Cost of Government Day (COGD)
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The Burden of Regulation

The average American will have to work 62.6 days in 2008 to pay for the costs of government regulation.  This is up from a revised 61.7 days in 2007.  While those costs had been stable at 16.9 percent of national income for the previous four years, this year regulation is estimated to cost 17.2 percent of national income.

Among the most costly new regulations issued since the last COGD report is the fine particle implementation rule imposed by the Environ­mental Protection Agency (EPA), which the agency itself estimates will add an additional $6.7 billion per year to regulatory costs.  The Department of Homeland Security has issued anti-terrorism standards for chemical facilities, which it estimates will cost $1.4 billion per year. The Department of Transportation has issued new regulations on electronic stability control systems for auto­mobiles, which will cost an additional $1 billion per year.  Transportation has also issued new rules regarding vehicle side-impact collisions costing, again by their own estimates, about $764 million.  These agency estimates have generally been well below actual costs imposed by their new regulations.

The above estimate of total regulatory costs includes only the cost of complying with regulations.  This includes the cost of material resources and labor needed to carry out compliance.  For example, if a regulation requires new pollution control equipment for power plants, compliance costs include the costs of manufacturing, installing, operating and maintaining the equipment.

Total Regulatory Burden 1977 to 2008

Not counted are the negative economic effects of regulatory requirements.  These hidden costs slow the economy, as they introduce inefficiencies and distortions, and reduce the economic reward left over for productive activity.  Regulations may prevent new firms from entering the market, or stop existing ones from expanding.  They may even force some existing firms out altogether.  The end result is less overall output, fewer jobs, lower wages and lower economic growth.

These economic costs may be as large as the direct compliance costs of regulation.  Economists at Washington University at St. Louis, leaders in the study of regulation, estimated these costs to be over $1.5 trillion per year. 

These costs are threatening to explode due to costly and unnecessary global warming regulation.  Proposed cap and trade legislation would require companies to buy costly federal permits to use oil, gas, coal and other hydrocarbon fuels in producing goods and services for the American people.  This would layer close to a trillion dollars a year in unnecessary costs on the American economy, just to start.  The price of gasoline would increase further, and the cost of electricity would begin to soar as well.  The cost of food, and especially meat, would rise due to higher costs for fertilizer, farm fuel, truck hauling for produce, and other factors.  The production of oil and gas would be further restricted, increasing their prices even more.

This would result in additional costs due to reduced economic growth.  Manufacturing would be especially hard hit, as U.S. firms would suffer a crippling disability in international competition due to high energy costs.  The resulting loss of high paying manufacturing jobs would climb to two million, and possibly more.

These costs would be imposed even though there is still no scientific consensus on the nature, origins, or extent of the global climate change we may be experiencing.  Indeed, some point to studies showing there has been no warming for at least 10 years, and even the U.N. has recently projected there will be no warming for at least another 10 years as well.  In fact, the global temperature data has shown a slight cooling trend over the last 5 years which may well continue.

Nor is the scientific community united in a best possible course of action, even among those supporters of the man-made theory of global warming.  Even some advocates of the most restrictive and far-reaching global warming regulation, the cap and trade bill, admit that it would have no significant effect on global warming, even if it is occurring.

These factors magnify the imprudence of imposing further regulatory burdens on the economy through arbitrary controls of CO2 production. 

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