What Is Wrong With Our Country: Our Alphabet Soup Of Agencies.

I started this current series to discuss what is wrong with our country and what we need to do to fix it. While I have discussed some of the topics that I will be including in this series, they have been included in other articles. In this series I will concentrate on a single topic. This will also mean that some of the articles may be slightly shorter than my readers have grown accustomed to, however they will still be written with the same attention to detail. This series will have no set number of articles and will continue to grow as I come across additional subjects.

How Many Federal Agencies Exist? We Can’t Drain The Swamp Until We Know

That’s something worth remembering as the Donald Trump administration proceeds with its “Comprehensive Plan for Reorganizing the Executive Branch,” set to be incorporated into the upcoming fiscal year 2019 federal budget proposal.

For example, there’s a twice-yearly publication called the Unified Agenda of Federal Regulatory and Deregulatory Actions. The Agenda compiles agency regulatory plans and actions in the federal pipeline, and it listed 61 agencies in the Fall 2016 edition. That count can vary slightly from report to report. But as we’ll see, its tally is on the low side.

Incidentally, the once-routine Unified Agenda’s April-and-October schedule became a thing of the past, as it has been published late or failed to appear at all (as in Spring 2012 under then-president Obama). The Spring 2017 Trump edition of the Agenda has yet to appear, and now Independence Day has passed.

The Trump delay may or may not be attributable to the reorganization effort, and to the prominent executive order requiring the elimination of at least two rules for every new agency rule created. Both would clearly affect agency priorities and reporting, regardless of their resistance.

Notably with respect to the number of agencies, the Administrative Conference of the United States — which lists 115 agencies in the appendix of its most recent Sourcebook of United States Executive Agencies — had the following to say:

[T]here is no authoritative list of government agencies. For example, FOIA.gov [maintained by the Department of Justice] lists 78 independent executive agencies and 174 components of the executive departments as units that comply with the Freedom of Information Act requirements imposed on every federal agency. This appears to be on the conservative end of the range of possible agency definitions. The United States Government Manual lists 96 independent executive units and 220 components of the executive departments. An even more inclusive listing comes from USA.gov, which lists 137 independent executive agencies and 268 units in the Cabinet.

That’s right: There is “no authoritative list of government agencies.”

In a 2015 Senate Judiciary Committee hearing, Chairman Chuck Grassley (R-IA) noted: “[T]he Federal Register indicates there are over 430 departments, agencies, and sub-agencies in the federal government.”

The Senator apparently was citing the Federal Register’s agency list, which now depicts 440 agencies as December 2016. The online 2016 Federal Register’s index depicted 272. (It had been 257 in December 2015.) The table nearby summarizes these and other tallies.

How Many Federal Agencies Exist?

Unified Agenda 61
Administrative Conference of the United States115
FOIA.gov (at Department of Justice)252
2016 Federal Register index272
United States Government Manual316
Federal Register agency list440
USA.gov tally443

Alongside the 220 executive department components the Administrative Conference referred to as appearing in the United States Government Manual, the latest 2015 Manual (which is not exhaustive) lists 61 “Independent Establishments and Government Corporations,” eight “Quasi-Official Agencies” and 16 “International Organizations.” Furthermore, an online supplement to the Manual notes another 48 “Boards, Commissions, and Committees” in existence.

FILE - In this Oct. 27, 2016, file photo, supporters of then-Republican presidential candidate... [+] Donald Trump hold signs during a campaign rally in Springfield, Ohio. President-elect Donald Trump’s campaign promise to “drain the swamp” of Washington might make it difficult for him to fill all the jobs in his administration. (AP Photo/ Evan Vucci, file)

FILE – In this Oct. 27, 2016, file photo, supporters of then-Republican presidential candidate… [+]

If no one knows definitively how many agencies, components and commissions exist by whose decrees we must abide, that means we similarly do not know how many employees (let alone contractors) work for the government. The job of reforming the executive branch is an extremely complex one, and the agencies are fighting it and will fight it, with support from dominant media. This entrenchment and collaboration appears to account for some of what is meant by the “swamp.”

Even when we isolate a given agency, it may be hard to tell exactly what is and is not a binding rule or regulation. Since the federal government is so extensive, issuing a formal rule may not even be necessary to achieve bureaucratic ends since agencies can issue “guidance” instead.

That calls out for a concerted, sustained response.  The Trump program is focused on what the executive branch can do alone, but also on identifying what will require congressional action, as detailed in Office of Management and Budget Director Mick Mulvaney’s memorandum to agencies on the reorganization effort.

Ultimately that congressional action will be required to reverse the delegation (or abandonment) of legislative power to the unelected that characterizes “democratic” governance today.

However, congressional opposition to any administrative state reforms are also part of the swamp. There is little Democratic support, for example, for any of the administrative state reform bills in the 115th Congress that would rein in the bureaucracy.

How Many Rules And Regulations Do Federal Agencies Issue?

With Congress on summer vacation, it’s an appropriate time to reflect on the number of laws it passes vs. the number of rules and regulations put out by the hundreds of federal agencies they (are supposed to) oversee.

There’s been much talk in the new Donald Trump administration about cutting regulations, speeding up construction permitting, executive branch reorganization and the like.

There’s also been talk of the “administrative state” (some have said “deep state“) and the reality of agency bureaucrats digging in their heels to slow down Trump’s reforms (with media sympathy: only some seven percent are Republicans) .

But these things matter no matter who’s president, because increasingly, since the federal government is so pervasive, it can regulate private activity without waiting for Congress to pass a law, and without even going through the normal notice-and-comment rulemaking process to which agencies “must” adhere. That threatens conservative and liberal values alike.

The bottom line is that in today’s America, most binding rules comes from agencies (unelected) rather than elected lawmakers.

Let’s look at year-end 2016 for starters. Federal departments, agencies, and commissions issued 3,853 rules in 2016, while Congress passed and the president signed 214 bills into law—a ratio of 18 rules for every law.

The average has been 27 rules for every law over the past decade (see chart nearby). Naturally, the rules issued in a given year are typically not substantively related to the current year’s laws, since agency output represents ongoing implementation of earlier legislation.

Laws vs agency rules and regulations.

Laws vs agency rules and regulations.TABLE COMPILED BY AUTHOR.

Looking back, there have been 88,899 federal rules and regulations since 1995 through December 2016, as the chart shows; but “only” 4,312 laws.   

Another 2,419 proposed rules were in play at year-end 2016. Given the Trump administration moratorium, many of those were under review during 2017.

As the chart also shows, dozens or hundreds of rules each year are characterized as “major,” “economically significant,” or “significant.” There are differences between these defined in law and executive orders, but the frequent characterization is of at least $100 million in annual economic impact.

Notably, “significant” regulatory actions regularly exceed the number of duly enacted laws.

In the Trump era, things have slowed down considerably. While Trump’s agencies have issued 1,748 rules since January 21 as of today, many were date-deferrals and such. Per Trump’s 2-for-1 executive order, “economically significant” regulatory actions and guidances need to be offset.

If there’s a desire in Washington to maintain a lower pace or even just to bring things into more balance, some of the measures in Congress, such as the bipartisan Regulatory Accountability Act (S. 951) to improve regulatory review would need to pass. It was introduced this year by Sen. Rob Portman (R-OH) and Heidi Heitkamp (D-ND).

For a more limited move, Trump’s one-in, two-out proposal would be a good one to enact in law. As it happens, Rep. Mark Meadows (R-NC) has introduced H.R. 2623 legislation that put the in/out approach into law. It’s called the “Lessening Regulatory Costs and Establishing a Federal Regulatory Budget Act” of 2017.

This cannot be deemed radical, since Sen. Mark Warner (D-VA) proposed one-in, one-out, and other nations have enacted such policies. Warner called his approach Regulatory PAY-GO. The point is, this “Trump” idea has bi-partisan legs, even in today’s heated Washington environment.

And Washington does have to deal with the federal budget, the approaching debt limit and federal spending priorities. The increasing interconnections between the fiscal and regulatory enterprises should offer, one would hope, at least some opportunities for collaboration on the idea of making regulation more accountable to someone — even in a year like this one. Washington doesn’t just spend our money, it makes the private sector spend on its regulatory priorities too.

Or, is an accumulation of over 3,000 rules, plus untallied and undocumented regulatory dark matter besides, going to remain OK with policymakers even if the economy turns. We shall see.

These 8 federal agencies are the worst. Here’s how to fix them

Conservatives running for president always cite waste in Washington as reasons to shrink and reform the federal government. And 2015 gave them piles of ammunition.

From the historic breach of 22 million personnel records to the systemic failure to take care of veterans to outrageous shenanigans among Secret Service agents, federal agencies are acquitting themselves poorly these days.

What follows is a rundown of the eight worst agencies. But this list is by no means comprehensive. Others could join, but this is a magazine, not a phonebook. The list also includes the number of employees deemed essential during the 2013 shutdown.

And while it’s easy to take potshots, fixing the problem by simply abolishing the agencies is politically unlikely. So the Washington Examiner spoke to experts who offered real solutions. Most involve common-sense reforms, increased oversight or drastic reductions.

Over the course of its 36 years as a Cabinet-level agency, the Department of Education has spent more and more taxpayer money with no improvement in academics, figures show. The department will spend $79 billion in fiscal 2016, nearly twice as much as its budget in 1980 (after adjusting for inflation).

Despite all the extra spending, scores on the Nation’s Report Card haven’t budged. For 17-year-olds, math scores have improved by only 1.6 percentage points from 1982 to the most recent test. In reading, scores are up 0.4 percentage points since 1980. For decades, the department has failed at its self-described mission “to promote student achievement,” critics say.

The Department of Education had 4,137 employees as of August, with a total payroll of almost $100 million. Fewer than 250 of those employees would be deemed essential in case of a government shutdown, less than 6 percent of the total staff. Even then, federal student aid would continue to flow, as would the federal portion of K-12 education funding. Most students wouldn’t even notice if 94 percent of the department’s staff were furloughed during a government shutdown.

In 2015, eight years overdue, Congress finally reformed the federal role in education when it passed the Every Student Succeeds Act. It is one of the few issues upon which congressional Republicans, teachers unions and President Obama have been able to agree. Everyone agreed the federal role in education should be significantly limited. Rather than having federal definitions and prescriptions for failing schools, states now have the power to create their own plans, as long as they come up with something.

Since it became a Cabinet-level agency 36 years ago, the Department of Education has spent more and more taxpayer money with no improvement in academics, figures show. (AP Photo)

The department, through conditional waivers from No Child Left Behind’s punishments, had been directing states on how to reform education. Senate Education Chairman Lamar Alexander, R-Tenn., said the department had been acting as a “national school board” and hailed the Every Student Succeeds Act for ending the “Common Core mandate.” Along with the Race to the Top grants, the conditional waivers were used to pressure states into adopting the controversial education standards.

K-12 education aside, few are pleased with the status quo on student aid for higher education. Take a look at reform proposals from presidential candidates. Conservatives argue that federal student aid only prompts schools to raise their fees and thus increases tuition costs. Hillary Clinton and Bernie Sanders want to double down on that aid with debt-free and tuition-free public college, respectively. On the Republican side, Jeb Bush would give high school graduates a $50,000 line of credit for college or career training, which would be repaid through their income taxes over 25 years. Marco Rubio would make income-based repayment the standard in federal student loans, so loan payments are proportional to what borrowers earn.

Many conservatives are quick to say the Department of Education should be abolished. For example, Ted Cruz included the department in his list of five agencies that must go.

It’s important for the department and its programs to be eliminated, rather than just shifting it into another agency, said Neal McCluskey, who directs the Center for Educational Freedom at the libertarian Cato Institute. “It doesn’t mean much if you just get rid of the department and you keep all the programs, and you move all the programs to [the Department of Health & Human Services],” McCluskey told the Washington Examiner. “It’s the programs that are ultimately the problem.”

Most students wouldn’t even notice if 94 percent of the department’s staff were furloughed during a government shutdown. (AP Photo)

McCluskey said only two Department of Education activities can be justified: the Office for Civil Rights, to enforce the 14th Amendment, and Impact Aid, which gives federal funds to school districts that are burdened by nearby federal installations such as military bases or large science labs. Even then, the department doesn’t perform those two activities particularly well, McCluskey said, but at least they’re justifiable.

In the ideal world, McCluskey would simply get rid of the department. “What the federal government does in education, largely through the Department of Education, is unconstitutional. As important, we don’t have evidence it’s really helping. So why should it continue to do any of this?”

That doesn’t seem possible with today’s political reality, though. The only plausible reductions might involve reforms of some of the department’s lesser functions. Even then, there would be horse-trading between the GOP and Democrats. Perhaps Republicans would give up on 529 college savings plans and Democrats would give up on PLUS loans for parents and graduate students. Who’s to say a government expansion, possibly on pre-kindergarten, wouldn’t be the Democratic demand instead, though?

Rick Hess, director of education policy studies at the conservative American Enterprise Institute, agrees that most federal education programs won’t get cut by Congress, even if Republicans had complete control. “It’s not a serious conversation,” Hess told the Examiner. “But what you can do is, legislatively, you can absolutely pin back the arms of the Department of Education so they have a very precisely defined, very narrow role.”

Furthermore, the department itself could be reformed by the next president, thanks to the Every Student Succeeds Act. “It clearly reduces the role of the federal government in overseeing what’s going on, and that should absolutely allow for downsizing.”

Of the department’s 4,137 employees, “many of those jobs don’t have to exist,” Hess said.

Even if some of the major federal programs continued, it could be done by a smaller office that makes sure federal funds go where they’re supposed to, are spent appropriately and spent transparently. “You could probably pare this thing back to an organization … that could probably run comfortably with about 150.”

The U.S. intelligence community recently reaffirmed its conclusion that senior officials in Russia were behind hacks during the 2016 presidential campaign into the Democratic National Committee and emails belonging to associates of Hillary Clinton.

But what exactly is the “intelligence community?” It’s not just an amorphous term for all U.S. intelligence officials. It’s a veritable alphabet soup of 17 agencies and offices. The group includes agencies strictly focused on intelligence as well as the intelligence arms of other government agencies and of the military. Its total budget in 2015 was $66.8 billion.

Here are the 17 offices:

1. Office of the Director of National Intelligence

Created by Congress in response to the terrorist attacks of Sept. 11, 2001, the office coordinates intelligence collection and sharing among U.S. intelligence agencies. The director is the head of the intelligence community and the principal advisor to the president, National Security Council and Homeland Security Council on intelligence matters related to national security.

2.Central Intelligence Agency

The CIA is the most recognized intelligence agency, known for spying on foreign governments and conducting covert operations, including funneling money to opposition groups in other countries to sway elections or oust certain foreign leaders.

3. National Security Agency

Once so secret it was referred to as “No Such Agency,” the NSA is the largest and perhaps most technologically sophisticated of all the intelligence agencies. It focuses on signals intelligence — monitoring, collecting and processing communications and other electronic information — and cracking secret codes. It also protects U.S. information systems from outside penetration. The NSA oversees PRISM and other mass surveillance programs revealed by Edward Snowden in 2013. It is believed to employ more mathematicians than any other organization in the country — a fact not all math whizzes are happy about.


4. Defense Intelligence Agency

The Pentagon’s top spy agency, the DIA is the primary entity responsible for collecting and analyzing intelligence on foreign militaries, with support from the intelligence offices of all the military branches. The DIA shares this information with military leaders, fighters and defense policy makers in order to “prevent and decisively win wars,” according to its mission statement.

5. Federal Bureau of Investigation

The FBI has both law enforcement and intelligence functions. On the intelligence side, it aims to protect the U.S. against terrorism, cyberattacks and foreign intelligence operations and espionage. It maintains the government’s terrorist watch list and has been involved in the interrogation of “high-value” detainees, sometimes clashing with the CIA.

6. Department of State – Bureau of Intelligence and Research

This bureau collects and analyzes intelligence on global affairs and advises the secretary of State and other diplomats. It conducts foreign opinion polls and tracks and analyzes issues that may undermine U.S. foreign policy objectives, such as weapons proliferation, human trafficking and drug smuggling. Though it’s one of the smallest intelligence agencies, its assessment on weapons of mass destruction in Iraq was not as inaccurate as that of other agencies.

7. Department of Homeland Security – Office of Intelligence and Analysis

The scope of “homeland security” includes emergency preparedness, border control, transportation security and biodefense (Ebola and SARS, for example), among other issues. The Office of Intelligence and Analysis is charged with gathering intelligence in these areas and sharing it with state, local, tribal, territorial and private sector partners through a network of “fusion centers.”

8. Drug Enforcement Administration – Office of National Security Intelligence

The DEA is the government’s watch guard for drugs that are illegally manufactured, distributed or dispensed. It is also responsible for the seizure and forfeiture of assets connected with illicit drug trafficking. The Office of National Security Intelligence assists law enforcement with investigations and prosecutions. Most recently it has focused on the threat posed by a surge in heroin and counterfeit prescription pills containing fentanyl.

9. Department of the Treasury – Office of Intelligence and Analysis

Intelligence gathering at the Treasury dates back to its beginning, when Secretary Alexander Hamilton sent a tax official in disguise to investigate the “whiskey rebellion” underway in western Pennsylvania. Today the Office of Intelligence and Analysis sits within the Office of Terrorism and Financial Intelligence, which works to prevent sanctioned countries, money launderers, terrorists, drug kingpins and purveyors of weapons of mass destruction from parking or moving their money through the U.S. financial system.

10. Department of Energy – Office of Intelligence and Counterintelligence

Even the Department of Energy has an intelligence office. It traces its origin to the Manhattan Project, when the Atomic Energy Commission was charged with analyzing the Soviet Union’s atomic weapons program. Today the office’s role is to provide technical intelligence on foreign nuclear weapons, energy security, science and technology, and nuclear energy, safety and waste.

11. National Geospatial-Intelligence Agency

Supporting the Defense Department, this agency is the principal provider of geospatial intelligence – analysis and information about Earth’s natural and man-made features and geo-tagged activities. This “GEOINT” is used for combat, humanitarian and disaster relief, border and transportation security and security planning for special events. One of the agency’s claims to fame is pinpointing the Abbottabad, Pakistan, compound where Osama bin Laden was hiding; another is operating the reference system for GPS.

12. National Reconnaissance Office

The NRO was a secret agency for 31 years, until its existence was declassified in 1992. The office designs, builds and operates the nation’s reconnaissance satellites, providing the Pentagon, CIA and others precision navigation, early warning of missile launches and near real-time imagery to support anti-terrorism activities. On the civilian side, the satellites help survey damage from natural disasters and support environmental research.

13. Air Force Intelligence, Surveillance and Reconnaissance

The Air Force’s intelligence branch, organized into the 25th Air Force, uses airplanes, drones and satellites to identify hideouts, bunkers, mobile launchers and weapons caches. It is also responsible for code-breaking activities within the Air Force. All that surveillance takes up a lot of digital space – in 2013, one wing alone received 20 terabytes of data daily, processed 460,000 hours of video and disseminated 2.6 million images.

14. Army Military Intelligence

The Army’s intelligence branch intercepts electronic communications and provides maps, ground imagery and information on foreign forces to assist fighters in the battlefield.

15. Office of Naval Intelligence

The Navy’s intelligence branch keeps tabs on foreign scientific and technological research, analyzes the structure, tactics and readiness of foreign naval forces, and tracks merchant shipping to identify illicit activity.

16. Marine Corps Intelligence

The Marine Corps’ intelligence officers create military maps, intercept and translate radio and electronic signals, analyze images collected from sensors and carry out counterintelligence.

17. Coast Guard Intelligence

The Coast Guard, part of the military and the Department of Homeland Security, protects and defends more than 100,000 miles of coastline and inland waterways. On an average day, the Coast Guard conducts 45 search-and-rescue cases, seizes 874 pounds of cocaine, interdicts 17 migrants and helps move $8.7 billion worth of goods, according to its website. Its intelligence office helps with criminal investigations and provides other national agencies with intelligence from domestic and foreign ports, coastal waters and offshore.

Bite the Bullet – We’ve Got Too Many Agencies With Armed Agents

As of 2011, there are at least 25,000 sworn (and armed) law enforcement officers working for federal agencies not traditionally associated with law enforcement.

It raised many eyebrows when we learned last week that the National Oceanic and Atmospheric Administration received 46,000 rounds of ammunition. This revelation—which we are now told was a “clerical error” — came on the heels of the Social Security Administration procuring “174,000 rounds of “.357 Sig 125 grain bonded jacketed hollow point pistol ammunition.”

All of this leads to the question: Why do so many federal agencies need bullets?

While the government claims it needs the ammunition for training– that is exactly the problem. The expansion of the federal law enforcement and regulatory apparatus should be deeply troubling for anyone who believes in limited government and federalism. America has too many national authorities employing their own armed officers to police a vast and growing array of federal statutes.  And in the process, these Feds trample on the police powers left to the states under the Constitution.

The growth of the federal law enforcement bureaucracy has jumped dramatically over the last 20 years. There are now 73 federal agencies that have armed officers, often called “special agents.” And all of these agencies now cordon off and enforce a federal fiefdom of the more than 4,500 criminal laws at the federal level and thousands of additional regulations that have sprung up in recent decades.

The result is a panoply of specialized, niche enforcement organizations that will be tasked to balance the rights of U.S. citizens with a need to justify their budgets. While the U.S. Congress has used the interstate commerce clause to pass sweeping legislation that has eviscerated state rights, the enforcement mechanisms have started to catch up with the rampant over-legislation.

As of 2011, there are at least 25,000 sworn (and armed) law enforcement officers working for federal agencies not traditionally associated with law enforcement, and 3,800 of them were specifically criminal investigators.

The list of agencies—many of which are recent creations—that have their own police forces is staggering. Even the Environmental Protection Agency has its own sworn officers, as does The National Oceanic and Atmospheric Administration (NOAA). While NOAA only has 63 officers today, the EPA started out with one armed officer in 1978 and as of last year it had 265. There is also the General Services Administration, the Department of Education, Agriculture, Housing and Urban Development—and the list goes on.

This is not to say that these agencies do not pursue, in many cases, real violations and crimes. And the protections intended by the laws themselves may be necessary. But the problem is that state and local law enforcement should be tasked to handle many of the issues that have been transformed into federal concerns.

There is a lot of overlapping and duplicative effort with these federal agencies. With approximately 800,000 local and state police officers in the United States, the burden of enforcing laws that cover wildlife, agriculture, or other localized issues should fall on those closest—and therefore most accountable—to the people they police.

As we head into the thick of the 2012 election, a majority of the American people claim to wanted a smaller federal government. Nowhere is the power and reach of the state more acutely felt than in law enforcement. But unless Americans begin to push back against this avalanche of federal police and regulators, the number of people receiving a paycheck to investigate and prosecute average citizens for opaque and even unknowable federal violations will grow dramatically.

Government Regulation: The Good, The Bad, & The Ugly


The American free enterprise system has been one of the greatest engines for prosperity and liberty in history, and has the potential to deliver a promising future for the United States and the world.1 Through protecting property rights and fostering healthy competition, democratic capitalism rewards work and ingenuity which improves our lives and has liberated more people from poverty than any other system.

Yet, the United States faces growing challenges in an increasingly competitive global economy. Recent decades have seen a decline in economic growth and innovation, and one important cause is poorly-designed government policies. Large swaths of the American economy are distorted by government mandates and incentives, and the vast majority of binding “laws” are not enacted by our elected representatives in Congress, but are promulgated by agencies as regulations.

Sensible, evidence-based regulations that respect the fundamental role of free-market competition can provide vital public benefits – such as protecting the environment, public health and safety, civil rights, consumers, and investors. Yet, despite the best intentions, government regulation too often disrupts the marketplace or picks winners and losers among companies or technologies. When regulators behave this way, they invariably cause unintended harms. Poorly designed regulations may cause more harm than good; stifle innovation, growth, and job creation; waste limited resources; undermine sustainable development; inadvertently harm the people they are supposed to protect; and erode the public’s confidence in our government.

This paper examines the important role regulations play in a vibrant economy, how they differ from other government programs, why they can produce unintended consequences, and how reforms could help us achieve the benefits regulations can provide with fewer negative outcomes. With a better regulatory system, we can enjoy a healthy environment, safe workplaces, more innovative products, and greater opportunities and prosperity for all Americans.

I. Regulation can be an important government function.

The federal government has two main vehicles for diverting private resources to achieve policy goals. The first is through spending programs. The IRS collects compulsory taxes, and the revenues are spent on desired public functions such as parks, roads and other infrastructure, schools, law enforcement, homeland security, and scientific research, as well as welfare and social insurance programs such as Social Security, Medicare, Medicaid, food stamps, and unemployment assistance.

The second is through regulation. Federal agencies issue and enforce standards ranging from environmental quality, to consumer protection, business and banking practices, nondiscrimination in employment, Internet privacy, labels and “disclosure,” safe food, drugs, products, and workplaces.

The goals of spending programs and regulations are widely accepted. For example, a clean and healthy environment, safe food and drugs, and fair business and employment practices are among the most important things citizens expect of their government. The goals are largely nonpartisan—most conservatives, moderates, and liberals agree on them. However, the implementation of spending and regulatory programs often is controversial. Disagreement over government policy is inevitable in a society where people’s values, opinions, incomes, and interests vary widely, and when the breadth of government has grown substantially.

A.  Regulation presents special issues, problems, and controversies.

While the goals of most regulatory programs enjoy broad public support, in practice regulation usually comes down to detailed rules and lots of paperwork that can be highly costly and burdensome to those who must comply with them. This includes not only large corporations but small businesses, nonprofit organizations, schools, state and local governments, farms, and consumers and citizens. Some sectors of the economy bear the heaviest burdens, such as manufacturing, automobiles and transportation, energy and power, banking and finance, and health care and pharmaceuticals. But all of us pay for federal regulations through higher prices, fewer available products, services, and opportunities, and stifled wages or job opportunities. The costs of regulation are never “absorbed” by businesses; they always fall on real people.

In our democracy, citizens express their views at election time by voting for candidates and parties that stand for broad menus of policy positions. Between elections, choices on controversial subjects are made through presidential leadership, voting in Congress, court rulings on specific disputes, and “checks and balances” among the three constitutional branches. For citizens to intelligently hold elected officials accountable, however, policies’ benefits and costs must be visible.

While policies effected through both spending and regulatory programs provide benefits to Americans, the costs associated with regulatory programs are much less transparent than their on-budget counterparts. To implement spending policies, presidents send proposed budgets each year to Congress, and Congress must both authorize activities and appropriate necessary funds to implement them. Spending agencies are generally enthusiastic about their programs and want more resources to pursue them, but the available funds are necessarily limited and must be allocated to the highest priorities by Congress and the President in a much-debated, highly-publicized, annual budget process. These checks and balances make elected officials accountable to citizens. Regulatory policies cannot be measured in the same way, however; and there is nothing equivalent to the fiscal budget to track regulatory costs. These costs are like stealth taxation, and because they are assumed to fall on businesses (even though individual consumers and workers ultimately bear them), regulatory tools may seem preferable to direct spending programs for accomplishing an agency’s policy objectives.

Further, regulations have the force of law, but Congress usually just sets broad regulatory goals by statute, and delegates the power to write and enforce detailed rules to specialized regulatory agencies. This means that Congress gets credit for popular regulatory goals while the often-unpopular rules are blamed on “unelected bureaucrats.” This criticism often comes not only from citizens and businesses but also from the legislators who voted for the regulatory statutes in the first place.

B.  Regulatory costs are large, but invisible.

As the size and reach of the government has grown dramatically over the last century, so too have concerns about the costs and unintended consequences of regulatory programs. At the end of the nineteenth century, government accounted for less than ten percent of the U.S. economy. Today, government consumes or directs nearly half of the economy, with direct government spending alone reaching on the order of one-third of U.S. gross domestic product. Regulatory costs, while off-budget and less visible, are no less real.

At the federal level alone, there are over 70 federal regulatory agencies, employing hundreds of thousands of people to write and implement regulations. Every year, they issue about 3,500 new rules, and the regulatory code now is over 168,000 pages long.

Because regulatory impacts are diffuse and hard to measure, no estimates of the actual costs of regulation are completely reliable, but some researchers peg the total annual cost at more than $2 trillion. Other research suggests the drag on economic growth could be twice that much, about $4 trillion per year, or $13,000 for every man, woman, and child in the United States. And we will never know the other costs, such as the value of jobs never created, factories never built, medicines never discovered, or entrepreneurial ideas never realized.

Regulatory mandates often are very costly—for example, for expensive pollution control equipment, extensive testing of new drugs, and collection of detailed information from consumers. As noted, these costs are not controlled as they are for spending programs. Federal spending is limited by the available revenues, and by budgeting among many competing programs. But regulatory costs are born outside the government, by those who must comply with the rules, their customers, and their employees. Additionally, lacking the budget constraint of spending agencies, regulatory agencies are prone to excess. They often pursue their specific mission with zeal, but this results in too little regard for other legitimate goals, such as a strong and growing economy. This “tunnel vision” can result in rules that impose costs greater than the benefits they provide.

C.  Regulation faces fewer checks and balances.

Spending programs, like regulatory programs, often are authorized with broad aspirational language that everyone can support, like the ‘War on Cancer’ or ‘No Child Left Behind.’ But funds for those programs must be appropriated as well as authorized, and it is there in the budget process that we confront the necessary tradeoffs among competing priorities. In contrast, regulatory programs never realistically adjust to the reality that our country’s resources are limited. Both types of programs may claim dramatic benefits from eliminating disease, or crime, or pollution, but such claims often lack credibility and accountability. We would never allow the spending agencies to collect their own taxes from the public, in whatever amounts they feel they need. Yet regulatory agencies effectively do just that.

While many regulatory costs initially fall on regulated businesses, those costs are necessarily passed on—to consumers in the form of higher prices, to employees in the form of lower wages, and to investors in the form of lower returns on investment. For this reason, regulation can produce not only large social benefits but also large negative effects on prices, wages, business investment, and job opportunities. As mentioned earlier, regulation functions essentially as stealth taxation. The balance is often ignored in political debate—when it is assumed, incorrectly, that regulation is a “free lunch.”

D.  The regulatory challenge.

The regulatory dilemma is this: On the one hand, regulation can be critically important to our welfare. Federal and state regulatory agencies have contributed to great improvements in air and water quality, highway safety, public health, honest commerce, racial and gender equality, and many other central aspects of American life. On the other hand, regulatory actions often have come at a cost that exceeds their benefits and sometimes actually have been counterproductive. These failures are abetted by the structure of the regulatory process: regulation operates outside our usual system of checks and balances, where policies are enacted directly by our elected representatives and disciplined by taxing and budgeting. Regulatory agencies have too often fallen short of public expectations and disappointed public trust.

Precisely because of its importance, regulation deserves constructive criticism and earnest efforts at improvement. In the following pages, we attempt to show how regulation can be reformed to achieve its valuable goals more thoroughly, more effectively, and at lower cost.

II. Serious problems with how regulations are made and enforced in practice.

In thinking about the real effects of regulation, it is important to understand that the special resource of the government—which private entities do not possess—is the power to coerce. Interest groups that can convince the government to use its coercive power to their benefit can profit at the expense of others. As a result, regulation tends to get “captured” by well-organized interest groups acting to maximize their own well-being, often at the expense of broader society.

Note that efforts of businesses, activist groups, unions and other organized groups to gain wealth or power through favorable government treatment (called “rent-seeking” in economic jargon), is very different from “profit-seeking, when people attempt to create wealth by discovering and acting on new opportunities. The motivation for each of these activities is to maximize economic returns, but the unintended consequences of profit-seeking and rent-seeking differ dramatically.

A.  Why is “regulatory capture” a problem?

As Adam Smith famously wrote, “it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” “Profit-seeking entrepreneurs continuously move resources to more valuable uses, and in the process create economic growth and development,” which unintentionally leads to “socially beneficial consequences.” More importantly, in a competitive market environment, those returns that initially accrue to a successful entrepreneur are quickly competed away by other profit-seeking entities. Ultimately, consumers receive the gains in the form of lower prices and better products.

In contrast to profit seeking, rent seeking emerges when regulation or other political intervention in markets creates opportunities for some people to gain “rights” that only the government can confer. Such rent-seeking to achieve favorable regulatory treatment is a rational response to the opportunity presented by regulation, and generates concentrated gains for the successful rent seekers at the expense of everyone else. But rather than creating new opportunities and value for consumers, such behavior leads to socially wasteful uses of resources. When regulations can provide competitive advantage, it is often in the self-interest of regulated parties to support them, (often hiding behind public interest arguments) even while other interests oppose them. Thus, talent and energy get channeled into lobbying for favorable government treatment (a zero sum game at best), rather than into entrepreneurial experimentation and innovation that leads to growth and prosperity. This leads to regulatory agencies advancing the commercial or political concerns of the most well-organized special interests (which may be, but are not necessarily, regulated parties).

B.  Insiders gain advantage.

Regulatory programs are sometimes captured by businesses and other “interest groups,” who use them to promote their own end—such as restricting competition and suppressing innovation from new firms and business methods, or advancing their market power or political agendas. And even where regulations are well intended, they can produce unintended negative consequences. For example, drug regulation may delay the introduction of new, life-saving pharmaceuticals.

The well-connected—those who can hire lobbyists and know the right people in Washington—can gain at the expense of ordinary citizens. For example, large, established interest groups, such as large companies and trade associations, environmental groups, trial lawyers, unions, and state, local, and tribal governments, generally have much better access to legislators and regulatory officials, and can influence how regulations are designed and enforced. They often have Washington offices dedicated to ensuring their interests are reflected in regulations. This can disadvantage everyone else—ordinary consumers, taxpayers, workers, small businesses, the middle class, and the poor.

Businesses who ignore Washington, and just concentrate on competing for customers in the marketplace, can quickly find themselves on the losing side of trade policy, or tax policy, or some other regulatory tilt of the playing field. Large businesses also have advantages over smaller entities in that they have systems in place to handle the burdens of regulatory compliance, and can spread those costs over more employees and products. In heavily regulated industries like medical care or consumer finance, it becomes difficult, if not impossible to be successful by attending only to the needs of consumers. Catering to the whims of the regulators can dominate other considerations.

C.  The vulnerable shoulder many of the costs.

The real costs of regulation are passed on to all Americans, who are generally unaware of these costs because they are hidden in lower wages, higher prices for consumer goods and services, and fewer products and opportunities made available. Often, those least able to represent themselves shoulder the greatest burdens.

For example, many regulations lead to higher energy and transportation costs, raising product prices on almost everything we buy. These regulations may lead to some benefits, but is it really fair to ask low-income families to pay a larger share of their income for these benefits than wealthier families?

Products standards that may make sense for many may also price low income consumers out of the market entirely. Higher prices for new cars to incorporate backup cameras, for example, make them less affordable to lower income consumers who end up driving older, less safe cars longer.

Some have suggested that wireless carriers offering certain programming for free or without counting against data limits would violate “net neutrality,” but this could potentially preclude an offering likely to be especially attractive to lower income consumers.

Regulations in the workplace may keep the workplace safer, but they limit worker flexibility, and can dampen wages, or discourage employers from hiring less-experienced or lower-skilled workers.

Lengthy drug approval processes not only increase the cost of new drugs but discourage investment in potentially life-improving products. Consumers may face absurdly high drug prices, not because the drug is new or expensive to produce, but because it enjoys a monopoly protected by regulatory barriers. Only those pharmaceuticals with the potential to earn the highest profits can afford to go through the expense of decades’ long scrutiny. And, patients are prevented from getting access to promising products during the bureaucratic delay, even those with terminal illnesses.

Small, pioneering companies cannot afford the costs and time required to get approval of innovative new products, and often sell out to larger companies with the expertise and resources to obtain government approvals. It is then up to the larger company whether to market the new product or crush it. This reduces competition and innovation, and ultimately increases prices.

D.  The bureaucracy is slow to change and often out of touch with the realities of an increasingly competitive global economy.

There is a growing concern that the U.S. regulatory system has become unsustainable, exceeding the basic rules needed for an efficient, competitive market capable of evolving to meet changing consumer needs. Regulatory burdens accumulate, with new regulations piling on top of old. Like pebbles tossed in a stream, each individual regulation may not have a significant impact, but cumulatively, they can hinder the flow of innovation and economic growth. Feedback loops are lacking in government policy. Regulators have incentives to appear responsive by continually issuing new regulations, but not to evaluate how well existing rules are working. Thus, regulators typically proceed from one regulation to the next without focusing on understanding the results of their work. Insofar as regulators are concerned about results, the yardstick tends to be whether they are criticized by elected officials, interest groups, or judges. This is a weak feedback loop since, when citizens experience good or bad outcomes in their daily lives (such as safer products or higher prices), they rarely know whether those outcomes relate to regulation or other causes. Politicians’ and bureaucrats’ ability to learn from prior policy decisions is constrained not only by poor feedback, but also by a tendency to interpret subsequent events as vindicating the adopted policy or as justifying even more regulation.

III. There is a better way.

Regulation is an essential tool for achieving broad public goals, but as we have shown, poorly designed regulations can do more harm than good. Recognizing that regulations can impose costs on entrepreneurs, workers, and consumers, the U.S. government has adopted procedural and analytical requirements, such as “notice-and-comment” rulemaking and “benefit-cost analysis” for issuing new regulations. These tend to focus on one problem at a time, however, and too often are based on regulators’ over-confident analysis of what consumers should value. As a result, they have done little to constrain regulations or ensure they are serving broad public goals.

Thus, regulations accumulate and stifle innovation and economic growth that is beneficial for all Americans. It need not be this way, however. Americans can enjoy the benefits of regulation while reducing the costs.

A.  Respect market forces and the beneficial effects of competition.

First, in deciding whether to regulate, agencies should determine whether there is a material failure of private markets. This is because competitive markets are not only very efficient at allocating scarce resources to their best use, but in encouraging entrepreneurial activity and innovation. When important effects of a free market transaction (such as environmental pollution) are not captured in the decisions made by buyers and sellers, government should examine the underlying cause of that “market failure” and seek to address it by exploiting, rather than disrupting, the “marvel” that is the market-based economic ecosystem. For example, are property rights poorly defined, or could economic incentives, such as an emissions tax, internalize those costs without inhibiting innovation? Calibrating regulations to address market failures can ensure that government interventions achieve the intended goals while minimizing adverse consequences.

B.  Do more good than harm.

Second, because the goal of regulation is to enhance, not undermine, societal well-being, regulatory agencies should consider important trade-offs and design regulations to do more good than harm. Benefit-cost analysis, despite its limitations, is the best tool for understanding regulatory consequences and ensuring that regulations provide social benefits greater than their social costs. There is longstanding bipartisan consensus on this point: every President since Ronald Reagan has required regulatory agencies to use benefit-cost analysis by Executive order. As the Clinton Administration put it:

[R]egulations (like other instruments of government policy) have enormous potential for both good and harm. Well-chosen and carefully crafted regulations can protect consumers from dangerous products and ensure they have information to make informed choices. Such regulations can limit pollution, increase worker safety, discourage unfair business practices, and contribute in many other ways to a safer, healthier, more productive, and more equitable society. Excessive or poorly designed regulations, by contrast, can cause confusion and delay, give rise to unreasonable compliance costs in the form of capital investments, labor and on-going paperwork, retard innovation, reduce productivity, and accidentally distort private incentives.

The only way we know how to distinguish between regulations that do good and those that do harm is through careful assessment and evaluation of their benefits and costs. Such analysis can also often be used to redesign harmful regulations so they produce more good than harm and redesign good regulations so they produce even more net benefits.”

Although presidential directives have required agencies to balance benefits and costs in designing their regulations for over 36 years, agencies often have interpreted their regulatory statutes to preclude doing so. Fortunately, the courts—including the Supreme Court—recently have clarified that in the vast majority of cases, agencies may exercise their discretion to balance benefits and costs in implementing regulatory statutes. Accordingly, a president could direct all regulatory agencies to reexamine their statutory interpretations, and unless expressly prohibited by law, implement their regulatory statutes through benefit-cost balancing to do more good than harm.

Moreover, to date, a significant number of regulatory agencies—so-called “independent” agencies that do not report to the President (such as the Securities and Exchange Commission, the Federal Communications Commission, and the Consumer Products Safety Commission)—are not required to conduct benefit-cost analysis for their major rules at all, but there is a strong consensus that they should be required to do so. Therefore, presidents could include the independent regulatory agencies within the requirements for benefit-cost balancing, including the directive to modernize their statutory interpretations to do more good than harm.

Unfortunately, the office that reviews important regulatory proposals under the presidential directives for benefit-cost balancing—the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget—is grossly underfunded for the task at hand. Since its creation over 36 years ago, OIRA has lost over half its staff (from 97 to about 47), while the staff of the regulatory agencies has almost doubled (from 146,000 to 278,000). Increasing OIRA’s resources commensurately could improve agency analysis and regulatory outcomes.

Finally, it is important that the fundamental and eminently rational requirement for regulators to balance benefits and costs to ensure regulations do more good than harm be required by statute, not just through a presidential order. A judicially enforceable benefit-cost test is needed because the status quo is inadequate for many reasons, including the institutional limitations of the agencies and OIRA (such as bureaucratic turf battles, failure to utilize both internal and external expertise, bias, and the mismatch between the vast volume of regulation and OIRA’s shrinking resources), as well as political dysfunctions (including inconsistent support for OIRA by varying administrations, interest group rent-seeking, and presidential electoral politics). Scholars have shown that the courts are quite capable of competently reviewing agency use of benefit-cost analysis. Indeed, benefit-cost balancing is so fundamental to rational decision making that the courts already have shifted toward requiring agencies to do more good than harm, even in the absence of Congressional action.

C.  Base decisions on the best available information and transparency.

Important regulatory decisions should be based on high quality information and should be transparent to the public. Specifically, regulators should base their regulatory decisions, priorities, and influential information disseminations on the best available scientific and technical information, including an objective and unbiased evaluation of the cost, benefits and risks, and a careful analysis of the weight of the scientific evidence. Influential scientific information and assessments should be peer-reviewed by independent experts before being disseminated.

Agencies also should disclose early to the public the important data, models, and other key information used in major rulemakings and provide a meaningful opportunity for public input. Court settlements between regulators and interest groups to require rulemakings should be published and made available to the public, and reviewed by OIRA, before they are final.

D.  Gather better feedback.

The feedback loop between businesses and customers is an essential element of an economic ecosystem that regulations often disrupt.40 When considering public policies to address perceived problems, regulators must appreciate the value of competition and choice at regulating undesirable behavior. We live in a diverse society made up of individuals in varied circumstances and with different preferences. One-size-fits-all regulatory approaches at the national level that reduce competition, choice, and feedback disrupt learning processes, protect favored interests from challenge, and make the economic ecosystem as a whole less able to adapt and innovate.

E.  Encourage experimentation and learning.

Regulation should not short-circuit trial and error. No one, in the market or in the government, makes mistakes on purpose, but they are inevitable, particularly in complex, rapidly changing conditions. Mistakes are inevitable when regulators take precautionary approaches to regulation or when they attempt to substitute some products for others. Mistakes in the marketplace generate immediate pressures to make corrections. Mistakes in regulation too often create pressures for even more regulation.

When regulation is necessary, the policies themselves should be designed in ways that encourage competition and allow for experimentation and testing of regulatory hypotheses. These need not be randomized controlled trials in the scientific sense, but rather natural experiments that allow for trial and error and real-world observation of how different policies affect behavior and outcomes.42 To generate natural experiments, whenever possible, policies should be developed at the state and local levels. Global governance structures that reduce competition among regulators will quash healthy differences that permit experimentation and learning.

F.  Regulatory humility.

Regulators should be humble about what they know, and what they do not.  Interventions in complex systems that are not completely understood are fraught with risk.  Even with the best of intentions, sensible sounding “solutions” can make things worse, and sometimes much worse.  For this reason, a foundation of medical ethics is the Hippocratic Oath:  First do no harm.

Regulators should follow the same principle.  When a problem is not well understood, or the effects of a regulation are uncertain, or rapid technological change means present circumstances are not likely to last, regulation that impedes market adaptation can do more harm than good.

The success of capitalist systems does not depend on markets being efficient, or on people always behaving rationally, but rather their complex, adaptive44 features, like natural ecosystems.45 Both market participants and markets learn from their mistakes and correct them. Static analyses by benevolent regulators willing to substitute their judgment for that of diverse individuals with different circumstances and preferences ignores this insight and unwittingly reduce opportunities, growth, and human flourishing.

Like everyone else, government actors are susceptible to giving more weight to information that supports their position, discounting data, research, values and perspectives that call regulatory action into question. Political demand for costly regulation of highly publicized risks, even when scientists believe that those risks are minimal and not worth addressing, may reinforce bad government policies.

G.  Address regulatory accumulation.

Finally, incentives are needed to address the accumulation of regulations already on the books. As noted above, unlike ecosystems and interactions in non-government spheres, where individuals and organizations are constantly learning from past experience and updating their behavior accordingly, the regulatory sphere has no feedback loop. The regulatory framework tends to focus on solving the next big problem (on the assumption that markets fail but regulators are infallible), without ever looking back to see if the rules in place are actually working as anticipated. The incentives of the regulatory agency can be perverse, causing it to actively avoid the efficient solution—to prefer a system of rules and enforcement actions, for example, to a self-enforcing system of emissions taxes.

All the incentives in the federal bureaucracy are to create more and more regulations under the vast authority of the administrative state. Thus, both administrative and statutory structures should be created to counterbalance these incentives.

There should be retrospective review to streamline and simplify existing rules and to remove outdated and duplicative rules. The retrospective review process should be the start of a bottom-up analysis of how agencies can best accomplish their statutory missions. This should include a careful analysis of regulatory requirements and their necessity, as well as an estimation of their value to achieve needed outcomes. No significant new rule should be issued without a plan for review.

A team within agencies (perhaps like the regulatory reform task forces established recently by Executive Order 13777) dedicated to identifying deregulatory opportunities could provide a counter-weight to the natural focus of regulatory agencies on issuing new regulations. But even such structures may at times be defeated by a culture of regulatory zeal within an agency. Thus, as Professor Michael Rappaport of San Diego Law School has suggested, Congress could create an agency that would have express statutory authority to deregulate. The agency should have the authority that all existing agencies have, but only to pass regulations that deregulate. The deregulatory agency would employ the additional time, insulation, and expertise that administrative agencies possess in the service of deregulation.

The agency would also have the right incentives to deregulate: it would likely be filled with people who understand and support deregulation, and the agency’s public reputation and internal incentive structure would be driven by the efficacy of its deregulatory actions.

By raising proposals in the form of proposed rules, the agency would both publicize the case for the deregulation and constrain any hubris from the regulatory agencies.

Precisely because of its importance, regulation deserves constructive criticism and earnest efforts at improvement.

The US Intelligence Community Is Bigger Than Ever, But Is It Worth the Cost?

The intelligence community has grown to an enormous size and Americans have no clue what they’re paying for.

The U.S. spends nearly $1 trillion on national security programs and agencies annually, more than any other nation in the world. Yet despite this enormous investment, there is not enough evidence to show the public that these programs are keeping Americans any safer – especially in the intelligence community. Excessive government secrecy prohibits the public and oversight agencies alike from determining whether our expensive intelligence enterprise is worth the investment.

The United States intelligence community is comprised of 17 federal agencies assigned an array of missions relating to national defense, foreign relations, homeland security and law enforcement. These agencies form just the foundation of a sprawling enterprise that incorporates intelligence and non-intelligence components of many other federal agencies, state and local police, including fire and emergency response, international government partners, as well as private companies and organizations.

These entities connect through an array of information sharing platforms and portals, including the National Counterterrorism Center, the Joint Counterterrorism Assessment Team , 71 FBI Joint Terrorism Task Forces , 56 Field Intelligence Groups , and 78 state and local intelligence fusion centers , which can incorporate military and private sector participants. Information collected by any of them can be distributed through official information sharing systems like the Defense Department’s Secret Internet Protocol Router Network, or SIPRNet ; the U.S. Navy’s Law Enforcement Information Exchange, or LInX ; the Department of Homeland Security Information Network, or HSIN ; the Director of National Intelligence’s Information Sharing Environment, or ISE ; and the FBI’s eGuardian , National Data Exchange, or N-DEx ; National Crime Information Center, or NCIC ; and Law Enforcement Online, or LEO , among others.

FBI and Department of Homeland Security officials operate several private sector intelligence sharing organizations as well, including the Domestic Security Advisory Council InfraGard , and the National Cyber Forensics and Training Alliance . They have established formal “strategic partnerships” with certain businesses and universities for counter-intelligence and counterterrorism purposes. Private industries and “key” resources the government deemed “critical infrastructure” have established 18 Information Sharing and Analysis Centers . In 2010, the Washington Post documented almost 2,000 private companies working on counterterrorism, homeland security, and intelligence. Over 5 million government employees and private contractors now hold security clearances giving them access to classified information.

U.S. intelligence agencies also have close working relationships with international partners, including the governments of the United Kingdom, Canada, Australia and New Zealand under the “ five eyes ” agreement. They share intelligence with other nations such as Israel and Saudi Arabia through memoranda of understanding, or other less formal agreements . The U.S. military maintains from 598 to 1,000 bases and installations in at least 40 foreign countries.

The annual intelligence budget exceeds $70 billion per year, but that figure represents just a small portion of what the U.S. spends on national defense and homeland security. 

The nonpartisan Project on Government Oversight and the Columbia Journalism Review back up Friedman’s estimate that the U.S. now spends roughly $1 trillion a year for national security. This figure dwarfs the combined defense budgets of all possible contenders, combined.

Friedman argues that the threats we face today don’t justify such profligate spending. Protected by oceans and bordered by friendly nations, there’s little risk of a foreign invasion. Deaths from wars and other political violence abroad have sharply decreased as well. Terrorism and violent crime in the U.S. are at historically low levels.

Yet despite the relative safety our nation enjoys and the enormous effort and expense dedicated toward strengthening U.S. security, Americans feel less safe than any time since the 9/11 terrorist attacks. So the question isn’t just whether our national security measures are necessary, but whether they work. Do our intelligence agencies actually improve U.S. security and give policy makers the best available information to make wise policy decisions?

Unfortunately, the excessive secrecy shrouding intelligence activities means Americans have little public information from which to evaluate whether the intelligence enterprise is worth the investment.

There are many culprits we can blame for spreading undue public fear, from a sensationalist media to manipulative politicians . But a significant part of the problem is that intelligence officials are incentivized to exaggerate threats, which risks the misapplication of security resources and poor national security policies.

Once the threat assessment process is corrupted this way, resources will be misdirected as policy makers overemphasize threats that resonate with the public, while ignoring ones that don’t, leaving us vulnerable even as security resources are squandered. The FBI’s 2004 warnings about increasing mortgage fraud fell on deaf ears in the intelligence establishment, for example, which waited until 2009 before it identified the resulting global economic meltdown as the primary threat to national security.

Americans’ ability to hold our government officials accountable for national security policy decisions requires public information about the threats and the measures necessary to protect us from them. As Friedman has argued , there isn’t a simple formula for defending American security, “but skepticism — toward both what we are told to fear and the defenses we are sold to confront it — is a good start.” 


The appropriate goal of regulation is to enhance, not undermine, societal well-being. In other words, regulation should do more good than harm. Without a counterfactual, it is impossible to know what a more disciplined regulatory environment would have meant for economic growth and well-being. However, evidence suggests that a smarter regulatory approach targeted at problems that cannot be solved by other means could have enormous benefits for current and future generations.

Though difficult to measure, it is widely recognized that the quality and extent of government regulation is “a major determinant of prosperity.” The World Bank conducts annual Doing Business surveys measuring government policies and the ease of doing business in different countries. Over the last decade, the U.S. has dropped from #4 to #8 on the World Bank’s list.

The World Bank finds that the highest ranked countries in its survey regulate, but “they do so in less costly and burdensome ways, and they focus their efforts more on protecting property rights than governments in other countries.” It observes, “a thriving private sector—with new firms entering the market, creating jobs and developing innovative products—contributes to a more prosperous society,” “promotes growth and expands opportunities for poor people.”

Empirical studies of deregulated industries in the U.S. demonstrate the impact of regulation on innovation; they consistently find that deregulation enables greater innovation and larger price reductions than economists predicted based on pre-deregulation costs and market conditions.

A few studies have attempted to quantify the effect of regulation on economic growth, productivity, and innovation. For example, in a classic analysis from the 1980s, Jorgensen & Wilcoxen simulate the long-term growth of the U.S. economy with and without environmental regulation and conclude that “the cost of environmental regulation is a long run reduction of 2.59 percent in the level of the U.S. gross national product.” More recently, McGrattan and Prescott find that higher regulatory costs contribute to lower total factor productivity (TFP) and GDP. Dawson & Seater estimate that regulations reduced gross domestic product (GDP) growth by 2 percent per year between 1949 and 2005, leading to an accumulative reduction of $38.8 trillion in GDP.

A better regulatory system is always in the national interest: With a better regulatory system, we can have more innovative products, higher wages, and upwardly mobile jobs. A smarter regulatory process can ensure that regulations enhance societal well-being, rather than provide an advantage for powerful interest groups. Now more than ever, regulatory reform is essential for both the economic and the political well-being of the nation. The United States faces one of its highest levels of debt to GDP since World War II. The retirement of the baby boomers will only exacerbate this problem. The only solution for reducing the ratio, other than painful tax increases or benefit decreases, is the faster economic growth that regulatory reform can bring.

The United States is more bitterly divided politically than it has been for decades. If regulations focus on promoting public goods and preventing public “bads”, rather than serving as a forum for special interests and partisanship, the regulatory system can address the needs we have in common rather than divide us. It also can address widespread social discontent at the ability of insiders to gain at the expense of outsiders. Regulatory reform can blunt the force for division by reducing rent-seeking and unlocking the healthy competition and creativity needed to revive opportunity, prosperity, and freedom in the United States and the world.

In the addendum of this article I included a complete list of federal agencies that exist in this country. What an eye opener, and you wonder why we have a deficit every year. We could eliminate 25% of them without missing a beat.


forbes.com, “How Many Federal Agencies Exist? We Can’t Drain The Swamp Until We Know.” By Clyde Wayne Crews Jr.; forbes.com, “How Many Rules And Regulations Do Federal Agencies Issue?” By Clyde Wayne Crews Jr.; washingtonexaminer.com, “These 8 federal agencies are the worst. Here’s how to fix them.” by Washington Examiner Staff; latimes.com, “There’s more than the CIA and FBI: The 17 agencies that make up the U.S. intelligence community.” BY NINA AGRAWAL; theblaze.com, “Bite the Bullet – We’ve Got Too Many Agencies With Armed Agents.” By Bruce Sexton; regproject.org, “Government Regulation: The Good, The Bad, & The Ugly.” By Howard Beales, Jerry Brito, J. Kennerly Davis, Jr., Christopher DeMuth, Donald Devine, Susan Dudley, Brian Mannix and John O. McGinnis; defense.com, “The US Intelligence Community Is Bigger Than Ever, But Is It Worth the Cost? The intelligence community has grown to an enormous size and Americans have no clue what they’re paying for.” By MICHAEL GERMAN; usa.gov, “A-Z Index of U.S. Government Departments and Agencies.”;


A-Z Index of U.S. Government Departments and Agencies























What Is Wrong With Our Country?