Washington’s Imprint on U.S. Economy Is Growing Larger

By Thomas J. Donohue, President and CEO, U.S. Chamber of Commerce

The oil spill in the Gulf has resurrected the debate over the appropriate level of government regulation. Often when there’s an accident or a recall, critics fault deregulation and whip up a rush to regulate. And that rush usually comes packaged with accusations that the business community does not want any regulation at all, which is patently false. Business supports sensible and effective regulation, but it doesn’t buy the premise that more is necessarily better.

A new study on the growth and composition of federal regulation shows that levels of federal regulation have been rising and continue to rise. President Obama’s fiscal year 2011 budget request calls for more than $59 billion to be devoted to developing and enforcing federal regulations—4.1% larger in real terms than appropriated outlays in 2010. His budget proposal also calls for a regulatory staff of nearly 284,000—an all-time high.

The steady increase in regulations is not unique to the current administration or to a single political party. Between 2000 and 2010, annual budget outlays for regulatory activities increased 75.5%, or $21.7 billion, in real terms. While growth in the portion of the budget devoted to developing and enforcing regulations was larger in percentage terms during the 1960s and 1970s, the increase in dollar terms over the last 10 years is more than double that of any previous decade.

According to the Competitive Enterprise Institute, although there was a decline in the number of final rules issued in 2009—“only” 3,505 of them—there was a 2% increase in the number of “economically significant” rules.

Again, there is an obvious and legitimate need for regulation. The Chamber has pushed for the right kind of financial regulatory reform and health care reform because both systems are broken.

However, much of what comes out of Washington is regulation for regulation’s sake. It’s time that we take a more thoughtful approach, one that does not unnecessarily sacrifice jobs and economic growth.