On Tuesday, the House Judiciary committee is marking up the Regulatory Freeze for Jobs Act (H.R. 4078), which would block virtually any “significant regulatory action”—basically, any step toward promulgating any regulation that has a large economic impact or is otherwise controversial— as long as unemployment is over 6 percent. Rather than support initiatives that actually help the unemployed, a band of House Republicans prefer another cheap political trick here. The reality is that a moratorium would leave millions of Americans more vulnerable to health, safety, environmental, and economic risks, without improving the economy at all. In fact, the bill has the potential to shrink economic activity, not grow it.
To begin with, all of the economic studies agree: regulation does not cause a net loss in jobs. As other CPR Member Scholars and I have discussed (see here, here, here, here and here, for example), the reason is simple. Firms subject to regulation spend money on compliance, which creates additional jobs. The number of those jobs offsets any employment lost in the industry being regulated. There is even evidence that regulation can lead to a net increase in jobs. To the extent this is true, the Republicans’ effort to bolster employment with a regulatory moratorium will actually decrease it – it might be an actual “job killer.” Congressional Budget Office (CBO) Director Douglas Elmendorf raised the concern of reduced private sector investment caused by delaying or weakening environmental rules when he testified (p.49) before the Senate Budget Committee last November.
But there is an even more fundamental flaw in stopping regulation as a method to grow the economy. When you don’t regulate, the harms that regulation would have addressed continue. Consider that the BP Oil Spill and the Wall Street collapse alone have imposed billions—perhaps even trillions—of dollars in damages. Moreover, the cost of regulating to reduce injuries, illnesses, fatalities, and other damages are normally less than the cost of these consequences if they are not addressed. The evidence (discussed in a CPR White Paper at p. 11) indicates that regulatory benefits (in the form of reduced injuries, illnesses, etc.) exceed compliance costs, often by a considerable amount. This is particularly impressive when you consider that agencies can’t fully measure regulatory benefits because of a lack of data, or benefits that simply defy monetization. So, once again, the anti-regulatory critics have it exactly backwards. A regulatory moratorium will cost more money than it saves, hardly a recipe for increasing economic wealth.
The House Republicans were more than willing to hold an extension of unemployment benefits hostage to their list of legislative demands, hardly the act of people actually concerned about the plight of the unemployed. This bill, however, does fit with the session-long effort by House Republicans to blame regulation for our current economic situation. The cynical calculation is that the public will reward the Republicans for acting boldly to reduce unemployment. It apparently does not matter that the legislation would actually harm the public and the economy.
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Sidney A. Shapiro | March 19, 2012
On Tuesday, the House Judiciary committee is marking up the Regulatory Freeze for Jobs Act (H.R. 4078), which would block virtually any “significant regulatory action”—basically, any step toward promulgating any regulation that has a large economic impact or is otherwise controversial— as long as unemployment is over 6 percent. Rather than support initiatives that actually help […]
Daniel Farber | March 12, 2012
A conventional approach to safety is based on the concept of design events. A building code might say, for example, that a building should be able to survive a 7.0 earthquake. This approach has been basic to the regulation of nuclear reactors. As the interim report of the post-Fukushima NRC task force explains: The regulation […]
James Goodwin | March 9, 2012
Inside EPA is reporting that yet another critical EPA rulemaking is now being delayed indefinitely. This time it’s the agency’s rulemaking to codify a draft guidance clarifying whether Clean Water Act protections apply to wetlands and other marginal waters. EPA had projected on its online rulemaking gateway that it expected to issue a proposed rule […]
Sidney A. Shapiro | March 8, 2012
In 1975, Indiana lawmakers joined a small but growing group of state legislatures passing aggressive medical malpractice “reforms.” Indiana’s law capped damages that victims of medical malpractice can recover at $500,000 and eliminated damages for pain-and-suffering altogether, Frank Cornelius, a lobbyist for the Insurance Institute of Indiana, played a role in helping pass this legislation. […]
| March 7, 2012
Last week, the Supreme Court heard oral argument in Kiobel v Royal Dutch Petroleum, the case asking whether corporations can be liable in federal court for violations of international human rights law. In the decision under review, the Second Circuit – unlike every other circuit court to consider the question – had held that they […]
Daniel Farber | March 7, 2012
Cross-posted from Legal Planet. The U.S. Court of Appeals for the Fifth Circuit has upheld a district court ruling that the federal government is liable for damage from the Katrina storm surge that went up the MRGO canal into the city. As I read the opinion, it is limited in three ways. First, it is […]
Ben Somberg | March 6, 2012
On November 7 of last year, EPA sent the White House Office of Information and Regulatory Affairs (OIRA) a rather important proposed rule – one that will, in some way, limit greenhouse gas emissions from new power plants. The Greenhouse Gas New Source Performance Standard for Electric Generating Units for New Sources has now been […]
Robert Verchick | March 5, 2012
The BP Oil Spill case settled! Well, part of it. The smaller part. But, still, we must count this a victory for U.S. District Judge Carl Barbier, whose reported 72 million pages of assigned reading will inevitably be shaved down. (Does this man have an iPad?) On Friday evening the court announced that BP had […]
Rena Steinzor | March 2, 2012
The toll: An estimated 6,500 to 17,967 premature deaths, 9,867 non-fatal heart attacks, 3,947 cases of chronic bronchitis, and more than 2.3 million lost work and school days. That’s just a partial tally of the costs Americans will bear because of unjustified delays in two critical health and safety regulations. More broadly, the Administration’s Fall […]