Government regulations take a significant toll on the U.S. economy. Oftentimes, these regulations prove to be heavy handed, and stifle industries that are creating American jobs. In the last decade we have seen new regulations on healthcare, power plants, fuel standards, and finance. When considering the impacts of government regulation, it’s important to remember that the people who ultimately pay for government red tape are the consumers.
While government regulations are often aimed at businesses (such as power plants) that that are deemed non-grata, businesses almost inevitably pass the regulatory costs onto consumers via higher prices. In 2015 President Obama put new regulations on coal and natural gas production, even though Americans now get about 53% of our electricity from coal and natural gas.
The Heritage Foundation estimates these rules alone will cost the economy nearly 600,000 jobs and the average middle class family of four will lose $1,200 in annual income. The Competitive Enterprise Institute now estimates that the regulations will cost American consumers $2 trillion a year. This is more than the $1.7 in corporate and individual income taxes collected last year. Since Americans bear much of the cost burden that comes from regulation. This represents a heavy hidden tax burden. Regulations must be subject to a rigorous cost-benefit analysis in a way they currently are not.
Lastly, government regulations can also be used by big companies to drive out competition. If a large, established company finds itself threatened by a small-yet-innovative startup, sometimes companies will work to persuade the government to craft government policies that will impede their upstart competitors. When Big Business joins forces with Big Government, the marketplace is deprived of the potential innovations and better, more affordable, goods and services.
In order to unleash America’s full job-creating potential, politicians need to tackle our over-regulated economy, and reduce the governments’ footprint. It’s clear that work needs to be done in order to make America’s economy more competitive.