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.
Lowering inflation requires limiting regulation.AFP via Getty Images
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.
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