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Regulation Business, Jobs Booming Under Obama

By JOHN MERLINE, INVESTOR'S BUSINESS DAILY

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If the federal government's regulatory operation were a business, it would be one of the 50 biggest in the country in terms of revenues, and the third largest in terms of employees, with more people working for it than McDonald's, Ford, Disney and Boeing combined.

Under President Obama, while the economy is struggling to grow and create jobs, the federal regulatory business is booming.

Regulatory agencies have seen their combined budgets grow a healthy 16% since 2008, topping $54 billion, according to the annual "Regulator's Budget," compiled by George Washington University and Washington University in St. Louis.

That's at a time when the overall economy grew a paltry 5%.

Meanwhile, employment at these agencies has climbed 13% since Obama took office to more than 281,000, while private-sector jobs shrank by 5.6%.

Michael Mandel, chief economic strategist at the Progressive Policy Institute, found that between March 2010 and March 2011 federal regulatory jobs climbed faster than either private jobs or overall government jobs. (See chart.)

Regulatory production is way up, too, if you measure that by the number of rules federal agencies churn out.

The Obama administration imposed 75 new major rules in its first 26 months, costing the private sector more than $40 billion, according to a Heritage Foundation study. "No other president has imposed as high a number or cost in a comparable time period," noted the study's author, James Gattuso.

The number of pages in the Federal Register — where all new rules must be published and which serves as proxy of regulatory activity — jumped 18% in 2010.

This July, regulators imposed a total of 379 new rules that will cost more than $9.5 billion, according to an analysis by Sen. John Barrasso, R-Wyo.

And much more is on the way. The Federal Register notes that more than 4,200 regulations are in the pipeline. That doesn't count impending clean air rules from the EPA, new derivative rules, or the FCC's net neutrality rule. Nor does that include recently announced fuel economy mandates or eventual ObamaCare and Dodd-Frank regulations.

But what's good for regulators isn't necessarily good for the private sector, as compliance burdens impose ever-increasing costs on businesses.

"Our economy is continuing to sink," Sen. Barrasso said, "and it's being weighed down by regulations coming out of this administration."

By 2008, the cost of complying with federal rules and regulations already exceeded $1.75 trillion a year, according to a 2010 study issued by the Small Business Administration.

Worse, the SBA found that small companies — which account for most of America's new jobs — spend 36% more per employee to comply with these rules than larger firms.

Cass Sunstein, who runs the White House Office of Information and Regulatory Affairs, denies the regulatory upsurge, writing recently that "there has been no increase in rule making in this administration." He also notes Obama ordered a comprehensive regulatory review in January that uncovered $1 billion worth of needless red tape.

But Progressive Policy Institute's Mandel says this review "doesn't go far enough" and that having regulators prune their own rules "has been tried repeatedly in the past, and it's always fallen far short of expectations." He favors an independent "regulatory improvement commission."

Meanwhile, Rep. Geoff Davis, R-Ky., is pushing the REINS Act, which would require Congress to vote for and the president to sign off on all new major regulations.

Not everyone in the Obama administration sees a problem. The EPA thinks new regulations can fuel the economy and hiring.

The EPA wrote in February that "in periods of high unemployment, an increase in labor demand due to regulation may have a stimulative effect that results in a net increase in overall employment."