August 31, 2011

The Agenda Behind the Republicans' Latest 'Jobs' Agenda: New CPR Report Reveals Effort to Gut Regulations Is Based on False Premises

House Republicans have promised this week that upon their return to Washington after the recess they will attempt to stop 10 important proposed regulations because they are “job-destroying.” Adhering to the belief that “if you say it often enough, people will believe its true,” the party continues to insist that regulations cost jobs. But, as I discussed in a recent post, the evidence shows that regulation is not a drag on employment because it stimulates the creation of as many new jobs as are lost, and because job gains from regulation can offset job losses, leading to a net gain in employment.

But there is another problem with the Republican agenda: it ignores the benefits of regulation.  A new CPR white paper on regulatory benefits indicates why the Republican deregulatory agenda won’t help with jobs and is a bad deal for Americans.

Government regulation has greatly benefited the American public, while the failure to regulate has cost us dearly. This reality is easily missed because no single, easily digested statistic perfectly proves the point. But, when my coauthors and I assembled the available evidence, we found that regulation has produced substantial and important benefits for the public without sacrificing jobs at the same time. There is simply no reason to suppose the regulations on the Republicans’ hit list will produce any different result.

This CPR white paper, Saving Lives, Preserving the Environment, Growing the Economy: The Truth About Regulation is the first of its kind to assemble the available evidence concerning the benefits of regulation. And the evidence is impressive.   For example, according to OMB’s annual report on regulation to Congress, regulatory benefits exceed regulatory costs by 7 to 1 for significant regulations.   Even these estimates don’t capture the full advantages of regulations; some benefits, such as reducing toxic mercury pollution, are difficult to monetize, and aren’t even counted. The advance estimates of benefits from agencies have historically proven lower than the benefits in reality. The payoff for environmental regulations is even greater. EPA estimates the regulatory benefit of the Clean Air Act exceeds its costs by a ratio of 25 to 1. Similarly, a study of EPA rules issued during the Obama Administration found that their regulatory benefits exceeded costs by a ratio as high as 22 to 1. Nevertheless, 8 of the 10 regulations House Minority Leader Eric Cantor put on his hit list are proposed EPA regulations.

The high costs that we have paid for the failure to regulate provide additional evidence of the benefits of regulation. The total costs of the BP oil spill are estimated to be between $11 billion and $100 billion. The bill for the collapse of Wall Street is even larger. The economy lost 8.4 million jobs, the government spent billions in the Troubled Asset Relief Program (TARP), and pension funds were decimated.

Other evidence indicates that regulations serve their intended purposes without causing economic dislocation. There have been dozens of retrospective evaluations of regulations by EPA and OSHA, and these studies have found that the regulations being studied were still necessary, and they did not produce significant job losses or cause adverse economic impact on the regulated industries, including on small businesses.

The plain truth here is that the House GOP’s latest “jobs agenda” is actually the same old anti-regulatory agenda they’ve been pushing for years. Their solution, such as it is, would do a whole lot more to help a number of very profitable industries become a lot more profitable, but at the cost of exposing Americans to a variety of needless health, safety and environmental hazards. To make their case, the Republicans have chosen to ignore the mountains of evidence about the benefits of regulation. Much of it is gathered in our report, but my hunch is that no amount of evidence about regulatory benefits is likely to slow down the House Republican’s anti-regulatory agenda.  

It should.   Genuine public policy arguments must take into account regulatory benefits. After advocating for years that regulations should be measured solely by means of a cost-benefit test, the anti-regulators now seek to evade their previous position by pushing their spurious claims about “job-killing regulations.” As our report establishes, the country has much to lose if they prevail.

Sidney Shapiro, CPR Member Scholar; Fletcher Chair in Admin Law, Wake Forest University School of Law. Bio.

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1 It is a shame that our elected officials, primarily Republicans, simply do not care about the average American or the environment. Ignoring research data is inexcusable.
-- James McLauchlan, Jr.

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