Competitive Enterprise Institute: Burdensome Federal Regulations Cost Economy $2 Trillion Annually
A new report from the Competitive Enterprise Institute (CEI)—the 2025 edition of Ten Thousand Commandments—highlights the staggering impact of federal regulations on the economy. It estimates compliance with burdensome federal regulations has an annual impact of at least $2.155 trillion on the economy. This represents a substantial burden on U.S. households and businesses alike, which is further exacerbated by federal fiscal mismanagement that has generated a gross national debt of over $36 trillion.
WORD ON THE STREET
Excerpts from the Competitive Enterprise Institute:
In January 2024, the Commerce Department’s Bureau of Economic Analysis estimated 2023’s US current-dollar GDP at $29.37 trillion. Our highly conservative $2.155 trillion regulatory cost figure is equivalent to approximately 7 percent of GDP ... Combining $2.155 trillion in regulatory costs with federal FY 2024 outlays of $6.750 trillion, the federal government’s share of the economy stood at $8.9 trillion in 2024, or 30 percent of GDP. None of these metrics include state and local spending and regulation.
Regulations are sometimes called a “hidden” tax for good reason ... Most regulatory costs are embedded in prices of goods and services, and never show up on a receipt or an annual statement. Regulations can affect households directly, or they can occur indirectly. Businesses pass regulatory costs on to consumers just as they do the corporate income tax. Other regulatory costs find their way to households in the form of lower returns on retirement funds and other investments, as well as fewer investment opportunities and more paperwork. ... If one were to allocate annual regulatory costs, assuming the full pass-through of costs to consumers, US households pay $16,016 annually in embedded costs ($2.155 trillion in regulation divided by 134,556,000 consumer units), or 16 percent of an average income before taxes (and of course more as a share of after-tax income) ... Using the $2.155 trillion baseline, the hidden regulatory tax exceeds every annual household expenditure item except housing. Regulatory costs amount to up to 21 percent of the typical household’s expenditure budget of $77,280. That means the average US household spends more on hidden regulation than on health care, food, transportation, entertainment, apparel, services, or savings.
Biden’s fourth year concluded with 45,028 pages devoted to final rules, the highest on record and a 71 percent increase over 2023. Final-rule page bulk is up 40 percent over 5 years and 79 percent over 10 years (see Figure 9). The previous record was 38,639 pages in 2016, Obama’s final year. By contrast, 2018’s 18,214 pages of final rules was the lowest count since 1993.
Congress should make it hard to both spend and regulate... In today’s setting, rightsizing will require Congress to repeal or amend statutes that sustain the massive regulatory enterprise.
THE BOTTOM LINE
According to the report, U.S. households are paying an average of $16,016 annually in hidden regulatory taxes, consuming 6% of household income and 21% of household expenses. This makes regulations the second-costliest expenditure for households— more than spending on health care, food, transportation, or entertainment—behind only housing costs. In 2024, federal agencies issued a record 3,248 new final regulations, contributing to the highest-ever Federal Register page count at 106, 109 pages, marking a 19% increase over 2023.
Reducing regulatory burdens is a priority for House Republicans. That’s why the House budget blueprint included a language in the budget resolution emphasizing the importance of reasserting congressional authority over the rulemaking process and encouraging authorizing committees to incorporate regulatory reform measures into the final reconciliation package. This initiative seeks to reduce unnecessary and costly regulations, promote economic growth, and restore legislative oversight in accordance with Article I of the Constitution.
MORE FROM THE HOUSE BUDGET COMMITTEE
Read more about the House Budget Committee’s work to rein in federal overregulation HERE.
