Report: Federal Regulations Cost The Economy Over $2 Trillion A Year

Michael Bastasch | Energy Editor

Federal government regulations cost the economy more than $2 trillion in lost growth every year, according to a new study.

A report commissioned by the National Association of Manufacturers (NAM) found that regulations not only cost roughly 12 percent of the entire economy, but they fall hardest on manufacturers, who now face $19,564 per employee in regulatory costs every year. This is compared to $9,991 per employee per year cost of federal regulations paid by U.S. companies on average.

Over the past 10 years the federal government has finalized 37,022 regulations which have disproportionately hit manufacturers, according to economists Nicole Crain and Mark Crain, who crunched the numbers for NAM.

Small manufacturers are some of the hardest hit firms, according to the Crains. Small manufacturers with 50 employees or less face regulatory costs that are more than triple what the average U.S. company faces — $34,671 per employee per year.

“Some people will say that regulation creates jobs — to some extent that’s true,” Nicole Crain told The Daily Caller News Foundation. “But what are you giving up for this? I would be cautious to say that people are fired, it just distorts the market.”

“We repeatedly heard from manufacturers they would be investing and they would be hiring,” Mark Cain told TheDCNF.

Some of the costliest regulations U.S. firms face are environmental regulations. These alone cost manufacturers $10,497 per employee per year, according to NAM’s study. Some of the most onerous rules come from the Environmental Protection Agency, which imposes rules ranging from water discharges to refinery emissions.

“The incidence of environmental regulations have hit the manufacturers particularly hard,” Mark Cain told TheDCNF. “It’s not only just that the costs are high, it’s also that the incidence falls heavily on the manufacturing sector.”

Cain also noted that the study only looked at figures through 2012, which means that major EPA rules that have been proposed since 2012 will likely add more costs to manufacturers and U.S. businesses.

“Manufacturers are not anti-regulation,” Chad Moutray, NAM’s chief economist, told TheDCNF. “All we’re asking for are smarter regulations.”

Since 2012, the EPA has crafted several major regulations that would likely raise compliance and energy costs for manufacturers. These rules include, mercury and air pollutant limits for power plants, carbon dioxide emissions rules for new and existing power plants, water rules and upcoming ozone standards for the whole country.

Lawmakers have recently passed laws looking to stop EPA regulatory overreach. On Tuesday, the House passed the “Waters of the United States Regulatory Overreach Protection Act,” which prohibits the EPA and the Army Corps of Engineers from expanding their reach under the Clean Water Act.

“They think they know best how people should be using their property,” said Louisiana Republican Rep. Bill Cassidy in a statement after the bill’s passage.

“Expanding the Obama administration’s authority over our waters and wetlands means property owners and local governments could have less say in decisions affecting them,” the Louisiana Republican added. “It could also increase energy costs and threaten jobs. Preserving Americans’ decision-making power is a priority.”

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