Invisible Economic Red Tape

I've read and collected several recent editorials from the Wall Street Journal which, taken together, provide a clearer picture of how our government is strangling the US economy and perverting energy policy in ways which aren't hitting the front pages of the nation's newspapers, nor the headlines of the conventional broadcast network news programs.


Item One
A Journal staff editorial from the Memorial day weekend contends,


"The regulatory tax on Americans is now larger than the income tax."


It cites two Lafayette College economists, in a study "sponsored by the Small Business Administration" as finding that federal regulatory compliance costs the US $1.7T annually. So much for Cass Sunstein's little piece claiming that regulatory burdens are shrinking.


In one incredible passage, the editorial notes,


"In one case, the (CTFC) lawyers even insisted that the only costs they needed to count were what a company would have to spend to find out if a rule applied to it, but not the costs of actually complying with the rule."


Item Two
Nick Schulz of the American Enterprise Institute reviewed the book Great Again by Henry R. Nothhaft.


Schulz writes,


"Nothhaft is not one of those professional declinists.....a veteran Silicon Valley entrepreneur who is the CEO of.....Tessera."

The review describes one California company being forced to pay a state 'use' tax of $1MM on top of the $10MM it paid for the German production equipment.

Nothhaft recounts how a prior startup which he took public spent $3MM on Sarbanes-Oxley compliance, far in excess of the bill's average estimated $91K.

America's tax rates are also excoriated. With reductions in many European national rates and the Chinese competing aggressively with low tax rates, including special low rates for semiconductor manufacturers, one venture capitalist explains that his firm won't even bother trying to start those kind of ventures in the US anymore. They'll choose China instead.

Item Three
Yesterday's lead staff Journal editorial detailed how the current administration is implementing a sort of 'pocket veto' of Alaskan oil exploration, production, and usage of the North Slope pipeline.

What the average American doesn't know is that, once the pipeline no longer pumps oil, it must be dismantled. Well, the original North Slope fields are aged and pumping about a third of their peak production. This results in slow-moving oil that causes damage to the pipeline.

Meanwhile, although the Bush administration auctioned leases for one section of the North Slope expected to contain more oil than the original find, the Obama administration has allowed green anti-oil lawyers to block development of the leases, leading to Shell to shut down said attempts at development. ANWR remains off limits, as does at least one other large block of almost-proven tens of billions of oil reserves.

The net result is to silently shut down Alaska's potential oil production and, in the process, force the owners of the pipeline to dismantle it, making subsequent construction in this age of greater environmental obstructions, nearly impossible.

So much for government's solutions to spending hundreds of billions on Arab oil. And for removing regulatory constraints on the American economy.