Last month in Grand Junction the National Association of Manufacturers partnered with the National Federation of Independent Business to review a recent report produced by W. Mark Crain and Nicole V. Crain of Lafayette College, a husband and wife economic research team, who estimated the financial impacts of federal regulation on small firms. NFIB’s

Colorado-Wyoming director, Tony Gagliardi, invited Congressman Scott Tipton, R-Cortez, to join 100 Western Slope business owners at a briefing on the 2014 study, which was sponsored by NAM. Whether you are a supporter or critic of extensive regulation, the size and scope of the federal regulatory apparatus is daunting. The regulatory burden per employee for all businesses averages $9,991 annually, but rises to $11,724 per worker for companies with fewer than 50 employees. For manufacturers these costs jump substantially, averaging $19,654 per employee. Large, fixed compliance requirements drive the price to $34,671 at companies with fewer than 50 workers.

This appears to be nearly enough money for government to place an auditor next to each employee, as 88 percent of all firms report compliance with federal regulations as their single largest challenge. Smaller companies that lack the internal accounting, legal, fiscal, human resource and environmental expertise of larger firms must rely on extensive use of outside consultants to meet these reporting requirements. Also looming over employers is the possibility of a random compliance investigation. The chance of such an audit runs about 20 percent each year and, when selected, response costs for a business average $83,000. In a small firm, this represents is a lot of regulation — not to mention state and local requirements that are often layered on top of the federal regime. It is evident that a lot of courage is required to start down the entrepreneurial path.

Since 1997 the White House Office of Management and Budget has produced an annual report that provides an estimate of the cost/benefit balance for federal regulations. In OMB’s 2014 draft report, it identifies 37,022 distinct rules adopted between 2004 and 2013; 569 of these are classified as major rules and 116 of were subjected to financial analysis since their projected fiscal impact exceeded $100 million dollars. In total the economic cost for these rules is estimated in the range of $74-110 billion annually, less than 1 percent of GDP. The Crains believe this methodology significantly understates the actual regulatory costs. Many regulations don’t begin to express their true costs for a decade, or more, following their adoption and the tens of thousands of minor rules collectively constitute an unseen drag on the economy. Consequently, they estimate the true regulatory burden as closer to 12 percent of GDP. Total federal regulatory costs in the economy are estimated at $1.9 trillion, with $1.1 trillion of that falling on businesses.

As large as these costs appear, they have not prevented the United States from being ranked as the third most competitive economy in the world, exceeded only by Switzerland and Singapore. The World Economic Council ranks governments across the globe on a range of obstacles to economic vitality, including corruption and graft, which often exceeds 10 percent of national GDP, tax policies, trade barriers and infrastructure. One of the most frequent complaints from American manufacturers and business owners is the unpredictability of federal policy in a regulatory environment that authorizes dozens of new rules on a weekly basis. Across the economy compliance costs grows at a rate of 6 percent a year and now average 36 percent of payroll expense.

Although Democrats are frequently pummeled for the relentless growth of the regulatory state, it is worth noting that the Obama administration has approved fewer new federal rules than any administration over the past half-century — yet another achievement it has failed to adequately advertise. Cass Sunstein, a libertarian behavioral economist from the University of Chicago, was selected to head the Office of Information and Regulatory Affairs. Married to Samantha Powers, the President’s United Nations Ambassador, Sunstein is a prolific author whose most recent work is “Valuing Life: Humanizing the Regulatory State.” He has carefully culled proposed regulations emerging from the administration’s executive agencies and departments. As economist Robert Kuttner observed in a recent evaluation of Sunstein in Harper’s Magazine. “For more than a decade, Sunstein’s passion has been the idea that markets may be reconciled with government intervention — if the government will respect individual’s right to choose.” Protecting that right demands regular re-examination of rules and a commitment to reducing their complexity. John Hickenlooper has evidenced a similar commitment to streamlining Colorado’s regulatory framework.

With a little vigilance and audible complaint, there’s no reason why things can’t get better.

Miller Hudson writes about public policy issues for The Colorado Statesman. He can be reached at mnhwriter@msn.com.