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Hey Y’All, Guess What?

We are already in chains, thanks to 75 years of “progressive” policies

By: Dr Charles Ormsby – September, 2012
“He gonna put y’all back in chains.”-Vice-President Biden speaking to a largely African-American audience, referring to Governor Mitt Romney
 Much has been made of Vice President Biden’s gratuitous comment to a crowd in Danville, Virginia. His mimicking of a southern drawl was pathetic and his attempt to exploit racial divisions was despicable – especially given the office he holds. But let’s not dwell on these criticisms since they have been already beaten to death by the media.

Obama-Biden supporters claim that these remarks were taken out of context. Exactly what context would justify them? Putting aside Biden’s disingenuous linguistic contortions and deceitful use of the race card, there is no context that justifies an assertion that Romney or the GOP is intent on putting additional chains on anyone.

In short, Biden’s statement in Danville was a pathetic, disingenuous, despicable and deceitful packaging of a BIG LIE. The media’s attention has been focused on the “pathetic, disingenuous, despicable and deceitful” nature of these comments while ignoring the fact that they were merely window dressing for the BIG LIE.

In truth, the Romney-Ryan ticket is all about reducing the chains that bind us, not adding to them. The only shackles borne by Americans today are those put in place over the years by our government (federal and state). While Republicans have often been complicit in forging these restraints, they have certainly been the more reluctant of the guilty parties. The Progressive wing of the Democrat Party (now, essentially all that is left of the party) has been actively fighting to shackle Americans while destroying our Constitution in the process.

The onerous taxes imposed by all tiers of government diminish our freedoms and drain our economy. Since taxes are the most easily quantifiable burden of big government, it is not surprising that they are the most often discussed.

The taxes we pay fund over 1300 distinct organizations under the direction of 479 departments and agencies in our federal government. As of FY2011, these organizations collectively spend $3.7 trillion annually with approximately $2.2 trillion of that from taxes and fees, and $1.5 trillion (approx. 40%) borrowed.

Yes, paying these taxes hurts. The spending and resultant diversion of productive economic activity hurts. The increased debt adds a fearsome burden onto the shoulders of our children and grandchildren. And the interest on the accumulated debt threatens to swamp any prospect of escaping a downward economic spiral.

What is less commonly quantified and discussed is the impact of the regulations that are a natural byproduct of the growth of government. As everyone knows, the government has a nasty habit of passing new laws and issuing additional regulations that pile up over time and that discourage economic activity and wealth creation. The loss of this wealth reduces our current disposable income and reduces the formation of capital investments that are needed to improve the standard of living of all Americans.

As it turns out, the cost of this accumulated regulatory burden is nearly as great as the burden of all taxes and fees combined.

What is the annual cost of these regulations? In 2008, the estimated cost of complying with federal regulations was $1.75 trillion (over $15,000 for every American family). This amount exceeded all corporate pre-tax profits and dwarfed the $157 billion in income taxes paid by corporations. In fact, it even dwarfed all personal income taxes which peaked in 2007 at $1.116 trillion ($1.032 trillion in 2008, $866 billion in 2009 and $936 billion in 2010).

In 2010, the federal regulatory burden represented approximately 12% of America’s Gross Domestic Product (GDP was $14.65 trillion in 2010). That means that for every $8 in economic value created, $1 was destroyed by the compliance costs of our federal regulatory burden.

It must be noted that these figures substantially underestimate the impact of these regulations. Annual costs are just that: annual. If that wealth were produced, much of it would accumulate each year as savings/investments. Those savings and investments would not only make us more financially secure, they would be reflected in the accumulated capital invested in our industries and research, leading to more efficient production and greater knowledge.

The process of national wealth creation is similar to compound interest in a savings account. Every dollar of wealth that is produced and not consumed can be invested in new factories, capital equipment, research, training, etc., and the proceeds from those investments will compound over time.

It is very likely that poverty, as it is defined today, would have been eradicated long ago if government had not declared war on it, but instead merely created half as many regulations. I often wonder what research this accumulated wealth would have spawned, what new products might have resulted and what diseases might have been cured.

If you think about it, the costs expended to comply with regulations and the productive activities avoided because of regulations are two different things. Both cause enormous damage to our economic health. We can only imagine the true cost to our society because entrepreneurs and businesses were dissuaded by existing or threatened regulations.

The pure volume of regulations is intimidating. In 2010, federal regulations amounted to 81,405 pages. There were 3,573 new “final rules” in 2010, contained in 24,914 pages of the Federal Register. The Obama administration for the three years of 2009 through 2011 added 10,215 new regulations. Over 38,000 rules were promulgated between 2002 and 2010.

Since the Republicans captured the House in the 2010 elections, the number of new laws has dropped dramatically; but this has not slowed the regulatory bureaucracy. In a trend that should scare all Americans, the growth of regulations has not subsidedjust because Congress is deadlocked. Over the years Congress has ceded substantial authority to unelected bureaucrats. It is the unelected bureaucracy that now passes the rules largely independent of the Congress we elect.

Today, President Obama rules our lives through the federal bureaucracy and via executive fiat – NOT through the legislative process as was intended by our Founders. EPA regulation of carbon dioxide emissions and ICE declarations regarding immigration are only the most publicly discussed examples.

Regulations are like hidden spending and taxation. Instead of the government spending taxpayer money to achieve some goal, why not just mandate that businesses shoulder the burden? Whether it is job training, health benefits, or sweeping the streets … just dictate what must be done. The costs will rarely be reported by the media or recognized by the public.

Why don’t powerful business interests fight these regulations?

The answer is simple. Small firms (less than 20 employees) spend 36% more per employee ($10,585/employee) than large businesses ($7755/employee for firms with more than 500 employees) to comply with federal regulations. Larger businesses often condone new regulation because it gives them a competitive advantage over their smaller but scrappier competitors.

State regulations merely add to the oppressive federal burden. 

During the 2009-2011 year period, the state of Washington slapped on over 4000 new permanent regulations. Washington’s regulations now take upover 5 feet of shelf space. Would you want to start a business knowing you had to comply with over 100,000 state regulatory requirements? And that is before the Feds even show up!

You probably wouldn’t be surprised if I told you that the state of Washington has the nation’s second highest failure rate among new businesses. After “poor sales,” small business owners list regulatory compliance and red tape as the second most important problem facing them.

The resulting transformation of America – from a mostly free nation where simple common sense dictates if an action is permissible to a nation where hundreds of thousands of pages of impenetrable regulations must be deciphered first – is mindboggling. That the free market has been able to survive this onslaught is even more amazing.

Only Br’er Rabbit, after wrestling with the tar baby, could appreciate the difficulty of dealing with today’s regulatory environment. So … Joe Biden, GET A CLUE! We are already in chains!


The Romney-Ryan ticket should shout from the roof tops: “America: Elect us and we will take off your chains!”
Dr. Charles Ormsby

Dr. Charles Ormsby

Dr. Charles Ormsby served two terms on the North Andover School Committee, co-founded of the North Andover Taxpayers Association, is a a co-founder of and columnist for The Valley Patriot, broadcasts weekly opinion pieces for WCAP (980 AM) in Lowell, and is a faculty member in the Department of Mathematical Sciences at the University of Massachusetts Lowell. Dr. Ormsby is a graduate of Cornell and has a doctorate degree from MIT. You can email him at ccormsby@verizon.net

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