$3000 more income per year   Leave a comment

Regulation under the Last Six Presidents

That last figure represents reduced regulatory costs of $23 BILLION by eliminated hundreds of burdensome regulations.

This represents a fundamental change in the direction of the administrative state after decades of unchecked growth.

For contrast, the Obama administration imposed more than $245 billion in regulatory costs on American businesses and families during its first two years.

The benefits are lower consumer prices and more jobs.

But is it safe to reduce regulation like that?

The questions we should be asking are:

What is the problem this regulation is trying to fix?

The answer to that question should be

Unless otherwise required by law, we move forward with regulation only when we can identify a serious problem or market failure that would be best addressed by federal regulation. President Bill Clinton recognized that “the private sector and private markets are the best engine for economic growth.”

Let’s look at some new research from the Council of Economic Advisers, which estimates the added growth and the impact of that growth on household income.

  • Before 2017, the regulatory norm was the perennial addition of new regulations.
  • Between 2001 and 2016, the Federal government added an average of 53 economically-significant regulations each year.
  • During the Trump Administration, the average has been only 4.

Even if no old regulations were removed, freezing costly regulation would allow real incomes to grow more than they did in the past, when regulations were perennially added. The amount of extra income from a regulatory freeze depends on (1) the length of time that the freeze lasts and (2) the average annual cost of the new regulations that would have been added along the previous growth path.

…In other words, by the fifth year of a regulatory freeze, real incomes would be 0.8 percent (about $1,200 per household in the fifth year) above the previous growth path.

As shown by the red line, removing costly regulations allows for even more growth than freezing them. As explained above, the effect, relative to a regulatory freeze, of removing 20 costly Federal regulations has been to increase real incomes by 1.3 percent. In total, this is 2.1 percent more income—about $3,100 per household per year—relative to the previous growth path.

Even modest improvements in growth lead to meaningful income gains over time.

Posted July 5, 2019 by aurorawatcherak in economics

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