Getting the economic facts right during the House regulatory debate

This week, the House of Representatives is expected to vote on two regulatory reform bills: H.R. 3010, the Regulatory Accountability Act (RAA), and H.R. 527, the Regulatory Flexibility Improvements Act. These bills would alter the regulatory process significantly, likely severely restricting the adoption of new regulations. In advancing these bills, proponents argue that regulations have become exorbitantly costly and are a large threat to jobs. These claims do not hold up to scrutiny, and are frequently made in a greatly exaggerated or substantially misleading manner.

EPI has issued a series of reports this year that assess these claims.  The evidence we have compiled, which I summarized in two recent EPI publications, might be of particular interest this week.

A quick guide to EPI’s research on the costs and benefits of regulations” describes three main findings:

  • Government data show that over several decades, and during the Obama administration as well, the benefits of regulations have significantly and consistently exceeded their costs.
  • The much-scrutinized EPA regulations fare especially well according to cost-benefit criteria. The compliance costs of Obama EPA regulations are tiny relative to the size of the economy, are neutralized by their economic benefits, and are dwarfed by their health benefits.
  • Regulatory opponents often cite large cost estimates that are entirely unsupportable. This conclusion particularly applies to their repeated use of the Crain and Crain $1.75 trillion estimate of the costs of regulation, which our own research, the Congressional Research Service, the Administration’s Council of Economic Advisers, and the Center for Progressive Reform have found is unreliable and grossly overstated.

A quick guide to the evidence on regulations and jobs,” also has three main findings:

  • A huge shortfall in demand, not regulatory uncertainty, is what ails the economy.
  • New EPA regulations, in particular, can be expected to have a negligible effect on the overall economy. The largest EPA regulation proposed so far (the “air toxics” rule) would, in fact, likely create a modest number of jobs.
  • Academic studies of and data on the relationship between employment and regulations generally find they have a modestly positive or neutral effect on employment.

Throughout the past year, the case against regulations has been driven by inaccurate overestimates of the economic damage they cause. As Congressional debate over sweeping regulatory reform bills proceeds this week, these erroneous claims are likely to be repeated, potentially contributing to the adoption of legislation damaging to the rules necessary to promote public health and safety, as well as economic stability.  It is an important time to compare these claims to the facts documented by EPI research this year.

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  • Brent Pittman

    Both the Republican and Democrat parties are going in the wrong direction. To SAVE the US entrepreneurial ranking, credit rating, stock market, the $, Medicare, Social Security, Medicaid and the police, fire, k-12 public school, library, military, defense and homeland security budgets while CUTTING government spending, debt and present tax rates without causing inflation or high interest rates; both State and Federal parties would be winners if they would compromise with the following strategies: Create good paying American jobs with good benefits for American citizens by repealing all sales taxes & replace the lost revenue with an import tax/tariff on imported labor (India) & manufactured goods (Mexico, Communist China & Vietnam). Increase the federal income tax deduction from $5700 (2010) to $15000 for American citizens. Increase the IN state income tax exemption for non-dependent adults from $1000 to $5000, up to $15,000; depending on disabilities and age. All standard deductions and exemptions should be adjusted for inflation. Collect an export tax on natural resources/commodities such as coal, oil, natural gas & grains. Repeal all wealthy individual, business and new development/construction tax incentives such as tax abatement, tax increment financing, grants, deductions, credits, tax free bonds, earmarks and loopholes that are creating poverty wage American jobs or exporting jobs. OR, require these corporate welfare kings to pay a living wage, minimum wage of $15/hour with good benefits; adjusted for inflation. Collect mandatory impact fees (IN code: 36-7-4-1300, only infrastructure today); but, expand the code to collect impact fees for schools, libraries, parks, police and fire. Search for Brent Pittman Brownsburg, IN at flyergroup.com, LinkedIn.com and google.com for more information and details.

  • Oilboomer2

    Let the ‘Tea-Baggers have there way- corporate America’s way-Profits over people! Way Too many lies coming from those people-Politicians and Corporations! Enough!

  • http://pulse.yahoo.com/_M4ICBDKJF6TS6XUME5UCZSQIXU JWW

    I am not opposed to new regulations where, and when, they make sense – which includes determining current benefit and current costs.   Any sensible company will resist increased regs during periods of reduced economics, and as the article points out, “A huge shortfall in demand, not regulatory uncertainty, is what ails the economy.”  Introduction of new regs is not market stimulating.  Rather, generally speaking, new regs cause corporations to necessarily increase internal costs.  The downstream of that is either (or both) to pass on increased costs, or for the company to be less profitable, which does have affects on our 401k, 403B, IRA, etc, and reduce the amount of $’s available to pay increased salaries and hire new peeps.   Furthermore, in order to reduce special interest group raping of our system, all proposed regs need to be openingly and fairly debated in both the House and Senate, and should follow all the rules set forth for our elected officials.  Any deviation of that should be cause for alarm by all American citizens.