How Expensive Has Federal Regulation Become?
Federal regulation now costs the American economy more than $2 trillion each year by some estimates, a burden larger than the GDP of all but a handful of countries. Small businesses pay the highest price. The Competitive Enterprise Institute publishes an annual survey of federal rules, and it found that agencies finalized more than 3,000 new regulations in 2024 alone. That is not governance. It is a paperwork factory. For a business with fifty employees, compliance can consume thousands of hours and hundreds of thousands of dollars that could have gone to wages, inventory, or expansion.
The cost is not just financial. It is human. Entrepreneurs spend evenings filling out forms instead of designing products. They hire compliance officers instead of machinists. They postpone openings because permits move at the speed of bureaucracy. The Small Business Administration has reported that regulatory compliance costs small firms roughly $12,000 per employee per year. For a corner hardware store or a family restaurant, that is the difference between profit and loss. It is also the reason many young people stop dreaming of opening a shop and settle for a corporate cubicle.
And the burden keeps growing. The Federal Register, the official journal of federal rules, regularly exceeds 80,000 pages annually. No human can read it. No business can fully obey it. The result is selective enforcement, where regulators pick winners and losers based on political pressure rather than public safety. That is the opposite of the rule of law. When the rules are too numerous to know, everyone becomes a lawbreaker. And selective prosecution becomes a tool of power, not justice.
Large corporations absorb these costs more easily than small ones. They maintain legal departments, government affairs teams, and lobbyists who help write the rules. Regulation becomes a barrier to entry that protects incumbents and strangles startups. This is the dirty secret of progressive rulemaking. It claims to constrain corporate power while entrenching it. The small business owner has no such armor. She is exposed.
Which Rules Hit Small Businesses Hardest?
Some of the worst offenders come from agencies that small business owners barely know exist. The Department of Labor's overtime rule, the EPA's waters rule, and the FTC's noncompete ban all piled new obligations onto Main Street in recent years. Each was sold as protection for workers or consumers. Each created chaos for employers trying to stay afloat. Each assumed that Washington knows better than the owner who signs the paychecks.
The Federal Trade Commission's 2024 noncompete rule is a perfect example. It voided millions of existing employment contracts nationwide in the name of worker mobility. The U.S. Chamber of Commerce sued, and courts blocked the rule before it could take full effect. But the damage was done. Companies spent months revising agreements, consulting lawyers, and worrying about whether their trade secrets would walk out the door. The uncertainty alone was a tax on enterprise.
The EPA's definition of Waters of the United States has been revised so many times that farmers and developers need a law degree to know what they can do with their own land. One version expands federal jurisdiction over seasonal streams and ditches. Another narrows it. The pendulum swings with each administration. Meanwhile, the family-owned property sits unused because nobody can afford the permitting fight.
Healthcare regulation is another anchor. The Affordable Care Act imposed reporting requirements, insurance mandates, and tax forms that keep accountants busy year-round. A 2023 National Federation of Independent Business survey found that healthcare costs ranked as the top concern for small employers, ahead of taxes and regulations. But regulations are what make the costs opaque and the choices narrow. They prevent association health plans, direct primary care, and price transparency from taking root.
What Would Real Regulatory Relief Look Like?
Real relief starts with a simple principle: no new major rule without a vote by Congress. The REINS Act, which has passed the House in previous sessions, would require lawmakers to approve any regulation with an annual economic impact over $100 million. That restores accountability. It also restores balance. Agencies write rules because legislators prefer to avoid hard votes. That cowardice ends when the people's representatives must own the consequences.
Congress should also mandate regulatory sunsets. Every rule should expire after ten years unless explicitly renewed. Sunsets force agencies to justify old rules in light of new evidence. They prevent obsolete requirements from lingering like barnacles on the hull of the economy. The Paperwork Reduction Act was supposed to help. It did not. Sunsets would.
The administration can act now. It can direct agencies to identify rules that impose costs without clear benefits and suspend them pending review. It can expand the use of regulatory budgets, where new costs must be offset by repealed costs. The United Kingdom tried a one-in, two-out rule under Prime Minister David Cameron, and the early results were promising. The Trump administration's own deregulatory efforts in the first term saved billions by requiring agencies to cut two rules for every new one.
Finally, Washington must respect state and local laboratories. One-size-fits-all regulation from a distant capital rarely fits anyone well. States like Texas and Florida have shown that lighter touch oversight can coexist with strong consumer protection. Let communities experiment. Let businesses vote with their feet. Competition among jurisdictions is a feature, not a bug.
The American entrepreneur is not asking for special treatment. She is asking to be left alone long enough to build something. On June 5, 2026, that should not be too much to ask. But after decades of regulatory creep, it will take more than speeches. It will take a wrecking ball aimed at the federal rulebook. Main Street deserves nothing less.
