Federal regulation has grown dramatically in recent decades, whether considered absolutely, as a relative share of the U.S. economy, or as a relative share of the output of the federal government. Businesses increasingly face an assortment of federal mandates and legal liabilities that dictate decisions about production, products, payrolls, and personnel practices.

The authors of this statement of principles believe that the current approach to federal regulation urgently needs repair. The problem is not simply that current expenditures mandated by regulation are large?on the order of $200 billion annually for environmental, health, and safety rules alone. It is rather that a substantial share of those expenditures is ineffective: as a result, more intelligent policies could achieve the same social goals at much less cost or more ambitious goals at the same cost.

We do not take the view that all regulation is bad or that all regulation is good. We should judge regulations by their individual benefits and costs, which in the past have varied widely. The important point is that, in an era when regulation appears to impose very substantial costs in the form of higher consumer prices and lower economic output, carefully assessing and weighing the likely benefits and costs of rules has become a central task of responsible government.

This primer identifies six critical problems with regulation and offers eight concrete recommendations for regulatory reform. We offer this agenda for reform in hopes of engaging legislators and policymakers interested in constructive action.

Some of our recommendations, such as revising many existing laws and experimenting with a regulatory budget, may be politically difficult. But several recommendations?routine reporting of the benefits and costs of federal regulation, improving regulatory analysis, and increasing resources devoted to regulatory analysis?could and should receive serious consideration in the 105th Congress.

If Congress continues to allow regulations to be produced without much attention to their full economic consequences, there is a very real danger that the standard of living that most citizens enjoy will slowly but surely erode. If, on the other hand, Congress takes the lead in more effectively targeting regulation at the nation?s most important social problems, Americans can count on enjoying a high standard of living and continued social progress.