The highest inflation in 40 years isn’t driven just by record federal spending, a record government-driven labor shortage and record restrictions on US energy production. President Joe Biden’s record regulation spree is also pushing prices higher. Stopping the bureaucratic assault on the economy is essential to taming inflation and giving families relief.
The role of regulations in the inflation crisis is largely overlooked but shouldn’t be. When Washington wraps the economy in red tape, businesses must spend massive sums on compliance.
That cash doesn’t materialize from thin air. Every dollar that goes toward hiring lawyers, filling out paperwork and redesigning products and assembly lines gets passed to consumers through higher prices. Mercatus Center research finds that a 15% increase in federal regulation hikes the cost of consumer goods by a full percentage point.
This puts the president’s regulation obsession in perspective. In its first year, Team Biden added more than 72,000 pages of regulations, executive orders and agency notices. That’s 25% more than the Trump administration added in its first year, according to my review of the Federal Register. Biden’s team also pushed through more major regulations in his first year than any president in modern US history — 69 such regulations compared with 22 under Donald Trump and 52 under Barack Obama.
These mandates, by definition, cost more than $100 million a year or have substantial effects on the economy. The list includes, most recently, a massive Environmental Protection Agency decree forcing cars to meet unprecedented and potentially unachievable mileage standards. The Biden administration is also forcing retirement plans to take “climate change” into account and making it harder for independent contractors to find work. Biden even repealed a commonsense policy that sunsets old regulations that haven’t been updated in years.
All told, the cost of Biden’s regulations far outpaces that of his predecessors’. In his first 12 months, he saddled the economy with more than $200 billion in higher costs, per the American Action Forum. That’s three times more than Obama imposed and 40 times what Trump did.
So businesses are spending at least 131 million more hours annually complying with Washington’s mandates and dictates. Since time is money, that’s extremely expensive for the consumers who ultimately get stuck with the bill.
The Biden regulatory burden is only going to increase — and probably at an even quicker pace. Congress has been unable to pass most of the president’s legislative agenda, which is heavy on imposing new mandates on the economy, so the White House is increasingly defaulting to federal rulemaking. That translates to more regulation — and higher inflation.
So long as the regulatory deluge continues, lower-income families will be the hardest hit by the resulting price hikes. They pay a disproportionate share of their income on the most heavily regulated goods, including utilities and groceries. Even the Biden administration’s recent bump to food-stamp benefits will likely lead to higher food prices, since there’s more money chasing fewer goods.
And as the Biden team rolls out more red tape, families will be pushed closer and closer to the breaking point. Mercatus research has confirmed the grim reality that burdensome regulations are associated with a rise in the poverty rate.
With Democrats in control of Congress, there is no check on the Biden administration’s ability to roll out costly regulation after costly regulation. But if Republicans retake the House and Senate this November, they can push to limit the president’s ability to regulate the economy and bring much-needed relief to families struggling to put food on the table.
The REINS Act is the best example. It would empower Congress to vote on every proposed major federal regulation. With a “yes” vote, a mandate would go into effect, and with a “no” vote, it would be sent back to the drawing board or scuttled altogether. While Biden would likely veto the REINS Act, it’s a debate Republicans should welcome. Let the president explain why Americans shouldn’t have a say in how their tax dollars are spent. Let him explain why he opposes a commonsense measure that could help bring inflation under control.
Lowering inflation requires limiting regulation. It’s at least as important as producing more energy, getting more people back in the workforce and controlling federal spending. Americans should see the rapidly growing list of heavy-handed mandates for what it really is: a direct assault on our ability to afford everyday life.
Jonathan Ingram is vice president of policy and research at the Foundation for Government Accountability.