Trends in Federal Regulatory Spending, 1960–2010
Figure 1: Budgetary Costs Adjusted for Inflation of Federal Regulation (Click to Enlarge)
Figure 1 shows the changes in real (inflation-adjusted) expenditures on regulatory agencies since 1960. Numbers and percentages in this section are in constant 2000 terms unless otherwise indicated.
While spending has generally increased over time, the rate of growth has varied depending on the priorities of elected officials in the executive and legislative branches of the federal government. For example, regulatory expenditures declined in the early years of the Reagan administration, and again in 1996 during the Clinton administration, reflecting a desire to move toward deregulation and to downsize government spending and intervention in the economy and in Americans’ lives.
In 1960, fiscal outlays directed at administering regulation were $533 million (equivalent to $2.5 billion in 2000 dollars). By the end of the decade, total spending by federal regulatory agencies had grown to $1.6 billion ($5.8 billion in 2000 dollars). This represents a real annual growth rate of 8.6 percent and a total increase of 127.1 percent over the decade. Most of this growth—more than $2 billion—occurred in social regulatory agencies (which experienced a real 136.9 percent increase in annual budgets over the decade). Economic regulatory programs expanded more slowly, by $0.9 billion (or 107.8 percent) over the period.
The 1970s brought increased expenditures on federal regulation. Over that decade, real spending at regulatory agencies grew by $7.7 billion or 134.5 percent (9.1 percent per year on average). Social regulatory expenditures continued to grow rapidly and increased by $7.2 billion (181.2 percent), while economic agencies showed a much smaller increase of $0.5 billion (29.2 percent). Most of the growth occurred in the early part of the decade, when several of the significant social regulatory agencies (particularly the Environmental Protection Agency and the Occupational Safety and Health Administration) were formed. During the 1970s, expenditures to fund social regulatory agencies grew from under 70 percent of the total Regulators’ Budget to over 80 percent. Double-digit increases in the first three years preceded much slower growth during the latter part of the decade.
This slower rate of growth continued into the early 1980s. Total annual expenditures on regulatory agencies declined by 5.2 percent between 1980 and 1985, but rebounded in the second half of the decade, increasing by 31.1 percent overall between 1985 and 1990. Annual spending on regulatory activities at the end of the decade was $3.3 billion more than at the beginning. Throughout the decade, spending on economic regulation increased at a faster rate␣36.5 percent between 1980 and 1990␣than spending on social regulatory agencies, which grew by 21.8 percent over the same period. Spending increased by an average of 2.3 percent per year over the decade.
Spending on regulatory agencies continued to increase in the 1990s for a total increase of 51.9 percent over the decade, or $8.7 billion. The budgets of agencies administering social regulations increased by 54.4 percent over the decade and those related to economic regulations increased by 40.6 percent. The first few years of the decade witnessed greater percentage increases—an average of 7.5 percent per year between 1990 and 1992, compared to an average of 4 percent per year between 1992 and 2000. The Regulators’ Budget actually declined in real terms in 1994 and 1996. On an annual basis, the real rate of increase averaged 4.3 percent over the decade.
Between 2000 and 2010, real-term budgets devoted to regulatory agencies increased significantly. The FY 2010 budget calls for expenditures that are 76.1 percent higher than in 2000—an increase in real spending on regulatory activities of $19.4 billion between 2000 and 2010. The budgets of agencies administering social regulations grew by 82.8 percent, and those involved in economic regulation grew by 44.2 percent in real terms over that period.
On average, the Regulators’ Budget has grown a little more than 6.2 percent per year since 2000. Double-digit increases in fiscal years 2002, 2003, and 2009 (16.4, 24.3, and 13 percent respectively) drive the large average and reflect the response to the terrorist attacks of September 11, 2001, and the response to the current economic crisis.
The Regulators’ Budget declined 9.5 percent in 2004 and grew by less than 1 percent in 2005. In 2006 and 2007, however, the Regulators’ Budget increased by 3.1 and 1.4 percent, respectively. In 2008, the Regulators’ Budget increased by 5.8 percent, the 2009 budget represents a 13 percent increase over 2008 in real terms and the 2010 budget represents a further increase of 3.2 percent.
