The U.S. government regulates many sectors of the economy and American life, from health and the environment to energy and food, and most rules come with tradeoffs. For example, regulations that ensure food safety or clean air — which may prevent future health or other costs — may also raise compliance costs for businesses. As the administrative state and the number of regulations have grown, the proper scope of regulation has been a topic of continuous, and often contentious, debate.

In 2010, the Office of Management and Budget issued its annual “2010 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local and Tribal Entities” (PDF), which calculates the annual price over the past decade of the regulations of the many government agencies involved in oversight. The report’s authors do warn that some categories of benefits, such as ensuring national security, preserving ecological assets or reducing discrimination, cannot be captured fully in monetary figures.

The study’s findings include (figures are in 2001 dollars):

• From 1999 to 2009, the annual benefits of regulations were estimated to be between $128 billion and $616 billion; compliance and associated costs were annually between $43 billion and $55 billion.
• Over that decade, the Department of Health and Human Service’s 20 major rules annually yielded $21.9 billion to $44.4 billion in benefits and produced $5 billion to $6 billion in costs; within those department rules, the 10 major Food and Drug Administration rules produced $2.2 billion to $22.5 billion in annual benefits and $900 million and $1.3 billion in costs.
• Eight rules from the Center for Medicare and Medicaid Services yielded annual benefits of $18 billion to $20.9 billion and cost $3.4 billion to $4.6 billion.
• The annual benefits of the Environmental Protection Agency’s 19 air quality rules were $77.3 billion to $518 billion, while the costs were $20.6 billion to $23.7 billion.
• The benefits of the Office of Water’s rules were $2 billion to $5.6 billion, while the costs were $2 billion to $2.3 billion.
• Three Occupational Safety and Health rules annually cost $342 million to $369 million and produced $242 million to $1.4 billion in benefits.
• In 2009 executive agencies established 66 major rules. Of those, only 16 rules were fully quantified and monetized in terms of costs and benefits by the issuing agencies.

Overall, the OMB estimates indicate that from 1999 to 2009, the net positive benefits of federal regulation exceeded the costs between $73 billion (worst-case scenario) and $573 billion (best-case scenario). During that time, the benefit-cost ratio ranged from 2.3 to 14.3.

Tags: Congress, economy, law, safety, water, Native American

By John Wihbey | September 4, 2011