Answer:
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.”
