Chairman Price Opening Statement: An Introduction to Regulatory Budgeting
As prepared for delivery
Yesterday’s hearing focused on a series of different potential alternative budgeting methodologies. Today, we are focusing on a specific area of interest – regulatory budgeting.
This is an area apart from the different styles of budgeting that would directly affect how this committee would allocate discretionary and mandatory spending. However, there is a direct connection between the financial impact of regulations on our economy – on American innovators, individuals, and families – and our nation’s fiscal well-being. So it is appropriate and fitting that we – in the context of an overhaul of the Congressional budget process – highlight regulatory budgeting.
At nearly $2 trillion, the annual regulatory burden in this country is 6-7 times larger than the annual corporate federal income tax burden. It is roughly equivalent to half of what the federal government spent last year in its entirety! If the annual cost of the regulatory state in America was represented by an independent country’s economy, it would qualify as one of the world’s top 10 economies, ranking between India and Russia – this is money removed from the productive economy.
How has this happened? For too long, Congress, as an institution, has ceded greater and greater authority to a regulatory state that has grown in power to become, in many ways, an unchartered 4th branch of government. Not surprisingly, the Executive Branch has welcomed the opportunity to impose its will on the American people through a cadre of unelected and unaccountable bureaucrats. Without conceding that this arrangement is acceptable – and it is not – we should still be willing to consider the establishment of a budget that accounts for the impact of the regulatory state.
A regulatory budget would serve several purposes – not the least of which is a transparent accounting of the true impact of actions taken by the Executive Branch of government. As we have discussed numerous times in this committee, a budget is not simply a set of numbers. It identifies and signifies priorities. Similarly, a regulatory budget would not simply be an accounting of the financial consequences of a given regulation. It would be a window into the impact of that regulation on the broader economy – on the lives and livelihoods of the American people. It would present the American people and Congress – which is charged with oversight of all governmental activity – facts supremely important to the conduct of that oversight.
The volume of regulations has increased significantly. They are markedly overshadowing the number of laws being passed. Just last year there were 115 laws passed by Congress and enacted – total. At the same time, there were 3,410 new Rules issued by Federal agencies.
So, who is most harmed by the ever expanding regulatory state and the costs associated with it? It is not predominantly the big banks and corporations that are often the target of choice of regulators and those backing their regulations. In fact, it is small businesses who do not have the army of lawyers that large businesses have to help comply and/or weather the fallout. It is lower-income individuals and households who see the price of goods and services like housing, electricity, and transportation go up because of the heavy regulation in those industries. That is who is getting squeezed – low-income Americans and small businesses. Remember – nearly $2 trillion are spent each year by those trying to be certain they are complying with all of these regulations. Those costs – of necessity – are passed on to everyone; and the folks harmed most by these compliance costs are those least able to pay.
Despite all of this, Congress has no systematic means of tracking, and if possible restraining, this expansion of the regulatory state.
The Budget Resolution passed out of this committee earlier this year specifically discussed the need for regulatory budgeting. It was the first time a budget resolution expressly called for such a budget. We are not alone in this effort. The Speaker of the House’s Task Force on Reducing Regulatory Burdens also specifically recommends establishing a regulatory budget to help address the growing concern of the regulatory state.
I’m grateful for the participation of our panel here today. We have Dr. Patrick McLaughlin, Senior Research Fellow at the Mercatus Center at George Mason University; Richard Pierce, Jr., the Lyle T. Alverson Professor of Law at George Washington University; and Clyde Wayne Crews, Vice President for Policy at the Competitive Enterprise Institute.
Thank you all for being here and for you attention to this incredibly important issue.
And with that, I yield to the acting Ranking Member, Mr. Yarmuth.