Report: Administration’s Efforts to Cut Red Tape Cost Economy $23 Billion

Mechanism for ‘streamlining’ regulations actually used to increase burden on businesses, taxpayers

September 23, 2014

Administration efforts to cut red tape have actually added $23 billion in costs to the economy this year, according to a new report released by the American Action Forum (AAF).

Cabinet agencies are required to issue a "retrospective review" every six months on how they are improving burdensome regulations, in order to comply with Executive Order 13563, which was issued by President Barack Obama in January 2011. However, AAF has found that these efforts rarely reduce the costs of regulation.

"Despite attempts to reduce red tape and ‘promote economic growth,’ recent regulatory reform plans from the administration actually added more than $23 billion in costs and 8.9 million paperwork burden hours," AAF said. "Only three agencies managed to reduce costs."

The report analyzed agencies’ regulatory plans from January through early August, which included a review of 529 regulations, an average of 22.5 per agency.

The Environmental Protection Agency (EPA) contributed the most in costs to the economy with $14.4 billion added from the 21 regulations it reviewed. The costs are mostly attributed to its "Tier 3" rule to reduce the sulfur content in gasoline, which will add 150,000 hours in paperwork.

The purpose of the executive order is for the government to modify "outmoded, ineffective, insufficient, or excessively burdensome" rules, though AAF has found that retrospective reviews allow agencies to expand regulations.

"In the past, AAF has found that not all regulations are ‘streamlined’ or ‘repealed,’ but rather many are expanded," the report said. "In fact, that’s the main reason why many cabinet agencies are actually adding regulatory burdens in these biannual plans."

AAF also found that federal agencies have only reviewed one third of the more than 400 regulations identified for reform earlier this year.

The one bright spot from the last retrospective review earlier this year was the Department of Transportation, which revised a regulation to save $1.7 billion a year and eliminate 46.6 million paperwork-burden hours. In the latest report, the DOT does not live up to this example.

"Although DOT did propose to modify the ‘Safe Transportation of Bulk Explosives,’ saving more than $100 million, several new requirements dwarfed this deregulatory measure," AAF said. "The agency decided that new standards for tank cars, which will cost more than $5 billion, are retrospective."

"On net, DOT’s new ‘reform measures’ will increase costs by more than $5.7 billion," the report said.