Regulators' Budget

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Federal Outlays for Agencies

The president’s FY 2020 Budget would increase overall spending on regulatory agencies over 2019 levels. It requests $75.2 billion in regulatory outlays, compared to estimated outlays of $71.5 billion in 2019. In real (inflation-adjusted) terms, this would mean a 2.9 percent increase in spending. The FY 2019 regulators’ budget is 0.9 percent higher than in 2018.

These topline figures hide some large proposed increases in some regulatory agencies and large decreases in others, however. Reflecting the Trump administration’s priorities of strengthening the border and limiting illegal immigration, agencies involved in border security and immigration enforcement are slated for significant increases in both funds and staff. Under the president’s proposal, regulators in the Department of Homeland Security (DHS) would receive a 9.2 percent real increase in resources and a 5.6 percent increase in staff in 2020. Within DHS, funding for Customs and Border Protection (CBP), Immigration and Customs Enforcement (ICE), and the U.S. Coast Guard would increase by 6.3 percent, 22.2 percent, and 24.9 percent, respectively.

These increases are offset by reductions at other agencies. Apart from the homeland security category, funding for the four other main categories of social regulation—consumer safety and health, transportation, workplace, and energy and environment—would decline in real terms. Similar to the president’s request for FY 2019, the FY 2020 Budget targets agencies involved in environmental and energy regulation for the biggest cuts. In particular, the Department of Energy (DOE) would receive 31.8 percent less in 2020 than appropriated in 2019, and the Environmental Protection Agency (EPA) is slated for a 5.1 percent reduction below 2019 spending levels in real terms.

Overall, agencies conducting economic regulation—categorized as finance and banking, industry-specific regulation, and general business—would receive 0.6 percent less in real resources. However, those cuts are primarily concentrated in spending on finance and banking, which would fall by 4.7 percent.

Federal Agency Staffing

The president’s Budget calls for a 1.9 percent increase in the total number of FTEs at the regulatory agencies tracked here. The FY 2020 Budget requests 287,063 employees—5,457 more than estimated 2019 levels, which were 5,628 greater than 2018.

Similar to the trend for federal spending on social regulation, the Budget requests large staffing increases in agencies focused on homeland security regulation (5.6 percent), while seeking substantial reductions in staff dedicated to the environment and energy category (-14.0 percent). The other categories would remain largely unchanged from 2019 to 2020.

The FY 2020 Budget requests a 1.3 percent increase in staffing at agencies involved in economic regulation. FY 2019 levels are an estimated 1.8 percent higher than in 2018. In 2018, FTEs totaled 44,777, while estimated FTEs for this category are 45,589 in 2019 and 46,184 in 2020. Overall, staffing for the finance and banking category would fall an estimated 0.2 percent in 2020, rise by 1.4 percent for industry-specific regulation, and increase by 2.6 percent for general business.

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Federal Outlays for Agencies

The president’s FY 2019 Budget would maintain overall spending on regulatory agencies at 2018 levels. It requests $71.0 billion in regulatory outlays, compared to estimated outlays of $70.0 billion in 2018. In real (inflation-adjusted) terms, this would mean a 0.1 percent increase in spending. The FY 2018 regulators’ budget is 4.7 percent higher than in 2017. The number of regulators would fall slightly from 280,872 in 2018 to 280,268 in 2019 (a 0.2 percent reduction).

These overall figures hide some large proposed increases in some regulatory agencies and large decreases in others, however. Reflecting President Trump’s priorities, agencies involved in border security and immigration regulation and enforcement are slated for significant increases in both funds and staff. Regulators in the Department of Homeland Security would receive a 4.8 percent real increase in resources, and a 3.8 percent increase in staff in 2019. The Budget also requests a 5.0 percent increase in resources for the Food and Drug Administration and an 11.5 percent increase for the Department of Housing and Urban Development.

These increases are offset by reductions at other agencies. The president’s “Budget Message” emphasizes his deregulatory priorities, and promises to “continue to relentlessly target unnecessary regulations for elimination. For example, the Consumer Financial Protection Bureau requests a 10.4 percent reduction in its outlays, which marks the first year since it was established in 2011 that its outlays have not increased by at least $40 million (or 5 percent). The Budget targets agencies involved in environmental and energy regulation for the biggest cuts. In particular, the Environmental Protection Agency (EPA) is slated for a 24.9 percent reduction below 2018 spending levels.

Federal Agency Staffing

The president’s Budget calls for a 0.2 percent reduction in the total number of full-time equivalent employees (FTEs) at the regulatory agencies tracked here. The FY 2019 Budget requests 280,268 employees—604 fewer than estimated 2018 levels, which were 3,709 greater than 2017. While total staffing remains relatively constant, Table 2 shows the distribution of FTEs across agencies may be changing.

As is true with spending, in the social regulation category, the Budget requests large staffing increases in agencies focused on homeland security regulation, while seeking reductions elsewhere. ICE seeks an additional 3,356 FTE, the Coast Guard an additional 1,159 FTE, and TSA an additional 681 FTE. Offsetting these increases are requested reductions of 4,930 from the energy and environment regulators; with EPA requesting 3,838 fewer staff than estimated levels in 2018. The Budget also requests reductions of 1,183 FTE in the consumer safety and health category, 220 fewer employees regulating transportation, and 99 fewer FTE involved in workplace issues. Overall, the Budget requests staffing levels for agencies in the social regulation category of 234,056 FTE in 2019. That is a 0.4 percent reduction from the estimated 234,936 personnel in 2018.

The FY 2019 Budget requests a 0.6 percent increase in staffing at agencies involved in economic regulation. FY 2018 levels are an estimated 1.5 percent higher than in 2017. Estimated FTEs for this category are 45,936 in 2018 and 46,212 in 2019. Despite proposed reductions in spending, the CFPB requests a slight increase of 16 additional FTEs in 2019, after adding an estimated 149 new staff in 2018. The Patent and Trademark Office would also continue to grow, with an increase of 149 people in 2019 and 228 in 2018. The Budget calls for reductions in the Securities and Exchange Commission’s staff of 61 FTE in 2019 and 98 in 2018.

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Although President Trump has made reducing regulatory burdens a priority, he proposes to increase the regulators’ budget in FY 2018. The proposed 2018 regulators’ budget reflects a 3.4% real increase in expenditures. The proposed increase is twice the 1.7% increase estimated in 2017.

Proposed outlays are $69.4B for 2018 compared to $65.9B in 2017 and $63.7B in 2016. Proposed staffing levels would decline by 0.5%—from 281,300 full-time personnel in 2017 to 279,992 in 2018. In 2017, regulatory agency staffing increased 1.5%.

Some agencies are budgeted for significant increases in both expenditures and staff, while others face dramatic cuts.  Agencies within the Department of Homeland Security (DHS) focused on immigration are the big budgetary winners including:  Coast Guard,  Immigration and Customs Enforcement, Customs and Border Control, and  Transportation Security Administration.

Overall, DHS regulatory agencies would increase expenditures by 13.7% (an additional $4.1B) in 2018, after a 5.9% increase ($1.7B) in 2017.  DHS staffing is also budgeted to grow by 2.3% (3,294 additional people) in 2018 following a 1.3% increase (1,896 people) in 2017.

The Environmental Protection Agency (EPA) is targeted for sharp reductions in both expenditures and staffing. The Budget proposes a 26.2% reduction in EPA’s outlays, to $4.1B in 2018, down from $5.5B in FY 2017.  If implemented, this would be EPA’s smallest budget since 1987.

EPA’s staff under the proposed 2018 budget would decline by 3,811 employees—from 15,500 to 11,689—a reduction of 24.6%. The last time EPA employed fewer than 12,000 employees was 1984.

Agencies that are at least partially funded by fees on the entities they regulate are generally growing at a faster rate than those that depend on appropriations from general funding.

The Food and Drug Administration, the Patent and Trademark Office, the Consumer Financial Protection Bureau, and the Securities and Exchange Commission have significantly increased their expenditures in recent years.

While spending and staffing at federal agencies has generally increased over the 59-year period covered by this report, the focus of those resources and the rate of increase have varied with the perceptions of public policy issues and the philosophies of elected officials in the executive and legislative branches.

The 1960s and first half of the 1970s were characterized by very rapid growth in regulatory expenditures and staffing, particularly at the newly formed social regulatory agencies. The regulators’ budget grew by 129.1% during the 60s and 136.6% in the 70s.

Total real annual expenditures and personnel on regulatory programs declined in the early 1980s, but rebounded later that decade, for an overall budget increase of 24.5% between 1980 and 1990.

Regulatory spending and staffing continued to grow in the 1990s, for a total spending increase of 51.5% over the decade. Between 2000 and 2010, regulatory expenditures and staffing grew at a faster rate than the previous two decades (71.5% overall) due largely to an increased focus on homeland security regulation.

Between FY 2009 and FY 2017, which roughly conforms to President Obama’s two terms in office, regulatory expenditures increased by 13.3%, while staff levels increased by 7.4%. This pace of growth in both regulatory outlays and staffing was slower than during President George W. Bush’s two terms in office.

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This report provides a measure of regulatory activity from 1960 to 2017 by tracking the budget outlays and staffing devoted to developing and enforcing federal regulations.

In the final year of the Dwight D. Eisenhower administration (FY 1960), regulatory agencies employed a little more than 57,000 people and spent $533 million (equivalent to $3 billion in 2009 dollars). President Barack H. Obama recently submitted his final budget to Congress. It proposes expenditures of $70.0 billion ($61 billion in 2009 dollars) on regulatory activities in FY 2017, and a staff of almost 279,000. In the 58 years tracked in this report, fiscal outlays for administering regulation have increased more than 20-fold (after adjusting for inflation) and staffing has increased by a factor of five.

In real, inflation-adjusted terms, President Obama’s FY 2017 regulators’ budget is 8.9 percent higher than in FY 2016. The Budget also requests increases in federal regulatory agency personnel of 1.9 percent in FY 2017, after an estimated 2.9 percent increase in FY 2016.

Since President Obama’s first budget, the regulators’ budget has increased by 18.8 percent in real terms, and staffing has increased by 8.4 percent. This is significantly less than the 54.4 percent growth in outlays and 51.4 percent increase in personnel during President George W. Bush’s term.

In Eisenhower’s day, 34 percent of the regulators’ budget was devoted to economic forms of regulation (controlling price and quality, entry and exit), while the remainder addressed social regulatory issues (related to environment, safety and health). Over the 58 years since then, outlays for economic regulatory programs have grown, but at a much slower rate than those for social regulatory programs (a factor of 11, compared to a factor of 25). Personnel in economic regulatory agencies is 2.5 times greater than in 1960, while staffing at social regulatory agencies is six times larger. By 2009, only 15 percent of the regulators’ budget focused on economic regulation.

This trend away from economic regulation appears to be changing, as the bulk of the increase during President Obama’s two terms accrued to agencies engaged in economic regulation; their outlays in FY 2017 are expected to be 40.0 percent larger than FY 2009 levels. The social regulatory agencies’ budgets have grown 14.9 percent between 2009 and 2017. Staffing at economic regulatory agencies has increased by 30.1 percent, while employment at agencies involved in social regulations has increased by 5.0 percent.