Our guest blogger is Sidney Shapiro, University Chair in Law at Wake Forest University and Vice-President at the Center for Progressive Reform.
The United States Chamber of Commerce, which spends millions of dollars donated by large corporations to lobby against government regulation, has kicked off a new anti-regulatory road show, starring former Sen. Evan Bayh (D-IN) and Andrew Card, George W. Bush’s former chief of staff. In a press conference at the Chamber yesterday, Bayh bashed “excessive” regulations, saying they “suck the vitality” out of the economy. And in an op-ed today, Bayh and Card laid out their case on behalf of the REINS Act, legislation that would virtually halt new or updated health and safety protections (see here, here, and here) by requiring that Congress vote to approve final regulations before they go into effect.
Their case is not only weak; it is false. Bayh and Card, hewing to the Chamber’s talking points, claim that the economic recovery depends on cutting back on government regulation, because “more regulations impose heavy burdens on job creators.” The answer is to “get Americans back to work by removing excessive and costly regulations that make it hard for businesses to grow.” The available evidence supports neither of these claims.
To support their claim about excessive regulatory costs, Bayh and Card cite a study commissioned by the Small Business Administration’s Office of Advocacy, which claimed that regulations cost $1.75 trillion in a year. That study is popular with anti-regulation advocates, but never stood up to scrutiny. A Center for Progressive Reform report I co-authored details the serious methodological problems with this estimate; 70 percent of which was based on a regression analysis using opinion polling data on perceived regulatory climate in different countries. The nonpartisan Congressional Research Service backed up and expanded upon this critique . In congressional testimony, Cass Sunstein, the President’s point person on regulation, described the statistics now cited by Bayh and Card as an “urban legend.”
As with any type of spending, regulatory compliance generates economic activity. While it is difficult to measure whether on balance job gains from this spending offset any job losses, existing studies (described in congressional testimony I gave) do not support the conclusion that regulation retards economic recovery. Instead, the studies find either no overall impact or, in some cases, an actual increase in employment. Read more