Study: Sequester didn’t put a dent in regulatory spending

Daily Caller News Foundation logo
Font Size:

Is the era of deregulation over?

A study by Susan Dudley and Melinda Warren of the George Washington University Regulatory Studies Center and Weidenbaum Center at Washington University in St. Louis has found a trend of increased federal spending on agencies that pursue economic regulation.

In the 1970s, widespread deregulation of entire industries meant the federal government cut back on determining who participated in which industries, what services they would provide and at what cost, Dudley told The Daily Caller News Foundation.

Federal regulation since then has been largely devoted to situations where the government believes a public interest must be represented — such as Environmental Protection Agency regulation, which interferes in private markets only to promote environmental interests that may not be met by consumers or producers.

But Dudley found that  federal outlays devoted to economic regulatory activities are increasing much faster than social regulation. Dudley told TheDCNF that “we’re seeing a resurgence of that bipartisan reform in the 1970s to get rid of these kinds of things.”

And it’s not tried-and-true regulatory agencies that are accounting for the uptick: Dudley told TheDCNF that new legislative proposals have sparked the spending increase on regulatory activities. “The EPA is very active doing things based on old regulations, and their budget is declining.”

Instead, it is new legislation which has sparked the recent trend of economic regulation. Especially with the Dodd-Frank Wall Street Reform and Consumer Protection Act, Dudley said, “We seem to have forgotten the lessons we learned.”

The Dodd-Frank Act and the Consumer Financial Protection Bureau, have massively increased the amount of regulation devoted to policing the interactions of consumers and the companies they choose to buy from, according to Dudley’s study. The CFPB has grown dramatically since its creation and is set to expand even more in 2014.

The CFPB’s staff is budgeted for a 46.1 percent increase in 2013 and, under the president’s plan for 2014, a further 27.3 percent increase. Congress has not yet passed a budget for the upcoming year, but regulatory spending for the agency (and for most others) has continued to increase in 2013 despite sequestration cuts.

Congressional oversight over the CFPB is limited due to its placement under the auspices of the Federal Reserve, leading critics to decry the agency’s unaccountability. Judicial review of agency decisions have also been limited and the agency is formatted so that its director, now Senate-approved Richard Cordray, cannot even be removed by the President unless he commits a crime.

But a lack of oversight may become a pattern: according to the study, the U.S. Patent Trademark Office, which plans on increasing spending by $700 million in 2014, was granted the authority to set its own fees for patent applications, allowing it to bring in as much money as it deems necessary, Dudley explained. According to The Hill, however, the agency believes it has already been targeted by sequestration: the three new satellite offices it hoped to open have been delayed.

And due to the administration’s decision to combine Affordable Care Act regulations with rules on entitlement spending in its budget proposal, Obamacare regulations could not even be analyzed for the study.

Because Obamacare regulations were not included in this report, the already significant trend of increasing economic regulation may be even greater. The Affordable Care Act will drastically enlarge the federal government’s involvement in the health care market, increasing both federal spending on regulatory activities and economic repercussions of surging rules for businesses and consumers alike.

Dudley told TheDCNF she hopes to look into Obamacare regulations and their effects if federal reporting methods permit such oversight. If the increase in regulatory activity following Dodd-Frank can tell us anything about its health care equivalent, we can expect even more government interference in personal economic decisions.

Follow Sarah on Twitter

Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.

Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.