Most economists agree that one of the greatest hindrances to the economy today is over-regulation by government at all levels, but especially at the federal level. A new study from the conservative non-profit American Action Forum (AAF) found that President Obama has already issued more major regulations than any president before him.
AAF defines “major” regulations as those which have an economic impact of $100 million or more and have a significant effect on consumer prices. As we all know, the cost of regulation gets passed along to consumers in the form of higher prices for goods and services we purchase.
In its latest report issued at the end of last week, the AAF states that since President Obama took office in 2009, the federal government has issued over 600 major regulations totaling $743 billion in cost. They say the Obama administration plans to issue 40-50 new pieces of major regulation before the president leaves office in January, bringing the cost up to $813 billion.
By contrast, President George W. Bush issued 426 major regulations during his full eight-year tenure in the White House. That was also way too many, and I criticized him for it at the time.
The Obama administration has issued an average of 81 major regulations per year. That’s about one major new rule every four to five days, or as the AAF puts it, one major regulation for every three days that the federal government is open. And this does not include the costs of thousands of non-major rules and regulations the Obama administration has implemented.
Speaking of the cost of the torrent of Obama regulations, Sam Batkins who oversaw the study at the American Action Forum stated, “It is a $2,294 regulatory imposition on every person in the United States.” Let that sink in.
Some (liberal) public interest groups dispute studies from the AAF, saying they don’t accurately take into account the economic benefits of regulations. However, AAF maintains that its cost estimates reflect the results from both good and bad regulations, most of which are the latter.
President Obama is fond of saying that it’s a myth that tax cuts and deregulation will produce economic growth. “It doesn’t work. It has never worked,” he said a few years ago. As recently as June, he said, “The primary story that Republicans have been telling about the economy is not supported by the facts. It’s just not.” He’s just plain wrong!
Let’s leave aside the fact that the two strongest periods of economic growth in the past 35 years occurred amid tax cuts and significant deregulation – under Ronald Reagan in the 1980s and Bill Clinton in the latter half of the 1990s, when he signed legislation deregulating the banking industry and a capital gains tax cut.
The truth is that the opposite has never been shown to work. It certainly hasn’t worked under Obama. This is the slowest economic recovery since at least 1949.
After a multitude of tax hikes imposed by Obama, federal revenues as a share of GDP are now over 18%, and are on track to hit 19% in the next few years, according to the White House. Taxes were 17% of GDP in Bush’s last full year in office, and have averaged 17.3% since 1950.
So, what do we have to show for Obama’s allegedly superior economic policies? Since the recovery started six months into Obama’s first term, GDP growth has consistently been below trend, with not a single year of 3% expansion. It’s been well under 2% in each of the past three quarters and only 1% for the first half of this year.
In essence, then, what we have here is a three-decade-long test of two very different approaches to economic growth.
The results: Two periods where tax cuts and deregulation spurred strong, sustained growth (Reagan, Clinton), and one where tax hikes and over-regulation produced anemic growth (Obama).
That’s just at the federal level. Various studies have shown that states which impose lower taxes and fewer regulations also have stronger growth rates than those following Obama’s economic prescription. The facts are not on Obama’s side.
Hillary Clinton laid out her economic plan today, which is even worse than four more years of Obama. If she is elected president, our laggard economy will continue and a new recession could unfold.