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Tax cut nullification: Regulations rob taxpayers of any gains

By Alan Caruba
web posted June 4, 2001

My Sunday newspaper led off with the headline "Massive tax cut a signature away." It spoke of how Republicans and moderate Democrats drove a sweeping $1.35 trillion, ten-year tax cut through Congress. Who could argue with such good news? I could.

Here's the rest of the story and you probably won't read about it in your daily newspaper. You will, however, find it in the 2001 edition of "Ten Thousand Commandments", a brilliant analysis by Clyde Wayne Crews, Jr. of the costs generated by the huge regulatory engine of Federal departments and agencies. It is published by the Competitive Enterprise Institute (www.cei.org).

While the President and Congress are patting themselves on the back for cutting your taxes, much of the real lawmaking power has been shifted to non-elected agencies whose regulations offer no guarantee of real benefits to the nation. This, Crews points out, "allows Congress to escape accountability and to blame agencies for costs."

Regulatory costs rival the amount estimated to be paid in 2000 individual income taxes, approximately $951.6 billion.

In 2000, the Federal Register contained 74,258 pages, the highest level since the presidency of Jimmy Carter, a 4 percent increase over 1999. Approximately 4,300 final rules were issued by federal agencies in 2000.

Of those in the works, 158 are considered "economically significant", a term used inside the beltway to describe a rule that will have an economic impact at least $100 million. At least $15.8 billion in future off-budget costs, paid by every American, is in the pipeline.

And you wonder why corporations and whole industries have an army of lobbyists in Washington, DC? Without lobbyists trying to moderate this juggernaut of regulation, the cost of which is always passed on to the consumer, we would all be paying even more than we already do for everything we purchase.

There are five agencies that produce the most regulations. Top among them is the Department of Transportation, responsible for 536 new regulations in the pipeline. Then comes the Department of the Treasury with 450 and, in third place, not surprisingly, the Environmental Protection Agency with 449 new regulations. Also no surprise, the Department of the Interior with 418 and, finally, the Department of Commerce with 390.

Together, they are looking to impose 2,243 new, costly regulations.

I have long argued that the EPA, founded in 1970, exists primarily to find ways to drive up the cost of everything upon which the economy depends.

Among the initiatives in the works are those that would make plywood and composite wood products more costly, thus driving up the cost of building homes. The excuse is that they emit "hazardous air pollutants." This is an agency that thinks carbon dioxide, which we all exhale, is a hazardous air pollutant. The EPA wants to impose still harsher limits on the emissions of internal combustion engines. In his book, Earth in the Balance, former Vice President Al Gore, wanted to "eliminate" internal combustion engines within the next twenty years. The EPA appears to be trying to bring this about through insane regulatory emissions standards. Cars built since 1996 are already exempt from certain inspection standards because they're so clean.

In 1977, the total cost of environmental and social regulations made up just 12 percent of the total regulatory cost burden. By 2000, the burden imposed by these regulations had risen to 37 percent! That burden is felt by everyone in the cost of everything they purchase and by businesses that must undertake the mountain of paperwork required, as well as often extremely expensive equipment purchases and re-engineering.

Over at the Department of Energy, they are seeking to impose "energy efficiency standards" for water heaters and clothes washers. There is no single activity affecting our lives that these and other faceless bureaucrats will not intrude at the cost of driving up the cost of every appliance we use, including toilets that have been mandated to flush using less water.

Between 1999 and 2000, the number of "economically significant" rules have increased 15 percent. Of the 4,699 regulations now in the works, fully 1,054 impact small businesses. Rules affecting this engine of our economy are up 9 percent over the past year and up 40 percent over the past five years!

And you wonder why consumers are beginning to purchase less? Why there are large inventories of unsold goods? Why unemployment is beginning to rise? You wonder why Wall Street is nervous?

Regulations can be bad for your health if you consider a recent study by the Association of American Physicians and Surgeons. It found that a whopping 66.2 percent of doctors say they will "retire from active patient care at a younger age than they would have considered five years ago." The primary reason cited is the increased government interference in the practice of medicine. The study found that 64 percent, nearly two-thirds, cited "decreased control" over medical practices and blamed Medicare bureaucracy as a reason for early retirement.

This nation is being regulated to death. Now let's look at that tax cut, based on anticipated surpluses. The maximum anticipated surplus, based on taxes collected, is $796 billion in 2010. Regulatory costs of more than $700 billion already rival that number! Regulatory costs exceed that of most major taxes collected. And the politicians are telling us they just cut taxes. They should be cutting regulations that impose these vast hidden costs.

While the typical family of four may be celebrating the 2001 tax cut, what they don't know is that, in 1998 (the latest figures available) economic, social, and environmental regulatory costs totaled an estimated $749 billion, absorbing 17.7 percent of their after-tax income or approximately $7,410.

They paid more than seven thousand dollars after they had paid their income taxes. You can bet that figure is even higher today and will be higher still in the years to come.

There have been more than 45,000 final rules since 1990. More than 28,000 have been issued just since 1994. That's an important year because it marked the Republican takeover of Congress.

So, while the President and Congress tell you that they've cut your taxes the metastasizing flow of regulations is robbing you of any savings in real dollars.

You've been had, my friend, by Republicans and Democrats alike.

Alan Caruba writes a weekly column of commentary, "Warning Signs", posted every Friday on the Internet site of The National Anxiety Center. (c) Alan Caruba, 2001

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