The Federal Gov’t Now Consumes 31 Percent Of U.S. Economy

The federal government now consumes 31 percent of the U.S. economy due to trillions in spending and thousands of pages of costly regulations, according to a new report.The Competitive Enterprise Institute (CEI), a free-market think tank, put out a report on Tuesday saying that the regulatory costs of federal rules amounts to $1.863 trillion per year, or 11.1 percent of the U.S. economy. Combine this with the $3.454 trillion in federal spending last year and the U.S. federal government consumes 31 percent of the economy.

U.S. regulatory costs alone are bigger in size than the economies of Australia and Canada. Regulatory costs would be the 10th largest economy in the world, according to CEI, slightly larger than the economy of India.

“Federal agencies crank out thousands of new regulations every year, but we have little information on the cost or effectiveness of most of them,” said Clyde Wayne Crews, Jr., CEI’s vice president for policy. “There is little transparency and no reliable source of information on exactly what benefits rules are supposed to be generating or if they are serving their intended purpose.”

The federal government has been rapidly adding regulations to the Federal Register since President Barack Obama took office in 2009. Obama has presided over four out of the top five years in terms of the number of pages added to the Federal Register.

“The regulatory state wasn’t small before, but it has grown at an alarming rate during the Obama administration,” Crews added. “The president has said publicly he will not wait for Congress to pass legislation because he has a ‘pen’ and a ‘phone.’ This means the administration aims to implement policy through regulation, which will add a hidden tax on every form of commerce and trickle down to all consumers.”

Currently, the federal regulatory agencies are working on 3,305 regulations. Nearly half of these regulations are from one agency: the Environmental Protection Agency.

EPA regulations make up 49.3 percent of all the rules currently being crafted by federal agencies. The EPA has announced some of the most controversial regulations during Obama’s tenure, most recently with rules aimed at redefining its authority under the Clean Water Act and carbon dioxide emissions limits for coal plants.

The EPA is looking to redefine its powers under the Clean Water Act by changing the definition of “waters of the United States” to possibly include bodies of water on private property. The agency says it’s looking to create certainty by clearing up the confusion surrounding past court decisions, but Republicans have called it one of the biggest land grabs in history.

“The ‘waters of the U.S.’ rule may be one of the most significant private property grabs in U.S. history,” said Louisiana Republican Sen. David Vitter. “Today’s rule also shows EPA picking and choosing the science they use.”

“Peer review of the agency’s connectivity report is far from complete, and yet they want to take another step toward outright permitting authority over virtually any wet area in the country, while at the same time providing a new tool for environmental groups to sue private property owners,” Vitter added.

Environmentalists have backed the EPA’s plan to expand its regulatory reach, saying that it’s necessary to protect the health of U.S. waters.

“This is good news for boaters, anglers, swimmers and families who rely on clean drinking water,” said Peter Lehner, executive director of the Natural Resources Defense Council. “EPA took an important step to finally rescue these waters from legal limbo. Even though these are common-sense protections, the polluters are sure to attack them.”

The EPA also published a new regulation early this year that would effectively ban the construction of new coal-fired power plants. The EPA says the rule is necessary to curbing global warming — though it admits the rule will do nothing against global warming in its regulatory analysis.

The coal industry argues that the only way to comply with the rule is for plant operators to install carbon capture and storage (CCS) technology, which is not commercially available. Republicans have alleged that such a requirement violates federal law.

“In typical EPA fashion, they’re putting the cart before the horse to advance their environmental policy agenda,” said Vitter. “They’re moving forward with a controversial rule to regulate carbon based on technology that isn’t commercially available. Not only is this wrongheaded, it’s beyond the scope of their legal authority.”

Despite its dubious legal footing, the EPA is pressing forward with the coal-plant ban and is in the process of crafting emissions rules for existing power plants.