The new law would increase the transparency of expenditure, but greater regulatory transparency is needed

Galileo may not have uttered the famous words, “Measure what is measurable and make measurable what is not,” but the sentiment behind this admonition often attributed to him resonates deeply in today’s overly complex federal fiscal landscape.

While the federal government’s spending and regulatory actions shape our nation’s economic trajectory, the true impact of these policies on individual households remains unclear.

The astonishing overall numbers are well known: annual federal spending exceeding $6 trillion, a national debt exceeding $34 trillion, and annual borrowed funds exceeding $1.5 trillion without end. However, what is often overlooked is how these costs translate to the average taxpayer or household.

Introduce the Taxpayer Debt Disclosure Act (H.R. 8372), a legislative effort to increase spending transparency on a personal level (see my comment to the Budget Committee here and my Forbes column devoted to the Act and the need to extend similar transparency to regulations here).

This bill, led by Speaker Jodey Arrington (R-TX), provided taxpayers with key information about their personal “share” of the national debt, enabling them to better stir the pot and hold elected officials accountable for managing the budget. Summarized in the Budget Committee’s press release, the bill:

“…provide every American filing a tax return with information on their W-2 regarding federal income, expenses and deficit for the most recent available tax year, total gross debt and estimated debt per taxpayer. Enactment of H.R. 8372 would also require the President’s budget request and accompanying budget resolution to include estimates of debt per taxpayer“

In a remarkable show of bipartisan unity, the bill passed the full House by a 21-4 majority, although Democratic members partially succeeded in emphasizing the purported benefits of government spending in a way that undermines the broader bill.

Transparency should not be limited to fiscal issues and debt data alone. Regulatory costs, often overlooked but significant, also place a burden on households. Annual regulatory costs of more than $2 trillion include a hidden “tax” that manifests itself in a variety of forms, from compliance burdens on businesses to increases in the prices of goods and services.

For the average American household, these regulatory costs are significant, outweighing spending on essentials like health care, food, and transportation, as shown in the figure below (and described in more detail at Forbes) means. Only the costs of housing exceed the costs of regulation.

However, unlike income taxes, which are clearly itemized on payslips, regulatory costs remain opaque, leaving taxpayers in the dark about their real and perhaps undesirable responsibilities.

To address this disparity, policymakers should prioritize transparency in both spending and regulatory issues, not just spending, as tends to be the case. By ensuring taxpayers have a comprehensive understanding of their financial burden, lawmakers can support an informed citizenry and strengthen the democratic accountability everyone is talking about today.

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