Federal regulation is associated with some big numbers:
- An average of 3,300 new regulations are issued each year.
- Between 66 and 99 of these regulations are major, meaning each has an estimated impact of at least $100 million or more in a single year. A few have an estimated impact of more than $1 billion in a single year.
- Together, old and new federal regulations impose annual costs in the hundreds of billions of dollars, 3 plus or minus an order of magnitude because of uncertainty. Even greater is the uncertainty over estimates of aggregate annual benefits.
Public debates over the value of regulation tend to focus on these figures in stark, proversus-con terms. Buried within these numbers are two often overlooked facts: (1) regulations pose significant compliance challenges; and (2) resources spent complying with a mandatory requirement cannot be spent on valuable discretionary activities. As one compliance official interviewed for this report noted, “We will dedicate the resources even if the resources could be better used for risk reduction elsewhere.” It is these missed opportunities that represent the true cost of regulation and hold the United States back in a competitive global economy.
This report represents an attempt to convey the opportunity cost of regulation from the perspective of manufacturers in the United States. Unlike other studies that quantify regulatory impact using macroeconomic modeling (a “top-down” approach), this study identifies specific regulatory requirements and elicits the perspective of compliance officials at regulated firms (a “bottom-up” approach). Our goal is to paint a broad picture of the compliance challenges facing a business. The picture that emerges is a constantly changing one; layer upon layer of new regulatory mandates create a burden on manufacturers that is significant, growing and impactful, diverting resources away from important discretionary activities like market innovation.
Say regulatory burden has gotten higher in the past five years