The real price gouging is coming from the government

If Kamala Harris has anything to say about it, Donald Trump will likely be president of the United States next year, not least because the vice president, not content to enjoy her momentum, decided last week to take a death-defying leap off the cliff of price controls.

The leap caused paroxysms of despair even on the left: The Washington Post seemed to go into a collective editorial seizure. At last report, Kamala was still free falling, though still laughing, toward the bottom of the canyon.

Harris has now made two major campaign decisions, and both have been disastrous for the Democrats. Choosing the radical Minnesota Gov. Tim Walz over the more moderate Pennsylvania Gov. Josh Shapiro was the first, and now there’s the price gouging thing. Or, more precisely, the price controls thing. Not only do they never work, they are also never popular. Just ask Richard Nixon, if you could. What in the world was she thinking?

Well, I suppose she was thinking about how everybody is hurting when they buy groceries, and that she knows that she and Joe are the real culprits with all those trillions of dollars they spent, and so maybe, just maybe, she thinks she can fix things with a command for everybody to stop all those dastardly price increases.

This is a campaign of Joy, after all. But there will be no joy in Kamala-ville when she discovers command pricing won’t work and will just create long lines and empty shelves to boot. There are way too many pundits explaining why that is—and I won’t add to it—except to say there is a teachable moment in all this about gouging and inflation.

To be blunt, there is most certainly gouging going on. Only it’s not food-related corporations doing the gouging. There may be individual culprits—there always are, that’s why it’s illegal to gouge now—but for the most part it’s not your local grocer, it’s not meat producers, it’s not the food industry.

It’s the government. The government is gouging taxpayers outrageously through its out-of-control spending. As Milton Friedman once said, when the government spends beyond its means, it’s the taxpayers who will pay, either through direct taxation, or debt, or inflation and a lower standard of living. And that’s exactly what the Biden-Harris administration is doing. Its 2025 budget proposal would hike taxes by about $5.3 trillion through 2034, and that’s on top of the nation already being ravaged by record debt and inflation. It’s bureaucratic and progressive gouging by any other name.

Hence Kamala’s death-defying leap. When it comes to inflation, it’s government policy driving that particular beast through the heart and soul of America.

And it’s not just federal government policy, we should all remember. State government also has a role to play in driving our daily cost of living higher, albeit a lesser role than federal policy, but it is still significant.

Take the state’s minimum mark-up law, which requires a 9.18-percent minimum increase in gas over the wholesale price, a 6-percent mark-up for alcohol and tobacco, and which bans anything else from being sold below cost to attract customers. Deceptive and Unfair! Sounds like price controls to me. Imagine, a whole law enshrining government gouging. Nothing like legally mandated inflation.

Perhaps the biggest culprit in state government-driven inflation is the state’s gargantuan bureaucracy, a titan that always seems to live on to regulate for another day. Year after year, no matter which party controls the governor’s office or the legislature, it piles on ever more rules with ever stricter compliance and implementation standards, all fueling a higher cost of doing business.

And that drives the cost of living ever upward.

To say it another way, when the bureaucracy tacks on another rule and cost for business, it’s helping raise the cost of everything you buy from homes to beer to paper. The text of a rule might look complicated, but it’s really nothing more than a new and higher price tag on your dreams.

According to the Mercatus Center at George Mason University, as of 2023, Wisconsin was the 13th most regulated state in the country, with 165,311 restrictions and 10,534,668 words in the administrative code. That number of regulations is up, by the way, from 161,549 regulatory restrictions in 2020. The slogan for Wisconsin bureaucrats is not “Forward,” but “Upward.”

An earlier study by Mercatus found that increases in regulations correlated with increases in poverty rates, lost jobs, and higher inflation, among other things. And it’s not just pocketbook costs that have to be calculated, but loss-of-liberty costs that exact a higher and higher price on the quality of life.

As it turns out, though progressives chant about the need to protect public health and safety, many of these costs are unreasonable, excessive, and unnecessary. Or, to simmer it down to a fine and relevant point, these bureaucratic actions are not just inflationary, they represent massive government gouging of businesses and citizens.

As (bad) luck would have it, one such example of these kinds of rules is on the docket right now. On August 29, the state Department of Natural Resources is holding a public hearing on a rule revision to raise permitting fees on air pollution control construction permits. Owners of industrial facilities, including small businesses, that propose construction, reconstruction, replacement, relocation or modification of a stationary source that emits air contaminants are impacted, the DNR states.

Naturally, the DNR says the rule is necessary because of—wait for it—inflation. Since January 2011, when the fees were last revised, the DNR says they have failed to keep pace with a 37-percent to 40-percent inflation rate over that time. That in turn has created a deficit that the agency covered with a revenue surplus that, in the DNR’s words, was built up in earlier years but is expected to be exhausted by the end of next year.

All of which begs the question of how the agency was able to build up such a surplus, apparently during the Democratic Doyle years—funny how that happens—and how such a surplus so quickly disappeared.

The DNR obviously points to that 37-percent inflation, but here’s the clincher. Even with inflation rising by 37 percent (or 40 percent, in a revised agency calculation), the increases the agency is requesting far outstrip inflation—in fact, they represent a 94-percent increase in air permits, emission, and inspection fees, or 135-percent greater than an inflationary adjustment of 40 percent.

In specific numbers, the DNR estimates that its fiscal 2026 and 2027 air pollution permit fees would increase by $2,540,045 under its proposed schedule over expected revenues for those two years now; a 40-percent boost over the two years would increase revenues by $1,080,554.

Something more than inflation is going on, and it’s inflationary in and of itself. Back on April 2, Patrick Stevens, a vice president and general counsel for the Wisconsin Paper Council, and Craig Summerfield, senior director for environmental and energy policy for Wisconsin Manufacturers & Commerce (WMC), analyzed the numbers in depth and rightfully called out the agency’s smokescreen.

The impact would not be insignificant, they argued. Stevens and Summerfield pointed out that the pulp and paper sector employs more than 30,000 people in the state with an annual payroll of $2.5 billion and an output of paper manufactured products of more than $18 billion. Many of WMC’s 3,800 member companies would also be unduly burdened, they wrote. The bottom line is that such regulatory increases would affect the ability of those businesses to stay competitive in the state, or to do business here at all; they would not only impact the rate of future investments but the price of all those paper and other products.

Since that April 2 memo, the DNR’s number have changed slightly—I am using the new draft rule numbers—but nothing to change the bottom-line argument by Summerfield and Stevens: The proposed fee increases are not reasonable under Wisconsin state law, which is an explicit statutory requirement for the agency’s promulgation of construction permit fees. While Wisconsin consumer laws protect consumers by outlawing price gouging under certain conditions, this law protects consumers from being gouged by the administrative state. And gouging is what is going on here.

In the new numbers, 30 fees are increased, a fee reduction was eliminated, one stayed the same, three new fees are added, and three are removed. Almost all of the increases are demonstrably excessive.

Some examples make the point. The initial fee submitted with an application for a basic direct source construction permit would double from $7,500 to $15,000. A permit for the construction of a PSD (Prevention of Significant Deterioration) or non-attainment area major source or a major modification where the modification itself is a major source would skyrocket from $16,000 to $29,300 in 2026 and then $35,000 in 2028.

The revision of a permit—which is common—would jump from $1,500 to $2,550 in 2026 to $3,000 in 2028. Basic emission unit fees would more than triple by 2028. As Steven and Summerfield wrote, “In addition, typical fee increases under the rule are 80% or 100%. One fee is tripled, and two other fees increase by 183% and 175%. Again, these adjustments far exceed any inflationary increase.”

The fee increases will wash like a tsunami over the entire regulated landscape, from large to minor projects, from large businesses to small businesses. For example, the agency is expecting six major construction projects in both 2026 and 2027, with permitting fee costs under the rule increasing from $352,876 in 2026 to $514,041, and in 2027 from $352,876 to $527,318. The average cost per permit would rise from $58,813 under the current fee schedule to $87,886 in 2027, a 49-percent increase per project.

For 60 minor construction permits in 2026, the cost would rise from $889,489 to $1,806,368 with the rule, or from $14,825 per permit now to $30,106, up more than 100 percent. Small businesses would not escape the regulatory hammer, either. In 2026, the current average construction permit fee would rise from $12,490 to $23,020.

As mandated for the rule’s Economic Impact Analysis, the DNR sought to compare its request to other states’ total air pollution permitting program costs. Naturally, it found Wisconsin’s bureaucracy wanting.

“Based on the comparison of Wisconsin’s construction permit program to those of the nearby states, it is evident that the revenue and staffing levels the proposed rule is intended to support are lower than those of other states, in most cases considerably so,” the agency stated. “Even in FY29, the year the department expects construction permit program funding to stabilize after the proposed fee increases take effect, Wisconsin’s construction permit program will remain smaller than those in nearby states, both in terms of budget and staffing.”

However, Summerfield and Stevens wrote, that claim was impossible to verify based on the information compiled by the DNR, because the agency was unable to obtain apples-to-apples comparisons between the air construction permit program in Wisconsin versus neighboring states. For example, they wrote, Michigan charges no construction permit fees; Minnesota uses both construction fees and general funding, but the DNR was unable to specify what amount of revenue was from fees; Iowa relies on construction permit fees and other sources, primarily general revenues; and Indiana uses a combination of fees and other sources of revenue and was unable to provide funding details.

“In contrast to the states referenced above and other states not referenced above, Wisconsin relies entirely on construction permit fees to fund its air construction permit program,” they wrote.

Of course, if one looks hard enough, the DNR does acknowledge in the draft rule that it has no idea what it is talking about: “Fee structures in these states differ considerably, making direct comparisons challenging,” the rule draft states. “For example, one state may offset a low ‘base fee’ with additional fees that reflect the complexity of the permit, while another might charge a higher base fee. As a result, the exact fee a state might charge is highly project dependent.”

Ah, yes, project dependent, but trust us when we say we are undercharging for those permits. At the end of the day, the DNR does own up that this is going to hit state businesses, saying the proposed fee increases would “marginally increase” the direct cost associated with business development and expansion. Only a government bureaucracy can describe a virtually doubling of average fees as a “marginal” increase.

Hopefully, both the public and lawmakers as well as stakeholders will show up in force on August 29 to send the DNR back to the drawing board for more reasonable increases that address inflationary impacts on the program over the last decade without actually making the program inflationary itself. The agency’s reasoning should be shredded in front of the public, because it has engaged in a mockery of the rule promulgation process, including invalid comparisons, numbers that far outstrip its stated reasoning for needed increases, and its constant understatement of the actual effects of these kinds of rules on business and citizens and taxpayers.

For the longer term, it’s important to remember that this is just one rule and one agency. It doesn’t even begin to scratch the surface of similar kinds of bureaucratic rulemaking that are simply fictional manipulations to reach forgone conclusions, always assuming what they are trying to prove.

In short, we simply can’t trust the bureaucracy to be anywhere near honest in its rulemaking. To offer a different take on Ronald Reagan, when it comes to the bureaucracy, never trust, and always verify.

In the last several legislative sessions, Republicans in the legislature have proposed new legislation to increase oversight of the rulemaking process, including more requirements for peer review and consulting industry stakeholders, as well as measures to tighten the statutory grants of power the legislature doles out to the agencies.

This must become a top priority, or the bureaucratic gouging of Wisconsin consumers and taxpayers will continue and worsen, driving the state over its own cliff of regulatory inflation and control.