What does President Obama’s “Year of Action” mean, exactly? The answer is more than $100 billion in regulatory burdens so far this year, putting the nation on track for $200 billion by year’s end. This is what “using his pen and his phone” means for countless manufacturers, energy producers, and consumers who routinely must pay the bill for costly new rules.
Behind the nation’s regulatory tab are the Department of Energy (DOE) and the Environmental Protection Agency (EPA), accounting for more than $88 billion of total costs, the vast majority of the total.
On an annualized basis for these agencies, EPA’s proposed greenhouse gas standards (GHG) easily led the way at $8.8 billion. The silver medal in costs belongs to the agency’s sulfur emissions standards for gasoline, which costs $1.5 billion annually and imposes more than 150,000 paperwork hours on refineries and automobile manufacturers. In third, DOE’s energy efficiency standards for fluorescent lamps will impose more than $860 million in annual burdens.
The DOE leads EPA in regulatory burdens this year, at $50.6 billion to $38.1 billion. This “Year of Action” has routinely dished out expensive energy efficiency standards designed to correct the irrational consumer choice of purchasing less efficient, but cheaper, products. The agency has already published six standards that impose at least $100 million in annual burdens. For perspective, in the most expensive year ever for regulation, FY 2012, DOE published only five.
Bruising the Midwest
If we tailor the $100 billion in costs to an individual level, it means that the administration added $330 per person. However, because EPA and DOE have done the majority of the regulating, these burdens do not fall equally across the nation.
The manufacturing and energy industry are primarily affected, and thus, so is the Midwest. Ohio and Pennsylvania ranked third and fourth in 2014 regulatory burdens, with more than $11.4 billion in combined costs. Michigan and Indiana are also in the top ten, with $6.3 billion in burdens between them.
On a per capita basis, the energy-rich states of Alaska, Wyoming, and Louisiana, are all in the top five. Their average per-person regulatory burden: $640, or three times Maryland’s paltry share of $209.
More Penny Pinching Ahead
This is not all we can expect in 2014. The administration has already issued 14 billion-dollar regulations in 2014, with the promise of more to come; more than a dozen major regulations await approval at the White House, including redundant rules on calorie labeling for vending machines, three more efficiency regulations, and drug pricing measures. The most expensive, and perhaps the two measures that will most affect consumers, are due at the end of 2014. A new ozone proposed rule is due in December; the last round in 2010 was estimated at upwards of $90 billion. New ozone standards are likely to affect every state in the nation and, eventually, most consumers. Finally, EPA is scheduled to finalize its controversial rule on “coal ash,” which will likely be yet another multi-billion dollar imposition on coal power plants.
Thankfully, Americans can rest assured there will technically be no tax hikes this year, but the total regulatory bill could eclipse $30 billion on an annualized basis, about what the nation witnessed from the fiscal cliff tax deal. Many economists admitted that $30 billion in additional taxes would hurt the economy, but regulatory burdens of similar scale often remain unseen.
President Obama’s “Year of Action” could betray him by finally highlighting the most expansive use of the regulatory state in decades. When Americans realize higher energy bills, food prices, and consumer goods are the result of this action, they just might demand the president dump his pen and phone for good.
Sam Batkins is director of regulatory policy at the American Action Forum.