Analysis: The Costly Impact of Bidenomics on the Private Sector
Introduction:
The Biden administration has been making waves in terms of regulations, with a recent report stating that more regulations were mandated in a single week than during both terms of the Obama administration. This has led to concerns about the expanding control of the government over private industry and the potential economic consequences.
Bidenomics as State Capitalism:
Economists like Steve Hanke from Johns Hopkins University argue that Bidenomics represents a form of state capitalism. Hanke believes that the Biden administration has shifted the economic template of the country from one that relied on the free-enterprise private sector to one that relies on the state. This shift is characterized by heavy-handed regulation and massive state subsidies.
The Cost of Regulations:
The American Action Forum (AAF) released a report detailing the costs of the regulations issued by the Biden administration. Through April 26 of this year, these regulations amounted to $1.47 trillion and 278.6 million paperwork hours. In comparison, the cost of regulations issued under the Trump administration totaled $26.8 billion and 67.5 million paperwork hours, while under the Obama administration, they amounted to $303.4 billion and 236.5 million paperwork hours.
Underestimating Costs:
As is often the case with regulations, the actual costs tend to be much higher than official estimates. For example, green energy and electric vehicle tax credits were initially estimated to cost taxpayers $369 billion over the next decade but have since been revised to an estimated $1.2 trillion.
Impact on Consumers and Taxpayers:
Regulatory limits on auto emissions have the unintended consequence of increasing the costs of new cars. Requirements for renewables may also raise prices and make the electrical grid less reliable. Electric vehicle subsidies cost billions and influence consumer choices that they may not have made without the subsidy.
Political Motives:
The timing of the surge in regulations may be driven by electoral considerations, as the upcoming election season begins. These regulatory proposals align with campaign messaging aimed at securing progressive voters’ support for President Biden’s reelection. However, the costs of these regulations are ultimately borne by consumers and taxpayers.
Avoiding Congressional Interference:
The regulatory deluge may also be an attempt to avoid interference from Congress and circumvent GOP efforts to nullify the directives through the Congressional Review Act (CRA). The CRA allows a simple majority of both the House and Senate to issue a joint resolution of disapproval for any agency rule, preventing it from going into effect. House Republicans have already passed several CRA resolutions, seeking to nullify certain regulations.
Challenges in the Courts:
Opponents of administrative lawmaking have turned to the courts to challenge the Biden administration’s regulations. For example, the US Court of Appeals for the Fifth Circuit temporarily blocked the SEC’s climate accounting rule, following a challenge brought by plaintiffs including the fossil fuel industry and 25 state attorneys general. These challenges argue that the regulations are arbitrary, capricious, and exceed the powers granted to federal agencies by Congress.
Comparison to Trump Administration:
The Trump administration took a different approach to regulations, actively canceling and rolling back regulations passed by previous administrations. The aim was to constrain the overall magnitude of rules and lift burdens on industry. However, with the change in administration, some of these deregulatory actions have been reversed.
Conclusion:
The Biden administration’s push for increased regulations has raised concerns about the expanding control of the government over the private sector. The costs of these regulations are significant, potentially reaching trillions of dollars. While some argue that these regulations are necessary for meeting climate goals and ESG objectives, economists warn that they will have costly consequences for consumers and taxpayers. The political motives behind this surge in regulations and the attempts to avoid interference from Congress further complicate the issue. Overall, the impact of Bidenomics on the private sector remains a topic of debate and concern.
