DoL rules are omitted from official tabulations and that rules issue forth
at a not-insignificant rate. If a multipliers use as a simplifying mechanism is a sin, it seems a
greater transgression when parties actively cheerleading regulations rather than complying with
them do not regard the bulk of rules as having any cost impact. Willful disregard of regulatory
costs impacts is a bias that extends far beyond the OSHA instance here. In other chapters of
Costberg, apart from a tiny amount noted for indirect costs of trade restrictions, and in the core
assumptions of OMBs 2002 estimate of aggregate regulatory costs, multipliers are not used but
perhaps should be.

Incidentally, for labor rules not involving safety and health matters, Johnson leaves out costs of
minimum wage mandates entirely (to either employers or to the unseen dispossessed workers).304 I
do so here as well, further understating labor regulation impacts. I also do not address what is seen
as a failure of labor regulation such as the Fair Labor Standards Acta measure directed at
sweatshop conditionsto keep up with a modern, mobile, telecommuting, digitally connected
workforce for whom its old rules are not suitable.305
The tens of billions in impacts of labor regulation and compulsion in the labor market observed
here may greatly understate actual economic drag. The aforementioned Dawson and Seater
Aggregate Growth study finding U.S. GDP to be affected by regulatory accumulation such that
what is a $15 trillion GDP should be $54 trillion instead implies such. So does a 2014 report by
Lowell Gallaway and Jonathan Robe for the Competitive Enterprise Institute, which analyzed the
economic impact of unionization on the states and found the 1935 Wagner act to be responsible
for long-term economic trauma.306 The small cumulative decreases in worker wages resulting
from unionization significantly affect economic growth over a long period of time, resulting in as
much as a 10-12 percent cumulative loss of GDP over a 50 year period.
A 10-12 percent cumulative GDP loss sounds like a lot, and it is. In dollars, the impact of the
presence of compulsory unionization alone dwarfs OMB estimates and the Johnson estimates of
the entire labor sector. Certain states without right-to-work laws have suffered more than others in
terms of foregone economic growth. In a prior (2002) report translating these cumulative GDP
impacts into dollars, Gallaway and Richard Vedder conclude that labor unions have reduced U.S.
output by trillions of dollars over decades. In an evaluation of the 1947-2000 deadweight loss of
U.S. national income resulting from the presence of trade unions, they conclude:307
The results ...are striking. By 2000, our simulations show a shortfall in current real GDP (1992-1994
dollars) of about $3.5 trillion dollars--about forty percent of current GDP.
This may seem to be an astoundingly large number. However, it must be remembered that the
deadweight economic losses that are being measured are not mere one-shot impacts on the economy.
They recur, every year, relentlessly, cumulating in their impact. What our simulations reveal is the
powerful effect of the compounding over more than a half-century of what appears at first glance to be
small annual effects. An even more dramatic statement of the economic cost of unions is provided by
cumulating the lost income and output over the entire 54-year period under consideration. The result
exceeds $50 trillion (1992-1994 prices), a breath-taking total.
By this reckoning, unionizations impact exceeds everything else discussed so far by a great
magnitude. Nonetheless, for present purposes Ive not added these astronomical figures to the total
cost of labor regulation, but certainly could have. I shall employ solely the Johnson figures and
The Johnson-derived figure for all 2001 labor costs $118.1 billion annually (in 2012 dollars; for
reference again, Johnsons own best estimate in 2000 dollars was $91 billion in direct costs).
Recall that OMBs figure for turn of the century labor regulation costs, which overlap with the
period of Johnsons study, was $28.2 billion. (And to clarify again, OMBs $28.2 billion for labor is
not part of the turn of the century economic regulation costs noted by OMB and addressed
earlier; such sums were designated social costs at the time, so there is no double-counting in that

We can assume that Johnsons turn of the century $118.1 billion annually and OMBs $28.22
billion encompass the same universe of rules and regulations. Actually, thats not precisely the
case since OMBs number from that era included some second-order or indirect costs that
arguably could be added to rather than subtracted from Johnson, who noted throughout his work
the categories of costs he omitted).
Still, subtracting OMBs $28.22 billion from Johnsons $118.1 to net them yields $89.88 billion
to capture the Johnson component of ongoing annual costs of workplace regulations that were
effective by 2001. By breaking the figures up this way, the chart Principia Bureaucratica: The Total
Annual Cost of Federal Regulation and Intervention retains for legacy purposes the OMB figure for
Department of Labor costs up to the year 2000, and presents the Johnson-derived overage f
$89.88 on a separate row rather than his entire 118.1 billion).
The OMB and Johnson legacy figures, plus the OMB partial estimates of $8.516 billion since 2001
brings total workplace regulatory compliance to $126.62 billion. This figure serves as the baseline
current, to-date cost of workplace regulation to which I may add future costs (such as a new major
OSHA hazard communication rule308 and the Gallaway and Robe data) while reserving the right
to incorporate future information that convinces me to increase or decrease the base.

Department of State
Ive not incorporated any State Department international relations elements as regulatory costs;
just for reference, State Department paperwork costs of $1.46 billion appear in Executive Agency
Paperwork Burdens but are not added to the Costberg total. Portions of such costs might relate to
restrictions on foreign labor that will be discussed briefly later (immigration is regulated by State,
DoL and DHS). But like DoD, these costs are not at this point incorporated into Tip of the Costberg
as embodying private sector compliance or governmental impacts.

Department of Transportation: $80.395 billion

Nobody could fly an airplane commercially on any route without specific permission from the Civil
Aeronautics Board, and price competition, cutting prices, was illegal.309
Alfred Kahn
For Department of Transportation rulings on trucks, trains and planes, OMB tallied total
aggregate costs of up to $26.737 billion up to 2001, as depicted in OMB-Tallied Social Regulation
Subset Costs Up to $473 Billion Annually. Another 36 rules during the past decade costing up to
$22.681 billion portrayed in Major Rule Annual Cost Detail, OMB Costs and Benefits Reports, FY 2002Present brings the OMB-based total with both costs and benefits to $49.418 billion in 2013 dollars.
These encompass a range of transportation concerns across a number of realms like air and
automobiles, alongside safety rules such as hours of service requirements for truck drivers.
Two additional joint DoT EPA rules on CAF (Corporate Average Fuel Economy) for light duty
and heavy duty vehicles and one joint rule for highway fuel efficiency for heavy vehicles also

appear in these same two charts; they are projected to cost up to $18.456 billion annually. All these
figures are summarized in Principia Bureaucratica: The Total Annual Cost of Federal Regulation and
The rules just noted encompass those for which both cost and benefit estimates exist. A lone rule,
of $61 million annually on procedures for dealer participation for recycling traded-in automobiles,
appears in OMB data accompanied by costs only. It appears in Annual Costs of Untabulated Major
Rules Reviewed at OMB By Department and Agency and in Principia Bureaucratica: The Total Annual
Cost of Federal Regulation and Intervention.
These 39 rules referenced so far comprise a fraction of the 11,893 rules issued by DOT issued
since 2001 (391 of them presumed significant).310 For present purposes, paperwork costs of $11.1
billion that appear in Executive Agency Paperwork Burdens are assumed accounted for.
Cars and Trucks
Other industry estimates merit attention that might sometimes supplement OMB figures. One can
see in Major Rule Annual Cost Detail, OMB Costs and Benefits Reports, FY 2002-Present for example
that several categories and designated vehicle model years of CAF requirements appear over the
decade. The EPA/DoT rule to affect 2017-25 model years of cars and light trucks would double
fuel economy to 54.5 miles per gallon by 2025, and comes with an expected overall cost of $157
billion.311 It would boost cost to consumers of cars and trucks alike well over $1500 per unit,
according to the administration.312
But the National Association of Automobile Dealers claims the agencies have underestimated
the increased consumer prices resulting from their proposal by a factor of 1.6, and that the per
vehicle price increase increases from $2,937 to $4,803.313 Relatedly an earlier Center for
Automotive Research report estimates automakers will spend an additional $3,700 to $9,000 per
vehicle to achieve a government fuel-economy standard of 47 to 62 miles per gallon by 2025.314
None of these additional costs are added here, however.
I havent located anything to supplement government-reported truck/automobile regulatory costs
for the past decade, but a turn of the century study appears capable of supplementing OMBs turn
of the century figures a bit, but we wont add a great deal more, just a placeholder. A 2004 report
headed by Daniel Sperling of the Institute for Transportation Studies and the University of
California found that the cost of emissions and safety regulations to beabout one-eighth of the
total vehicle price for 2001 cars, or around $2500 per vehicle.315 Note that these safety and
emissions costs exist prior to the newer CAF requirements that are built into existing OMB
estimates, however inadequately as NADA and Center for Automotive Research contend.
Benefits of regulations far outweigh costs in Sperlings view, but the study authors underscore the
complexities involved in assessing regulations price and impact: Even in the most sophisticated
analysesrarely are long-term or secondary impacts considered. The challenge was more
daunting than we initially imagined. We soon found that little is known about the effects of
previous regulationseven direct cost impacts. They conclude, though, that regulatory actions
have not distorted or perturbed automotive markets and industry much over the last few decades.

If we take that $2,500 figure, and assume no increase in the cost of pre-2001 regulation and apply
it to 2010 car and truck sales based on Wards Automotive Group sales figures,316 a rough overall
annual regulatory cost figure of $29.4 billion emerges, for 2010, but rooted in pre-2001 regulation.
A 2010 Estimate of Cost of 2001-Era Automotive Health and Safety Regulation (based on 2010 Sales)
SUVs and Trucks:
Overall cost at $2,500 per unit:
$29.4 billion
Overall cost at $2,000 per unit:
$23.5 billion
OMBs turn of the century safety regulation figure for the overall transportation sector (not just
automotive) was $26.737 billion. If one were to assume 60 percent of OMBs figure, or $16.04
billion, belongs to automotive transportation, the ITS/University of California study would imply
an additional $13.6 billion in automotive regulatory costs ($29.4 billion minus $16.04 billion). But
lets assume instead an even lower per-vehicle cost than Sperling, of $2,000 per unit ($23.5 billion
overall), and not inflate the 2001 $2,000 figure to 2010 dollars as would be appropriate. This yields
a placeholder overage for vehicle safety and efficiency costs to supplement OMB of $7.46
billion ($23.5 billion ITS/UC estimate, minus the $16.04 billion were assuming OMB is
attributing to cars and trucks). This is what I include in Principia Bureaucratica: The Total Annual
Cost of Federal Regulation and Intervention.
This is far from exact, its even arbitrary, but it seems better than positing nothing in the face of the
fact that little is known and with few other non-governmental studies available to supplement
Costberg and the existence of so many regulations beyond those for which DOT reports costs.
Whether regulations costs are known or not, compliance remains mandatory.
The trucking industrys overall regulatory costs, apart from that contained in OMBs figures, is not
yet examined here. But with respect to future regulatory costs, the Heritage Foundation noted
Under a provision buried in the 600-page transportation bill recently passed by the Senate, truckers
large and small would be required to buy and maintain electronic on-board recorders (EOBRs) that
would document their travel time and distance. The annual cost to truckers and trucking firms: $2
Much of what we all own spent part of its time on a truck somewhere. Policymakers should pay
closer attention, and better quantify costs to this industry of its transportation and environmental
mandates. But so far, no such costs are added here.
The introduction of so powerful an agent as steam [to a carriage on wheels] will make a great change in
the situation of man.318
Thomas Jefferson, 1802
Independent estimates for the costs of regulation to the freight railroad industry are lacking. A
notable rule, however, which does appear among OMBs figures is a $1.6 billion rule on positive

train control technology to automatize stopping or slowing in certain cases. Other cost figures are
sparse, but examples include the claim by some in the industry that AmTrak access to freight rail
tracks costs some $240 million annually.319 Most coal transport is by rail, so anti-coal regulations
affect the rail industry as well. The report Slow Train Coming by Marc Scribner describes
misguided attempts to re-regulate rail, some supported by shippers in the agricultural, coal and
petrochemical sectors a rebounding threats.320 It is remarkable that nothing tangible to add as an
annual cost to train regulation is otherwise available. Costberg, at this point, only includes
governmental figures.
Itll never fly, Orville.321
Aeronautics was neither an industry nor a science. It was a miracle.
Igor Sikorsky
A few rules among those issued since 2001 affect the aviation industry. These may be seen in
Major Rule Annual Cost Detail, OMB Costs and Benefits Reports, FY 2002-Present, and include rules on
Washington, D.C. area flight restrictions, fuel tank flammability, pilot age limit, but little else. The
net costs, apart from making an assumption that some of the pre-turn of the century $26.737
billion ascribed to DoT contains some aviation costs, amount to only a few tens of millions.
Its hard to imagine airline interventions and regulations cost that little. The American Aviation
Institute provides some figures on regulatory costs (such as tarmac limitations) and taxation in the
airline industry. Their 2011 report noting such impacts as flight cancellations and compliance
costs finds that Consumer regulations introduced since 2009 have added $1.7 billion per year in
cost to airlines. Higher fares resulting from these costs will result at least a $3.5 billion annual
impact on the national economy. 322 Here, in the absence of any other information on overall
aviation regulatory costs, we include the $5 billion total in Principia Bureaucratica: The Total Annual
Cost of Federal Regulation and Intervention. These enhanced passenger protections do not appear as
major rules, at least as far as what OMB compiles, which seems inappropriate.
An important, comprehensive study of the U.S. transportation system by Clifford Winston surveys
numerous categories of costs and interventions ranging from inefficient labor regulations in
highway projects and EPA regulations that delay runways, to welfare gains available from
adopting congestion pricing on highways, better gate management at airlines, repealing the Jones
Act in shipping, and much more.323 These costs (or implied savings and improvements in welfare
from liberalization) would sum into the many billions of dollars. Ill assume here, however, that
Ive covered EPA and labor costs elsewhere in Costberg, and will for the time being let OMB figures
and the placeholders we have (inadequately) stand in for the remainder. The baseline current, todate cost of transportation regulation to which I will add future costs, while reserving the right to
incorporate future information that convinces me to increase or decrease the base, is $80.395
billion, as may be seen in Principia Bureaucratica: The Total Annual Cost of Federal Regulation and

Department of the Treasury: $1.411 billion

In the fall of 1972 President Nixon announced that the rate of increase of inflation was decreasing.
This was the first time that a sitting president used the third derivative to advance his case for
Hugo Rossi
Professor of Mathematics
University of Utah
Three major Treasury Department rules involving a revised Basel Capital Accord, Internet
gambling prohibitions and the S.A.F.E. Mortgage Licensing Act appear separately in Annual Costs
of Untabulated Major Rules Reviewed at OMB - by Department or Agency, and on one line in Principia
Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention. The total is $1.411 billion.
We otherwise assume that most Treasury Department costs are reflected in the tax paperwork
noted earlier, since no costs are acknowledged by the federal government otherwise.

Environmental Regulation: $386.36 billion

EPA is trying to inflate the term waters of the United States into moistures of the United
Sam Kazman, Competitive Enterprise Institute, General Counsel
I was in a meeting once and I gave an analogy to my staff about my philosophy of enforcement. And I
think it was probably a little crude, and maybe not appropriate for the meeting, but Im going to tell
you what I said....It is kind of like how the Romans used to conquer the villages in the Mediterranean
theyd go into a little Turkish town somewhere and theyd find the first five guys they saw and
theyd crucify them. Then that town was really easy to manage for the next few years.
And so, you make examples out of people who are, in this case, not complying with the law. You find
people who are not complying with the law and you hit them as hard as you can and you make
examples out of them. Theres a deterrent effect there. And companies that are smart see that. They
dont want to play that game and they decide at that point that its time to clean up. And that wont
happen unless you have somebody out there making examples of people.325
Al Armendariz
Environmental Protection Agency, Region 6 Administrator
The Environmental Protection Agency (EPA), created in December 1970, occupies all the space
along Constitution Avenue between 12th and 14th streets, sports over 17,000 employees,326 and
requested $8.15 billion for fiscal year 2014.327 It is an executive branch agency, not an independent
agency, despite what some prominent websites imply.328
EPAs regulations are attention-getting, to put it mildly. When representative Darrell Issa (R-CA),
who chairs the House Committee on Oversight and Government Reform, asked 171 businesses,
trade groups and policy organizations about regulatory barriers, environmental mandates were

most prominent: Of the 651 total complaints [from 113 organizations], 334 of those pertained to
EPAa whopping 51 percent.329
The major EPA programs started over 40 years ago with:
The Clean Air Act of 1970
The Federal Water Pollution Control Act of 1972 (now the Clean Water Act)
With these two acts, responsibility for establishing and enforcing pollution control requirements
was shifted largely to the federal government.330
Continuing with subsequent major programs, we encounter:

Safe Drinking Water Act (1974)

Toxic Substances Control Act (1976)
Resource Conservation and Recovery Act (1976)
Comprehensive Environmental Response, Compensation and Liability Act (Superfund,
Amendments to the Federal Insecticide, Fungicide and Rodenticide Act (1972)
The amount of academic and consulting research into the costs of environmental regulation is
rather staggering, and capturing the extent of environmental regulatory analysis would (and does)
involve several books. Studies abound proposing general equilibrium models to gauge the scope
and costs of environmental regulation, but the numbers then are rarely run, or are run for a
handful of firms within some selected industry. We have several human lifespans worth of
research into the question of environmental regulation, so whats the cost of these environmental
programs? Like other forms of regulation, no one really knows. Several hundred billion can be
defended generally, given the EPAs own perception of the level of environmental regulatory costs.
Back in 1990, the EPA prepared a report called Environmental Investments: The Cost of a Clean
Environment. Therein the agency praised the cost-effectiveness of its own work, proclaiming that
the agencys achievement of a cleaner environment entailed: an investment of $115 billion a year
in current dollars to protect and restore our nations air, water, and land. This is just over two
percent of our Gross National Product.331
The Cost of a Clean Environment report informed other, future analyses; it featured prominently in
Thomas Hopkins initial regulatory cost studies. It appeared in 1998s The Cost of
Environmental Protection, from Resources for the Future (RFF), in which the authors
(Morgenstern, Pizer and Shih) noted the perception that Expenditures for environmental
protection in the U.S. are estimated to exceed $150 billion annually or about two percent of GDP,
(they name GDP rather than GNP as the EPA report had) but did not find much in the way of
additional hidden costs.332 In another 2003 RFF report by Pizer and Kopp, Calculating the Costs
of Environmental Protection, the same two percent reckoning is noted and it is remarked that
Data for other countries are less comprehensive but suggest similar levels of expense333
Other research points to additional indirect costs attributable to environmental protection; in
Estimating the Hidden Costs of Environmental Regulation, authors Joshi, Krishnan and Lave
find that Empirical results show that a $1 increase in the visible cost of environmental regulation

is associated with an increase in total cost (at the margin) of $10-11, of which $9-10 are hidden in
other accounts.334
The complexities involved in tabulating environmental regulatory costs were made apparent in
RFFs 2003 Calculating the Costs of Environmental Regulation when Pizer and Kopp described
their task:335
At the broadest level, we distinguish between partial and general equilibrium costs. Partial equilibrium
costs represent the burden directly borne by the regulated entity (firms, households, government),
including both pecuniary and nonpecuniary expenses, when prices are held constant. General
equilibrium costs reflect the net burden once all good and factor markets have equilibrated. In addition
to partial equlibrium costs, these general equilibrium costs include welfare losses or gains in markets
with preexisting distortions, welfare losses or gains from rebalancing the governments budget
constraint, and welfare gains from the added flexibilty of meeting pollution constraints through
reductions in the use of higher-priced, pollution-intensive products.
For framing, the OMB, in its 2002 Draft Report on Benefits and Costs of regulations noted turn of the
century environmental costs of up to $203 billion (in 2001 dollars), which appears in Total Annual
Costs of Regulations as of Sept 30, 2001, According to OMB. That would be $267 billion in 2013
dollars, also shown in the chart. Elements of EPAs Cost of a Clean Environment report were
instrumental in these OMB estimates of environmental regulatory costs. The estimated
environmental cost component noted by other observers hovers in this general $200-$300 billion
area as well, if one were to express those figures in 2013 dollars, as previously seen in Estimates of
the Cost of Regulation: Late 20th Century, Early 21st Century.
OMBs assessments of the aggregate, overall costs of environmental regulations (as opposed to the
incremental, piecemeal yearly figures the public gets now) also appeared in both its 2000 and 2001
Benefits and Costs reports, and all were the basis for the turn-of-the-century figures seen herein.
OMBs 2000 report, for example, incorporated the EPA Environmental Investments report as part of
its environmental cost estimate: OMB tallied a total of up to $170 billion in total environmental
costs at the time (that was 1996 dollars). The lower bound was comprised of $96 billion noted by
EPAs air rules assessment plus the newest cost data from Regulatory Impact Analyses
accompanying rules issued between 1995 to 1999; other amounts consisted of OMBs collation of
other researchers work and its own estimates regarding EPA costs between 1988 and 1995.336
Given this picture that emerges from all these, for a pre-turn-of-the-century (not recent decade)
costs of environmental regulation, I use OMBs 2001 report as depicted in OMB-Tallied Social
Regulation Subset Costs Up to $473 Billion Annually showing EPA costs of up to $252.52 billion in
2013 dollars as a placeholder for legacy environmental costs. This figure (which is less than
OMBs $267 just noted from its 2002-based Total Annual Costs of Regulations as of Sept 30, 2001)
appears in Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention as
EPA historical cost per OMB.
Weve experienced well over a decade of environmental rulings since this short-lived official flurry
of EPA aggregate cost estimates. Total EPA costs over the past decade-plus of up to $59.65 billion
using OMB Benefits and Costs reports and detail on exactly what these more recent rules are
appears in Major Rule Annual Cost Detail, OMB Costs and Benefits Reports, FY2002-present. These also
appear in Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention as EPA

per OMB C&B Reports 2002-present. To reiterate the parallel with other agencies, this $59.65
billion represents only rules for which both cost and benefit estimates were provided by OMB,
which is only a fraction of EPAs major rules.
Other independent reports put such EPA costs in context. For the manufacturing sector alone, the
study by NERA for MAPI described earlier (Macroeconomic Impacts of Federal Regulation of the
Manufacturing Sector), described an Environmental Protection Agency cumulative component over
the period 1993 through 2011:
[L]ooking at the ranking of the agencies in terms of total estimated costs of major regulations affecting
the manufacturing sector from 1993 through 2011, the Environmental Protection Agency ranks as the
top agency with total cost estimate of $117 billion. This cost figure far exceeds the cost of all other
These particular data in the NERA/MAPI report are derived from a model based on OMB
Reports to Congress just as Costberg figures are (minus the model, of course, in the case of the latter).
The authors of the NERA/MAPI study reiterate, as has been cited earlier and similarly stressed in
[T]hese totals represent only rules with cost estimates from the OMB Reports to Congress. To the extent
these reports do not contain cost estimates for all regulations over the 1993 though 2012 time period, the
totals shown below understate the total cost of all regulations.
As for EPAs overall 1993-2011 cost to the economy (not just the manufacturing sector),
NERA/MAPI arrived at $158 billion.337 This figure is superficially comparable to the interval
represented by Costbergs 2002-present $54.61 billion annualized figure, which includes a
substantial $10.89 billion component for 2013 alone. NERA/MAPI make the same word-for-word
caveat in this section of their report as just cited above regarding omitted costs.338
A small additional cost component for EPA rules (with costs but not depicting benefits) of $1.191
billion appears in Annual Costs of Untabulated Major Rules Reviewed at OMB - by Department or
Agency. For more than a decade, alongside the economically significant rules that OMB
highlights, EPA has issued hundreds of rules not regarded economically significant, creating huge
gaps in what gets counted. Since 2001, EPA has issued 6,866 rules, 382 of them significant.
Among these, some environmental regulations and proposals not fully unveiled in OMBs
roundups and proposals are regarded as exceedingly costly, referred to in the House Energy and
Commerce Committee as long and growing list of billion-dollar rules.339
While OMB practices benign neglect of its aggregate estimates in play around 2001, these three
OMB-based components of environmental regulations total up to $313.36 billion, as depicted in
Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention. Again, this omits
recent costly rules, and numerous unanalyzed rules, a small portion of which will be noted shortly.
But first, circling back to the future: EPA clearly saw, and necessarily still sees given its policies,
the two-percent-of-national-income cost of environmental protection as a terrific bargain and
investment to celebrate rather than downplay. When the Agency prepared Cost of Clean
Environment it even eagerly anticipated programs yet to be fully implemented, and projected that
their costs would be $158 billion (still 1990 dollars) in 2000, and to reach 2.4 percent of GNP by

that timestill a bargain to the agency.

Now for some context; the Commerce Departments Bureau of Economic Analysis estimated
2015s GDP to be $18.035 trillion.340 If EPA regulations had adhered to the standard of costing
two percent of national income annually today, they would cost around $361 billion. Our $313.36
billion OMB-based component estimate lies well below thateven though it includes 20 years of new
costs. Our figure lies well within what the agency regards as justified and once openly
acknowledged as the carrying cost of a much smaller set of rulemakings in a far smaller economy.
So our $313.36 billion is about as defensible as anything else without coming close to overstating
anything the agency hasnt acknowledged, and so can serve as a base. If an updated iPhone launch
can boost annualized GDP growth in the U.S. up to half a percent,341 EPA regulations having a
major impact across multiple sectors is no stretch by any means.
Incidentally, as noted, EPA anticipated that environmental regulations would cost at least 2.4
percent of national income by the year 2000, for programs then in effect, not 2.0 percent. Those
programs are in effect, plus another 15 years worth. If environmental regulations are presumed to
cost the 2.4 percent of national income that EPA said they would, turn of the century programs
in effect prior to the past 15 years worth would amount to $433 billion in todays dollars (using
GDP as is standard today rather than EPAs then-GNP proportion).
I do not yet ascribe to EPA the sweep of $433 billion in costs that it ascribes to itself (which,
again, omits rules issued over the past two decades) but a case for that can be made; in fact, it is
probably wrong not to do so, particularly from the perspective of those affected by the rules and
with little recourse to do anything about them. Of importance also is the status of an ever-cleaner
environment as a luxury good in economic jargon, and the implication in that respect that we
probably are spending more as a percentage of GDP today than we did in 1990 and in 2000 on a
clean environment. We just noted that $361 billion would have been two percent of GDP; for
environmental costs to actually be as low as the $313.36 billion adopted here as the OMB-based
placeholder, our spending on the environment would have to stand at less than two percent
(around 1.7 percent) of GDP today, implausible given the rise of EPAs economic footprint.
For a bit more framing and perspective on $313.36 billion as a placeholder in the absence of better
information, EPA pegged 2010 incremental costs of the Clean Air Act Amendments of 1990 subset
of its rules at $53 billion annually, projected to rise to $65 billion by 2020 (both in 2006 dollars).342
This cost represents not the sweep of clean air requirements, nor obviously the totality of EPAs
agenda, but a specific analysis to estimate the incremental change in annual compliance costs
from 1990 to 2020 that are attributable to the 1990 Clean Air Act Amendments. Portions of these
costs would presumably be implicitly embedded in OMB-Tallied Social Regulation Subset Costs Up to
$473 Billion Annually and in Major Rule Annual Cost Detail, OMB Costs and Benefits Reports, FY2002present; thus they are not added here, but the 2010 report provides context and validation for the
scale of environmental compliance cost and economy-wide impact. Furthermore, EPA notes
indirect effects of the Clean Air Act Amendments add to these direct costs to the tune of billions
of dollars, expressed in such areas as higher energy costs and diversions of capital investments
from more productive avenues:343
[C]ompliance expenditures associated with the Amendments will reduce GDP and consumption by
approximately 0.5 percent in 2010 and 2020, relative to the without-CAAA scenario. The total
estimated GDP reduction of $79 billion in 2010 and $110 billion in 2020 are 50 to 70 percent larger

than the total primary cost estimates of $53 billion in 2010 and $65 billion in 2020. The difference is
attributable to secondary effects of compliance costs on the overall economy, a large portion of which
are likely the result of increases in energy prices, which has broad effects on overall production. Another
factor is that investment in pollution control capital can divert capital from the purpose of enhancing
long-term productivity within the industrial sector.
So with this incremental portion of the Clean Air Act alone, we are looking at EPA-estimated
2010 economic impacts of $132 billion ($53 billion direct plus $79 billion GDP reduction).
All regulatory cost summations are apples and oranges, yet, nonetheless, for still further context,
with respect to air quality regulations impacting manufacturing plants, particularly ozone rules, a
September 2012 report by the National Bureau of Economic Research found annual economic
cost from the regulation of manufacturing plants of roughly $21 billion, about 8.8 percent of
manufacturing sector profits during the 1972-1991 period under review.344 These also appear not
to have figured into EPAs analyses of itself.
So far we have pondered mostly air-related regulations. Further adding context for our OMBbased $313.36 billion subtotal in Principia Bureaucratica: The Total Annual Cost of Federal Regulation
and Intervention is the range of Clean Water Act regulations that, as of 2001, totaled up to an
estimated $93.1 billion annually; 345 Like the Clean Air incremental just noted, these again are not
added but assumed to be (theoretically) captured in the EPA base estimate we already have, and in
the newer economically significant rules issued since the turn of the century in OMB benefits and
costs reports.
Along with all rules not deemed economically significant, many impose costs that are not
captured in EPA regulations over the past decade-plus. For example, with respect to gasoline
content regulations, one academic study found:346
There is no evidence, however, that the RVP (Reid vapor pressure) or RFG (reformulated gasoline)
regulations result in significant ozone reductions. These two regulations nonetheless impart substantial
costs on consumers, since the entire country is subject to one of them during the summer months. Given
U.S. non-California 2008 summer gasoline consumption of 47 billion gallons and a $0.01 - $0.015 per
gallon price effect estimated in Brown et al. (2008), the VOC standards imposed by these regulations
increase U.S. annual gasoline expenditures by $524 - $784 million.
Ive not added the half-billion-plus in costs of these regulations here, but could have. The point is
to show that of the many hundreds of EPA rules not folded into OMB cost estimates, some
matter. So lets assume for the time being they and others like them are captured in our OMBbased $313.36 billion subtotal in Principia Bureaucratica: The Total Annual Cost of Federal Regulation
and Intervention.
Beyond OMBs roundups, other costs of ethanol-related programs and a new water program will
be noted.
Government Moonshine347
The Freeman, March 24, 2010.

The market for ethanol would not exist without its policy privileges.348
The mandate for ethanol use in gasoline, the Renewable Fuels Standard, creates substantial costs
for consumers through the Environmental Protection Agency and the Agriculture and Energy
Departments. These costs include budgetary costs like corn and soybean subsidies, crop insurance
subsidies and maintenance of an ethanol reserve. As budgetary costs rather than regulations, these
tens of billions are not included here.349
However, the costs to consumers beyond these budgetary expenditures do need to be addressed by
policymakers, and they do not appear in any of the detail from OMB in its benefits and costs
reports, as far as I can tell. These costs need to be added to turn of the century and recent costs
since they are a newer development. In the book Corn Ethanol: Who Pays? Who Benefits?, author
Ken G. Glozer notes budgetary costs during the 2008-2017 period of $143 billion; but he also
delineates Consumer Cost Increases for the same ten-year period, as follows:350
Consumer Cost Increases (billions of $)
Mileage penaltyLower BTU ethanol blend
Increase in food costs
Increase in domestic ethanol price resulting from
Fee on imported ethanol
Increase in vehicle costs for flexible fuel vehicle upgrade
Total estimated consumer costs ten-year period):
The grand total for Glozers estimated impact of federal corn-ethanol policy on consumer and
federal taxpayer costs, 2008-2017 is $506.7 billion, a huge sum. The consumer cost increase
component alone, a proxy for regulatory costs, is $363.7 billion or $36 billion annually over the
period. For present purposes, I downscale the number to $25 billion and include it in Principia
Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention. The situation is worsened
by the finding that biofuels created from corn waste and residue are worse for emissions than the
gasoline they replace.351
Next, I highlight here a factor that Ive deliberately avoiding in assigning regulatory costs, except
for a small component in homeland security regulation earlier. The Glozer study does not
incorporate health effects; but by raising the price of basic food around the globe, industrialized
countries ethanol-into-fuel policies exacerbate world hunger and human mortality. In October
2011, the Competitive Enterprise Institute and ActionAid USA filed with EPA a joint request for
correction of information under the Data Quality Act, asking the agency to take account in its
analyses of the resulting risks of hunger and death.352 EPA refused their Request for Correction
of information under the Data Quality Act, and the groups filed a Request for Reconsideration in
March 2013.353
These groups demand highlights peer reviewed work by Indur M. Goklany suggesting that EPAs
lowball estimates of the costs of its ethanol-into-fuel program ignore global deaths due to
[B]y increasing food prices, biofuel mandates have caused chronic hunger in developing
countries, and that at least 192,000 deaths annually may be occurring as a result of

expanded biofuel production.

In contrast, EPA praises its own estimates of health benefits of the Clean Air Act Amendments in
each Section 812 study. But catastrophic health effects on the worlds poor created by misguided
ethanol policies get little treatment. Such impacts are costs just as ferociously as theoretical lives
saved are benefits. They are more valid in comparison to EPAs claims of up to $60 billion in
benefits for its cross-state air pollution rule in the 2012 Draft Report,355 and its use of international
benefits in its latest CAF proposals.356 Billions upon billions of dollars in additional costs of
reformulated fuel standards due to their health effects. could be added here to Principia
Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention.
For reference, an additional 100 fatalities theoretically associated with homeland security
regulations at $5 million apiece were noted above to cost a half billion. At $5 million, the
192,000 deaths annually plausibly attributable to biofuels is a staggering $960 billion. One reels at
that figure. In this and many other ways too, our EPA does not care to take into account the costs
of energy poverty or how green extremism hurts the poor.
I employ $48 billion in Principia Bureaucratica: The Total Annual Cost of Federal Regulation and
Intervention for this EPA component as a stepdown/placeholder figure. Its a mere five percent of
the jaw-drop figure implicit in Goklany, and if human life is valued by regulators in this instance
the way they claim to do in other circumstances, it should not be objectionable. Its true that these
are global costs and not just costs within the U.S. but Ill leave it to others to claim we shouldnt
count them for that reason. The federal government meanwhile claims international benefits with
respect to certain energy efficiency regulations, so in this sole instance, I will do so in Costberg, to
make a point.
To round things up here, the baseline current, to-date cost of environmental regulation to which I
will add future costs, while reserving the right to incorporate future information that convinces me
to increase or decrease the base, is $386.36 billion. The total and the elements composing it may
be seen in Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention. Note
that, even with the last two decades worth of costs added, that the figure here still below the $433
billion cost of environmental regulation if it assumed (as it surely must have done) the 2.4 percent
of GDP that the EPA proudly anticipated for environmental costs.
On Future EPA Costs
In addition to uncertainties regarding the costs of all existing regulation, a flurry of other recent
costs are hardly negligible.
A slate of costly rules are in the drafting stage, inducing some dramatically deemed an EPA
regulatory train wreck.357 An example is EPAs intention to modify its 1988 regulations on
Underground Storage Tanks. These are expected by EPA to cost an additional $210 annually
above the existing regulatory baseline.358 An EPA water rule is seizing power over backyards with
suspect congressional authority,359 and congressional resolutions of disapproval against it were
debated in 2015.
Occasionally, the high costs and employment hurdles imposed by EPA are acknowledged, and
inflated benefit claims get the official pushback. Regulatory impacts on the domestic cement
industry were recognized when a D.C. Circuit panel overturned EPA portland cement kiln

emission standards as cavalier and unscientific.360 This industry estimates that cost of a slate of
proposed and enacted rules will cost several billion annually.361
Its not the approach in Tip of the Costberg to include such proposed, not yet effective regulations
but in dramatic instances like EPA it is worthwhile to note them.
Industry estimates for the rules that have appeared over the past decade are sometimes
considerably higher than the EPA estimates. Utility Maximum Achievable Control Technology
(MACT) standards on mercury and other air toxics were pegged by EPA at $500,000 annually,
while the National Economic Research Associates (NERA) point to costs of many billions and
substantial job impacts for the final rule.362 NERA pegged additional costs to power companies of
the Clean Air Transport Rule and the Utility MACT rule at an extra $17.8 billion annually363
compared to lower EPA claims.
The industrial boiler/process heater MACT rule is another example of divergent views. EPA
estimated annualized costs at $2.9 billion.364 The Council on Industrial Boilers released a report
estimating job impact and capital outlay costs far exceeding the EPAs capital costs of $9 billion,365
a plea met immediately by the requisite assertions that the rules arent burdensome.366 The
American Forestry and Paper estimated the portion of boiler MACT affecting pulp and paper
mills alone at $4.6 billion in capital costs, more than half EPAs overall capital cost estimate. As
the National Association of Manufacturers (NAM) noted, the House of Representatives in 2011
did vote to delay the rules367 but the Senate never did. The NAM contends that The Boiler
MACT rule will cost manufacturers more than $14 billion in valuable capital that could be spent
on investments to create jobs.368
States sometimes raise alarms about EPAs long reach. In Milwaukee, WI, the president of
Wisconsin Manufacturers and Commerce proclaimed: 369
EPAs war on fossil fuels hit Wisconsin harder than most other states because nearly 70 percent of our
energy for residential, commercial and industrial use comes from coal-fired plants...The Boiler MACT
rule alone could lead to the closing of 11 paper mills in Wisconsin and the loss of up to 7,500 jobs by
forcing companies to pay more than $400 million to meet new emissions standards.
Administrations occasionally find themselves compelled to back off a high-dollar upcoming rule
by economic and political realities. President Obama withdrew the Reconsideration of the 2008
Ozone National Ambient Air Quality Standard that could cost up to $90 billion (the rule would
lower the allowable concentration of ozone from 0.075 parts-per-million to between 0.060 and
0.070 parts per million).370 The Administration contests the claim, but the Manufacturers Alliance
pegged costs of meeting the regulation at $1.013 trillion and 7.3 million jobs between 2020 and
2030.371 Sen. John Barrasso (R-WY.) called EPAs temporarily delayed ozone rule the single most
expensive environmental regulation in history.372 That distinction now belongs to the EPAs Clean
Power Plan rule, which is also the target of 2015 resolutions of disapproval. A 2014 Chamber of
Commerce report anticipated that a version of this rulemaking on restricting carbon dioxide
emissions from fossil-fuel powered plants would reduce GDP by some $50 billion annually
through 2030 (and impact over 200,000 jobs),373 but the Obama administration shows no sign of
backing off this one, despite protests from some coal state Democratic senators.374
Also on the subject of pending regulatory costs, several of the just-noted rules among them,

President Obama sent an August 30, 2011 letter375 to then-House Speaker John Boehner in
response to a request for a list of pending rules with costs in excess of $1 billion. Dominant
among the total of seven were four EPA rules that cost up to $105 billion, the ozone rule among

Primary Cost Estimate
Reconsideration of the 2008 Ozone National Ambient
Air Quality Standards
$19-$90 b
National Emission Standards for Hazardous Air
Pollutants for Coal- and Oil-Fired Electric Utility
Steam Generating Units
$10 b
National Emission Standards for Hazardous
Air Pollutants for Major Source Industrial,
Commercial & Institutional Boilers and
Process Heaters
$3 b
EPA/SWER Standards for the Management of Coal
Combustion Residuals Generated
by Commercial Electric Power Producers
$0.6-$1.5 b
Speaker Boehners reaction was one of alarm, and he requested cost estimates of the remaining
economically significant rules.377 Skirmishes will continue over whether regulations are
misguided or laden with public benefits.378
Regulators recognize that these rules are costly, despite their challenges of industry estimates.
Actions are louder than words, and political considerations creating delays demonstrate this.
Senator James Inhofe provided a list in October 2012 of strategically delayed rules in a report
whose title partly read, Numerous Obama EPA Rules Placed on Hold until After the
Election.379 The Washington Post later detailed how EPA in particular held back on rules prior to
the 2012 national elections: As we entered the run-up to the election, the word went out the
White House was not anxious to review new rules, one official acknowledged.380 This
demonstrates that Washingtons regulators and leaders know regulations can be costly. Still, rules
delayed are not rules terminated; expect any rules delayed to return in some form when more
politically convenient accompanied by even more rules.
To seek better control of environmental regulatory costs isnt to disregard safety. We all have
children and grandmothers, so such arguments are obnoxious. Agency creativity with benefit
estimates, such as the arrogance of assuming benefits from correcting consumer irrationality in
EPAs analysis of the newest set of proposed CAF greenhouse gas and fuel economy rules is
widespread.381 EPAs interference with access to affordable heating and cooling imposes health
risks all on its owncosts that are not included here but should be. The agencys eagerness to act
without congressional authority, a move in violation of the Constitutions separation of powers,
yet encouraged by President Barack Obama, should alarm citizens and policymakers alike.382
Other costly rules usurp what should be state authority, even going so far as to regulate scenery
rather health and safety.383
People want environmental protection and increased environmental amenities. They differ over
whether EPA and central planning and public ownership of resources are the best means of
securing them. It is interesting to witness the rare occasions when even regulatory proponents

acknowledge that other existing regulations (federal, state and local), fear of tort liability, and
simple market forces induce companies to take some minimal level of environmentally protective
action all the time.384 These are worth exploring as alternatives to further command and control.

U.S. Access Board (ATBCB): $909 million

Regulations related to disabled access to electronic and information technology are estimated at
$909.36 million annually. The Access Boards web site relates that it is an independent agency,385
but OMB presented cost information as if it were an executive branch agency. This figure is
included in Principia Bureaucratica: The Total Annual Cost of Federal Regulation.

Federal Acquisition Regulation: $1.427 billion

Rules regarding contracting across various government agencies for goods and services are
estimated at $1.427 billion. This included an OMB-reported total of $185.56 million annually, and
paperwork cost estimates (see Independent Agency Paperwork Burdens) of $1.241 billion. This figure
appears in Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention.

15. Independent Agency and Certain Sectoral Regulatory Costs

A governmental monopoly need not worry that customers may go elsewhere or that inefficiency may
mean its demise.386
Murray N. Rothbard
Power and Market
The emphasis so far has been on cost of executive agency regulation and intervention, but oftneglected independent agency costs and unaccounted-for sectoral costs account for a substantial
portion of the regulatory enterprise and of government intervention. The aggregate figure for
independent agency costs of $9.51 billion shown above in Annual Costs of Independent Agency
Rulemakings will be broken down by agency and/or sector; one may observe that the GAO Basis Independent Agency column in Principia Bureaucratica: The Total Annual Cost of Federal Regulation
and Intervention sums to the same $9.51 billion, but other supplemental information will be

Antitrust Regulation: $2.34 billion

Will MySpace Ever Lose Its Monopoly?387
Headline in The Guardian, February 2007
As freak legislation, the anti-trust laws stand alone. Nobody knows what it is they forbid.388
Isabel Paterson
The God of the Machine
The rule of law, in complex times,
has proved itself deficient.
We much prefer the rule of men!
Its vastly more efficient!
Now let me state the present rules,
The lawyer then went on,
These very simple guidelines
You can rely upon:
Youre gouging on your prices if
You charge more than the rest.
But its unfair competition
If you think you can charge less!
A second point that we would make
To help avoid confusion:
Dont try to charge the same amount!
That would be collusion!
R.W. Grant389
Tom Smith and His Incredible Bread Machine

OMB cost estimates do not include assessment of antitrust regulations economic costs. Even
during its period when it did address aggregate costs, the OMB left antitrust out (so it is not a
component of the $397.75 billion in aggregate non-trade legacy economic costs described in the
earlier chapter A Baseline for Aggregate Annual Economic Regulation Costs). As OMB stated
back in its 2000 Report, our definition of economic regulation does not include antitrust
activities such as preventing the formation of monopolies through mergers or anticompetitive
Antitrust regulation is not to be regarded as a benign power, and its costs merit recognition. Large
companies may enjoy market power for a period of time (firms have life cycles like industries and
products), but they possess nothing that matches the near-absolute power antitrust authorities
wields over the entire economy as a whole. Antitrust intervention is capable of changing entire
industry structures (and it does so) and in the process it reorients economic trajectories and
generates outcomes that do not resemble what market competition would have delivered. As far as
deadweight losses are concerned, they can hardly get more injurious.
OMB itself in certain instances has shared the view that antitrust regulation may not be entirely
beneficial. As noted on p. 18 in the 2000 Report:
Economic regulation may produce net social benefits when natural monopolies are regulated to
simulate competition. Although ... the dollar amounts of such efficiency benefits are small and short
lasting in a dynamic and technologically vibrant economy, this is a judgment that is not the result of
an empirical study. It is, however, based on the increasingly accepted view that the U.S. economy is
becoming more competitive over time, with fewer long-lasting natural monopolies, and on evidence that
much economic regulation seeks primarily to enhance one group at the expense of another.
The U.S. Department of Justice collected $1 billion in payments related to criminal antitrust
investigations in FY2011.391
Apart from such assessments, costs of antitrust regulation (not including the governments onbudget enforcement costs) have been estimated at $1.9 billion annually for 2003, as seen in Costs of
U.S. Antitrust Regulation (with benefits said by practitioners to almost surely outweigh costs).392
What that author may consider a benefit, I would probably consider a cost.393 Be that as it may,
assuming no added costs and putting this estimate in 2010 dollars, we have indirect antitrust costs
of around $2.34 billion that were using in this report and including in Principia Bureaucratica: The
Total Annual Cost of Federal Regulation and Intervention. These costs include responding to
government investigations; costs of private litigation; and indirect costs such as opportunity costs
of management time spent on compliance and litigation, and distraction and deterrence of
beneficial firm activities.
Costs of U.S. Antitrust Regulation
This is a low figure, insufficient for capturing antitrusts enormous impacts on the economy. While
not disputing claims that benefits of enforcement outweigh costs, Robert W. Crandall and Clifford
Winston provide some context for the billions involved annually:394

Total resources consumed by antitrust enforcement, however, amount to much more than government
antitrust agency expenditures....Firms involved in antitrust cases must pay for legal advice, particularly
in obtaining approvals for mergers and acquisitions. Fisher and Lande (1983) estimate that a merger
case cost a rm as much as $1.5 million during the 1980s. Firms that face a lawsuit must pay for their
defense, which could involve a lengthy trial and subsequent appeals. Antitrust cases also require the
time and resources of management and critical staff to address issues of rm conduct, to provide
nancial information and so on. We are not aware of estimates of the costs to rms caused by antitrust
investigations and court proceedings, but they undoubtedly run into the billions of dollars per year.
Finally, the largest cost of antitrust enforcement may be that rms are discouraged from pursuing
potentially efcient mergers, taking competitive pricing actions, developing new products or making
new investments for fear of being embroiled in an antitrust action, especially if competitors use the
antitrust authorities to block one another.
Another survey notes, regarding cost of a failed merger attempt alone, that:395
The failure of a merger attempt can entail significant direct and indirect costs to the acquirer, target, or
both firms. From the time of a merger announcement to the time when it is completed or canceled, the
acquiring firm discloses information that it would not otherwise disclose, incurs substantial legal
expenses, and faces production activity disruptions as well as management distraction. If the deal falls
through, then competitors are in a better position to use such information to their advantage. Ekbo and
Wier (1985) find evidence that rival firms benefit from the news of a merger proposal and that a delay
in completion of the deal gives rival firms additional time to exploit the news. Bates and Lemmon
(2003) find that the inclusion of target termination fees is more frequent in merger deals where the
potential for information expropriation by third parties is significant. The target, on the other hand,
has to seek other means of restructuring, including being taken over by a different firm, which may not
be possible within a short period of time.
Second-order and indirect regulatory effects not reflected in OMB and SBA estimates permeate
antitrust activism. And so do direct effects; for example AT&Ts abandoned merger with T-Mobile
entailed a breakup fee of $4 billion. This cost was caused entirely by governments interference
with one free market transaction, a derailment from which rivals benefit and avoid the need to
respond competitively. This cost and others like it are not added here but could have been.
Also not included are lost synergies and inefficiencies created by conditions forced upon
transactions, such as the spinoffs of business elements that frequently occur with respect to
mergers. Such meddling is standard now, even with respect to something as mundane as ecigarettes.396 It happened before with intense mints.
So, the baseline current, to-date cost of antitrust regulation to which I will add future costs, while
reserving the right to incorporate future information that convinces me to increase or decrease the
base, will stand at $2.34 billion for now.

Federal Communications Commission and Telecommunications Regulation; Plus

Infrastructure Regulation Placeholder: $131.58 billion
You know who owns your pipes? Your customers. You have no right to set up a tollbooth.
former Sen. Byron Dorgan (D-North Dakota), Sept. 17, 2007
Markets without divisible and transferable property rights are a sheer illusion. There can be no
competitive behavior, real or simulated, without dispersed power and responsibility.397
G. Warren Nutter
The past decades independent agency regulations surveyed in the annual OMB benefits and costs
reports included no Federal Communications Commission costs whatsoever. Nor did any FCC
rules appear in the independent agency compilations presented above, but $2.891 billion in FCC
paperwork costs do appear in Independent Agency Paperwork Burdens. Those are included in Principia
Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention.
As the FCC would have the public understand the state of play, none of its rules are
economically significant or major, something difficult to fathom given its sweeping power
over networks and spectrum, and its roles in tech and antitrust policy. The FCC is an agency that
embodies the principle that even if certain rules dodge economic significance, the sweep of its
programs is vast, and in the normal human understanding of the phrase, its rules most are
emphatically economically significant.
So one must look elsewhere. Jerry Ellig of the Mercatus Center authored a study finding that,
including wealth transfers, an assortment of FCC regulations cost up to $116.58 billion annually
as of roughly 2004 (not including FCC budgetary spending and associated deadweight costs he
demonstrated, which I elect not to include here).398
A dominant FCC rule is its net neutrality order, a highly controversial, sweeping rule that FCC
implausibly does not regard as economically significant. For example, FCCs 2011 open Internet
order held that: 399
In short, rules that reinforce the openness that has supported the growth of the Internet, and do not
substantially change this highly successful status quo, should not entail significant compliance
costsBy comparison to the benefits of these prophylactic measures, the costs associated with the open
Internet rules adopted here are likely small.
The cost of a pronouncement dictating the means by which foundational infrastructure must be
operated forevermore, even infrastructure not in existence yet, is inherently huge. Yet the FCC
used the word prophylactic eight times in the Order. There is a new FCC order in play and the
cycle continues,400 as the ruling naturally is under legal challenge.401 Regardless of FCCs shrug
over costs, private estimates from Frost and Sullivan put net neutralitys increased annual operator
costs at $20-$40 billion, industry revenue impacts at $4 to $5 billion, and tens of billions in impact
in 2015 to non-network service providers.402
In an article for The Street describing the findings, Mike Jude, one of the authors, called net
neutrality a tax on the Internet, explaining that:403

Net neutralitythe idea that data on the Internet should be moved without regard to content,
destination or sourcehas the potential to distort the parameters built into the business models of
broadband operators in such a way that will increase expected risk and significantly discourage further
industry investment. As a result, the average American citizen will pay the price.
For purposes of this analysis, of the many possible net neutrality costs to incorporate, I am
include only $15 billion, or a portion of the increased operator costs in the total. This leaves out
industry revenue impacts and non-network service providers and so on, even though I regard the
costs of a sustained public policy of centralizing control over tomorrows network infrastructure
decisions as exceedingly high and well beyond what I am employing here. A superb narrative
covering the impacts of net neutrality regulation, and that addresses FCCs failure to acknowledge
neutrality as a major rulemaking and the lack of offsetting benefits, is contained in Larry Downes
The True Cost of Net Neutrality.404
At this point, the baseline current, to-date cost of telecommunication regulation to which I will
add future costs, while reserving the right to incorporate future information that convinces me to
increase or decrease the base, is $131.58 billion. This consists of the $2.891 billion for FCC
paperwork in Independent Agency Paperwork Burdens; $113.69 billion for general
telecommunications regulation (which consists of Elligs $116.58 billion, less the $2.891 billion
captured in FCC paperwork costs to avoid assumed double counting). Some spectrum
liberalization has occurred which argues for lower costs than Ellig presented, so Ive not inflated
the number to 2013 dollars in recognition of that. But on the other hand, the value of spectrum
and opportunity costs of persistent suboptimal access to it due to FCC policy has increased since
2004 given the rise of mobile broadband and multimedia and apps, so the figures may understate
costs. The process for spectrum auctions remains lengthy as well as controversial.405 Incidentally,
restrictions on the bidding for spectrum could cost the federal treasury money as well.406
The noted $15 billion as a partial placeholder for the wide range of net neutrality cost impacts
surveyed in the Frost and Sullivan report rounds out the tally, but it serves as a placeholder for
more than that. The net neutrality rule is the only instance in Costberg for which I include cost of
an initiative in such a state of flux. However as I detail in a series I refer to as Before Net Neutrality
Eats the World,407 the widespread nature of central regulation of infrastructure creation and
infrastructure wealth as such gets too little attention. This placeholder is my only means of
capturing the significance of the siloed nature of all infrastructure regulationwater, sewer,
fuel, telecommunications, electric power, transportationthat keeps these industries perpetually
segregated from one another and synergies underutilized.408 I suspect the costs are far higher.409

Financial Regulation: $80.21 billion

Has anybody done a comprehensive analysis of the impact onon credit? I cant pretend that anybody
really has.You know, itsits just too complicated. We dont really have the quantitative tools to do
Then-Chairman of the Federal Reserve Ben Bernanke
International Monetary Conference, 2011

The crucial test of private property is the attitude of government toward money. Devaluation of
currency is outright expropriation. 411
Isabel Paterson
The God of the Machine
Unlike most areas of economic activity where efforts to calculate regulatory costs are few and far
between, numerous estimates exist of financial regulations impacton aggregate cost of certain
financial regulation elements, on annual costs, on GDP, on small business. The problem is the
difficulty in consolidating all the disparate pieces into some coherent picture. One major catalyst
for modern financial sector regulatory costs is the 848 page Dodd-Frank Wall Street Reform and
Consumer Protection Act,412 signed by the president on July 21, 2010. (The Senate Banking
Committee summary itself was 15 single-spaced pages.413) Thousands of pages of regulation have
since been generated.414
But financial regulation didnt start with Dodd-Frank, of course, and rules issue from numerous
independent agencies. The Federal Reserve was founded in 1913. Silver and gold certificates long
ago were replaced by Federal Reserve Notes. The Securities and Exchange Commission was
created in 1934, about which public choice-oriented analysis may have interesting things to say,
such as Nobel Laureate George Stiglers conclusion that the SECs control over issuance of new
shares did not enhance investor returns.415
Still, no turn of the century estimate of financial regulation from OMB exists, except to the extent
one might ascribe financial regulation costs to OMBs economic regulation figure of $640.89
billion that appeared in Total Annual Costs of Regulations as of Sept 30, 2001 According to OMB. Recall
that, as detailed earlier, a far lesser placeholder of $399 billion is used here for costs of economic
regulation in the total cost roundup. Even so, nothing in the derivation of OMBs estimate was
directly traceable to financial regulation.
Financial rules do not appear in OMBs annual Benefits and Costs compilations either. Some of the
more recent financial regulatory costs do appear in Annual Costs of Independent Agency Rulemakings,
but only for the past few fiscal years. Some also appear in Independent Agency Paperwork Burdens.
But these small amounts hardly capture the magnitude of financial regulation and intervention
and the politicization of money and credit as a phenomenon. The federal government directly
regulates the supply of money and credit, and long ago decoupled money from a stable store of
value. Yet there is zero acknowledgment of any cost to this, nor even to the costs of the inflation
of the money supply and devaluation of savers dollars over the decades. Nor are the costs of the
federal governments manipulation and expansion of home ownership via Fannie Mae and
Freddie Mac captured anywhere in regulatory cost estimates. As it stands, even the limited
acknowledgement of regulations we observe is on modern regulations, not the phenomenon of
fiat money and unbacked legal tender,416 currency debasement and economic manipulation via
that mechanism, or the costs of financial social policy that backfire on colossal scale. The Feds
zero-interest rate policy alone could cost more than four times the $80 billion placeholder I engage
here as a marker for all financial regulatory/intervention costs. One wealth management firm
called the zero-rate policy an invisible tax that costs savers and investors roughly $350 billion a
year, costing yields, stifling consumption and pushing people into riskier securities.417
There are also grave costs involved in replacing free competitive enterprisein which businesses
come and gowith entities forevermore deemed too big to fail per the Dodd-Frank legislation.

This policy has intentionally birthed political regulatory entities far more powerful than the private
entities that could have been otherwise disciplined by insurance, competition and other market
mechanisms, and fostered cronyism. Now, alongside entities too big to fail are regulators too
big to succeed plus cronies too big to jail. Quantification of the political distortion that
saturates the entire financial services industry and that governs its trajectory would have to sum in
the tens or hundreds of billions, but theres no obvious means of doing it. Before misguided
interventions like Dodd-Frank were implemented, authorities were told in no uncertain terms that
attempts to forge ahead legislatively without allowing prior distortions to work themselves out will
lead to future failures and catastrophes created by the regulation itself.418 All such arguments were
dismissed, yet one may safely assume that future collapsescosts of regulationwill be blamed on
the market rather than the political opportunism and cronyism at root, just as long-ago warnings
about the moral hazard of deposit insurance and about the credit overextension campaigns by
Fannie Mae and Freddie Mac were dismissed by those with the power to do anything about it.419
Compounding these systemic errors, too big to fail is being expanded to non-banking institutions
by the Financial Stability Oversight Council (FSOC). This has alarmed some experts:420
What the FSOC has done will be seen in the future as the most damaging action taken under the
authority of Dodd-Frank. It has the potential to turn what are today competitive industries into
financial sectors dominated by large, government-backed firms, exhibiting all the indicia of crony
capitalism. The fact that it was done in the shadow of our disastrous experience with Fannie Mae and
Freddie Mac, and while Congress was concerned about firms that are too big to fail, only demonstrates
how mindless it really was.
Current financial regulations and interventions are swimming in the vastly larger sea of
government control of money and credit populated by entities untethered from market realities
and disciplines. And its not just the U.S. that is comfortable with regulation, the inclination has
long since gone global. A September 2012 report on Estimating the Costs of Financial
Regulation prepared by the International Monetary Fund seems unperturbed.421
As for costs, its impossible to disentangle the sweep of financial regulation here, and probably
anywhere else; there are many non-governmental studies of various parts of the elephant, and we
are only beginning to witness the impacts of modern interventions like Sarbanes-Oxley and costs
of Dodd-Frank beyond those captured in the independent agency tally reviewed earlier. What
follows is a hodgepodge way of dealing with the tangle of financial regulation. Official costs
estimates are skimpy when it comes to rules enacted. Where possible Ill use the governments
(limited) data and supplement it with other annualized cost estimates.
As detailed in Annual Costs of Independent Agency Rulemakings, limited annual cost estimates
available since 2008 regarding regulations from independent agencies affecting the financial sector
total as follows:

Federal Reserve System (and other agencies)

Commodities Futures Trading Commission
Securities and Exchange Commission:
Bureau of Consumer Financial Protection:

$3.582 billion
$1.44 billion
$4.10 billion
$10 million

Also, Independent Agency Paperwork Burdens depicts some paperwork associated with some of these

independent financial agency rulemakings, reproduced here.

Federal Reserve System (and other agencies)

Bureau of Consumer Financial Protection
Commodities Futures Trading Commission
Securities and Exchange Commission paperwork
Federal Deposit Insurance Corporation paperwork

$472 million
$1.38 billion
$260 million
$8.2 billion
$420 million

These, hardly indicative of the sweep of financial regulation, appear itemized in Principia
Bureaucratica: Total Annual Cost of Federal Regulation and Intervention.
With respect to the broader scope of securities industry regulation, a survey by the Securities
Industry Association finds that the sector spent $23 billion on compliance in 2004, and projected
$25.5 billion for 2005. Mandates that firms regarded as significantly burdensome in the SIA
survey included:422

SEC Books and Records (36 month rule)

Sarbanes-Oxley (especially section 404)
Patriot Act (AML requirements and Customer Identification)
Supervisory Procedures and CEO Certification (NASD Rules 3010, 3012, 3013)
Email Review and archiving
Investment Advisory Regulations
Inconsistency among regulators
Lack of clarity in rules and guidance

I will retain the federal paperwork estimates just noted, but include only half of the SIA
regulatory cost figure for 2005 as 2014s cost, or $12.75 billion annually, in Principia Bureaucratica:
The Total Annual Cost of Federal Regulation and Intervention (depicted as Securities industry, various
rules). None of SIAs cost overlaps with the independent agency costs noted immediately above,
since those have all appeared after fiscal year 2009, while the SIA study appeared back in 2006.
Unfortunately, independent agency costs prior to that time are for all intents and purposes
unknown except perhaps to those monitoring the GAOs databases on major rules.
Sarbanes-Oxley Placeholder
The post-Enron, post-WorldCom Sarbanes-Oxley legislation that reformed corporate accounting
and auditing in 2002 is argued to have imposed significant costs. For example SarbOx
requirements raise the cost of capital by making it more difficult for smaller companies to raise
funds through public equity markets.
The Securities and Exchange Commission found that the Sarbanes-Oxley Section 404 internal
control procedure and reporting mandates cost individual companies an average $2.3 million
yearly;423 for even the smallest public companies, a 2010 study estimated costs at an average of
over $1 million annually,424 a sizable burden with obvious implications for those affected. The SEC
report concluded that Effects of this order of magnitude could cause private companies to simply
forgo growth opportunities and stay small.425 The American Electronics Association (now AeA)

during that era estimated a huge early impact of $35 billion.426 Since that time, the JOBS Act
(Jumpstart Our Business Startups) of 2012 has reduced this small business compliance burden.
One study from the William E. Simon Graduate School of Business at the University of
Rochester posits extraordinary Sarbanes-Oxley impacts: In this model, The loss in market value
around the most significant rulemaking events amounts to $1.4 trillion, which likely reflects direct
compliance costs, indirect costs and expected costs of future anti-business legislation.427
Many effects of Sarbanes-Oxley are being explored, and studies consistently find that it creates
incentives for public companies to go private and eject themselves from listing on U.S. stock
exchanges, where SarbOx reporting is not required.428 The true costs of Sarbanes-Oxley are varied
and probably much will remain fundamentally unknown. Here we will use $10 billion annually as
a placeholder. This assume the financial impacts are just a fraction of the Simon/Rochester level
to allow for overestimation on their part as our way of dealing with a $1.4 trillion impact. In so
doing, I am not counting AeAs $35 billion or SECs $2.3 million per company, or the like. Other
anecdotal material on the costs to firms of compliance that could boost totals and/or complement
the placeholder here was compiled by the American Enterprise Institute.429 A survey by Protiviti
Risk and Business Consulting of firms 10 years after the implementation of Sarbanes-Oxley finds
that, once firms are in compliance, by the fourth year, most spend between $100,000 and $500,000
annually.430 As yet, these are not added here beyond the $10 billion Im using as the SarbanesOxley placeholder element appearing in Principia Bureaucratica: The Total Annual Cost of Federal
Regulation and Intervention.
Dodd-Frank Wall Street Reform and Consumer Protection Act Placeholder
[A]dmit itYou havent read it all either.431
The Fed, in short, can literally occupy the boardrooms of the largest financial institutions in America
and influence how they deploy capital.
Rep. Jeb Hensarling, Chairman of the House Financial Services Committee
The possibility that the pre-Dodd-Frank, Sarbanes-Oxley law alone could have costs surpassing $1
trillion is a sobering thought. The newer Dodd-Frank Wall Street Reform and Consumer
Protection Act imposes many costs, but unsurprisingly, the federal government does not know
what those are.432 The placeholder for Dodd-Frank used here will be $37.6 billion annually, just a
portion of the costs described below.
The Dodd-Frank law raises the cost of borrowing and a Durbin Amendment provision
imposing price controls on what banks can charge retailers to process debit card transactions has
largely eliminated free checking, and added fees to many consumers and entrepreneurs bank
accounts.433 The laws contribution to main street community banks' decline as a portion of
America's nationwide commercial banking assets has often been remarked upon.434 Alongside
Dodd-Frank, it is noteworthy that the international financial sector has faced massive new global
rules since the 2008 financial crisis occurred. The Financial Times highlighted a Thomson Reuters
finding of an amazing 14,215 regulatory changes globally over a years time period.435
In a report called Over-regulated America, The Economist had this to say about Dodd-Frank:436

The home of laissez-faire is being suffocated by excessive and badly written regulation ... Consider the
Dodd-Frank law of 2010. Its aim was noble: to prevent another financial crisis. ... But Dodd-Frank is
far too complex, and becoming more so. At 848 pages, it is 23 times longer than Glass-Steagall, the
reform that followed the Wall Street crash of 1929. Worse, every other page demands that regulators fill
in further detail. Some of these clarifications are hundreds of pages long.
The New York Times described how one consulting firm offers subscriptions costing $7,000 to those
trying to keep up with Dodd-Frank, while another firm charged $100,000 to compose one 17 page
client letter. The sobering article spotlights what is effectively an entire industry spawned by the
[T]he broadest financial overhaul since the Great Depression, the law has spawned a host of new
businesses to help Wall Street comply and capitalize on the hundreds of new regulations.
Besides the lawyers, there are legions of corporate accountants, financial consultants, risk management
advisers, turnaround artists and technology vendors all vying for their cut.
These jobs and businesses are all costs of regulation, not a productive gain to the economy.
An ongoing survey by the Davis Polk firm tracks the hundreds of rules required to be issued under
Dodd-Frank, and compares the proportion of rules actually issued to those that, by statute, should
have been issued but have not.438 For the 390 rulemakings required under the act, as of thirdquarter 2015, deadlines for 271 of them have passed. Of the total 390, 249 (63.8%) have been
met with finalized rules and rules have been proposed that would meet 58 (14.9%) more. Rules
have not yet been proposed to meet 83 (21.3%) rulemaking requirements.439 So there is still
considerably more to come. There are other efforts at surveying the scope of Dodd-Frank. For
example, a compendium of financial rules of the new century, appeared as the Financial Services
Roundtables Cumulative Weight report, which assembled various studies and reports on the
impact of modern financial regulations on the economy/GDP, credit, consumers, jobs and
industry affects like costs of financial services.440 The financial blog site ZeroHedge also prepared
an early breakdown of Dodd-Frank cost categories.441
Commenting on Dodd-Franks fifth anniversary in 2015 about certain major rules issued, the
American Action Forum wrote that the law has imposed more than $24 billion in final rule costs
and 61 million paperwork burden hours. From a housing market still experiencing mediocre
growth, to an uneven labor picture, its clear the law has fundamentally altered capital markets and
added layers of complexity for consumers and financial institutions.442 This estimate is based
largely on governments own numbers, its own regulatory impact estimates of the costs imposed
by certain major rules. Another AFF report by president and former Congressional Budget Office
Director Douglas Holtz-Eakin modeling the much broader economic growth implications of
Dodd-Frank, rather than the costs of particular rules, found "roughly $895 billion in reduced
Gross Domestic Product (GDP) over the 2016-2025 period, or $3,346 per working-age person."443
Thats an average of $89 billion a year over the ten year timeframe.
The AFF report unsurprisingly came under intense criticism from champions of the law444 But
such advocates claim as a reduction in costs of Dodd-Frank interventions such as cuts in executive
compensation and the (forced) investment into information technology and data reporting.445
Such narrow views, along with the general lack of concern over the role of GSEs, over

government control of money and credit, or over indirect effects of regulation that persist beyond
an arbitrary implementation timeline are worrisome. There are costs to such alleged benefits,
among them an unaudited central bank whose power is growing and even less accountable under
Dodd-Frank, and an escalation of the too big to fail that allegedly justified the law.446
Irreconcilable world-views regarding Dodd-Frank further illustrate my claim in this report that
there is no securing agreement on the cost of regulations, even when the central too big to fail
justification for the law is now aggravated rather than reduced.
Alongside those big-picture costs, lets now look at a couple additional examples of the many
kinds of costs at issue. For context, in 2010, the International Swaps and Derivatives Association
had estimated U.S. firms could face an additional $1 trillion in capital/liquidity requirements. 447
Also, a 2012 Standard and Poors report estimated that Dodd-Frank as a whole could reduce
pretax earnings for the eight largest banks by $22 billion to $34 billion annually.448 While much can
be added, we will ultimately use the magnitude represented by this latter figure to designate our
(for the time being) Costberg placeholder to proxy the many costs of Dodd-Frank that we have
already discussed and are about to discuss.
A 2014 report from Federal Financial Analytics, Inc. found selected rule costs for the six of the
largest systemically important banks doubled, from $34.7 billion in pre-crash 2007, to $70.2
billion in 2013.449 In other words, regulations cost $35.5 billion more for these entities now, largely
but not entirely attributable to Dodd-Frank; moreover the report advises that it is not possible to
quantify some of the rules often ascribed as among the most costly.450 Quantifiable costs in the
Federal Financial Analytics report included capital costs, interchange fee restrictions, FDIC
premiums and supervisory assessments fees. Given such studies, for Dodd-Franks non-Volckerrule bank impacts generally, I will use $8 billon in Principia Bureaucratica: The Total Annual Cost of
Federal Regulation and Intervention. This is less than a third of the amounts that affect certain
banking entities, as just noted above from Standard and Poor (up to $34 billion annually) and
Federal Financial Analytics (incremental costs of $35 billion). This also is a way of conservatively
assuming some overlap with independent agency costs already covered.
Next we will address the Volcker rules direct and indirect costs, and following that, interchange
fees, and include placeholders for them.
The Volcker rule, or the section 619 component of Dodd-Frank, places restraints on proprietary
trading and hedge fund participation on the part of banking entities. It receives much attention,
but was not included in the just-noted Financial Analytics report. An analysis of the Volker Rule
from the several agencies now overseeing it estimates that the costs associated with the final rule
range from $412 million to $4.3 billion, and acknowledges that the estimate does not capture
some costs that are quantifiable but difficult to estimate, such as indirect costs due to decreased
market liquidity and the impact this decrease in liquidity may have on the market value of some
assets and the cost to corporations of issuing debt.451 For starters, we will use the $4.3 billion here
in Principia Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention.
The indirect costs of any regulation, of course, are where much of the action is. The lack of
official analysis is alarming. The Mercatus Centers Hester Peirce warned, Despite the sweeping
nature of the Dodd-Frank changes, Dodd-Frank does not generally require regulators to conduct
economic analysis. The organization issued a report describing just how little high-quality
economic analysis the federal financial regulators charged with implementing Dodd-Frank and

regulating the financial markets are doing.452

The Volcker rule component increases risks of default for some banking institutions,453 and
furthermore, affects other economic sectors beyond finance such as the energy industry, within
which venture finance relies on complex financial instruments. The IHS CERA consulting group
estimated that:454
The Volcker Rule will raise energy prices and reduce energy investment, resulting in 200,000 lost jobs.
If the Volcker Rule is implemented, electricity costs will increase by $5.3 billion per year; gasoline
prices will increase by $2 billion per year; natural gas investment will be reduced by $7.5 billion and;
two East Coast refineries will close.
And, more generally on liquidity, according to the Oliver Wyman firm;455
The Volker Rule will cost American businesses up to $315 billion, increase borrowing costs by up to
$43 billion per year, and dramatically reduce liquidity.
Even as the Volcker rule was being implemented, firms were re-orienting in anticipation of it.456
These are huge cost estimates for impacts beyond the banking sector. For now Ill use some of the
just-noted indirect Volcker rule annual cost estimates as proxies for themselves and other indirect
costs imposed on other economic sectors (the energy industry is not the only industry outside
banking that is affected by Dodd-Frank rules). Therefore, in Principia Bureaucratica: The Total
Annual Cost of Federal Regulation and Intervention, I include these noted energy cost increases but
just a fraction (less than a quarter) of borrowing and other cost increases to non-bank businesses:
Electricity cost increases:
$5.3 billion
Gasoline price increases:
$2 billion
Borrowing/business cost increases: $10 billion (I could have used $43 billion and may elect
to include more of these costs later)
These magnitudes serve as a placeholder for all direct and indirect costs of Dodd-Franks Volcker
rule for the time being. Yet there are still further costs that extend beyond banking. For example,
for the mortgage finance industry, Dodd-Frank has also been projected to contribute to up to 20
percent fewer home loans, translating into 600,000 fewer home sales, and to significantly impact
home starts, jobs and reduce GDP over the coming years.457 These costs are not added here.
As one economist heavily involved in Dodd-Frank analysis told Bloomberg:458
The key to effective cost-benefit analysis is assessing real costsi.e., to efficiency, profitability,
liquiditynot to focus on the easy ones like how many hours it will take to file all the requisite forms....
The benefits are similarly qualitativethe reduced risk of systemic failure, market benefits of new
competition, etc. Thats what makes these cost-benefit analyses so trickythere are few hard numbers
anywhere and regulators have yet to develop a robust methodology for more qualitative cost-benefit
assessments that will stand up in court.
Impossible is another way to characterize the task of cost measurement. Other costs could be
included, such as Dodd-Franks impact on community banking, but for present purposes the only
additional Dodd-Frank costs Ill note are rules regarding limits on debit card interchange fees.

The new rules require that interchange fees charged to retailers be reasonable and proportional to
the cost of processing. What it will take for those conditions to obtain to the satisfaction of
regulators and rent-seekers remains to be seen.459 The Heritage Foundation noted that the banking
industry asserted that the July 20, 2011 Federal Reserve Board rule on Debit Card Interchange
Fees and Routing, for which the Federal Reserve made no cost estimate, will cause losses of $6.6 billion
annually (impacting reward programs, and checking account and credit card annual fees).460
According to the Financial Services Roundtable, Overdraft and interchange rules have cost the
industry about $12.2 billion annually, translating into 20% higher fees for consumers. (Javelin
Study of February 2012 cited in FSR).461 Given these ranges, well use $8 billion as a placeholder
representing interchange fee regulation in Principia Bureaucratica: The Total Annual Cost of Federal
Regulation and Intervention.
The chart Annual Costs of Independent Agency Rulemakings contains the Securities and Exchange
Commission rule, required by Dodd-Frank, on conflict minerals and transparency for the
extraction industry. Note that this is a topic unrelated to addressing the financial crisis, and
diverts attention from government-sponsored enterprises and their culpability, not to mention the
harm the rule can cause in African nations, hurting those they are presumably intended to help.
The conflict mineral rule is, in fact, as Hester Peirce and James Broughel of George Mason
Universitys Mercatus Center wrote, a clear example of how a statute invoked as the answer to
the financial crisis is, in reality, an odd conglomeration of responses to issues, many of which had
nothing to do with the financial crisis.462
The conflict mineral rule within Dodd-Frank will cost billions. An independent study from Tulane
regarded a National Association of Manufacturers estimate of $9-$16 billion as too high, but that
of the SEC regulators as too low:463 The $7.73 billion Tulane estimated it would take to implement
Section 1502 would constitute a one-time cost/investment (not included in Costberg). Thereafter,
the most notable external cost incurred annually is $207 million in commissioning independent
Conflict Mineral Report audits, per the Tulane report. SECs costs have already been noted in
Annual Costs of Independent Agency Rulemakings, so no additional costs for conflict minerals are
added here at this point,464 although the degree to which the SEC is adequately accounting for
these costs is unclear.
In summing up Dodd-Frank, I wish to note here that the total placeholder amount so far for the
many components of Dodd-Frank stands at $37.6 billion. Note that this amount is a few billion
more than the $34 billion annually by which the 2012 S&P report estimated that the law would
reduce annual pretax earnings for the largest banks; thus we are effectively using that one cost as a
placeholder for all the Dodd-Frank costs noted herein. Naturally I reserve the right to increase the
size of the Dodd-Frank placeholder used here (note Ive not used the implied $80 billion-plus in
economic impacts uncovered in the AAF report, for example, but could have). Indeed, the growth
of financial guidance documents and other such regulatory dark matter push costs up in other
not-calculated and perhaps incalculable ways not even remotely addressed here. For example, The
St. Louis Federal Reserve Banks compiles lists of federal banking guidance that it deems
significant (as well as compilations of ordinary notice-and-comment regulation); the current
tally stands at 69,465 Meanwhile, the Federal Agency Guidance Database from the Conference of
State Bank Supervisors contains over 1,400 items in effect as of August 2015, including directives,
bulletins, manuals, notices, announcements and more from numerous agencies.466 Such regulatory
dark matter deserves scrutiny similar to what standard notice-and-comment rules implementing

Dodd-Frank receive, at minimum.

So: At this point the baseline placeholder for all financial regulation to which I will add future
costs, while reserving the right to incorporate future information that convinces me to increase or
decrease the base, is $80.21 billion. Note that this figure for all financial regulation since the
Republics founding is less than the AFF estimate for economic impacts of Dodd-Frank alone.
The total and all the aforementioned elements comprising it may be seen in Principia Bureaucratica:
The Total Annual Cost of Federal Regulation and Intervention.
More Costs Ahead
Destabilization created by regulations like those issuing from the Dodd-Frank law are starting to
concern even proponents.467 Yet the enforcement hunger at newly energized financial regulatory
agencies can be expected to grow. When announcing her departure from the SEC at the end of
2012, Chairman Mary Schapiro boasted, Over the past four years we have brought a record
number of enforcement actions, engaged in one of the busiest rulemaking periods, and gained
greater authority from Congress to better fulfill our mission.468 So again we see that Congress has
delegated much authority, and it is being thanked for it by unelected regulators.
Numerous complexities, such as a 160-page regulatory definition of swaps, and inconveniences
such as the loss of free checking and higher banking fees for Americans add to turmoil and
uncertainty.469 Some community banks and credit unions with good mortgage track records are
getting out of the business thanks to Dodd-Franks complexity and cost.470 Life insurance
companies will be deemed systemically important like banks if Federal Reserve interpretations
hold, and could face new capital standards that raise consumer prices by billions in the form of
higher premiums and fewer benefits.471 This also misdirects focus from business risks that do exist
to those that do not,472 creating new costs.
The fallout from Dodd-Franks Durbin amendment on interchange fees goes beyond impacts on
financial institutions unable to charge certain swipe fees. Big firms adapt, smaller ones enter into
economically inefficient mergers, but others have fewer options. Iain Murray of the Competitive
Enterprise Institute explains:473
[T]thanks to other aspects of Dodd-Frank such as the Durbin amendment, which caps the amount
debit-card issuers can charge retailers every time a card is swiped bank fees have ballooned. ATM
fees have gone up. Monthly maintenance fees have gone up. Minimum-balance requirements have gone
up. Free checking is much rarer, and debit-card reward schemes have almost disappeared. The result has
been that a million former bank customers are now unbanked they have no checking or savings
account with a bank.
Financial interference can advance even without issuing explicit regulation. The Department of
Justice in 2013 described an Operation Choke Point concept to undermine payday lenders and
other officially frowned-upon financial services and institutions and certain products used by the
poor. Their intervention, unless stopped, will help further complete the takeover of the financial
industry by obstructing transactions and getting accounts cancelled.474 Congress has investigated
the Federal Deposit Insurance Corporations role in similar behavior with respect to legitimate
entities like coin and firearms dealers.475

The Federal Reserve, too, shows interest in rulemaking without Congress. It issued a consultation
document demonstrating further intent to centrally manage the financial system. The Fed
presumably wants real-time payments rather than rapid payments for financial transactions in
which we all engage, regarding this as a market failure, and wants to replace the private electronic
payments system with its own.476 The unaudited Federal Reserve Bank wants to enter the
electronic payments business, competing against or replacing the private entities that do the job,
and which it regulates, with no congressional oversight.
Another undocumented cost is the fact that in the wake of modern financial regulation our
privacy will suffer. An expansion of a database operated by the aforementioned Consumer
Financial Protection Bureau along with the Federal Housing Finance Agency means as many as
227 million Americans may be compelled to disclose intimate details of their families and
financial lives.477 Again, privacy regulation will be touched on later in this report.
Another example of an upcoming costly proposal not designated economically significant: Iain
Murray of the Competitive Enterprise Institute notes that, The IRS has rolled out a new rule that
will force deposit institutions, such as banks and credit unions, to report how much interest
nonresident aliens have earned on their U.S.-held accounts to the IRS, who will then report it to
their home country governments.478 He explains the significance:
The IRS doesnt tax foreigners interest on U.S. deposits, but this new reporting rule would actually be
worse than if it did. Conservative estimates of a previous version of the rule, which affected just 15
countries, found that it will suck at least $87 billion out of the economy. This is because foreigners often
invest in the U.S. because their money is protected from their home government. Consider that as much
as one third of all bank deposits in Florida are owned by foreigners.
The American Action Forum referred to the same non-resident alien interest reporting rule as the
most expensive rule you never heard of.479 The Treasury Department called the time required to
fill out paperwork minimal, and maintained that the rule does not impose a significant
burden and therefore no regulatory flexibility analysis was required, this dismissing comments to
the contrary.480
Unfortunately I believe the official disclosures we get only scratch the surface of the burden
federal regulation of the financial sector inflicts upon the economy and the public.

Federal Energy Regulatory Commission: $377 million

Is it a factor have I dreamt itthat, by means of electricity, the world of matter has become a great
nerve, vibrating thousands of miles in a breathless point of time?
Nathaniel Hawthorne; awestruck by the telegraph.
When Im through, only the rich will be able to afford candles.481
Thomas Edison
Heaven help the utility companies. I dont intend to.
From Microcosmic God, by Theodore Sturgeon

For our ancestors, fire and light were the same thing. Electricity is largely regulated at state public
utility commissions. Still, the only acknowledged regulatory costs for the Federal Energy
Regulatory Commission, an entity that oversees wholesale power grids and sales, energy mergers,
oil and gas pipeline transmission, network siting and more, are $377 million in the annual
paperwork costs. These are displayed in Independent Agency Paperwork Burdens and in Principia
Bureaucratica: The Total Annual Cost of Federal Regulation and Intervention. The case of is another
example demonstrating the need for far greater regulatory cost reckoning than we have.

Federal Trade Commission: $2.633 billion

Regulation and competition are rhetorical friends and deadly enemies: over the doorway of every
regulatory agency save two should be carved: Competition Not Admitted. The Federal Trade
Commissions doorway should announce ,Competition Admitted in Rear, and that of the Antitrust
Division, Monopoly Only by Appointment.482
George Stigler
Can Regulatory Agencies Protect the Consumer?
The Citizen and the State: Essays on Regulation, 1975, p. 183.
The agency with authority over consumer protection and antitrust might be expected to report
high levels of compliance costs associated with its rules. We dont have thatapart from the small
placeholder estimate presenter earlier for antitrust costs, to which FTC contributed nothing. The
agencys paperwork costs in Independent Agency Paperwork Burdens of $2.633 billion are all we have.
Recent examples of FTC interventions appear to be crackdowns on advertisements targeting the
elderly (health products and financial services) and the young (food and beverage advertisements)
and investigations of companies social media activities. Regulation of the mundane includes
FTCs crackdown on dinnertime telemarketing calls.483 But overall costs of FTCs regulatory
activities are unknown.484 Privacy regulation is an important one, but will be addressed separately
in Costberg.

Consumer Product Safety Commission: $454 million

A good rule for rocket experimenters to follow is this: always assume that it will explode.
Astronautics Magazine
Issue 38, 1937
Cost estimates of consumer product safety rules and recalls do not appear apart from $192.9
million for a rule on testing and labeling with respect to product certification. This appears in
Annual Costs of Independent Agency Rulemakings and Principia Bureaucratica: The Total Annual Cost of
Federal Regulatio and Intervention. Certain paperwork costs associated with the CPSC of $261
million also appear in Independent Agency Paperwork Burdens.
This yields a total of $454 million for CPSC. According to the federal rules database at, there were two completed rules issued since 2003 (apart from the testing and labeling
rule quantified here) that qualify as economically significant. These involve mattress fire resistance
and baby crib safety, but costs were not presented.

A recent notable product ban was the CPSC suit against the Buckyballs magnetic desk toy, despite
the companys marketing to adults and warnings about use. Bans are an interesting category of
regulation, since an agency simply issues a prohibition, and escapes acknowledgement of
compliance costs of the normal sort.485
Cost-benefit analysis is banned at the Consumer Product Safety Commission, but some private
research indicates that, in assessing the impact of product recalls using measurements of change
in stock price, losses averaged 5.4 percent of net worth, and excess returns were negative in 67
percent of the cases. Evidently the market imposes strong penalties on firms when products are
deemed defective. 486 But apart from the $1 billion relevant to the firms in this study sample, there
appear to be no systematic overviews of CPSC regulatory costs. The finding of substantial market
impacts indicates that competitive pressures and reputational impacts apart from CPSC
governance would and do play an important disciplinary role that may deserve more credit and
Indeed, an article published in The Hill by two CPSC commissioners points to a number of rules
that deserve greater attention, including outdated and sometimes duplicative standards on bicycle
safety, fireworks, and redundant mattress flammability standards.487 The costs of these, and others,
however, appear to be unknown.

Equal Employment Opportunity Commission: $385 million

The EEOC is another independent agency (it is not part of the Department of Labor) about
which information on rule compliance costs appears less than abundant. One $121.5 million rule
regarding implementation of equal employment provisions of the Americans with Disabilities Act
is referenced in Annual Costs of Independent Agency Rulemakings. No amount of evidence to the
contrary would likely make a difference to regulators, but some suggest the agency bears
responsibility for creating an environment in which costs for hiring the disabled are increased and
outcomes for the population the agency claims to champion are worsened.488
An official reporting aberration is that, while EEOC is an independent agency, the OMB listed
ADA amendments among the executive agency costs it compiled in Annual Costs of Untabulated
Major Rules Reviewed at OMB By Department and Agency of $263.2 million. It is possible this may
be double counting, but both amounts are employed in Principia Bureaucratica: The Total Annual
Cost of Federal Regulation and Intervention to maintain consistency among tabulations and charts in
this report. The EEOC also shows a paperwork burden of some $464 million in Independent Agency
Paperwork Burdens, but I omit this here to offset the possible double counting. I probably should not
make this concession, however, since the agency does have over 30 other rules during the past
decade about which we have no cost information, plus a considerable amount of published
significant guidance.
The EEOC can be an outright menace, pressuring employers to do such things as hire people with
criminal records as security guards and to give up criminal background checks and employment
tests. It has forced firms to not require a high-school diploma (under the guise of enforcing the
Americans with Disabilities Act) and sued firms electing not to hire truck drivers with a drinking
history.489 One of the EEOCs latest campaigns is that against beauty bias in San Francisco

coffee shops. This bit of remarkableness and other costs associated with employment issues but
not counted for the time being are assumed here to be captured in the earlier-cited Johnson study
A Review and Synthesis of the Cost of Workplace Regulations.

Nuclear Regulatory Commission: $440 million

One would assume the officially reported costs of regulation of nuclear power according to the
federal government must be enormous. But apart from a $38.65 million rule on power reactor
security and a $17.6 million one on physical protection of byproduct material totaling to $56.25
million in Annual Costs of Independent Agency Final Major Rules, nothing recent appears on the
rulemaking side. We also have NRC paperwork costs of $383 million in Independent Agency
Paperwork Burdens. The total is $440 million annually.
The Heritage Foundation released a report on nuclear energy investment, noting regulations role
in raising the costs of siting and permitting and in banning the recycling of spent fuel as other
nations permit. 490 Much new nuclear power is effectively banned. Of course, we do not really
know the free markets verdict on nuclear power owing to the Price Andersen Acts
indemnification of operators from liability. One can reasonably accept the claim that in a genuine
free market nuclear power may not exist at all; or, it may not exist as we know it but perhaps in
some other institutional form with alternate liability arrangements and scale. Rulemakings such as
power reactor security requirements, for example, encompass fields of endeavor that might
alternatively have become entire productive industries.491 Either way the actual cost of regulatory
intervention, whether the original phase that artificially boosted nuclear power, or the current
rules that hamper it, are unknowablea situation that is in itself an unmeasured regulatory cost.
We have lost decades of the knowledge that a market might have afforded.
For the time being, $440 million is all that appears in Principia Bureaucratica: The Total Annual Cost
of Federal Regulation and Intervention for the cost of regulation of nuclear power; that needs

Other Independent Agency Paperwork

If you make 10,000 regulations you destroy all respect for the law.492
Winston Churchill
Also presented separately in Independent Agency Paperwork Burdens and in Principia Bureaucratica:
The Total Annual Cost of Federal Regulation and Intervention are paperwork costs for a handful of
other independent agencies. These include NASA, the National Science Foundation, the Small
Business Administration, the Social Security Administration and certain e-government

Privacy Regulations and Loss of Privacy: $1 billion placeholder

I believe theres something out there watching over us. Unfortunately, its the government.
Woody Allen

When cryptography is outlawed, bayl bhgynjf jvyy unir cevinpl.

Compliance with privacy regulations is a major social and commercial issue in the modern
financial, Internet and digital economies, but few federal and state breakdowns of privacy costs
appear readily available. Some categories, such as HIPAA and Sarbanes-Oxley compliance costs,
are arguably implicit in the health services and financial sector sections already covered. An
unmeasured cost is the loss of privacy generated by the National Security Agency, which was
referenced above in the Department of Defense section, but not explicitly added to costs herein.
A Forbes report references the growing number of firms sporting a chief privacy officer, and
notes that: 493
More than 300 privacy-related laws are on the books in Washington, D.C. and in state capitals.
Privacy-related consulting services provided by law and accounting firms are a $500-million-a-year
business and have been growing at double digits...Expenses inside companies for privacy compliance
easily run into the billions
There are substantial state components to these requirements, of course. The information
technology industry contends with a slate of federal and state rules and naturally industrys own
internal standards. Among IT executives and security professionals, one survey by Nemertes
Research identified Top Regulations by Cost-to-Comply as follows:494
Top Regulations by Cost-to-Comply
36.8%: Federal, vertical specific
o HIPAA: Health Insurance Portability and Accountability Act
o FERPA: Family Educational Rights and Privacy Act
o Gramm-Leach-Bliley Act
o CALEA: Communications Assistance for Law Enforcement Act
26.3%: Sarbanes-Oxley
15.8%: CA SB1386 or other state rule
13.2%: Federal agency rule
5.3%: Commercial Association (PCI, NASD)
2.6%: Other (such as EU Safe Harbor )
Other studies look at such metrics as net costs for credit report preparation by country.495 While
Forbes notes compliance costs in the billions, some of the costs outlined here are at least partially
accounted for across other agencies and sectors.
In the absence of solid information on privacy compliance, here I employ in The Total Annual Cost
of Federal Regulation a low placeholder of $1 billion annually for national compliance simply in
order to not entirely neglect the category. Note that privacy violations by the government, as distinct
from its regulations imposed on the private sector, get neglected as a cost of federal policy. These
are anti-benefits. The loss of liberty with respect to Homeland Security and the Patriot Act was

noted earlier, where, with respect to privacy and loss of trust in the cloud computing industry, the
New America Foundation reckoned the cost to the industry of the NSAs PRISM at $22 to $180
billion over the coming three years. That alone vastly outstrips the $1 billion placeholder here.
In the future, better estimates are necessary. New online privacy rules from the FTC implementing
the Childrens Online Privacy Protection Act requirements for parental consent before collecting
online information could be very costly, particularly to small website developers. Application
Developers Alliance head Jon Potter said the rules could mean that that talented and responsible
developers will abandon the childrens app marketplace, hardly the desired result.496 Another
forthcoming costly regulation impacting privacy is a National Highway Traffic Safety
Administration (NHTSA is part of the Department of Transportation) rule mandating black
boxes in all cars by 2014.497
Loss of liberty with respect to the federal governments unprecedented meddling in our private
affairs and disdain for the First and Fourth Amendments is noted at the end of Costberg in
Unfathomed, Unmeasured Omissions: On Regulatory Costs Absent From Tip of the Costberg.

Foreign Worker Mobility Restrictions: $12 billion

Without in this venue taking a position on the immigration debate, particularly with regard to
citizenship, it is worthwhile for policymakers to consider the annual economic losses reasonably
attributable to impediments to smoother international worker mobility. Free enterprise in goods
and services creates wealth, and freedom of skilled and unskilled individuals to better themselves
and create jobs also improves the broader economy. As has been noted by CEI President Fred L.
Smith Jr., people arent just mouths and stomachs, theyre hands and brains498 in economies where
everyone is expected to pull the wagon rather than ride in it.
The Labor Department, the State Department and the Department of Homeland Security all have
a hand in immigration matters. The OMB hasnt attributed costs to DoL at all for immigration
restrictions; none appear in OMBs annual benefits and costs reports. Some homeland security
costs mightve already captured some, but that doesnt appear to be the case or part of the
philosophy of assessing costs and benefits of homeland security measures. The State Department
does have substantial paperwork costs of $1.46 billion as seen in Executive Agency Paperwork
Burdens, but the proportion of that that conceivably is attributable to immigration compliance is
unclear. Here Ill assume none is (and Im not counting State costs otherwise, either) and instead
will just use a placeholder drawn from other research, in anticipation of further study by
immigration scholars and official Washington.
On the extreme end of claims for the large benefits of streamlined international migration (and
the implicit costs of leaving barriers in place), Bjorn Lomborg in Project Syndicate summarizes his
research as follows:499
We examined the costs and benefits of an expansion in international migration over a 25-year period,
amounting to a 3% boost in host countries labor forces by 2025. The costs would include one-off
expenses to migrants: transport, obtaining visas and permits, and finding housing, schooling, and
employment, as well as the emotional cost of separation from family. There are also one-off costs to
host-country governments, such as processing applications and providing initial help with housing and

These costs have been estimated at between $14,000 and $42,000 per worker and family (shared
equally by migrants and host governments). The global net benefit of the increased flow of migrants for
25 years is between $13 trillion and $39 trillion close to the median estimated gains from the Doha
round. The benefits are between 28 and 220 times higher than the costs.
Thats trillion with a t. Annualizing the U.S. portion of that $13 trillion would amount to many
tens of billions of dollars annually if this kind of analysis regarding liberalization of cross-border
worker productivity is sound. But more modestly, looking at technology or skill-related
immigration, a report by Arlen Holen of the Technology Policy Institute finds:500
In the absence of green card and h-1B constraints, roughly 182,000 foreign graduates of U.S. colleges
and universities in STEM fields would likely have remained in the United States over the period 20032007. They would have earned roughly $13.6 billion in 2008, raised the GDP by that amount, and
would have contributed $2.7 to $3.6 billion to the federal treasury.
Much is notable in both these analyses but comparable to the annualized cost approach in Tip of
the Costberg is the annual contribution to GDP of nearly $14 billion. Holen further claims another
annual $23 billion in GDP gain:
In the absence of green card constraints, approximately 300,000 H-1B visa-holders
whose temporary work authorizations expired during 2003-2007 would likely have been
in the United States labor force in 2008. These workers would have earned roughly $23 billion in
2008, raised the GDP by that amount, and would have contributed $4.5 to $6.2 billion to the federal
Another study, from the Center for Economic and Policy Research, describes estimated gains from
freer trade in professional services:501
The potential gains to consumers from freer trade in professional services are enormous. Assuming that
a reduction in trade barriers led to a 15 percent increase in the supply of four types of highly paid
professionals doctors, dentists, lawyers, and accountants the paper calculates that the gains to
consumers would range from $160 billion to $270 billion a year. By comparison, the cost to consumer
of the steel tariffs imposed last year has been estimated at just $3 billion a year.
The efficiency gain from having access to an influx of foreign professionals would be between $12 and
$20 billion annually. This efficiency gain is a benefit to the economy beyond the transfer from
professionals to consumers.
Competing research claims that increased foreign student influx into particular doctoral field had
a significant adverse effects on the earnings of other contemporary graduates.502 Labor markets
respond like any other to supply and demand, so such a finding is not unexpected. Lower wages
are not necessarily inconsistent with gains otherwise in a dynamic environment, but dislocations
clearly happen for some. Objections will naturally persist, but it does appear that scholars
examining different components of the question of freer migration estimate mitigating certain
restrictions could generate many tens of billions of dollars in benefits, for discrete types of
restrictions alone.

A gain from removal of a restriction is not the same as the cost of imposing one, but it is
worthwhile to include a placeholder for certain foreign work restrictions in Tip of the Costberg.
While recognizing the utility of the stratospheric costs implied in Lomborg and Holen, we will go
conservative here. The baseline current, to-date cost of immigration restrictions to which I will
add additional or future costs, while reserving the right to incorporate any future information that
convinces me to increase or decrease the base, is $12 billion, which is a fraction of all the gains
estimates described here. Just reducing paperwork and bureaucracy alone could provide large
savings, since related paperwork across various agencies reaches $29 billion.503

16. Unfathomed, Unmeasured Omissions: On Regulatory Costs

Absent From Tip of the Costberg
Measure what is measurable, and make measurable what is not so.504
Quote frequently attributed to Galileo, that, alas, probably was not his.
If I let them compute those statistics, theyll want to use them for planning.
Sir John Cowperthwaite to Milton Friedman;
On the lack of statistics for the Hong Kong economy.
All of the above, plus.
Magnitudes above notwithstanding, I do not come close to counting everything that could be
ascribed to compliance with federal requirements and to the economic, social and cultural impacts
of intervention. Omissions were alluded to throughout the various sections of Costberg, as well as
in detail such as The Funnel of Gov-- On the Depth of Regulatory Cost Review, 2001-present, which
addressed material OMB both reviews and omits from review.
But the omissions are even more significant than inferred in the Funnel or that is recognized by
policymakers. Many categories of costs from independent agencies, executive orders and agency
directives dont get attention or acknowledgment, let alone quantification, yet they are real in the
eyes of the affected. Untallied costs constitute the great unseen. I will include such costs in future
editions to the extent possible, but below will briefly describe some of them.
The summer 2013 Wall Street Journal Playing It Safe installment on our now risk-averse business
and entrepreneurial culture disheartening, but given all of the above plus what is to follow, is not
entirely surprising.505 Unfortunately those who so readily advance the regulatory state will not fill
take up the slack; they will not employ people, cover their health costs or personally give up coalfired electricity and gasoline. They rarely do that which they demand of others.
What follows surveys a non-exhaustive list of neglected regulatory costs, the hidden costs of

The loss of liberty.

Most economic regulatory impacts and consequences of government intervention.
The unacknowledged elimination of genuine economic, social, environmental and safety
benefits by over-regulation.
The costs of poor regulatory control processes.
Most instances of the job costs of regulations

Loss of Liberty Costs

I may enjoy myself and my property but presume no further; else I am an encroacher and invader upon
anothers right.506
Richard Overton,1646

An Arrow shot from the Prison of Newgate

into the Prerogative Bowels of the Arbitrary House of Lords
I think there are very few constitutional limits that would prevent the federal government from rules
that could affect your private life. ...The federal government, yes, can do most anything in this
California Congressman Pete Stark at a 2010 town hall meeting.
I am not a friend to a very energetic government. It is always oppressive.
Thomas Jefferson to James Madison, December 20, 1787.
There are more instances of the abridgment of freedoms of the people by gradual and silent
encroachment of those in power than by violent and sudden usurpations.
James Madison, June 6, 1788
If ye love wealth better than liberty, the tranquility of servitude than the animated contest of freedom
go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands
which feed you. May your chains sit lightly upon you, and may posterity forget that you were our
Samuel Adams
Speech, State House of Pennsylvania, Philadelphia, August 1, 1776
Federal Regulatory Impact Analyses and regulatory bureaus generally are not particularly adept at
capturing the value of lost liberty and choice. With the rise of the nanny state comes a loss of the
right to disagree and go ones own way, to elect to take risks. Benefits get invoked as if
paternalism were a good thing, and the ongoing erosion of our liberties never gets measured; after
all, what government does must be for our own good and for that of the children.
The unfathomed, unmeasured omissions may be even more significant than that which we can
loosely measure, especially when we ponder the political, social and cultural costs of intervention.
We do not quantify loss of choice, opportunity cost, or incursions upon individual rights and
federalism. None of our metrics incorporate these or trends like growing over-criminalization
(Who runs the worlds most lucrative shakedown operation? ...Americas Regulatory system,
says The Economist.509) Due process erodes as agencies keep fines they charge510 The administrative
state becomes increasingly authoritarian: for example, an EPA final decree claims authority to
bypass courts and unilaterally garnish polluters wages for non-tax penalties in violation of the
Constitution and due process.511 Over-criminalization, when bureaucrats attack, has become a
major issue. As Ronald Cass notes, Growing numbers of federal crimes, driven largely by the
immense number of administrative rules that are criminally enforceable, have created a serious
problem for anyone committed to the rule of law."512 Meanwhile most Inspectors General consider
the Obama administration to be impeding investigations into internal corruption, which appears
unprecedented in our history.513
Whether the issue is the ability to communicate anonymously online, energy standards for
residential dishwashers, e-cigarettes that emit water vapor instead of noxious chemicals, the size
of beverages, whether or not menus have calorie labels, whether or not to use ethanol, where the
opening on ones washing machine appearsit is not sufficient that others remain safe and

unharmed. With his pen and phone, President Obama asserts authority not granted by
Congress.514 A Virginia politician of similar persuasion wants to force doctors to accept Medicare
and Medicaid patients.515 And even though knowledge is dispersed on the Internet and parents
may know more than the Federal Trade Commission does, parents are not permitted to decide for
children since the FTC (naturally without cost estimates) seeks to regulate marketing online to
children. Whether the issue is big or small, liberty must yield and authorities must decide.
The nanny state convinced of its wisdom is often explicit; other times, it seeks to nudge us
toward ends that it sees fit.516 One example are the weight loss nudges described by Michael L.
Marlow in a Mercatus Center working paper, in which Marlow tells of those who believe welldesigned nudges devised by choice architects can steer individuals toward wiser decisions that
enhance their welfare.517 Yes, behavioral economists actually say choice architect. Bureaucrats
do intend to change your mind about things, as Richard Williams, another Mercatus Scholar,
notes. Sure, people make mistakes:518
But if we begin to recognize the correction of these errors as a legitimate function of government
with no constitutional constraintsthere is absolutely no area of our personal lives that bureaucrats
cannot try to shape. We the unwitting children in this scenario, along with our personal liberties and
consumer preferences, will take a back seat to the preferences of the supercilious bureaucrats and
special interests.
Nudge on the surface seems trivial but is tyrannical in its own way. And to challenge it, one
must now battle other professors who have concluded that nudge is better at making you do the
things they want you to do than taxes, subsidies or other regulations.519
More obvious a worry to many has been the noted the loss of liberties brought to bear in the
aftermath of the Patriot Act, such as the creation of the Department of Homeland Security and its
issue such as the Transportation Security Administrations nudie scanners. To that list we must
now add the revelations regarding National Security Agency data sweeps, and now, DHS
guidance to retailers on monitoring buying habits of customers.520 These costs also are omitted
in Tip of the Costberg apart from the homeland security costs placeholder.
Perhaps the need for there to have been introduced something called the Regulatory Agency
Demilitarization Act in the wake of Department of Education SWAT teams and Department of
Agriculture machine gun requests best illustrates the decay.521 It would be worthwhile if citizens
watched and regulated government to the extent it watches and regulates them. As Marlo Lewis
noted regarding recent high profile regulatory intervention, the biggest hidden costis the
damage to our constitutional system of separated powers and democratic accountability.522 One
cant put a price on it.

Economic Cost and Interference Omissions

There is far more danger in public than in private monopoly, for when Government goes into business
it can always shift its losses to the taxpayers. Government never makes ends meetand that is the first
requisite of business.523
Thomas A. Edison
A society of sheep must in time beget a government of wolves.

Bertrand de Jouvenal
Men must choose between the market economy and socialism. The state can preserve the market
economy in protecting life, health and private property against violent or fraudulent aggression; or it
can itself control the conduct of all production activities. Some agency must determine what should be
produced. If it is not the consumers by means of demand and supply on the market, it must be the
government by compulsion.524
Ludvig von Mises
Planned Chaos
Mere economic costs of regulations are supposed to be the easy part, the stuff we can really get
a grip on. As it turns out, most economic interference is unmeasured and probably unmeasurable
too. The market mechanisms touted as alternatives to command and control regulation often
represent an expansion of government. As time passes, the burdens of past regulation expands, as
deadweight builds upon deadweight, and the market failure rationale for intervention reveals
itself to be at the core cost of government on which other costs accumulate. Policymakers need to
focus on the costs of regulation to innovation and opportunity.
The grave economic, social and cultural costs of enabling a regulatory environment and its close
cousin, the interventionist environment, get too little attention. Here follows a non-exhaustive
rundown of some economic costs not included in the rough $1.885 trillion annual regulatory cost
placeholder that I have so far.
Antitrust: Most of the cost of antitrust intervention in the economy is untabulated.
Permitting restrictions and denial of access to resources:
The meek shall inherit the Earth, but not its mineral rights.
J. Paul Getty
The meek arent inheriting mineral rights, and sometimes the strong arent getting them either. The
federal government owns a large portion of Americas lands, and access for resource extraction
and other uses is a constant battle.
No one is working and jobs are not created while awaiting permits for access to energy resources,
obviously. The Environmental Protection Agency and the Interior Department are notorious (such
as EPAs interference with the Alaska Pebble Mine project525), but costs of most of their
restrictions do not appear in OMB reporting. On the resource drain of regulations and job impact
of permit delays, one might note:526
The [U.S.] Chambers Project No Project study found that in March 2010, 351 proposed new power
plant projects were unable to secure permits. These projects alone, if constructed, would have resulted in
a direct investment in our economy of $577 billion and would have created 1.9 million jobs per year
during the seven years of construction.

Costs created by proposed rules that halt commercial activity: Agencies count costs, in the rare
instances they do it, of life under enactment, not the incentives changed by the existence of and
uncertainty created by a proposed rule. The late 2013 EPA proposed rule to limit carbon
emissions from all coal plants, even without enactment of the final rule, means that the United
States will build no more coal-fired power plants.
As the Competitive Enterprise Institute put it, During the several years it will take to finalize the
rule and then overturn it in federal court, no electric utility will invest in planning or building a
new coal-fired power plant. American consumers and manufacturers will be denied the benefits of
the low-cost electricity produced by coal.527 This phenomenon applies across the regulatory
Costs of policy uncertainty: Wynn Resorts CEO Steve Wynn called Washington:528
...the greatest wet blanket to business, and progress and job creation in my lifetime. And I can prove it
and I could spend the next 3 hours giving you examples of all of us in this market place that are
frightened to death about all the new regulations, our healthcare costs escalate, regulations coming
from left and right.
A Vanguard study on the uncertainty created by regulations and fiscal, trade and debt policy
matters estimated $261 billion in such costs just since 2011.529 The consequences of uncertainty
are severe: business startups have recently hit a record low,530 the number of self-employed
Americans is down. 531 In food service, regulations are driving restaurants out of business and
abroad,532 even causing reflection on the part of a former Democratic lawmaker trying to make a
go of free enterprise.533 Business is made more risk averse in uncertain regulatory environments. 534
At this point such costs are not added in Costberg, but likely will be in some fashion in the future
since they are not likely to be already embedded in the $402 billion placeholder for Aggregate
Annual Economic Regulation Costs noted herein. A lot of bad ideas get generated to reach the
one that is a winner; overregulation and uncertainty cut down on breakthroughs. Moreover the
threat of regulation can induce companies to behave in reactive ways and incur costs, distort
markets and create economic inefficiency.
The costs of rent-seeking: Also disruptive are firms seeking regulation deliberately in order to
disadvantage their competitors and rivals, allowing them to capture their customers and markets.
Environmental rules, privacy mandates and antitrust are examples (for the latter I included an
inadequate placeholder number). The unseen cost here is the dampening effect of rent seeking and
exploitation of bureaucracy, the businesses not created and other distortions. OMB reports neglect
the phenomenon. Even Ralph Nader once agreed, writing in Yale Law Journal with co-author
Mark Green:535
The verdict is nearly unanimousthat economic regulation over rates, entry, mergers, and technology
has been anticompetitive and wasteful. Such regulation undermines competition and entrenches
monopoly at the publics expense.
The same rent-seeking impulses occur in the public sector as in the private, as government seeks
new powers and domains. There is nothing saintly about government compared to the rest of
humanity, and the merging of the two types of self interest is the source of cronyism.

The distortions of crony capitalism:

Its only bribery if its not enough.
And the great thing about this proposal is it really is an investment opportunity. This is not about
pollution control. Its about increased efficiency at our plantsIts about investments in renewables
and clean energy. Its about investments in peoples ability to lower their electricity bills by getting
good, clean, efficient appliances, homes, rental units.536
EPA Administrator Gina McCarthy before the Senate
Environment and Public Works Committee, July 2014
Closely related to rent-seeking is cronyism, which usually involved spending as well as regulatory
favors. Like the fish who wonders, quite seriously, Water? Whats water? one commentator on
an email exchange this writer saw had a pertinent point regarding the Export-Import bank: What
constitutes corruption at a bank whose very basis is crony capitalism?
Cronyism, whether of the budgetary or regulatory kind, is highly disruptive to free enterprise.537
Government funding obviously bestows favors on the crony, but creates distorstions by over-ruling
the market. Government steering by definition always has implications for the trajectory of any
marketplace in which it occurs, compared to what the marketplace otherwise would have done.
Examples include bailouts of traditional industry like GM, to new ventures like Solyndra; from
Farm Bill subsidies to government funded sciences and pet technologies.
Cronyisms impacts can be particularly severe in frontier sectors of the economy where entire
industry structures are being upended, and the very role of the regulator and even incumbent
firms are evaporating. In describing an investment in BuzzFeed, Chris Dixon, a partner in the
Silicon Valley venture firm Andreessen Horowitz, explained their motivations:538
We see BuzzFeed as a prime example of what we call a full stack startup. BuzzFeed is a media
company in the same sense that Tesla is a car company, Uber is a taxi company, or Netflix is a
streaming movie company. We believe were in the deployment phase of the Internet. The foundation
has been laid. Tech is now spreading through every industry and every part of the world. The most
interesting tech companies arent trying to sell software to other companies. They are trying to reshape
industries from top to bottom.
The sharing economyfirms like Uber and Airbnbare facing backlash from the firms whose
business models they replace. Regulators tolerance for and enabling of cronyism will make a
dramatic difference in tomorrows creative destruction and wealth creation. The many
distortions of crony capitalism remain unaccounted for.
Forced technologies: Estimates of the cumulative impacts and possible distortions of
government support of technological projects like green energy and cybersecurity versus relying
on market guidance of technology are not readily available, since the assumption is that the
government is the proper vehicle for investment in basic knowledge. The alternative persective is
that markets are required to best advance basic research and to properly allocate funding, but
meanwhile the cost of government steering while the market rows is unmeasured and probably
substantial.539 One can see that this concern can be closely related to rent-seeking and to cronyism.

Diversion of resources and private initiative created by government funding: More mundane
that government steering of technologies is simply government funding in general. The taxes we
pay are, of course, counted in the federal budget. But related to the phenomenon of deadweight
cost is the distortion caused when government assumes a role or conducts investments that should
be vetted and carried out by the competitive private sector. Diversions like Farm Bill spending and
the market interference created by highway spending and transportation research are examples.
This cuts to the core of the central planning vs. free enterprise debate, the age-old debate of why
one should think a government employee spends someone elses money better; yet funding of
productive activity and the resultant crowding out is not recognized as a cost of government
requiring measurement. Such spending is more likely, in defiance of Says Law, 540 to be regarded
as stimulus. In public/private partnerships, contemporaries involved in related and unrelated
endeavors remain free to compete, but they dont get any of these advantages of government
support. Meanwhile, such support also comes with strings attached for the recipient.541
Differential effects of rules on contemporary businesses: Also related to rent-seeking but
perhaps inadvertent for the sake of argument, the very existence of regulation ends up picking
winners when something new comes along, in that there are complex differential effects on
incumbents with hands tied relative to newcomers. The communications industry is an example,
where incumbents face impediments that dont apply to newer entrants. Much of regulatory costs
impacts are not measured because they involve this unseen effect on business models. Other ISPs
were not free do what Google did with its Google Fiber project,542 since they face impediments
that didnt apply to the newer firm, so we are likely years behind in infrastructure development.
Differential effects of regulation on business clearly matter, but the estimated costs? Generally
wont be found. But wealth creation and technology wont advance at same rate in a regulated firm
as a less regulated one.
Indirect costs of regulation: Direct costs are already impossible to compute; indirect cost occupy
a higher plane of impossibility. Indirect costs, as opposed to obvious regulatory impacts like
compliance costs, include ventures not pursued, economic distortions created by reaction to being
a regulated vs. unregulated entity. Other indirect costs involve the way regulatory impacts ricochet
from one sector of the economy to another, such as a smoking ban in private restaurants that
could have instead been addressed by the marketplace creation of newer forms of air filtering
equipment, and in turn new forms of wealth that preserved choice and freedom besides.
Indirect costs can take many forms. While agencies may attempt to incorporate opportunity costs
according to OMB guidance; emphasis is on compliance. Still, efforts are sometimes made to
assess dynamic effects, such as in the EPAs lookback on Clean Air Act amendment costs.
Sarbanes-Oxley and other financial cost estimates above contained some indirect impacts. In
recognition of indirect effects, recent proposals Sen. Olympia Snowes FREEDOM Act featured
an explicit requirement that indirect effects be accounted for in small business regulatory flexibility
analyses.543 Indeed, even the unapologetic EPA acknowledges that it still does not hear enough
from small business, and that public comment is limited 544 But a problem with thinking that small
businesses do not adequately register their complaints regarding regulation arises from the reality
that small businesses that were never created never comment on negative impacts of regulations.
Ventures not pursued are a critical indirect cost of a heavily regulatory environment that we do
not capture.

Finally, product bans and their costs also are hard to tabulate and arent fully incorporated herein.
Those might be regarded as indirect costs but the target firm would see it as direct. The Consumer
Product Safety Commissions targeting of Buckyball magnetic toys might be seen as an
Economic effects of the minimum wage: The impact of the minimum wage on the needlessly
unemployed but voiceless worker population is of no concern to the policymaker establishment,
and these individuals get no sympathy in any official tally of government-imposed cost of a
minimum wage.545 Those unemployed because of a minimum wage may not know it, while those
not affected may not care. Those imposing the minimum wage know of its detrimental effects,
however. In 2014, the Congressional Budget Office declared that Once fully implemented...the
$10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent.546 It
could be less, on the other hand it could be double that, says CBO.
Destructive environmentalism: Failure to address tragedy of commons as an economic matter,
the failure to extend the institutions of property rights in the name of stewardship, and the failure
to bring resource expansion into the wealth creating sectors as an alternative to political oversight
undermines conservation and resource expansion.547
Perpetuation of early-20th century style infrastructure regulation:
What if the government built this thing?
I doubt it.
Because it works.548
Television pilot episode of Stephen Kings novel Under the Dome
The costs of siloed, regulated infrastructure could be far more significant than many realize.
Weve seen some costs for the FCC on the one hand, but on the other, little for the Federal Energy
Regulatory Commission. A placeholder for infrastructure costs does appear herein, but is
Early electricity and telecommunications were characterized by competing, overlapping,
redundant, maybe even ugly, infrastructurebut not by natural monopoly. Cronyism is not new,
and regulatory commissions outlawed competition and guaranteed returns for some. Instead of
changing that, the modern approach is to sustain this model while blocking major private projects
like pipelines. Other incarnations seek to force access and deny infrastructure property rights, such
as the FCCs net neutrality rules.
The stock of infrastructure could be far larger. Today, infrastructure banking is proposed rather
than liberalization.549 Network industrieswater, sewer, telecom, Internet, electricity,
transportationcould work together to build infrastructure rather than invest separately and be
regulated separately. The persistence of regulation that keeps infrastructure eternally segregated
has left us with less robust networks, less overlap and redundancy than would be optimal. 550
Armageddon-proof mega-assets may be possible, but whether regulation is the way to have them is
debatable. Vulnerabilty that otherwise might not exist feeds the drive for cybersecurity and critical
infrastructure rules, which perpetuates dependence. Regulation spawns calls for more regulation
over the most important assets and wealth-enabling infrastructure in society. The cost is accounted

for nowhere, nor acknowledged, in officialdom, however I did include a placeholder for such
impacts in the telecommunications regulation section of Costberg.
Net neutrality was covered, but is only symptomatic of the impulse to politically compel open
infrastructure and technology sharing rather than allow the blockage and rivalry that is the
lifeblood of competitive infrastructure and that could serve consumers, robustness, wealth and
GDP. Cyber and critical infrastructure security benefit from property rights too, for that matter.551
Politicians should avoid policies that prevent networks from being regarded as proprietary, from
being controlled by their owners; but the philosophical capability to make that case is rare among
policymakers. Perhaps capitalism and free enterprise are themselves too young.
Alongside the perpetuation of inappropriate regulatory models for infrastructure is the explicit
blockage of new infrastructure for alleged environmental reasons, such as the EPA blockage of the
Keystone XL pipeline from 2008 through late 2011, stalling an estimated $20 billion. 552 The U.S.
State Department had issued an environmental impact statement of the Canada-to-Texas project,
saying it would pose no significant impacts to most resources along its proposed corridor if the
company follows through on environmental protection measures, though it could have
significant adverse effects to certain cultural resources.553 It is misleading to speak of just the
cost of Keystone; there should be dozens of such projects underway, including perhaps water
Patent inefficiency: Potential costs of a flawed patent system including delays and other
imperfections on the one hand, and the costs of abuses that could sum in the billions on the
other,555 are omitted here. The costs of inefficiencies in intellectual property recognition or
transfersshould they exist; it is not a settled matter among commentators, and I am not taking a
position on it here, apart from noting the issue will increasingly matter as intangible wealth plays a
greater role in the economy relative to tangible wealth, and protections for intellectual property
matter more, not less. Further, the interference with private fencing of intellectual property, such
as antitrust, compulsory licensing are not examined here either.
AlasMost economic regulations impacting mostly every industry and sector: Actually, apart
from a relative handful of rulesonly a few dozen, when all is said and donethat appear over
the past decade in the OMB roundups with which we are concerned, plus some paperwork tallies
and a few industry reports, interventions impacting mostly every industry and sector (like
railroading, aviation, energy, electric power and telecommunications) are not officially tabulated.
Also, review and conceptualization of entire categories of interferencelike antitrust, central
federal control of the money supply, federal manipulation of housing markets, the embrace of a
too big to fail stance and its consequenceshave no cost estimates. Not merely, shucks,
independent agencies get left out, but entire abstract categories of human action get ignored by those
manipulating them.
A baseline placeholder regarding various elements of economic regulatory costs at various points
since the turn of the century appears in Estimates of the Cost of Regulation: Late 20th Century, Early
21st Century. But new estimates since then are few, some more sparse than others: In railroading,
only positive train control; in the airline industry only fuel tank flammability, pilot age and hours
of service; and in HUD only Real Estate Settlement Procedures rules.

The Costs of Benefits

Nothing is so galling to a people not broken in from the birth as a paternal, or, in other words, a
meddling government, a government which tells them what to read, and say, and eat, and drink and
Thomas B. Macaulay
Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the
creed of slaves.
Pitt the Younger, Nov. 18, 1783
Act surprised...Show concern...Deny...Deny...Deny.
For every action, there is an equal and opposite government program.
What if those in power paid close attention to the body count of federal regulation? Regulation is
at its worst when it undermines a wealthier, healthier, more resilient and more egalitarian nation
and world.
An early chapter discussed the Costs of Benefits with respect to the proper emphasis of
regulatory overseers on costs. But there are other costs of benefits: Many indirect costs of
government regulation have been noted, but perhaps none are as corrosive as when regulation
purported to create and deliver benefitswhether economic or of the health and safety variety
instead undermines benefits and advances in the public welfare and condition. The problem is not
merely that some particular regulation can be detrimental; scholars have noted how safety
regulations can overwhelm, and amount to less safety.557 Yet each year brings another 3,500 rules
and regulations within 75,000 Federal Register pages.
Regulations can even be deadly, affecting the publics right to choose and costing more lives than
they allegedly save: Compulsory corn-into-fuel ethanol policies aggravate global hunger;
Corporate Average Fuel Economy standards that downsize cars cost lives; homeland security
regulations that put more people on the highways relative to the airways cost lives, too. The EPA is
not known for a philosophy taking into account the costs of the energy poverty it imposes, or for
recognizing how green policies in general hurt the poor across the developing world; the poor
cant eat carbon credits.558 Regulatory cost-benefit analyses, which rarely exist in the first instance,
rarely incorporate any life-years or negative wealth effects from regulations diminishing of
societal wealth generally. Nor do regulators fret about individual human beings job losses. Job
losses may lead to people obtaining lower quality or no health care, for example.
But when net-benefit analysis does carry the day, it is oxygen for a philosophy of ever expanding
government. Concerns that may not even properly be regarded as public policy questions at all
tend to resolve in favor of expanded state action. A technocratic cost-benefit approach is
insensitive to how command and control undermines actual elevation of safety and health features
as forms of wealth.

Indeed, benefits are best seen as forms of wealth. When regulation as a phenomenon
removes values like risk reduction, or privacy, or cybersecurity or safety from the competitive
pressures required to advance them, the actual regulation that needs to take place in society can be
undermined. A regulation can supersede or make unnecessary a superior pro-consumer,
competitive response to some real need. Complex frontier industries and technologies in particular
require that private risk-management institutions like insurance and liability emerge alongside the
innovation itself (consider nuclear energy, homeland security, nanotechnology, biotechnology,
financial instruments, cybersecurity). Government now preempts the requisite private risk
management in almost every respect, from flood insurance on wealthy seashores to too-big-to-fail
financial institutions, to ordinary health care, to, probably soon, driverless cars. This demonstrates
how the very philosophy of central, administrative regulation is flawed. When agencies substitute
their one-size-fits-few policies for actual advancements, they impose incalculable costs and cause
harm to values that should constantly increase and improve.
The same wealth status also applies to information available and useful to the public, which
means that information mandates such as those affecting concerns like privacy standards and food
labeling can backfire. Government can interrupt the processes needed for the right information on
health, safety, privacy, financial or other benefits to get created in the first place. It is irresponsible
for government to undermine self-reliance, to induce people into becoming overly dependent on its
vision of correct information while at the same time pursuing a philosophy of regulation that, on
the one hand, sometimes positively injures the public, and on the other undermines real
Government-created risks resulting from efforts to allegedly do good are the costs of benefits for
which no one is accountable. The ways risks are identified and society made safer and healthier
have not all been discovered by a priestly elite. Still another cost of benefits occurs when a
regulator pursues a benefit that simply not one. Denial of choice by an energy efficiency
mandate purportedly to help an ignorant consumer conserve energy, for example, is a cost, not a
benefit. Compulsion is a negative, a denial of options.
There are costs of closing doors, of distorting industry structure (like antitrust,
telecommunications, electrical grid or cybersecurity regulation). There are costs of interfering with
normal market trajectories and pricing experimentation. There are costs to ignoring limits on the
role of government, costs to ignoring the extent of risks created by regulation itself, and costs to
ignoring alternatives for which the public might have used resources wasted on some regulatory
Sometimes reality dictates that an agency scale back in favor of the emergence of new human
institutions to discipline market power, risk and uncertainty. Agencies do not accept this, and
instead seek solely to expand, such as regulation of net neutrality, low-earth orbit
experimentation, and nanotechnology. There is such a thing as pretense of knowledge, and it is
costly. It took the emergence of generally accepted accounting principles for large scale human
free enterprise to arise in the 19th century. The public sector is decades behind in conveying the
true costs for endeavors that are compulsion rather than trade-based.

Costs of Poor Regulatory Processes and Regulatory Dark Matter

The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of
one, a few, or many, and whether hereditary, selfappointed, or elective, may justly be pronounced the
very definition of tyranny.559
James Madison, Federalist No. 47.
Applying computer technology is simply finding the right wrench to pound in the correct screw.
Old computer joke
States, like men, have their growth, their manhood, their decrepitude, their decay.560
Walter Savage Landor
English Poet
Systemic omissions rather than disclosure define the regulatory enterprise. Regulations have
compliance costs, of course, but some costs of government arise from how regulations are enacted
and accounted for (or as is actually most often the case, unaccounted for). Here we explore some
of these shortcomings of the regulatory process that leave wide gaps in our knowledge about
impacts. If lawmaking up on Capitol Hill is compared to sausage making, it gets even worse down
here in the agency packing houses. Angelo M. Codevilla, Professor emeritus of international
relations at Boston University, described the administrative state this way:561
Todays America, ruled over by an administrative state, is ever less different from the rest of the world.
Virtually all of the rules by which we live are made, executed, and enforced by administrative
agenciesfrom the IRS to the EPA and countless othersthat are responsible only to themselves, to
those who appoint them, and to the interest groups with which they are affiliated. Ordinary people have
virtually no recourse against them.
Yet it is even worse than that. The notice and comment the Administrative Procedure Act does
successfully enable is increasingly insufficient since final rules are not properly submitted to the
Government Accountability Office and to Congress as required under the Congressional Review
Act (CRA).562 That undermines the ability of Congress choose to introduce a formal Resolution of
Disapproval of an agency rule under the CRA, significantly impairing oversight and
accountability. This matters also because these GAO reports are the only spot independent
agency rules get picked up and disclosed Furthermore even simplest of disclosure is allowed to
lapse, such as delayed appearances of the semi-annual Unified Agenda of Federal Regulations in
recent years.563 With regulation we have little accountability, costs imposed off-budget and
problems readily blamed on business implementation by proponents of regulation.
The pretense of knowledge/fatal conceit cost: Regulatory agencies, and increasingly the
executive operating outside even the regulatory process, see alleged market failure everywhere. But
they remain unconcerned with the downsides of the static, man-made institutions with which they
would replace dynamism. Seemingly the more governmental institutions need to scale back as
new human institutions emerge to discipline new endeavors, they instead they seek to expand,
such as regulation of driverless cars, net neutrality, low-earth orbit experimentation,
nanotechnology, science investment, infrastructure, health care, financial services. The regulator
seems to think he knows best; that creates a mindset that aggravates the other costs we cover in
this section.

Independent agency regulations startup costs: A small fraction of independent agency costs was
analyzed in Tip of the Costberg, but these are not reviewed by the Office of Management and
Budget (OMB) as executive agency rules (theoretically but not really) are. However, the onetime startup costs of such rules, while reported by agencies in a handful of cases, are not
included here at all, even though some are available. The GAO database, and in turn the Heritage
Foundations Red Tape Rising series, notes tens of billions of dollars in this category. Congress
needs to address the matter.
Cumulative effects of rules: As rules accumulate, their overlap can worsen regulatory outcomes.
Underbrush never gets cleared, a problem noted across the political spectrum.564 Even the
Progressive Policy Institute regrets the regulatory accumulation and calls for a bipartisan
commission to reduce them.565 There is a cost to neglecting basic regulatory housekeeping.
Costs of rules not deemed economically significant by the agencies but that in fact are
significant: Many of the thousands of regulations issued by agencies may exceed $100 million in
cost annually, but no one actually knows and they never get counted (See The Funnel of Gov
above for perspective) and the public never gets told. The net neutrality order is an example, but
input on others is needed. Congress needs to take steps to address significance of non-major.
Others have noted, for example, an EPA navigable water rule that became a $1.2 billion rule, and
diversity training that left out cost of scheduling and attending meetings.566
Sue and Settle Agreements: Sue and settle agreements are mock adversarial stagings in which
environmental pressure groups sue an agency that is all too happy to be sued to have its power
increased over private actors.567 The settlement becomes a regulation without congressional input
or a public disclosure process. The revolving door between the EPA and green pressure groups has
become something of a scandal, but it took Freedom of Information Requests to reveal the
Budget or Transfer Rules, and Associated Deadweight Costs: Budget rules implement
federal budgetary programs, primarily income transfers from taxpayers to beneficiaries. Program
changes involving Medicare and Medicaid are examples. Transfer rules are those implementing
Federal budgetary programs, which primarily caused income transfers, usually from taxpayers to
program beneficiaries.569 Such wealth transfers, like taxes, were not a primary concern in Costberg,
but this neglect can no longer be the approach, since expansion of federal authority over private
action (Obamacare) and regulatory dark matter (Federal Reserve takeover of electronic payments)
mean that governmental programs are displacing what the private sector could or would otherwise
do. No matter ones philosophy concerning who ought to be primarily in charge of health care,
retirement and other matters, such wealth transfers matter and it is more important than ever that
their effects are measured.
Some budget rules are reported on, but not included in OMBs annual net benefit tally in the
Report to Congress. OMB does note that these entail transfer costs (which matter to the parties
not on the receiving end) and deadweight losses thus far unaccounted for:570
[T]ransfer rules mayimpose real costs on society to the extent that they cause people to change
behavior, either by directly prohibiting or mandating certain activities, or, more often, by altering prices
and costs. The costs resulting from these behavior changes are referred to as the deadweight losses
associated with the transfer. The Regulatory Right-to-Know Act requires OMB to report the social costs

and benefits of these rules, and OMB encourages agencies to report these costs and benefits for transfer
rules; OMB will consider incorporating any such estimates into future Reports.
OMB has reviewed 354 major budget rules over the course of the decade, with vastly more nonmajor ones among the 50,284 rules finalized since 2001 as seen in The Funnel On the Depth of
Regulatory Cost Review, 2001-present.
Deadweight costs of budget regulations comprise a potentially significant category of government
induced cost that doesnt get addressed. The deadweight loss of social programs (now at $2.3
trillion annually) is compounded by the fact that agencies cannot even determine how many
exist.571 In this report, deadweight losses associated with taxes noted by OMB, a small component
of homeland security costs and some telecom costs are the only ones noted, but presumably others
could have been. One we might see in the future is deadweight loss associated with an online sales
tax, if Congress affirms state compacts on them.572
Executive Orders, Guidance Documents, Memoranda and the Rise of Regulatory Dark
And though we sung his fame
We all went hungry just the same
Steely Dan
Kings, on the album Cant Buy a Thrill.
A song about the transition from Richard the Lionheart
to King John, prior to the Magna Carta.
Also published in the Federal Register are executive orders and presidential and agency memoranda
(which may or may not be official guidance documents) that have unmeasured impact. The
recently amplified presidential component has been popularized by President Obama as the pen
and phone approach to policymaking without Congress. 574
Decisions may be made by agencies, and parties pressured to act without formal regulation or
appreciation of costs. Examples include EPA Clean Water Act jurisdictional guidance on Waters
of the United States,575 and the Federal Trade Commissions guidance on disclosure of paid
search engine results.576
As noted in a July 2012 U.S. House Committee on Oversight and Government Reform
Guidance documents, while not legally binding or technically enforceable, are supposed to be issued
only to clarify regulations already on the books. However they are increasingly used to effect policy
changes, and they often are as effective as regulations in changing behavior due to the weight agencies
and the courts give them. Accordingly, job creators feel forced to comply.
A researcher in Law Library Journal noted ambiguity in even what counts as an agency and
that there is an amorphous border between regulations and guidance. The body of guidance
documents (or non-legislative rules) is growing, both in volume and in importance.578

In my own examination as far as the presidents pen and phone is concerned, the vehicle most
regulatory in impact appears not to be executive orders (with major exceptions like a minimum
wage requirement for federal contractors), but instead presidential Memoranda.579 Presumably
most of what emerges from memoranda would and will need to traverse the Administrative
Procedure Act public notice and comment phases, but that has not been the case with such
matters as joint presidential/Internal Revenue Service implementation delays for Obamacare that
appear as hybrids of memoranda, notices, press releases and announcements on federal agency
blogs. The Mercatus Center at George Mason University, in the Harvard Journal of Law and Public
Policy, put together the most detailed set of reports yet on what they call quasi-regulatory
activity. 580
These nonstandard rulemaking vehicles indicate that, as governmental oversight of various sectors
in our economy expands, it will become even less necessary to bother with even formal guidance
documents, let alone enacting a law or adhering to APA notice-and-comment procedures. On the
upside, one thing that matters for this regulatory dark matter category and that needs
exploration is that, if the pen and phone can be used to curtail liberty, it can also be used to
expand it (within the rule of law). Re-orientation of the executive branch to better oversee
regulation (a stance that has prevailed in the past), and congressional reform of the regulationmaking process itself awaits.581
Unfunded mandates On States and Localities: Congress should consider fuller treatment of
unfunded mandates both on the budgetary and regulatory side.582
Mandates impacts get reviewed in the annual OMB benefits and costs reports and thus to some
extent are included herein presumably, but Congress should consider fuller treatment both of the
budgetary and regulatory impacts. According to the National Conference of State Legislatures
(NCSL) Mandate Monitor report, from 2004 to 2006, Congress had shifted $131 billion in costs to
the states.583 It would be useful to have better appreciation of the cost of the regulatory
component of mandates compared with other private sector regulatory costs.
Regulation by International Treaty: International treaty costs and impacts are terra incognita.
Treaties regulate: attempted greenhouse gas agreements, the Law of the Sea Treaty, the Outer
Space Treaty; exploration of their costs is an omission. OMB does not track such costs.

Job Costs of Regulations

Happiness: a good bank account, a good cook and a good digestion.
Jean Jacques Rousseau
[W]hen I am 100 percent utterly and completely certain that it is an absolute certainty that it is an
absolute necessity that I need to recruit a new employee, I go to bed, sleep well and hope that the
feeling has gone away by the morning.584
British businessman addressing French employment regulations
If you ever get annoyed, look at me, Im self-employed; I love to work at nothin all day.
Bachman-Turner Overdrive

Takin Care of Business

Just as some figure regulations dont cost a lot, some also say they dont impact jobs particularly.
But regulations can destroy jobs and prevent new ones from being created.
Its all but official government policy that regulations have no overall employment effect: they
displace employment in one area and grow it in another if anything, its claimed. Perhaps in a
static technical sense that can be correct from an economists standpoint. Alas, most people are
not economists.
Agencies typically dont look at jobs impact on a given regulation because that doesnt bear on the
social utility of a regulation in the world of arms length, detached bureaucracy. Agency cost
benefit analyses do not contain procedures or guidance for including job impacts, up or down. For
regulators, regulations either create jobs outright (the still-unlearned broken window fallacy) and
are a plus, or they merely shuffle jobs around. But from the standpoint of people actually
impacted and who have to function in the real world, job losses are costs. The parallel is to hold
that taxes dont cost anything because someone else spends the money in the same economy.
That isnt to say job impacts are easy to assess (refer back to the early sections in Tip of the Costberg
covering what I consider hopeless uncertainties over cost and benefit calculations, and in the face
of which I compile figures regardless). Moreover, as Richard Williams of the Mercatus Center
explains, From an economic perspectivethe total number of jobs can be a misleading measure
of the costs and benefits of regulation. Bad policies can increase total jobs, and good policies can
decrease total jobs.585 Consumers actually wanting what the jobholder is engaged in may be
beside the point as far as the regulator is concerned, but not as far as economic health is
concerned. Regulation may increase the number of administrators engaged in activity unrelated to
consumer demand for the product or service in question, or raise the number of employees
actually required.
Regulations that make it more expensive to create output that could have otherwise been created
with less input must impact either existing jobs somewhere or job creation, but these are ignored.
Still, proponents of economic liberalization as the path to wealth and jobs should not regard jobs
as an end in themselves. Jobs, as an input, by definition increase the cost of whatever the final
good or service in question is, compared to doing the same with fewer or no employees. From the
standpoint of the producer, jobs are a negative in terms of wealth creation, although they are
properly a public policy imperative in the sense that we genuinely make more of them feasible and
desirable when we advance an economic liberalization agenda. Bill Frezza clarifies in
RealClearMarkets: 586
Among the colossal fallacies that keep our economy mired in unemployment, few loom as large as the
notion that creating jobs leads to growth and prosperity, rather than the other way around. In fact,
when jobs are treated as ends rather than means, the perverse effect of pursuing policies designed to
artificially inflate employment figures only serves to make things worse....As impolitic as it is to say out
loud, we need to face the fact that jobs are a necessary evil. In any rationally managed business the
payroll is a burden, not a benefit. Entrepreneurs and hiring managers only add staff if they think
additional employees will produce more value than they consume. The challenge gets compounded

when companies are forced to devote ever more of their employees time to activities that deliver no
benefit beyond keeping the expanding army of federal bureaucrats and regulators at bay. ...
Jobs are a cost already, and regulation-induced ones unavoidably raise cost and are destructive of
wealth otherwise possible. The amount spent on each regulation-induced one represents the seen,
the observable: But as Frederic Bastiat says in What Is Seen and What is Not Seen, in reference to the
broken window regarded as magically creating employment for the glazier, To break, to destroy,
to dissipate is not to encourage national employment, or more briefly: Destruction is not
profitable.587 In the current instance, Society has lost the value of the unnecessary jobs, (to
borrow his phrasing). The what is not seen is what a firm would have done with their resources
had it not been for diversion.
Ignoring distributional effects is emblematic of the social planner convinced of the legitimacy of
doing good via compulsion; he may be doing good, and he may be stopping something bad. But
dislocation of capital and workers, the difficulty and unmeasured cost of moving resources
disrupted by regulation and forced to be redeployed must be substantial, particularly in times of
recession.588 The Bureau of Labor Statistics displaced worker studies589 can contribute to
understanding the magnitude in the future.
Still, the meme remains entrenched that regulations dont cause job loss, they dont affect
economic growth. Jobs may be lost in one area, but they are gained in another, goes this line of
thought, captured in a much cited study Jobs versus the Environment (We find that increased
environmental spending generally does not cause a significant change in industry-level
employment.) 590
Typical is the tone of a recent Washington Post story, Does government regulation really kill jobs?
Economists say overall effect minimal. A blocked-and-featured reader comment on the story
proclaims: The notion that deregulation will engender any significant increase in jobs is a
laughable lie sold to people who have no basic understanding of economics or real life.591 One
cant infer how many employees that individual has, or how he might respond to a rule requiring
that he hire some more, but he captures the mood.
A Gallup Poll differs though, noting that small businesses put government regulation at the top of
a list of complaints in a recent survey.592 And some legislators do stress job impacts, naturally. In a
Washington Times article, Rep. Tom McClintock noted:593
[T]he Congressional Budget Office estimates that Obamacare by itself will cost the economy a net loss
of 800,000 jobs. A few weeks ago, the House Natural Resources Committee received testimony that just
by getting government out of the way and opening up American energy resources to development, the
economy could generate 700,000 jobs and $660 billion of direct revenue to national and state treasuries.
Together, thats 1.5 million permanent jobs.
Regulations defenders do sometimes acknowledge that regulation can cause employment
problems when theres recession, such that it might be harder for workers to relocate and/or find
other jobs. Buy why high unemployment exists in the first place, and its possible linkage to the
body of regulation, simply doesnt register with regulators. Those affected do try, however; for
example the HRPolicy Association in comments to OMB, noted significant ways in which human
resources regulation impacts decisions on whether to hire or not.594)

Regulation must impact not only jobsbut also impact on the creation of them in the future.
Society cant lose jobs that havent been created and thus cant measure them, so we dont grasp
the dampening effect of a trillion dollar-plus regulatory enterprise.
In response to the claim that regulations create jobs, what needs stressing by policymakers is that
the doings595 being created are not jobs, from the perspective of the criterion by which benefits
are normally judged. If all jobs are a cost, regulatory jobs are more so, since theyre not jobs the
producer required. Moreover somebody has to stress that created is not a valid term to use with
regard to something compelled in a market economy.
Washington will continue to downplay job impacts of its rules, and say its all a wash or a net
plusexcept when it finally becomes politically unpalatable to do so. In late 2011, President
Obama had EPA back off $1 trillion ozone regulations temporarily during the election cycle. That
very act was an outright albeit reluctant acknowledgement of job impacts that otherwise go
unmeasured. 596
So today, job costs and delays-in-hiring costs that need to be counted and could be counted arent
by convention. This may change as we start to better incorporate opportunity costs on the one
hand (the broken window if it had been left intact) and, given our global economy, further
compare innovation rates in more regulated markets compared to less encumbered ones on the
other. We are beginning to see some push now to include jobs and distributional effects, to
acknowledge that worker dislocation is a cost that somebody externally imposed and needs to be
held accountable for. Cass Sunstein, the former director of OMBs Office of Information and
Regulatory Affairs, regards whether regulation can kill jobs an empirical question, does
acknowledge in a Bloomberg article that, Yes, Regulation Can Kill Jobs.597 Sunstein calls for a
separate treatment of job impacts, which is a good thing to do. Executive Order 13563 already
calls for assessing adverse effects on employment, but not with much vigor, and other OMB
guidance on cost-benefit analysis is lukewarm.
Another reason we need to account for jobs is the reality that rent seeking is a fixture of a mixed
economy. Regulation used to boost employment in certain sectors will create an adversarial
economy whereby demand at large can be impacted. Unemployment can be lower than the
national average in these industries (subsidized green energy, say), but that does not count as
evidence that regulation does not undermine jobs.
The real point is to consider far broader economic liberalization of energy, manufacturing, health
care, finance, communications, science and technology and more from disruptive political
interventions; to avoid misguided regulations that amount to prohibitions on hiring. This is the
source of magnification of jobs across industries, and expansions of national output. It would be
nice to double job creation and GDP again, the way we now double spending and regulations.
This report isnt the venue for it, but the claim that a lack of demand rather than regulation as a
culprit in the downturn doesnt quite work as a complete explanation. Lack of demand, properly
regarded, is actually a supply restriction, not a demand lapse; it is the perpetuation of non-marketclearing prices for all labor, goods and services.598 Government-elevated prices and wages must
adjust to market-clearing levels for recovery to resume; many policies deliberately prevent that
correction. Governments classical functions are maintaining order and thwarting contrived

scarcity (i.e., the holding of prices above market-clearing levels). Economic problems are
misunderstood when the diagnosis is insufficient demand and the prescription an artificial
stimulus political constraints on the creation of supply are the culprit.
Ive noted the need to measure regulations impact on jobs created and lost, and also to
acknowledge the jobs not created in the future. But of course, ours is a global economy. As the
book Lessons from the Poor: Triumph of the Entrepreneurial Spirit, edited by Alvaro Vargas Llosa notes,
regulations can contribute to worldwide poverty.599 A Bloomberg article recounted a law
professors conversation with an airline seatmate, who lamented:
How can I hire new workers today, when I dont know how much they will cost me tomorrow? ...
I dont understand why Washington does this to us....I dont understand why Washington wont
just get out of our way and let us hire.600 That was 2011, three years ago. Understanding
regulatory costs and their job impacts should be a priority.

17. Conclusion: Measure It, Control It

I will consider myself a success in this job if there is no job when I leave it.601
Alfred Kahn to Time magazine regarding his tenure at the Civil Aeronautics Board
Nothing is particularly hard if you divide it into small jobs.
Henry Ford
Perspective. Grab it with both hands. Its free.602
British black comedy film The Sightseers
Each of the unknowns in the previous chapter constitutes a dissertation in itself. As the subtitle of
Costberg implies, we have far to go in grasping the impacts of government intervention on our
liberty and prosperity. OMBs annual review increasingly encompasses an even smaller fraction of
intervention than realized, as the federal enterprise expands.
Regulation today is a hidden tax equivalent at least to half the amount of the fiscal budget itself.
Analyses of the numerous impacts of intervention may be assembled from scattered sources, and
when one does, the off budget regulatory numbers begin occupy heights equivalent to those
seen in the federal spending budgets of the 1990snot so long ago.
If only regulation were measured half as well as spending. Steps to manage it better have long
been proposed to deal with regulations past, present and future:603
Existing Regulations: Implement a bipartisan regulatory reduction commission; hold
hearings and streamline the remainder
New Regulations: Disclose them in an annual regulatory report card mirroring the federal
budget; experiment with regulatory budgeting (of costs, not benefits)604; require expedited
congressional approval before regulations are binding; employ sunset dates at which time
Congress would need to re-approve rules for them to remain in effect
Limit, at long last, the power of government to coerce, and recognize that Congress cannot
do anything it wants, and that we citizens cannot and did not delegate to it such blanket
authority it now exercises. One cannot delegate to a legislatureand in turn, bureaucrats
powers that one does not possess.
The extent of the governments power of compulsion extends well beyond the power to tax.
Whether or not regulation does good or bad things matters greatly, but not all that matters; like
spending itself, regulation either does or doesnt achieve its stated goals. What matters too is
recognizing the need to better measure regulation, and to force the necessary tradeoffs and
accountability. Our current regulatory oversight procedures, which omit independent agency rules
and important interventions like guidance documents and the number of them, are inadequate.
Tip of the Costberg represents a preliminary, ongoing attempt to assemble a baseline for regulatory
costs and will be regularly updated with what can be quantified and with placeholders for the
unquantifiable. The omissions and gaps Costberg makes apparent imply that future observers may
find taxation the lesser of the two components of governmental costs. In other words, it may be

taxation that emerges as the real tip of the costberg while growing costs of regulation looming
unseen below the surface at last come into greater relief. Much more investigation needs to be
Time to get busy.
Joyfully to the breeze royal Odysseus spread his sail, and with his rudder skillfully he steered.605
The Odyssey

Keep up to date on Costberg and Ten Thousand Commandments data at:

ENDNOTES: Tip of the Costberg:

On the Invalidity of All Cost of Regulation Estimates and the Need to Compile Them Anyway

Alexis de Tocqueville, Democracy in America, Book Four, Chapter VI.
Glenn Kessler, "The Claim That American Households Have a $15,000 Regulatory Burden," Washington Post. January
14, 2015.
Frank Ackerman, The Unbearable Lightness of Regulatory Costs, Global Development and Environment Institute
Working Paper No. 06-02, February 2006.
Clyde Wayne Crews Jr., The Other National Debt Crisis: How and Why Congress Must Quantify Federal Regulation,
Competitive Enterprise Institute Issue Analysis 2001 No. 4, October 2011.
The Census Bureau tracks some capital stock data; for example, Net Stock of Private Fixed Assets by Industry: 2000 to
2009, Table 781. Statistical Abstract of the United States, U.S. Census Bureau, 2012, p. 513.
Things such as buildings and roads are stocks of wealth. GDP doesnt measure that. It only measures the flow of wealth.
Buildings and roads only add to GDP in the year in which they are built. But they remain tangible stocks of wealth for as
long as they exist. Ryan Young, A Tsunami of Bad Economics, American Spectator. May 23, 2012.
Clyde Wayne Crews Jr. The Other National Debt Crisis: 2011.
See Marlo Lewis Jr., Reviving Regulatory Reform: Options for the President and Congress, Washington, D.C.:
Competitive Enterprise Institute, 2005. See also Clyde Wayne Crews Jr., Jump, Jive an
Reform Regulation: How Washington Can Take a Swing at Regulatory Reform, Competitive Enterprise Institute, February
Mark Drajem, Rules Study Backed By Republicans Deeply Flawed, Sunstein Says Bloomberg, Jun 3, 2011.
Competitive Enterprise Institute president Fred L. Smith Jr. related an amusing analogous tale in another context: Im
reminded of the story of the young precise analyst calculating results to four decimal points and the older analyst looking
over his shoulder pointing down to his estimate and stating: Son, I dont know about the last decimal point, but your first
one is wrong!

In fact the intent is to modify regularly at

Clyde Wayne Crews Jr., Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State,
Washington, DC: Competitive Enterprise Institute. 2013 Edition.
Curtis W. Copeland, Analysis of an Estimate of the Total Costs of Federal Regulations, Congressional Research
Service, April 6, 2011,
OMB archives the reports at
North American Industry Classification System, United States Census Bureau,
NERA Economic Consulting for the Manufacturers Alliance for Productivity and Innovation (MAPI), Macroeconomic
Impacts of Federal Regulation of the Manufacturing Sector. August 21, 2012. p. 26.
H. L. Mencken, On Politics: A Carnival of Buncombe. Baltimore: The Johns Hopkins Press, 1996/1956, pp. 278-279.
See for example, Wendy L. Gramm, Regulatory Review Issues, October 1985-February 1988, Administrative Law
Review, Vol. 63, Special Edition: OIRA Thirtieth Anniversary Conference, 2011.
See Susan E. Dudley, OMBs Reported Benefits of Regulation: Too Good to Be True? Regulation, Cato Institute:
Washington, DC. Summer 2013. pp. 26-30. Also see Susan Dudley of
George Washington University quoted in The Economist: The Rule of More: Rule-making is Being Made to Look More
Beneficial Under Barack Obama, The Economist, February 18, 2012.; also see
Susan Dudley, EPAs Mercury and Air Toxics Rule Will Not Improve Public Health, George Washington University
Regulatory Studies Center Commentary, December 21, 2011.
See analysis in Clyde Wayne Crews Jr, Boosting Regulatory Transparency: Comments of the Competitive Enterprise
Institute OnThe Office of Management and Budgets

2013 Draft Report to Congress on the Benefits and Costs of Federal Regulations and Agency Compliance with the
Unfunded Mandates Reform Act, Document ID: OMB_FRDOC_0001-0118, July 31, 2013.
Christopher C. DeMuth, The Regulatory Budget, Regulation: AEI Journal on Government and Society, March/April
1980, pp. 30.
See for example Sherzod Abdukadirov and Deema Yazigi, Inflated Benefits in Agencies Economic Analysis, Mercatus
On Policy No. 112. Mercatus Center, George Mason University. August 2012.
Ted Gayer and W. Kip Viscusi, Overriding Consumer Preferences With Energy Regulations, Mercatus Center Working
Paper, No. 12-21, July 2012.
Wendy L. Gramm, Administrative Law Review, p. 36.
Yesim Yilmaz, Private Regulation: A Real Alternative for Regulatory Reform, Cato Policy Analysis No. 303, April 20,
John Steele Gordon, An Empire of Wealth.
Alexis de Tocqueville, Democracy in America, Book Three, Chapter XXI.
Robert Higgs, Eighteen Problematic Propositions in the Analysis of the Growth of Government, Review of Austrian
Economics, Vol. 5, No. 1, p. 4.
H. L. Mencken, The Divine Afflatus, A Mencken Chrestomathy, chapter 25, p. 443
James M. Buchanan, Cost and Choice: An Inquiry in Economic Theory, University of Chicago Press: Chicago and
London, 1969, p. 42 43.
Edward Kosner, Shut Up, He Explained, Wall Street Journal, August 27, 2013.
H. L. Mencken In Defense of Women, 1918. p. 38.,+in+fact,+grows+more+and+
Pew Environment Group, Industry Opposition to Government Regulation, October 2010.
Hart Hodges, Falling Prices: Cost of Complying With Environmental Regulations Almost Always Less Than
Advertised, Economic Policy Institute, 1997, EPI Briefing Paper #69.
On the other hand, some point to a lack of confirmable bias either way. David Simpson, Do Regulators Overestimate the
Costs of Regulation? Working Paper. 2001.
Charles Murray, Why Capitalism Has an Image Problem, Wall Street Journal, July 30, 2012.
Measuring the Impact of Regulation: The Rule of More, The Economist, February 18, 2012,
Frederic Bastiat, That Which is Seen, and That Which is Not Seen, 1850.
Andrew Hale, David Borys and Mark Adams, Regulatory Overload: A Behavioral Analysis of Regulatory Compliance,
Mecatus Center Working Paper No. 11-47. November 2011.
Randall Lutter and Richard B. Belzer, EPA Pats Itself on the Back, Regulation, Cato Institute, Vol 23., No. 3, p. 23.
U.S. House of Representatives, Committee on Oversight and Government Reform, Staff Report, Broken Government:
How the Administrative State has Broken President Obamas Promise of Regulatory
112th Congress, September 14, 2011. p. 7.
The Social Cost of Carbon Gambit, Wall Street Journal, June 30, 2013.
The final 2013 rule for microwaves is here:

conservation-program-energy-conservation-standards-for-standby-mode-and-off-mode-for ; the regulatory impact analysis

is here: A
detailed critique by the Institute for Energy Research is available here: White House Revises Dubious Social Cost of
Carbon, June 6, 2013.
Media Advisory, A Big Day for Transparency on Capitol Hill, Competitive Enterprise Institute, May 09, 2013.
Media Advisory, CEI, May 9, 2013.
Clyde Wayne Crews Jr., Promise and Peril: Implementing a Regulatory Budget, Policy Sciences 31, no. 4 (January 1,
1998): 343369.
Isabel Paterson, The God of the Machine. G. P. Putnams Sons: New York, 1943. p. 171.
Caleb Howe, Carney On Obamacare Enrollments: We Dont Have Hard Numbers, But We Dispute Their Numbers,
May 1, 2014.
W. Mark Crain and Nicole V. Crain, The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small
Business, National Association of Manufacturers, September 10, 2014.
Nicole V. Crain and W. Mark Crain, The Impact of Regulatory Costs on Small Firms, report prepared for the Small
Business Administration, Office of Advocacy, Contract No. SBAHQ-08-M-0466, September 2010,
A 21st Century Regulatory System The White House, June 23, 2011.
The White House, Executive Order 13563, Improving Regulation and Regulatory Review, January 18, 2011.
W. Mark Crain, The Impact of Regulatory Costs on Small Firms, Report prepared for the Small Business
Administration, Office of Advocacy, Contract no. SBHQ-03-M-0522, September 2005
W. Mark Crain and Thomas D. Hopkins, The Impact of Regulatory Costs on Small Firms, report prepared for the Small
Business Administration, Office of Advocacy, RFP No. SBAHQ-00-R-0027, October 2001,
Thomas D. Hopkins The Changing Burden of Regulation, Paperwork, and Tax Compliance on Small Business: A Report
to Congress, Office of the Chief Counsel for Advocacy, U.S. Small Business Administration, Washington, DC, October
Curtis W. Copeland, Analysis of an Estimate of the Total Costs of Federal Regulations, Congressional Research
Service, April 6, 2011,
Nicole V. Crain and W. Mark Crain, Response to the CRS Report, Analysis of an Estimate of the Total Cost of Federal
Regulations, April 28, 2011.
Sidney A. Shapiro, Ruth Ruttenberg and James Goodwin, Setting the Record Straight: The Crain and Crain Report on
Regulatory Costs, Center for Progressive Reform White Paper #1103, February 2011, p. 3.
Nicole V. Crain and W. Mark Crain, Review of Setting the Record Straight: The Crain and Crain Report on Regulatory
Costs, a Center for Progressive Reform (CPR) white paper. April 27, 2011. Crain and Crain also responded to John
Irons and Andrew Green, Flaws Call for Rejecting Crain and Crain Model, Issue Brief #308, July 19, 2011. (Crain and Crain response: )
Crain and Crain, 2010, p. 15.
Crain and Crain, 2010, p. 15.
Susan E. Dudley and Melinda Warren, Regulators Budget Increases Consistent with Growth in Fiscal Budget: An
Analysis of the U.S. Budget for Fiscal Years 2015 and 2016. Regulators Budget No. 37. published jointly by the
Regulatory Studies Center at George Washington University and the Weidenbaum Center on the Economy, Government,
and Public Policy May 2015. p. 1.
The Dirksen Center, A Billion Here, A Billion There....
Robert W. Hahn and John A. Hird, The Costs and Benefits of Regulation: Review and Synthesis, Yale Journal on
Regulation, 1991, Vol. 8, No. 1, pp. 233-78.

Office of Management and Budget, Report to Congress on the Costs and Benefits of Federal Regulation, 2000, p. 11.
Office of Management and Budget, Stimulating Smarter Regulation: 2002 Report to Congress on the Costs and Benefits
of Regulations and Unfunded Mandates on State, Local, and Tribal Entities, p. 40.
See Thomas D. Hopkins, The Costs of Federal Regulation, Journal of Regulation and Social Costs, Vol. 2, No. 1, March
1992, pp. 5-31.
Thomas D. Hopkins, Costs of Regulation: Filling the Gaps, Report prepared for the Regulatory Information Service
Center, Washington, D.C., August 1992.
General Accounting Office, Briefing Report to the Ranking Minority Member, Committee on Governmental Affairs, U.S.
Senate, Regulatory Reform: Information on Costs, Cost-Effectiveness, and Mandated Deadlines for Regulations,
(GAO/PEMD-95-18BR), March 1995.
Derived from Office of Management and Budget, Draft Report to Congress on the Costs and Benefits of Federal
Regulations, Federal Register, March 28, 2002. Pp. 15037-8.
Office of Management and Budget, Stimulating Smarter Regulation: 2002 Report to Congress on the Costs and Benefits
of Regulations and Unfunded Mandates on State, Local, and Tribal Entities, p. 40., Table 8, p. 39.
OMB, 2002, p. 37.
OMB, 2011. P. 14.
2009 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and
Tribal Entities, Office of Management and Budget
Office of Information and Regulatory Affairs, Figure 2-1: Annual Costs of Major Rules (1981-2008), p. 32.
U.S. Office of Management and Budget, Office of Information and Regulatory Affairs, 2015 Draft Report to Congress on
the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities, 2015, Table 1-1,
Estimates of the Total Annual Benefits and Costs of Major Federal Rules by Agency, October 1, 2004September 30, 2014
(billions of 2001 or 2010 dollars), pp. 10-11,
Table 1-5, p. 24.
Office of Management and Budget, 2011 Report to Congress on the Benefits and Costs of Federal Regulations and
Unfunded Mandates on State, Local, and Tribal Entities, June 2011, p. 19.
OMB, 2015. p. 21.
Regulatory Right-to-Know Act (Pub. L. 106554, 1(a)(3) [title VI, 624], Dec. 21, 2000, 114 Stat. 2763, 2763A161.
Appearing on
Clyde Wayne Crews Jr., Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State, Competitive
Enterprise Institute: Washington, D.C., 2015 Edition. p. 3,000%20Commandments%202015%20-%2005-12-2015.pdf.
Ten Thousand Commandments, 2015 Edition, p. 21.
OMB, Benefits and Costs, 2011. p. 17.
OMB, 2015 Draft Report.
OMB 2015 Draft Report, Table 1-5, pp. 24.
Crain and Crain, p. 4, footnote 5.
Office of Management and Budget, Stimulating Smarter Regulation: 2002 Report to Congress on the Costs and Benefits of
Regulations and Unfunded Mandates on State, Local, and Tribal Entities, p. 38.


OMB 2011, p. 4.
Searching for a Regulatory Tsunami in Calm Seas, Center for Effective Government, July 10, 2012.
OMB, 2015 Draft Report, p. 8-9.
Federal Register, Vol. 74, No. 233, December 7, 2009, p. 64133.
Concern about regulatory costs on state and local governments resulted in the Unfunded Mandates Reform Act during the
104th Congress.
Friedrich A. Von Hayek, Economic Control and Totalitarianism, The Road to Serfdom. p. 101.
Cited in Merrill D. Peterson, The Jefferson Image in the American Mind, University of Virginia Press.
John W. Dawson and John J. Seater, Federal Regulation and Aggregate Economic Growth, Journal of Economic
Growth, January 2013.
Ronald Bailey, Federal Regulations Have Made You 75 Percent Poorer, Reason, June 21, 2013.
OMB Draft Report to Congress 2002,
Draft Report to Congress, 2002, p. 15024, footnote 16.
Draft Report to Congress, 2002, p. 15037.
Organization for Economic Cooperation and Development, Regulatory Reform in the United States, OECD Reviews of
Regulatory Reform, Paris 1999.
OMB Draft Report, 2002, p. 15,038.
Crain and Hopkins, 2001.
Crain and Hopkins, 2001. Table 8. Total Cost of Federal Regulatinos: By Type and Allocation Between Business and
Others (in billions of 2000 dollars). p. 25.
Crain and Hopkins, 2001.
United States International Trade Commission, The Economic Effects of Significant U.S. Import Restraints, Eighth
Update, Investigation No. 332-325, December 2013. p. vii.
United States International Trade Commission, The Economic Effects of Significant U.S. Import Restraints, Seventh
Update, Investigation No. 332-325, August 2011.
Crain and Hopkins, 2001, p. 11.
Bill McNabb, Uncertainty is the Enemy of Recovery, Wall Street Journal, April 28, 2013.
White House lawn speech to American Chemical Society, April 1924. Quoted In H. Hale, American Chemistry (1928), 8.
Alexis de Tocqueville, Democracy In America, Chapter 4, p. 180.
Two commenters stated that the report should not rely on the Hahn/Hird study to provide aggregate estimates of the
benefits and costs of environmental, health and safety rules (14, 22). Last years report carefully outlines some of the
shortcoming of this study and we have repeated some of these concerns in the final report. At the same time, it is the only
study available that offers a comprehensive estimate of the benefits and costs of environmental, health, and safety
regulation.Report to Congress on the Costs and Benefits of Federal Regulation, Office of Management and Budget, 2000.
The reason is that by using OMBs 2001 report rather than its 2002, I am able to retain separate 2002 social regulationspecific data for use here and in future versions of this report.
Mercatus Center Regulatory Cost Calculator, Mercatus Center, George Mason University.
See Appendix B: Interview Framework Document in The Impact of Federal Regulations on Franchised Automobile
Dealerships, Center for Automotive Research for the National Automobile Dealers Association. April 2014. p. 1.
Remarks to the White House Conference on Small Business, August 15, 1986.
Henry David Thoreau, Chapter 8, The Village, Walden. 1854.
OMB 2011, p. 31.

Compiled from OMB, 2015 Draft Report, Table 1-10, p. 35-38.
OMB, 2015 Draft Report, Table C-1, p. 84.
OMB, 2015 Draft Report, Table C-2, p. 85.
Several of the Red Tape Rising reports were very useful in deriving some independent agency costs from GAOs
(1) James L. Gattuso and Diane Katz, Red Tape Rising: Five Years of Regulatory Expansion, Heritage Foundation
Backgrounder No. 2895, March 26, 2014.;
(2) James L. Gattuso and Diane Katz, Red Tape Rising: Regulation in Obamas First Term, Heritage Foundation
Backgrounder No. 2793, May 2, 2013.;
(3) James L. Gattuso and Diane Katz, Red Tape Rising: Obama-Era Regulation at the Three-Year Mark, Heritage
Foundation Backgrounder No. 2663, March 13, 2012.
(4) James Gattuso and Diane Katz, Red Tape Rising: A 2011 Mid-Year Report on Regulation, Heritage Foundation
Backgrounder No. 2586, July 25, 2011.
(5) James L. Gattuso, Diane Katz, and Stephen A. Keen, Red Tape Rising: Obamas Torrent of New Regulation, Heritage
Foundation Backgrounder No. 2482. October 26, 2010.
(6) James Gattuso and Stephen Keen, Red Tape Rising: Regulation in the Obama Era, Heritage Foundation Backgrounder
No. 2394, March 31, 2010.
OMB stated, On average, roughly $5 billion in annual costs have been added each year over this [2001-10] period to the
total regulatory burden. OMB, Benefits and Costs, p. 19.
David Young, Great Funny Quotes. 2011.
Conn Carroll, Study: Government Regs Waste $46 Billion Every Year, Examiner, May 30, 2013.
Hammer, B. and C. H. Stinson, Managerial Accounting and Environmental Compliance Costs, Journal of Cost
Management, Summer 1995. pp. 4-10.
Gregory J. Millman and Samuel Rubenfeld, Compliance Officer: Dream Career? Wall Street Journal January 15,
Daniel Pinto, The West has killed its entrepreneurs and replaced them with bureaucrats, City A.M. February 24, 2014.
Ben Goad and Julian Hattem, Businesses hire up to deal with more regs, The Hill, November 9, 2013.
Office of Management and Budget, Office of Information and Regulatory Affairs, Information Collection Budget of the
United States Government, September 2014. p. 9 and p. 63.
Ibid. OMB, September 2014, p. 63.
Anne Kim, When Paperwork Attacks! Five Ideas for Smarter Government, Progressive Policy Institute Policy Brief,
March 2012. p. 3.
Crain and Crain, Table 4, Sources and Estimated Costs of Compliance with the Federal Tax Code. p. 29.
Crain and Crain, p. 29.
Government Accountability Office, Summary of Estimates of the Costs of the Federal Tax System, Report to
Congressional Requesters, GAO-05-878, August 2005.
GAO, 2005,
U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, Gross Domestic
Product, Third Quarter 2015 (Advance Estimate), October 29, 2015. Simlar data is also available at The World Bank.

Washington, DC, Data: GDP (Current U.S. $); Data: Chart at
Tax Foundation, Total Federal Income Tax Compliance Costs, 1990-2015, October 26, 2006
BUSINESSES, A Report to the IRS LMSB Division, Submitted by the Office of Tax Policy Research, University of
Michigan Business School, September 5, 2002
$224 Billion, 6.1 Billion Hours, Lost to Complex Tax Code According to New National Taxpayers Union Study,
Reuters, April 15, 2014.
Office of Management and Budget, Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs,
Circular No. A-94 Revised, Transmittal Memo No. 64, October 29, 1992.
Philip Klein, H&R Block CEO Says Obamacare to Add Significant Complexity to Tax Season, Washington
Examiner, September 3, 2014.
Noted in Klein, September 3, 2014.
Ryan Decker, John Haltiwanger, Ron Jarmin and Javier Miranda, The Role of Entrepreneurship in U.S. Job Creation
and Economic Dynamism, Journal of Economic Perspectives, Volume 28, No. 3. Summer 2014, pp. 3-24.
John Merline, Home Depot Co-Founder: Obama Is Choking Recovery, Investors Business Daily, July 20, 2011.
Sam Batkins, A Regulatory Flurry: The Year in Regulation, 2013, American Action Forum, January 8, 2014.
North American Industry Classification System, United States Census Bureau,
Stephen D. Oliner, How Long Did it Take to Plan That Building?, UCLA Economic Letter, January 2013.
Letter from the Construction Industry Round Table to Congressman Darrell Issa, Chairman, Committee on Oversight and
Government Reform. January 6, 2011.
The Impact of Federal Regulations on Franchised Automobile Dealerships, Center for Automotive Research for the
National Automobile Dealers Association. April 2014. p. 1.
The Cost of Regulation Just Topped $1 Trillion: Report,, November 21, 2013.
NERA Economic Consulting for the Manufacturers Alliance for Productivity and Innovation (MAPI), Macroeconomic
Impacts of Federal Regulation of the Manufacturing Sector. August 21, 2012, p. 8.
NERA, 2012, p. 35, footnote 37.
NERA, 2012, p. 6.
NERA, 2012, p. 6.
NERA, 2012, p. 6.
Josh Marks, Obama: If Congress Doesnt Act on Climate Change, I Will, The National Memo, February 13th, 2013.
Law/Culture Blog, Columbia University School of Law.
Alternate version is Ltat cest moi. (I am the State.)
Appearing in Paul Leicester Ford, Essays on the Constitution of the United States Published During Its Discussion by the
People, 1787-1788. Brooklyn, N.Y., Historical Printing Club. 1892. The Project Gutenberg EBook of Essays on the
Constitution of the United States by Paul Leicester Ford
Countless versions of the joke exist; this one appears at in a book chapter on history of the USDA.
Ingo Potrykus, Regulation Must Be RevolutionizedRegulation Must Be Revolutionized, Nature, Vol 466. p. 561.July
29, 2010. See also Matt Ridley, GM crops dont kill

kids. Opposing them does, The Times. August 1, 2013.
George LeMieux Says USDA Employs 1 Person for Every 30 Farmers PolitiFact Blog, Tampa Bay Times and Miami
Herald. June 8, 2010.
Via Federal Register websites Advanced Document Search over the period January 1, 2002 to December 31, 2013.
Pettus L. Read, Too Much Regulation Adds to Food Costs, Farm Bureau of Tennessee,
Coalition Letter, Farm Policy: The Terrible 12, Summer 2013 See also, Fran Smith, Coalition Urges Policymakers to Reform the Terrible
Twelve of Farm Policy, OpenMarket, May 15, 2013.
Chris Edwards, Agricultural Regulations and Trade Barriers, Downsizing Government project, Cato Institute, June
Promar International, US Sugar Policy is Costing Consumers An Extra $4 Billion Annually, October 19, 2011.
Chris Edwards, 2009.
Nicholas Kalaitzandonakes, Julian Alston and Kent Bradford, Measuring the Costs of Biosafety Regulation and the
Potential Impacts on Biotechnology Research and Development, Working Paper, See also Kalaitzandonakes, N., Alston, J.M., & Bradford,
K.J., Compliance costs for regulatory approval of new biotech crops. In J.M. Alston, D. Zilberman, & R. Just, (Eds.),
Economics of regulation of agricultural biotechnologies. New York: Springer. 2006.
See Table 2. Estimated costs of biosafety activities in US, India, and China (US$), in Jessica C. Bayer, George W. Norton
and Jose B. Falck-Zepeda, Cost of Compliance with Biotechnology Regulation in the Philippines: Implications for
Developing Countries, AgBioForum, Volume 13, Number 1, Article 4.
Willy De Greef, GM Crops: The Crushing Cost of Regulation, AgBioView, April 8, 2004.
James Madison to Thomas Jefferson, April 2, 1798. Writings 6:312--14.
Jeanne Sahadi, What the NSA Costs Taxpayers,, June 7, 2013.
Danielle Kehl, Surveillance Costs: The NSAs Impact on the Economy, Internet Freedom & Cybersecurity, New
Americas Open Technology Institute, July 2014,
John Gall, Systemantics: How Systems Work and Especially How They Fail, 1975.
The Suite Life of Zack & Cody, The Suite Smell of Excess.
Quoted in Charles W. Thompson, Presidents Ive Known and Two Near Presidents (1929), 374.
Lee Gardner, "Which Red Tape Do You Hate the Most? We Asked, You Answered." Chronicle of Higher Education.
November 21, 2014.
The proposed gainful employment rules will limit choice and access to post-secondary education for an underserved
population under the guise of consumer protection, as well as damage an important education channel Kara M. Cheseby,
Class Conflict: Gainful Employment Proposal Penalizes At-Risk Student Populations and Hurts the Economy,
Competitive Enterprise Institute Issue Analysis, 2011 No. 2, March 2011. Claims supporting the rule received two
pinnocchios from the Washington Post. Glenn Kessler, Do 72 Percent of For-Profit Programs Have Graduates Making
Less Than High School Dropouts? Washington Post. April 11, 2014.

For the history and impact and approaches to reform of public education, see Sheldon Richman, Separating School and
State: How to Liberate Americas Families. Future of Freedom Foundation: Fairfax, VA. 1994.
Bonnie Hunter and Dondald D. Gehring, The Cost of Federal Legislation on Higher Education: The Hidden Tax on
Tuition, NASPA Journal, 2005, Vol. 42, No. 4, pp. 478-497.
Press Release, Send Your Underwear to the Undersecretary, Competitive Enterprise Institute. May 16, 2007.
Stephen Moore, How North Dakota Became Saudi Arabia: Harold Hamm, discoverer of the Bakken fields of the
northern Great Plains, on Americas oil future and why OPECs days are numbered, Wall Street Journal, October 1, 2011.
See for example, Diana Furchtgott-Roth, New Yorks Fracking Ban Suffocates New Yorkers, RealClearMarkets, June
4, 2013.
Joseph R. Mason, The Economic Cost of a Moratorium on Offshore Oil and Gas Exploration to the Gulf Region,
Louisiana State University. July 2010.
Mark Green, The $449 Billion Answer, Energy Tomorrow, August 13, 2012.
Wood Mackenzie Energy Consulting, U.S. Supply Forecast and Potential Jobs and Economic Impacts (2012-2030),
September 7, 2011.
Sam Kazman, Deadly Overcaution: FDAs Drug Approval Process, Journal of Regulation and Social Costs. September
1990. pp. 35-54.
P.J. ORourke, The Liberty Manifesto, Speech at the Cato Institute. May 6, 1993.
Charles R. Kesler, The Tea Party, Conservatism, and the Constitution, Imprimis, January 2014, pp. 1-2.
Shirley Svorney, Could Mandatory Caps on Medical Malpractice Damages Harm Consumers? Cato Policy Analysis
No. 685, October 20, 2011.
Richa Arora and Mark Pimentel, Cost of Privacy: A HIPAA perspective, Privacy Policy, Law and Technology,
Carnegie Mellon University, Fall 2005, December 9, 2012.
Referenced in Craig Becker, Rules and Regulations Add to Cost of Caring, Middle Tennessee State University.
Jane Yakowitz Bambauer, Death by HIPAA, Huffington Post, June 25, 2012.
Melinda Beck, Slowdown in Health Spending Could Be at Risk, Wall Street Journal, July 14, 2013.
Fred L. Smith Jr. The Rich are Societys White Mice, OpenMarket, April 9, 2010.
Kevin Bogardus, Lobbyists brace for flood of regulations after healthcare ruling, The Hill, June 29, 2012.
Diana Furtchgott-Roth, Will Obamacare Hurt Job Creation and Marriage? MarketWatch: Wall Street Journal,
September 27, 2013.
Susan Jones, Sebelius: Im Not Signing Up for Obamacare, CNS News. October 23, 2013.
Roberta Rampton and Susan Cornwell, Obama Says We Screwed It Up On Health Law Debut, Reuters, December
20, 2013.
Stephen Moore, Bob Funk: Where the Jobs Areand How to Get One, Wall Street Journal, September 20, 2013.
Paul Bedard, Feds Need 18 Pages to Define Full-Time for Obamacare, Washington Examiner, September 10, 2012.
Penny Starr, 11,588,500 Words: Obamacare Regs 30x as Long as Law, October 14, 2013.
Daniel Halper, Obamacare Now Estimated to Cost $2.6 Trillion in First Decade, Weekly Standard, July 11, 2012.
Erik Wasson, O-Care will cost 2.5M workers by 2024, The Hill, February 4, 2014.
Fred Hyde, MD, The Unintended Consequences of Regulation: Report Prepared for The Physicians Foundation, March
Tom Murphy, Insurers Warn of Overhaul-Induced Sticker Shock, Associated Press. March 13, 2013.
Press Release, Sen. Mitch McConnell, Dem Budget and Obamacare Focus on Growing Government, Not the
Economy, Mar 20 2013.
Paul Bedard, 74% of Small Businesses Will Fire Workers, Cut Hours Under Obamacare, Examiner, July 16, 2013.
Jennifer Smith, Want a Law Job? Learn the Health-Care Act, Wall Street Journal, June 16, 2013.
Besha Rodell, The 3% Surcharge Catches On, LA Weekly, September 2, 2014.
Obama Administration Signals that Small Businesses May Not Get to Keep Their Self-Insured Health Plans.
Obamacare Watcher, June 5, 2012.
John Vinci, The battle against Obamacare is not just at the Supreme Court, NetRight Daily, November 16, 2011.
Benjamin Zycher, Comparative Effectiveness Reviews: Quantitative Analysis of Research and Development Investment
Effects, Pacific Research Institute.
Press Release, Republican Senators Introduce Alternative Jobes Bill, the Jobs Through Growth Act, October 13, 2011
Latest Obamacare Forecast: Higher Costs, The Leader Board, Republican.Senate.Gov. September 3, 2014.
Press Release, Employer Healthcare Mandate Would Wipe Out 1.6 Million Jobs, National Federation of Independent
Business, January 28, 2009.
Linda J. Blumberg, et. al., Implications fo the Affordable Care Act for American Business, Urban Institute, October
Tevi D. Troy and D. Mark Wilson, The Cost of the Affordable Care Act to Large Employers, American Health Policy
Institute. 2014.
Ibid, p. 5.
Noted in U.S. Small Business Administration Office of Advocacy, Letter to Margaret A. Hamburg, Commissioner of the
U.S. Food and Drug Administration re: Food Labeling; Nutrition Labeling of Standard Menu Items in Restaurants and
Similar Retail Food Establishments (FDA-2011-F-0172); and re: Food Labeling; Calorie Labeling of Articles of Food in
Vending Machines (FDA-2011-F-0171). June 28, 2011. p. 3.
FDAs estimate on the vending machine rule is at Its estimate of the chain
restaurant rule is at
Food Marketing Institute, Letter to Cass R. Sunstein, Administrator, Office of Information and Regulatory Affairs, Food
Labeling; Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments and OMB
Review Pursuant to Executive Order 12866 and 13563, Docket No. FDA-2011-F-0172, November 21, 2011.
Helena Bottemiller Evich, FLOTUS Goes Big On Food Label Changes, Politico, February 27, 2014.


For example, see July Tran and Ronald White, The Benefits of Public Protections: Ten Rules that Save Lives and Protect
the Environment, Center for Effective Government, July 2014.
Nina Teicholz, The Questionable Link Between Saturated Fat and Heart Disease, Wall Street Journal, May 6, 2014.
Cited in Charles C. Mann, Smoke Screening, Vanity Fair, December 20, 2011.
Department of Homeland Security, Budget-in-Brief, Fiscal Year 2015.
Press Briefing by Ari Fleischer (Excerpts on Homeland Security), Office of the Press Secretary, The White House, March
19, 2002.
New York Times,
Comments of the Competitive Enterprise Institute and Robert L. Crandall before the Transportation Security
Administration, In the Matter of Notice of Proposed Rulemaking For Passenger Screening Using Advanced Imaging
Technology, Docket No. TSA20130004,
June 24, 2013.
OMB, Benefits and Costs, 2008. p. 11-12
OMB, Benefits and Costs, 2008. p. 12.
OMB, Benefits and Costs, 2008. p. 12, footnote 17.
OMB, Benefits and Costs, 2009, pp. 16-17.
Scott Farrow and Stuart Shapiro, The Benefit-Cost Analysis of Security Focused Regulations, p.3
Scott Farrow and Stuart Shapiro, The Benefit-Cost Analysis of Security Focused Regulations, pp.3-4.
Scott Farrow and Stuart Shapiro, The Benefit-Cost Analysis of Security Focused Regulations, p.4.
See their narrative generally, and in particular their Table 6.3 on p. 66. Joseph J. Cordes, Anthony Yezer, Garry Young,
MEASURES, George Washington Institute of Public Policy, GWIPP WORKING PAPER SERIES, Working Paper Number
Bart Hobijn, What Will Homeland Security Cost? FRBNY Economic Policy Review / November 2002.
P. 24.
264 p. 31.
265 p. 32.
266 p. 32.
Statement of Stephen M. Lord, TSAs Process for Ensuring Foreign Flight Students Do Not Pose a Security Risk Has
Weaknesses, United States Government Accountability Office, GAO-12-900T, July 18, 2012.
269 pp. 35-36.
John Mueller and Mark G. Stewart, Does the United States Spend Too Much on Homeland Security? The government
refuses to subject homeland security to a cost-benefit analysis, Sept. 7, 2011
AND COSTS OF HOMELAND SECURITY, Paper prepared for presentation at the panel, Terror and the Economy:
Which Institutions Help Mitigate the Damage? at the Annual Convention of the Midwest Political Science Association,
Chicago, IL, April 1, 2011.
Relevant spending elements not included in their Trillion Dollar Table, from p. 27 of :

Terror-related wars in Iraq and Afghanistan

Costs of crime facilitated by focus of police and FBI on, or preoccupation with, terrorism
Costs resulting from hurricane Katrina that might have been mitigated if DHS had not been so
preoccupied by terrorism
Additional Post Office expenditures to deal with the effects of 9/11 and the anthrax letters
Effects on tourism, property and stock market values, business location decisions, etc. though
dead weight losses might capture some of these
In addition to the short-haul fatality effect included in the table, the increase in traffic fatalities in
the U.S. of 2300 lives to the end of 2003 due to the fear of flying and the inconvenience
of extra passenger screening
Extra fuel cost to airlines because of the weight of hardened (heavier) cockpit doors
Free airline seats to Federal Air Marshals
Passenger delays and inconvenience cause by false positive identification on TSAs no fly list.
Cutbacks to Medicare, Medicaid, education, social security and other government services in an
effort to reign in budget deficits caused by wars in Iraq and Afghanistan and
mushrooming homeland security budgets
Bart Elias, Screening and Securing Air Cargo: Background and Issues for Congress, Congressional Research Service, 75700, R41515, December 2, 2010. p. 5.
Paul Davis Compliance Costs Unbelievable, But This Banker Has a Plan, American Banker, October 4, 2013.
Ann B. Schnare, The Estimated Costs of HUDs Proposed RESPA Regulations, Prepared for the National Association
of Realtors, June 3, 2008.
Paul Emrath, How Government Regulation Affects the Price of a New Home, National Association of Home Builders.
July 2011.
Ronald Bailey Shoot, Shovel, and Shut Up: Celebrating 30 Years of Failing to Save Endangered Species. Reason.
December 31, 2003.
Randy T. Simmons and Kimberly Frost, Accounting for Species: The True Costs of the Endangered Species Act,
Property and Environment Research Center, 2004.
Simmons and Frost, 2004. See Table 1, page 3, Reported Expenditures on ESA Species.
Simmons and Frost, 2004, p. ii. See also p. 15.
Simmons and Frost, 2004, p. ii.
Press Release, Bill would tally cost of Endangered Species Act, May 6, 2011.
Jonathan H. Adler, Editor, Rebuilding the Ark: New Perspectives on Endangered Species Act Reform, American
Enterprise Institute Press: Washington, D.C. 2011.
Adler, 2011, p. 2.
Adler, 2011, Cited in Notes on p. 5; Katrina Miriam Wyman, Rethinking the ESA to Reflect Human Dominion Over
Nature, NYU Environmental Law Journal, Vol. 17, 2008. P. 502.
Endangered Species: Time and Costs Required to Recover Species Are Largely Unknown. U.S. Government
Accountability Office. April 6, 2006.
For example see Gardner M. Brown Jr. and Jason F. Shogren, Economics of the Endangered Species Act, Journal of
Economic Perspectives, Vol. 12, No. 3, Summer 1998, p. 3-20. See also Jason F. Shogren, Economics and the
Endangered Species Act.
T.R. Mader, Endangered Species Act: Flawed Law; Few Species Saved -- Millions Spent -- Thousands of Jobs Lost,
Abundant Wildlife Society of North America, See also Myron Ebell, An Update on
the Endangered Species Act, ALEC Issue Analysis, April 2005. .
Damien Schiff and Julie MacDonald, The Endangered Species Act Turns 40Hold the Applause, Wall Street Journal,
December 27, 2013.
Doug Bandow, The Administrations New Ivory Ban: Im From The Government And Im Here To Kill Elephants And
Treat Americans As Criminals, Forbes, March 17, 2014.
Department of the Interior, Bureau of Land Management, 43 CFR Part 3160, RIN 1004-AE26. Proposed Rule to

regulate hydraulic fracturing on public land and Indian land. May 2012.
Diane Katz, Tales of the Red Tape #29: Drowning in New Regulations, The Foundry, Heritage Foundation
Eugene Volokh, The Administration Says Universities Must Implement Broad Speech Codes, May 13, 2013.
Noted in Walter Olson, Overlawyered & Overgoverned,, March 1, 2001.
Helmut Schoeck, Envy: A Theory of Social Behaviour. Liberty Fund: Indianapolis. 1966 original publication.
The only reliable part of Crain and Crains estimate is for the cost of OSHA regulations from 2001 to 2008 [in other
words, the handful of rules reviewed at OMB]. But at just $471 million--or less than one percent--of Crain and Crains
estimate reflects the costs of major OSHA regulations enacted over that period. Ross Eisenbrey and Isaac Shapiro,
Deconstructing Crain and Crain: Estimated Cost of OSHA Regulations is Way Off Base, Economic Policy Institute, Issue
Brief #312, August 22,2011.
Via the Federal Register database at This particular search
range spanned, January 1, 2002 to December 31, 2014.
Source: Joseph M. Johnson, A Review and Synthesis of the Cost of Workplace Regulations, Mercatus Center, George
Mason University, August 30, 2001.
Steven Greenhouse, Labor Board Drops Case Against Boeing After Union Reaches Accord, New York Times,
December 9, 2011.
Harvey S. James, Estimating OSHA Compliance Costs, Center for the Study of American Business, Policy Study No.
135, October 1996. (Appendix available online at
Ross Eisenbrey and Isaac Shapiro, Deconstructing Crain and Crain: Estimated Cost of OSHA Regulations is Way Off
Base, Economic Policy Institute Issue Brief #312, August 22, 2011.
See Johnson 2001, p. 7: Indirect costs are more difficult to measure than direct costs. They include the second-order
effects of regulation, which spread from the regulated industry to other industries through price and quantity changes
instigated by the regulation. These involve real economic losses to society as a whole from regulatory distortions in markets
and decision-making; in essence, lost GDP or consumer and producer surplus from the promulgation of regulations. It
cannot be stated strongly enough how difficult it is to measure indirect costs, for the most part because isolating the effect of
regulations is very sensitive to other modeling assumptions.
Johnson 2001, p. 12.
Comment of the HR Policy Association on on the Draft 2011 Report to Congress on the Benefits and Costs of Federal
Regulations, 76 Fed. Reg. 18260 (April 1, 2011), May 2, 2011.
Lowell Gallaway and Jonathan Robe, The Unintended Consequences of Collective Bargaining, Competitive Enterprise
Institute, 2014.
Richard K. Vedder and Lowell E. Gallaway, Do Unions Help the Economy? The Economic Effects of Labor Unions
Revisited, Journal of Labor Research, Vol. 23, No. 1, Winter 2002. Available at Public Policy Research Foundation.
Cited in CNN Wire Staff, Kahn, the Architect of Airline Deregulation, Dies at 93, CNN, December 28, 2010.
Via the Federal Register database at This particular search
range encompasses rules since December 31, 2001 to September 15, 2014.
Proposed Rule, 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel
Economy Standards, RIN 2060AQ54; RIN 2127AK79, Environmental Protection Agency and Department of
Transportation National Highway Traffic Safety Administration, Federal Register / Vol. 76, No. 231 / Thursday, December
1, 2011. pp. 74854-75420.


EPA and DoT, See also David

Shepardson, Price Tag of 2025s Fuel Efficiency Standards: $157 Billion, Detroit News, November 16, 2011.
From Exhibit A in National Automobile Dealers Association filing on 2017 and Later Model Year Light-Duty Vehicle
Greenhouse Gas (GHG) Emissions and Corporate Average Fuel Economy (CAFE); 49 CFR Parts 523, 531, 533, 536, and
537 and 40 CFR Parts 85, 86 and 600; Doc. Nos. NHTSA20100131 and EPAHQOAR20100799. February 13, 2012.
Greg Gardner, Study: U.S. Slow to Embrace Electric Vehicles,, June 16, 2011.
Daniel Sperling, et. al. The Price of Regulation, Access, No. 25, Fall 2004.
Wards Automotive Group, U.S. Vehicle Sales, 1931-2010, 2011.
He never saw a train. Cited in Stephen E. Ambrose, Undaunted Courage: Meriwether Lewis, Thomas Jefferson, and
the Opening of the American West, Touchstone: New York. 1996.
High-speed railroading: Americas system of rail freight is the worlds best. High-speed passenger trains could ruin it,
The Economist, July 22, 2010.
Marc Scribner, Slow Train Coming? Misguided Economic Regulation of U.S. Railroads, Then and Now, Issue Analysis
2013 No. 1. Competitive Enterprise Institute, Washington, DC. March 2013.
One writer on a Snopes dialog regarding this quote cited the following New York Times excerpt from October 9, 1903.
The flying machine which will really fly might be evolved by the combined and continuous efforts of mathematicians and
machanicians in from one million to ten million years. He added the following: We started assembly today - Orville
Wrights Diary, 9 Oct. 1903.;f=101;t=000129;p=0.
Darryl Jenkins, Joshua Marks and Michael Miller, Consumer Regulation and Taxation of the U.S. Airline Industry:
Estimating the Burden for Airlines and the Local Impact, American Aviation Institute, November 16, 2011.
Clifford Winston, On the Performance of the U.S. Transportation System: Caution Ahead, Journal of Economic
Literature, 2013, 51(3), 773-824.
Cited in Paul Strand, David vs. Goliath: Idaho Couple Takes on the EPA CBN News, December 15, 2011.
Andrew Restuccia, EPA official apologizes after comparing his work to crucifixion, The Hill.
April 26, 2012.
U.S. Environmental Protection Agecy, Office of Inspector General, EPA Needs Better Agency-Wide Controls Over Staff
Resources, Evaluation Report No. 11-P-0136, February 22, 2011.
News Release, EPAs FY 2014 Budget Proposal Maintains the Strength of Federal, State, and Tribal Core Environmental
and Human Health Protections: FY 2014 Request Focuses on Transforming the Way EPA Does Business. Environmental
Protection Agency, April 10, 2013.!Op
For example, EPA appears on this list of independent agencies, but isnt one:; and this one:
Kenneth P. Green and Hiwa Alaghebandian, Industry Has Spoken Will the President Listen? The American.
February 23, 2011.

Myrick Freemans Environmental Policy Since Earth Day

U.S. Environmental Protection Agency, Environmental Investments: The Cost Of a Clean Environment, EPA-230-1 1-90083, November 1990.$file/EE-0294B-2.pdf.
Richard D. Morgenstern, William A. Pizer and Jhih-Shyang Shih, The Cost of Environmental Protection, Resources for
the Future Discussion Paper 98-36, May 1998.
William A. Pizer and Raymond Kopp, Calculating the Costs of Environmental Regulation, Discussion Paper 0306,
Resources for the Future, March 2003.
Joshi, Satish V., Krishnan, Ranjani and Lave, Lester B., Estimating the Hidden Costs of Environmental Regulation.
Available at SSRN: or
Pizer and Kopp, 2003.
See p. 27 in and Table 3 in
NERA, 2012, p. 51 and Figure 18, p. 52.
NERA, 2012, p. 51, footnote 40.
Press Release, U.S. House of Representatives, Energy and Commerce Committee, EPAs List of Billion-Dollar Rules
Long and Growing
July 10, 2013
U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, Gross Domestic
Product, Third Quarter 2015 (Advance Estimate), news release, October 29, 2015, Similar data are also available at the World Bank,
Washington, DC, Data: GDP (Current U.S. $); Data: Chart at
Can one little phone impact GDP? J.P. Morgan North America Economic Research. September 2012.
The Benefits and Costs of the Clean Air Act from 1990 to 2020, Final Report, U.S. Environmental Protection Agency
Office of Air and Radiation, March 2011.
EPA, March 2011, p. 8-18.
Greenstone, Michael, List, John A. and Syverson, Chad, The Effects of Environmental Regulation on the
Competitiveness of U.S. Manufacturing, National Bureau of Economic Research, NBER Working Paper 18392, September
Joseph M. Johnson, The Cost of Regulations Implementing the Clean Water Act, Mercatus Center Working Paper,
March 2004.
Michael Heberling, Government Moonshine, The Freeman, March 24, 2010.
Marlo Lewis, contribution to National Journal symposium Whats the Way Forward on Biofuels Policy?, July 16,
See the book by Ken G. Glozer, Corn Ethanol: Who Pays? Who Benefits? Hoover Institution Press: Stanford California,
Glozer 2011, p. 143.
Dina Cappiello, Study: Fuels From Corn Waste Worse than Gas, USA Today. April 20, 2014.
Information Quality Act Request for Correction Regarding Impacts of Biofuel Mandates on Global Hunger and
Mortality, filing submitted to U.S. Environmental Protection Agency Information Quality Guidelines Staff by the
Competitive Enterprise Institute and ActionAid, October 13, 2011. Statement at; petition at
Request for Reconsideration of Information Quality Act Request for Correction Regarding Impacts of Biofuel Mandates
on Global Hunger and Mortality, filing submitted to U.S. Environmental Protection Agency Information Quality Guidelines
Staff by the Competitive Enterprise Institute and ActionAid March 11, 2013.


Competitive Enterprise Institute and ActionAid, 2011.

OMB, Draft 2012 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on
State, Local, and Tribal Entities, March 2012, p. 24.
Ted Gayer and W. Kip Viscusi, Overriding Consumer Preferences With Energy Regulations, Mercatus Center Working
Paper, No. 12-21, July 2012.
EPA Land Grab, Fox News, March 25, 2014.
See NERA Analysis of the Final Utility MACT Rule, American Coalition for Clean Coal Electricity, May 7, 2012.; and An Economic Impact Analysis of EPAs Mercury and Air Toxics Standards Rule, NERA Economic
Consulting, March 1, 2012.
James E. McCarthy, EPAs Boiler MACT: Controlling Emissions of Hazardous Air Pollutants, Congressional Research
Service, 7-5700, R41459, October 21, 2010.; see also the
CRS blog;
Manufacturers Welcome House Vote to Rein in the EPA: BOILER MACT RULES WILL COST JOBS AND HARM
THE ECONOMY, National Association of Manufacturers, October 13, 2011.
Manufacturers Welcome House Vote to Rein in the EPA: BOILER MACT RULES WILL COST JOBS AND HARM
THE ECONOMY, National Association of Manufacturers, October 13, 2011.
Kurt R. Bauer, Overregulation, Skilled Worker Shortage Slow Recovery, Superior Douglas County Area Chamber.
December 14, 2011. December 14, 2011.
Zeke Miller, Obama Withdraws $90 Billion Draft Clean Air Regulation Due To Cost, Business Insider, September 02,
2011. Read more:
Zeke Miller 2011; and Donald A. Norman, Economic Implications of EPAs Proposed Ozone Standard, Manufacturers
Alliance Economic Report ER-70, September 2010.
Assessing the Impact of Potential New Carbon Regulations in the United States, Institute for 21st Century Energy and
U.S. Chamber of Commerce, 2014.
Laura Barron-Lopez, Senate Dems to Obama: Reconsider Coal Rules, The Hill, June 21, 2014.
Letter from the President to the Speaker of the House of Representatives, August 30, 2011.
Charles S. Clark, Obama Gives House Speaker Cost Estimates for Seven Regulations, Government Executive, August
30, 2011. The other three pending rules Department of Transportation rules costing $5 billion, and they include
rules regarding rearview mirrors and commercial vehicle operator hours of service requirements and documentation.

Press Release, Speaker Boehner Responds to White House Disclosures on Job-Threatening Regulations, Presses for
Disclosure of Cost Estimates on All Economically Significant New Rules, August 30, 2011.
See Alexis Simendinger, Regulatory Cost Battle Flares Anew Between Obama, House GOP, Real Clear Politics,
August 31, 2011.

379 Senator James Inhofe (R-Okla.), A Look Ahead to EPA Regulations for 2013: Numerous Obama
EPA Rules Placed on Hold until After the Election Spell Doom for Jobs and Economic Growth, Senate
Committee on Environment and Public Works, October 18, 2012,
Juliet Eilperin, White House Delayed Enacting Rules Ahead of 2012 Election To Avoid Controversy,
Washington Post, December 14, 2013.


Gayer and Viscusi, July 2012

Richard Harris, Obamas Climate Strategy Doesnt Require Congressional Approval, National Public Radio, June 25,
William Yeatman, EPAs New Regulatory Front: Regional Haze and the Takeover of State Programs--Which view is
worth $282 million? U.S. Chamber of Commerce, July 2012.
Sidney A. Shapiro, Ruth Ruttenberg and James Goodwin, Setting the Record Straight: The Crain and Crain Report on
Regulatory Costs, Center for Progressive Reform White Paper #1103, February 2011, p. 8.
Murray N. Rothbard, The Myth of Efficient Government Service March 18, 2004
This excerpt from Man, Economy, and State, with Power and Market
Victor Keegan, Will MySpace Ever Lose Its Monopoly? The Guardian, February 7, 2007.
Isabel Paterson, The God of the Machine. G. P. Putnams Sons: New York, 1943. p. 172.
R.W. Grant, Tom Smith and His Incredible Bread Machine, Competitive Enterprise Institute, 1998, (Quandary House:
Manhattan Beach, CA 1964), pp. 34-35.
OMB, Report to Congress On the Costs and Benefits of Federal Regulations, 2000. footnote 12, p. 18.
Gibson Dunn, 2011 Year-End Criminal Antitrust Update, January 9, 2012.
The chart is from Kai Hschelrath, Is it Worth all the Trouble? The Costs and Benefits of Antitrust Enforcement,
Discussion Paper No. 08-107, Center for European Economic Research,
The assertion that benefits exceed costs is from the compiler of one of the underlying data elements: Jonathan B. Baker,
The Case for Antitrust Enforcement, Journal of Economic Perspectives, Volume 17, Number 4, Fall 2003, Pages 2750.
Clyde Wayne Crews Jr., The Antitrust Modernization Commission: Proposed Issues for Reform, Comment by the
Competitive Enterprise Institute Submitted to the Antitrust Modernization Commission
(Pursuant to the request for public comment, Federal Register, Vol. 69, No. 141, July 23, 2004 p. 43969. September 30,
Robert W. Crandall and Clifford Winston, Does Antitrust Policy Improve Consumer Welfare? Assessing the Evidence
Journal of Economic Perspectives, Vol. 17, No. 4, Fall 2003. p. 326.
Bino, Adel, Essays on the Impact of Antitrust Regulation on Corporate Mergers and Divestitures (2007). University of
New Orleans Theses and Dissertations. Paper 1074. or
Angela Johnson, E-Cigarettes May Not Be the Savior of the Tobacco Industry, MarketWatch, July 22, 2014.
Cited in David Boaz, ed., Toward Liberty The Idea that is Changing the World. Cato Institute: Washington, D.C. 2002.
Jerry Ellig, Costs and Consequences of Federal Telecommunications Regulations, Federal Communications Law
Journal, Vol. 58, pp. 37-101.
Federal Communications Commission, Preserving the Open Internet, Federal Register, Vol. 76, No. 185, September 23,
Notice of Proposed Rulemaking, GN Docket No. 14-28, Federal Communications Commission, May 15, 2014.
Brief Amici Curiae of TechFreedom, the Competitive Enterprise Institute, the Free State Foundation, and the Cato
Institute, In Support of Appellant in the United States Court of Appeals for the District of Columbia Circuit; Verizon,
Appellant, v. Federal Communications Commission, Appellee. On Appeal from an Order of the Federal Communications
Commission. July 23, 2012.
Net Neutrality: Impact on the Consumer and Economic Growth, Stratecast/Frost & Sullivan Consumer Communication
Services (CCS), Vol 4, No. 13.
Mike Jude, Net Neutrality: A Tax on the Internet, The Street. June 6, 2010.
Larry Downes, The True Cost of Net Neutrality, Forbes, September 26, 2011.
Alina Selyukh, AT&T threatens to sit out U.S. spectrum auction over rules, Reuters, April 16, 2014.
Grant Gross, Limiting Bidding On Spectrum Auctions Could be Costly, Study Says, TechHive, April 30, 2013.
Comments of Clyde Wayne Crews Jr, Competitive Enterprise Institute, Before the FCC in the Matter of Framework for
Broadband Internet Service GN Docket No. 10-127 and Protecting and Promoting the Open Internet GN Docket No. 14-28,
July 18, 2014.
For discussion with respect to electric power, see Clyde Wayne Crews Jr., Electric Utility Reform the Free Market
Alternative to Mandatory Open Access, Electricity Journal, Volume 10, Number 10. December 1997.
Adam Thierer and Clyde Clyde Wayne Crews Jr. Jr., Whats Yours Is Mine: Open Access and the Rise of Infrastructure
Socialism, Cato Institute: Washington, D.C., 2003.
Quoted in Annalyn Censky, Jamie Dimon Gripes to Bernanke,, June 7, 2011. Video available here:
Isabel Paterson, The God of the Machine. G. P. Putnams Sons: New York, 1943. p. 171.
For one example pertaining, see Megan R. Wilson, Regulators Issue More Than 2,000 Pages of Dodd-Frank Rules,
The Hill, May 16, 2013.
George J. Stigler, The Tactics of Economic Reform, The Citizen and the State: Essays on Regulation, University of
Chicago Press: Chicago and London, 1975, p. 29.
After all, the idea that inflation is counterfeiting is an old one. See Keith Weiner, Inflation is Counterfeiting, May 3, 2014.
Gretchen Morgenson, Debts Deadly Grip, New York Times, August 21, 2010.
Including this writer: Clyde Wayne Crews Jr., Still Stimulating Like Its 1999: Time to Rethink Bipartisan Collusion on
Economic Stimulus Packages, CEI Issue Analysis 2008, No 1. February 2008.
Fred L. Smith, Jr. Testimony Before the House Banking Committees Subcommittee on Capital Markets, Securities, and

Government Sponsored Enterprises, June 21, 2000.

Peter J. Wallison, The FSOC Expands Too Big To Fail, The American, July 18, 2013
Andr Oliveira Santos and Douglas Elliott, Estimating the Costs of Financial Regulation, IMF Staff Discussion Note,
September 11, 2012.
The Costs of Compliance In the U.S. Securities Industry, Survey Report, Securities Industry Association, February 2006,
Noted in John Berlau, A Breather from Regulations, National Review, April 5, 2012. The SEC study invoked is Study of
the Sarbanes-Oxley Act of 2002 Section 404 Internal Control over Financial Reporting Requirements, OFFICE OF
Berlau, 2012.
Cited in Berlau 2012; the actual study is Study of the Sarbanes-Oxley Act of 2002 Section 404 Internal Control over
American Electronics Association, Section 404: The Section of Unintended Consequences and Its Impact on Small
Business, February 2005.
Ivy Xiying Zhang, Economic Consequences of the Sarbanes-Oxley Act of 2002, William E. Simon Graduate School of
Business Administration, Carol Simon Hall 4-312, University of Rochester, Rochester, NY 14627, February 2005.
Francesco Bova, Miguel Minutti-Mezaa, Gordon Richardson and Dushyantkumar Vyasb, The Sarbanes-Oxley Act and
Exit Strategies of Private Firms, White Paper. September 30th, 2010.
Peter J. Wallison, Sarbanes-Oxley and the Ebbers Conviction, AEI Outlook Series. June 2005.
2012 Sarbanes-Oxley Compliance Survey, Pritiviti Risk & Business Consulting, May 2012.
Bono, M.D.G.s for Beginners ... and Finishers, New York Times. September 18, 2010. Hat tip to John Berlau of CEI for
pointing out this quote, although, alas, Bono sees Dodd-Frank as a good thing providing daylight. John Berlau, DoddFranks Early Returns, National Review Online. June 7, 2013.
Sam Batkins, The Costs of Dodd-Frank? Even the Feds Dont Know, The Hills Congress Blog. May 5, 2011.
For a survey of some impacts see One Year Later: The Consequences of the Dodd-Frank Act, House of Representatives
Financial Services Committee, 2011.
For example see John Berlau, "Harvard Study Confirms Dodd-Frank's Harm to Main Street," CEI OpenMarket, February
10, 2015.
Over-regulated America: The home of laissez-faire is being suffocated by excessive and badly written regulation, The
Economist, February 18, 2012,
The monthly progress reports are available at
Davis Polk Firm, Dodd-Frank Progress Report, Third Quarter 2015 edition.
S&P Estimate Of Dodd-Frank Costs On TBTF: Up To $22 Billion, Zerohedge, November 11, 2010.
Ben Gitis, Andy Winkler, Sam Batkins, "Dodd-Frank at 5: Higher Costs, Uncertain Benefits," American Action Forum.
July 14, 2015.
Douglas Holtz-Eakin, "The Growth Consequences of Dodd-Frank," American Action Forum. May 6, 2015
Kate Davidson, "Dodd-Frank Supporters Argue Safer Financial System Justifies Cost of Regulation," Wall Street
Journal, May 7, 2015.; "AFR Response to American Action Forum
Study on Costs of Dodd-Frank Act," White Paper, Americans for Financial Reform, 2015.
Americans for Financial Reform, 2015, p. 4.
See, for example, Jeb Hensarling, "Reining In a Sprawliing Federal Reserve," Wall Street Journal, November 19, 2015.
News Release, US Companies May Face US $1 Trillion in Additional Capital and Liquidity Requirements As a Result
of Financial Regulatory Reform, According to ISDA Research, International Swaps and Derivatives Association, Inc.. June
29, 2010.
Joe Mont, Standard & Poors: Dodd-Frank Could Cost Big Banks $34 Billion Annually, Compliance Week. August 13,
2012. The S&P report Two Years On, Reassessing the Cost of Dodd-Frank for the Largest U.S. Banks,
is available at
The Regulatory Price-Tag: Cost Implications of Post-Crisis Regulatory Reform, Federal Financial Analytics, Inc., July
30, 2014, See also Saabira Chaudhuri, The Cost of New Banking Regulation: $70.2 Billion,
Wall Street Journal, Jul 30, 2014.
Federal Financial Analytics, Inc., 2014, p. 1.
Analysis of 12 CFR Part 44, White Paper, Office of the Comptroller of the Currency,
Hester Peirce, Economic Analysis by Federal Financial Regulators, Mercatus Center Working Paper No. 12-31,
October 2012.
Hester Peirce, The Volcker Rule Increases the Likelihood That Banks Will Default, Real Clear Markets, March 26,
The Volcker Rule: Impact Assessment on the U.S. Energy Industry and Economy. IHS CERA/IHS Consulting/IHS
Global Insight Special Report, 2012.
Oliver Wyman, "The Volcker Rule Restrictions On Proprietary Trading: Implications for Market Liquidity, February
2012., cited by
the Financial Services Roundtable.
Douwe Miedema, Fed Gives Banks More Time On Volcker Rule Detail, Reuters. April 7, 2014.
Douglas Holtz-Eakin, Cameron Smith & Andrew Winkler, Regulatory Reform and Housing Finance: Putting the Cost
Back in Benefit-Cost, American Action Forum. October 2012.
Jesse Hamilton & Cheyenne Hopkins, Volcker Rule Costs Tallied as U.S. Regulators Press Deadline, Bloomberg, Sep
30, 2013.
For an analysis of interchange fee issues with respect to credit cards, see Todd J. Zywicki, The Economics of Payment
Card Interchange Fees and the Limits of Regulation, International Center for Law and Economics, Financial Regulatory
Program White Paper Series, June 2, 2010.
Diane Katz, Here Comes the Durbin Tax, Heritage Foundation Foundry, September 30, 2011.
Economic Impact of the Dodd-Frank Act: Reports and public statements about the impact of financial regulatory reform
on the economy, credit, consumers, and the industry, assorted by The Financial Services Roundtable. June 2012.
Quoted in John Berlau, Dodd-Franks Early Returns, National Review. June 7, 2013.
Chris Bayer, A Critical Analysis of the SEC and NAM Economic Impact Models and the Proposal of a 3rd Model in
view of the Implementation of Section 1502 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act,
Tulane University Law Schools Payson Center. October 17, 2011.
For more background, see Hearing Memorandum, U.S. House of Representatives, Committee on Financial Services,
Monetary Policy and Trade Subcommittee, Hearing on The Unintended Consequences of Dodd-Franks Conflict Minerals

Provision. May 16, 2013.


Federal Reserve Bank of St. Louis, Federal Banking Regulations website, Guidance.
Conference of State Bank Supervisors, Federal Agency Guidance Database.
John Berlau, Dodd-Frank is the new ObamaCare, The Hills Congress Blog, July 28, 2014.
Press Release, SEC Chairman Mary Schapiro to Step Down Next Month, U.S. Securities and Exchange Commission.
November 26, 2012.
See Diane Katz, DoddFrank at Year Three: Onerous and Costly, Heritage Foundation Issue Brief #3993. July 19,
For a survey of costs of regulation and increases in compliance hiring for community banks, see Ron J. Feldman, Ken
Heinecke and Jason Schmidt, Quantifying the Costs of Additional Regulation on Community Banks, Federal Reserve
Bank of Minneapolis, May 30, 2013.
See Berlau, July 2014, and Oliver Wyman Firm, The Consumer Impact of Higher Capital Requirements on Insurance
Products. April 10, 2013.
Letter to Congress on Insurance Capital Standards Clarification Act of 2014, American Academy of Actuaries June 5,
Iain Murray, Obamaloans: How Obama plans to use Dodd-Frank to take over the financial industry, National, January 15, 2014.
Third Party Payment Processor Relationships, FDIC Presentation, September 17, 2013.
Federal Deposit Insurance Corporations Involvement in Operation Choke Point, Staff Report, U.S. House of
Committee on Oversight and Government Reform, Subcommittee on Economic Growth, Job Creation and Regulatory
Affairs113th Congress, December 8, 2014.
Iain Murray, The Federal Reserve Overreaches, National Review, July 21, 2014.
Richard Pollock, New Federal Database Will Track Americans Credit Ratings, Other Financial Information,
Washington Examiner, May 30, 2014.
Final Rules On Reporting of Interest for Nonresident Aliens, Newletters & Alerts, Gunster Law Firm. April 18, 2012.
Transcript, Edisons Miracle of Light, American Experience, PBS. 1999-2000.
Cited by Ryan Young in The Wisdom of George Stigler, OpenMarket, March 17, 2010.
T. Randolph Beard and Avery M. Abernethy (2007) Costs and Benefits of the Federal Trade Commissions Do-Not-Call
Regulations: A Second Look and Reply to Anderson. Journal of Public Policy & Marketing, Spring 2007, Vol. 26, No. 1,
pp. 149-151.
Ana Radelat, Fasten Your Seat Belts: Industry to Play Defense on Regulatory Front, Ad Age, December26, 2012.
Ken Shepherd, Nanny-State Obama CPSC Files Lawsuit Against Maker of Perfectly Safe Magnetic Desk Toy,, July 26, 2012.
Paul H. Rubin, R. Dennis Murphy, and Gregg Jarrell, Risky Products, Risky Stocks, Regulation, Vol. 12, No. 1.
Nancy A. Nord and Anne M. Northup, Using a Dull Scissors to Cut Red Tape, The Hills Congress Blog.
Disabling Common Sense, Wall Street Journal. April 25, 2012.
Hans Bader, Minimum Wage Increase to Wipe OUt 500,000 Jobs, CEI OpenMarket, February 19, 2014.
Jack Spencer, "Competitive Nuclear Energy Investment: Avoiding Past Policy Mistakes," Heritage Foundation
Backgrounder No. 2086, November 15, 2007.
Power Reactor Security Requirements; Final Rule. Federal Register, Vol. 74 , No. 58, March 27, 2009. pp 13926-13923.
National Churchill Museum.
Lee Gomes, The Hidden Cost of Privacy, Forbes, June 8, 2009.
John Burke, The spiraling cost of compliance: Staff time and storage requirements eat away at IT budgets as companies
grapple with logging and archiving compliance data, Network World, September 7, 2007.
Nicola Jentzsch, The Regulation of Financial Privacy: The United States vs. Europe, ECRI Research Report No. 5,
June 2003.
Anton Troianovski and Danny Yadron, U.S. Expands Child Online Privacy Law to Cover Apps, Social Networks, Wall
Street Journal, December 19, 2012.
Jaclyn Trop, A Black Box for Car Crashes, New York Times, July 21, 2013
Fred L. Smith Jr., Sustainable Development? How About Sustainable Growth? Wall Street Journal Europe, May 31,
Bjorn Lomborg, Free Trade, Free Labor, Free Growth, Project Syndicate, March 11, 2008.
Arlene Holen, The Budgetary Effects of High-Skilled Immigration Reform, Technology Policy Institute, March 2009.
p. 1.
Dean Baker, Professional Protectionists: The Gains From Free Trade in Highly Paid Professional Services, Center for
Economic and Policy Research Briefing Paper. September 9, 2003. p.3.
George J. Borjas, The Labor Market Impact of High-Skill Immigration, NBER Working Paper Series, Working Paper
11217. National Bureau of Economic Research. March 2005.
Sam Batkins, The Intersection of Immigration and Regulation, American Action Forum, April 4, 2013.
Wikipedia advises to see Der messende Luchs by Andreas Kleinert; NTM Zeitschrift fr Geschichte der
Wissenschaften, Technik und Medizin, Vol. 17, No. 2. (1 May 2009), pp. 199-206.
Ben Cassellman, Risk-Averse Culture Infects U.S. Workers, Entrepreneurs, Wall Street Journal, June 2, 2013.
Richard Overton, Wikipedia biography.
Speech, State House of Pennsylvania, Philadelphia (1 August 1776)
The Criminalization of American Business, The Economist, August 30, 2014.
Hans Bader, Due Process Eroded by Bills like CASA That Let Agencies Keep Fines They Impose, CEI OpenMarket,
August 11, 2014.
See Robert Gordon, EPA Harasses Americans, The Daily Signal, July 3, 2014., and S. A. Miller, Power grab: EPA wants to garnish wages of polluters, Washington Times, July 8,
Hans A. von Spakovsky, The Administrations Latest Abuse: Impeding IGs and Hiding the Truth From the American
People,, August 12, 2014.
Josh Marks, Obama: If Congress Doesnt Act on Climate Change, I Will, National Memo, February 13, 2013.

Virginia Democrat Calls For Forcing Doctors To Accept Medicare And Medicaid Patients, Mason Conservative,
November 2, 2013.
David Martosko, Federal Nudge squad Led by 20-Something Wunderkind Gears Up to Change Americans Behaviors
For Our Own Good, Daily Mail. July 30, 2013.
Michael L. Marlow, Weight Loss Nudges: Market Test or Government Guess? Mercatus Working Paper, September 3,
Richard Williams, Obamas Budding Nanny State, Politico, December 8, 2013.
Brian Galle, Tax, Command...Or Nudge?: Evaluating the New Regulation, Texas Law Review, Vol. 92, 2014. pp. 837894.
Stephen Dinan, DHS will ask stores to watch customers buying habits for terrorist clues, Washington Times,
September 10, 2014.
Walter Olson, Lets Demilitarize the Regulatory Agencies Too, Overlawyered, August 18, 2014.
Marlo Lewis, Jr., Biggest Hidden Cost Is to Democracy, The Environmental Forum, January 11, 2012.
Cited in Thoughts On the Business of Life, Forbes.
Ludwig von Mises, Chapter 2: The Dictatorial, Anti-Democratic and Socialist Character of Interventionism. Planned
Exposing the EPA, Wall Street Journal, May 13, 2014.
Introduction by William L. Kovacs to EPAs New Regulatory Front: Regional Haze and the Takeover of State Programs,
U.S. Chamber of Commerce, July 2012, p. 2.
Press Release, New EPA Rule Could Mean End of Coal-Fired Plants in US, Competitive Enterprise Institute.
September 20, 2013.
Wynn Resorts CEO Discusses Q2 2011 Results - Earnings Call Transcript, July 18, 2011,
Bill McNabb, Uncertainty is the Enemy of Recovery, Wall Street Journal, April 28, 2013.
U.S. Business Startups Rate at Record Low, Reuters, May 2, 2012.
Michael Snyder, They Are Murdering Small Business: The Percentage Of Self-Employed Americans Is At A Record
Low, The Economic Collapse, May 2, 2013.
See Katie Little, Fast Food CEO: How Government Regulation is Driving Us Abroad, CNBC, December 31, 2013.
See Thomas Heath, Former Congressman Bonior, Longtime Liberal on Capitol Hill, Discovers the Profit Motive,
Washington Post, April 27, 2014.
Ben Casselman, Risk-Averse Culture Infects U.S. Workers, Entrepreneurs, Wall Street Journal, June 2, 2013.
Mark Green and Ralph Nader, Economic Regulation vs. Competition: Uncle Sam the Monopoly Man, 82 Yale L.J. 871
Susan Jones, EPA Chief: This Is Not About Pollution Control...Its an Investment Strategy, CNS News, July 24, 2014.
See, for example, Julian Morris, The Economics of Americas Crony Society, Real Clear Markets, July 12, 2012.
Chris Dixons Blog, BuzzFeed, August 10, 2014.
Testimony of Clyde Wayne Crews Jr. Vice President for Policy/Director of Technology Studies, Competitive Enterprise
Institute, Before the: Committee on Science and Technology, U.S. House of Representatives, The Future of Manufacturing:

What is the Role of the Federal Government in Supporting Innovation by U.S. Manufacturers? Wednesday, March 17, 2010.
See Clyde Wayne Crews Jr., Still Stimulating Like Its 1999: Time to Rethink Bipartisan Collusion on Economic
Stimulus Packages, CEI Issue Analysis 2008, No 1. February 2008.
Testimony of Clyde Wayne Crews Jr. Vice President for Policy/Director of Technology Studies, Competitive Enterprise
Institute, Before the: Committee on Science and Technology, U.S. House of Representatives, The Future of Manufacturing:
What is the Role of the Federal Government in Supporting Innovation by U.S. Manufacturers? Wednesday, March 17, 2010.
Press Release, Senator Snowe: Now More Than Ever, Small Business Job Creators Need FREEDOM, June 9, 2011.
This Republican Leader Board memo pointed to several sources that predict job losses from minimum wage hikes.
April 29, 2014.
The Effects of a Minimum-Wage Increase on Employment and Family Income, Congress of the United States,
Congressional Budget Office. February 2014.
Fred L. Smith Jr., Markets and the Environment: A Critical Reappraisal, Contemporary Economic Policy, January
Under the Dome, Episode 1.
Clyde Wayne Crews Jr., Obamas Jobs Agenda: An Infrastructure Bank that Robs You,, September 7,
Clyde Wayne Crews Jr., The Free Market Alternative to Mandatory Open Access, Electricity Journal, 1997, vol. 10,
issue 10, pages 32-43.
Thierer and Crews, 2003
Noted by participants in What Factors Should Drive Keystone Pipeline Decision? National Journal, symposium on the
Energy Experts Blog, October 11, 2011.
Tennille Tracy & Edward Welsch, Keystone Poses No Significant Impacts to Most Resources Along Path, Dow Jones
Newswires, August 26, 2011.
For example see testimony of Wayne Crews, Competitive Enterprise Institute, Reauthorization of Water Desalination Act
of 1996, House Resources Committee, Water and Power Subcommittee, United States House of Representatives, May 23
James Bessen, Michael J. Meurer, The Direct Costs from NPE Disputes, Working Paper, Boston University School of
Law, June 28, 2012.
Macaulay, Thomas Babington, Lord. Sir Thomas More; or, Colloquies on the Progress and Prospects of Society, by
Robert Southey, Esq., LL.D., Poet Laureate. 2 vols. 8vo. London: 1829.
Do More Regulations Equal Less Safety? Mercatus Center,
Bjorn Lomborg, How Green Policies Hurt the Poor, The Spectator, April 5, 2014. See also Caleb S. Rossiter, Sacrificing Africa for
Climate Change, Wall Street Journal, May 4, 2014.; and see also TheGatesNotes on YouTube, Bjorn Lomborg: Saving Lives with Fossil Fuels:
James Madison, The Particular Structure of the New Government and the Distribution of Power Among Its Different
Parts, The Federalist Papers: No. 47. From the New York Packet, Friday February 1, 1788.
From Imaginary Conversations Pollio and Calvus in Works of Walter Savage Landor, 1876, Vol. 2. Cited in Oxford
Dictionary of Quotations. Oxford University Press, 1999.,+like+

Angelo M. Codevilla, Administrating the Decline in American Citizenship, Online Library of Law and Liberty, May 4,
Curtis W. Copeland, Congressional Review Act: Many Recent Final Rules Were Not Submitted to GAO and Congress,
July 15, 2014. White Paper.
Clyde Wayne Crews Jr., Red Tapeworm 2014: Federal Regulatory Disclosure Becomes More Confused, CEI
OpenMarket, July 17, 2014.
Wayne Crews and Ryan Young, Federal Rules Cost $10,000 Per Employee, Washington Times, December 18, 2012.
Michael Mandel and Diana G. Carew, Regulatory Improvement Commission: A Politically Viable Approach to U.S.
Regulatory Reform, Policy Memo, Progressive Policy Institute, May 2013.
Noted in presentation by Ronald Bird, U.S. Chamber, at American Action Forum Capitol Hill Conference.
See William L. Kovacs, Keith W. Holman, Jonathan A. Jackson, Sue and Settle: Regulating Behind Closed Doors, U.S.
Chamber of Commerce, May 2013.
Chris Horner, Improper Collusion Between Environmental Pressure Groups and the Environmental Protection Agency As
Revealed by Freedom of Information Act Requests, Interim Report, Energy & Environment Legal Institute Report,
September 2014.
Noted for example in OMB 2013, p. 22.
OMB, Draft Report, 2013, p. 22.
See Nicholas Eberstadt, Yes, Mr. President, We Are a Nation of Takers, Wall Street Journal, January 24, 2013.
A report, not addressing deadweight losses specifically but complexity, is Larry Kavanagh and Al Bessin, The RealWorld Challenges in Collecting Multi-State Sales Tax for Mid-Market Online and Catalog Retailers, TruST White Paper,
September 2013.
What my colleague Sam Kazman called it when I was discussing how most costs of regulations dont get measured in
any way.
See Philip Rucker, Obamas 7 State of the Union talking points. No. 6: The Pen and Phone strategy, Washington Post,
January 27, 2014.; See also Stephanie Simon, Obamas Power Play, Politico, January 31, 2014.
Clean Water Act Definition of Waters of the United States, Environmental Protection Agency.
Alexei Oreskovic, U.S. Regulator Tells Web Search Firms To Label Ads Better, Reuters, Jun 25, 2013.
U.S. House of Representatives, Committee on Oversight and Government Reform, Staff Report, Broken Government:
How the Administrative State has Broken President Obamas Promise of Regulatory
112th Congress, September 14, 2011. p. 7.
Mary Whisner, Some Guidance About Federal Agencies and Guidance, Law Library Journal, Vol. 105:3, 2013. 385. .
See for example, Clyde Wayne Crews Jr., Despotism-Lite? The Obama Administrations Rule By Memo,
July 1, 2014.
This important recent exploration of ways federal regulatory agencies circumvent formal procedures during the
rulemaking process appears as a series of five studies published by Mercatus Center scholars. For links to all of them, see
Media Advisory Mercatus Releases Five Academic Articles in Harvard Journal of Law and Public Policy, May 23, 2014.
Clyde Wayne Crews Jr., The Federal Office of No Enhancing the Executive Branch Role in Challenging Federal
Regulation, Comments of the Competitive Enterprise Institute On

The Office of Management and Budgets 2014 Draft Report to Congress on the Benefits and Costs of Federal Regulations
and Agency Compliance with the Unfunded Mandates Reform Act,
Document ID: OMB-2014-0002, September 2, 2014.
On unfunded mandates legislation, see Wayne Crews and Ryan Young, Even After Cuts, Regulation Pushes Up Cost of
Government, Investors Business Daily, April 10,2013.
Tom Richardson, "Small Companies Tend to Stay That Way In France," Letter to the Financial Times, July 18, 2013.
Richard Williams, The Impact of Regulation on Investment and the U.S. Economy, Mercatus Center,
Bill Frezza, Putting the Jobs Cart Before the Growth Horse, RealClearMarkets, September 19, 2011.
See for example, Clause and effect: The business cycle matters when assessing the cost of new regulations, The
Economist, October 29 2011.
Economic News Release, Displaced Workers Summary, Bureau of Labor Statistics, August 26, 2010.
Richard D. Morgenstern, William A. Pizer, and Jhih-Shyang Shih, Jobs versus the Environment: An Industry-level
Perspective, December 1998 (Revised November 1999, Revised June 2000) Resources for the Future Discussion Paper 99
Jia Lynn Yang, Does government regulation really kill jobs? Economists say overall effect minimal, Washington Post,
November 13, 2011.
Dennis Jacobe, Govt Regulations at Top of Small-Business Owners Problem List: One in three small-business owners
are worried about going out of business, October 24, 2011.
Rep. Tom McClintock, Putting Freedom Back to Work, Washington Times. November 7, 2011.
Doings (or more correctly in the southern, doins) is a term my grandma would use for whatever somebodys engaged
in that wasnt quite clear to an obersver). It may be a better term than jobs when regulation is the impetus.
President Postpones Trillion-Dollar Ozone Rule Until After 2012 Presidential Election, Press Release, Competitive
Enterprise Institute, September 02, 2011.
Cass R. Sunstein, Yes, Regulation Can Kill Jobs, Bloomberg View, March 4, 2014.
See Clyde Wayne Crews Jr., Still Stimulating Like Its 1999: Time to Rethink Bipartisan Collusion on Economic
Stimulus Packages, CEI Issue Analysis 2008, No 1. February 2008.
Alvaro Vargas Llosa, ed. Lessons from the Poor: Triumph of the Entrepreneurial Spirit, Independent Institute, 2008.
Stephen L. Carter, Economic Stagnation Explained, at 30,000 Feet, Bloomberg View. May 26, 2011.
Happy Hawk In the Hen House. Time, 111, May 8, 1978: p. 63.,9171,919618,00.html. Fuller quote: In addition, instead of following his
predecessors and limiting the number of airlines flying any route, Kahn has sought to increase competition on all routes.
Two weeks ago, the Senate approved a bill that would ease the way for new airlines to enter the industry, cut fares even
lower and permit lines to spread onto other routes with little or no Government interference. The bill, which the
Administration thinks has a good chance of passage in the House this summer, would drastically weaken the powers of the
CAB. But that does not worry Kahn, who contends that I will consider myself a success in this job if there is no job when I
leave it.
Online review at Rotten Tomatoes:


Clyde Wayne Crews Jr., Jump, Jive an Reform Regulation: How Washington Can Take a Swing at Regulatory Reform,
Competitive Enterprise Institute, February 2000.
Clyde Wayne Crews Jr., Promise and Peril: Implementing a Regulatory Budget, Policy Sciences 31, no. 4 (January 1,
1998): 343369.
Homer, The Odyssey.

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