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Regulations’ enormous costs and DOGE’s upside

The Department of Government Efficiency has made a promise: It will go after regulations that slow growth, obstruct innovators and cost American households thousands of dollars each year. Here’s hoping for success.

The burden of excessive regulation is hard to measure. We know, for instance, that the Code of Federal Regulations is over 188,000 pages long, guaranteeing that citizens can never really be sure they comply with every regulation.

While the stated intent of many rules is to protect the public interest — be it the environment, safety or market fairness — the unintended consequences are often staggering. Regulations frequently impose costs far beyond their benefits, stifling entrepreneurship and innovation while hampering businesses’ ability to produce at full potential, hire workers or provide consumers with what we need.

Wayne Crews, author of the Competitive Enterprise Institute’s “Ten Thousand Commandments” study, produced a price tag that he says is very conservative: $2.1 trillion per year. That’s equivalent to Canada’s entire economy and a hidden regulatory tax of $15,788 annually on each American household.

These eye-popping figures tell only part of the story.

The costs disproportionately impact new, small and medium-sized enterprises, which lack the resources to hire compliance officers or navigate complex regulations. The Dodd-Frank financial legislation, enacted in response to the 2008 financial crisis, was over 2,300 pages long and added more than 400 new rules and mandates. While it aimed at reducing systemic financial risks, it’s much harder for smaller banks and credit unions to navigate, leading to financial sector consolidation and reduced competition.

Environmental regulations are renowned for going too far and imposing costs that outweigh any benefits. Ignoring that the Clean Air Act’s approach could be better handled through property rights and tort law, this act — which the Cato Institute’s Peter Van Doren calls “utopian ‘costs-don’t-matter’ air quality standards” — imposes massive compliance costs on businesses with diminishing returns. Each new amendment tackles increasingly smaller amounts of pollution at exponentially higher prices that are passed on to consumers.

Stringent Environmental Protection Agency emissions standards have made it prohibitively expensive to construct new manufacturing plants, effectively halting innovation in certain industries. The auto industry, too, faces onerous fuel-efficiency standards that raise the cost of vehicles — even green ones — and reduce consumer choice, all while delivering marginal environmental benefits.

And don’t get me started on the National Environmental Protection Act of 1970. Its requirement for exhaustive environmental reviews has evolved into an endless process whereby even simple projects can be delayed for years through nonstop studies, public comments and litigation. A single environmental impact statement can cost millions of dollars; on average each takes four and a half years to complete. This regulatory maze makes it far more difficult to build critical infrastructure like highways, bridges and energy projects promptly.

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