[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
THE OBAMA ADMINISTRATION'S REGULATORY
WAR ON JOBS, THE ECONOMY, AND AMERICA'S GLOBAL
COMPETITIVENESS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
REGULATORY REFORM,
COMMERCIAL AND ANTITRUST LAW
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 28, 2013
__________
Serial No. 113-38
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin JERROLD NADLER, New York
HOWARD COBLE, North Carolina ROBERT C. ``BOBBY'' SCOTT,
LAMAR SMITH, Texas Virginia
STEVE CHABOT, Ohio MELVIN L. WATT, North Carolina
SPENCER BACHUS, Alabama ZOE LOFGREN, California
DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
J. RANDY FORBES, Virginia STEVE COHEN, Tennessee
STEVE KING, Iowa HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona Georgia
LOUIE GOHMERT, Texas PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio JUDY CHU, California
TED POE, Texas TED DEUTCH, Florida
JASON CHAFFETZ, Utah LUIS V. GUTIERREZ, Illinois
TOM MARINO, Pennsylvania KAREN BASS, California
TREY GOWDY, South Carolina CEDRIC RICHMOND, Louisiana
MARK AMODEI, Nevada SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho JOE GARCIA, Florida
BLAKE FARENTHOLD, Texas HAKEEM JEFFRIES, New York
GEORGE HOLDING, North Carolina
DOUG COLLINS, Georgia
RON DeSANTIS, FLORIDA
KEITH ROTHFUS, Pennsylvania
Shelley Husband, Chief of Staff & General Counsel
Perry Apelbaum, Minority Staff Director & Chief Counsel
------
Subcommittee on Regulatory Reform, Commercial and Antitrust Law
SPENCER BACHUS, Alabama, Chairman
BLAKE FARENTHOLD, Texas, Vice-Chairman
DARRELL E. ISSA, California STEVE COHEN, Tennessee
TOM MARINO, Pennsylvania HENRY C. ``HANK'' JOHNSON, Jr.,
GEORGE HOLDING, North Carolina Georgia
DOUG COLLINS, Georgia SUZAN DelBENE, Washington
KEITH ROTHFUS, Pennsylvania JOE GARCIA, Florida
HAKEEM JEFFRIES, New York
Daniel Flores, Chief Counsel
James Park, Minority Counsel
C O N T E N T S
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FEBRUARY 28, 2013
Page
OPENING STATEMENTS
The Honorable Spencer Bachus, a Representative in Congress from
the State of Alabama, and Chairman, Subcommittee on Regulatory
Reform, Commercial and Antitrust Law........................... 1
The Honorable Steve Cohen, a Representative in Congress from the
State of Tennessee, and Ranking Member, Subcommittee on
Regulatory Reform, Commercial and Antitrust Law................ 3
The Honorable Bob Goodlatte, a Representative in Congress from
the State of Virginia, and Chairman, Committee of the Judiciary 5
The Honorable Doug Collins, a Representative in Congress from the
State of Georgia, and Member, Subcommittee on Regulatory
Reform, Commercial and Antitrust Law........................... 6
The Honorable Darrell Issa, a Representative in Congress from the
State of California, and Member, Subcommittee on Regulatory
Reform, Commercial and Antitrust Law........................... 7
WITNESSES
Robert L. Glicksman, J.B. & Maurice C. Shapiro Professor of
Environmental Law, The George Washington University School of
Law
Oral Testimony................................................. 13
Prepared Statement............................................. 16
Drew Greenblatt, President and Owner, Marlin Steel Wire Products,
LLC, on behalf of the National Association of Manufacturers
Oral Testimony................................................. 38
Prepared Statement............................................. 40
Robert K. James, Member of the Avon Lake City Council
Oral Testimony................................................. 53
Prepared Statement............................................. 55
Douglas Holtz-Eakin, President, American Action Forum
Oral Testimony................................................. 66
Prepared Statement............................................. 68
William L. Kovacs, Senior Vice President, Environment, Technology
& Regulatory Affairs, U.S. Chamber of Commerce
Oral Testimony................................................. 78
Prepared Statement............................................. 80
Robert Weissman, President, Public Citizen
Oral Testimony................................................. 103
Prepared Statement............................................. 105
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan, and
Ranking Member, Committee of the Judiciary..................... 9
APPENDIX
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Spencer Bachus, a
Representative in Congress from the State of Alabama, and
Chairman, Subcommittee on Regulatory Reform, Commercial and
Antitrust Law.................................................. 149
Prepared Statement of the Honorable Steve Cohen, a Representative
in Congress from the State of Tennessee, and Ranking Member,
Subcommittee on Regulatory Reform, Commercial and Antitrust Law 150
Prepared Statement of the Honorable Bob Goodlatte, a
Representative in Congress from the State of Virginia, and
Chairman, Committee of the Judiciary........................... 151
Prepared Statement of the Honorable Doug Collins, a
Representative in Congress from the State of Georgia, and
Member, Subcommittee on Regulatory Reform, Commercial and
Antitrust Law.................................................. 153
Prepared Statement of the Honorable Henry C. ``Hank'' Johnson,
Jr., a Representative in Congress from the State of Georgia,
and Member, Subcommittee on Regulatory Reform, Commercial and
Antitrust Law.................................................. 155
Material submitted by the Honorable Hakeem Jeffries, a
Representative in Congress from the State of New York, and
Member, Subcommittee on Regulatory Reform, Commercial and
Antitrust Law.................................................. 156
Response to Questions for the Record from Robert L. Glicksman,
J.B. & Maurice C. Shapiro Professor of Environmental Law, The
George Washington University School of Law..................... 162
Response to Questions for the Record from Drew Greenblatt,
President and Owner, Marlin Steel Wire Products, LLC........... 166
Response to Questions for the Record from Robert K. James, Member
of the Avon Lake City Council.................................. 169
Response to Questions for the Record from Douglas Holtz-Eakin,
President, American Action Forum............................... 171
Response to Questions for the Record from William L. Kovacs,
Senior Vice President, Environment, Technology & Regulatory
Affairs, U.S. Chamber of Commerce.............................. 172
Response to Questions for the Record from Robert Weissman,
President, Public Citizen...................................... 175
THE OBAMA ADMINISTRATION'S REGULATORY WAR ON JOBS, THE ECONOMY, AND
AMERICA'S GLOBAL COMPETITIVENESS
----------
THURSDAY, FEBRUARY 28, 2013
House of Representatives,
Subcommittee on Regulatory Reform,
Commercial and Antitrust Law
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to call, at 9:01 a.m., in
room 2141, Rayburn House Office Building, the Honorable Spencer
Bachus (Chairman of the Subcommittee) presiding.
Present: Representatives Bachus, Goodlatte, Farenthold,
Issa, Marino, Holding, Collins, Rothfus, Cohen, DelBene,
Garcia, and Jeffries.
Staff Present: (Majority) Daniel Huff, Chief Counsel;
Ashley Lewis, Clerk; (Minority) James Park, Minority Counsel;
and Susan Jensen-Lachmann, Counsel.
Mr. Bachus. The Subcommittee on Regulatory Reform,
Commercial and Antitrust Law hearing will come to order.
Without objection, the Chair is authorized to declare recesses
of the Committee at any time. We are expecting some early
votes, so we will try to get rolling. We welcome all our
witnesses today and look forward to your testimony. Now we will
go to opening statements, and the Chair recognizes himself for
the purposes of an opening statement.
This is the first of a series of hearings that this
Subcommittee will hold on the Federal regulatory structure, its
impacts, and potential regulatory reform. To be clear from the
start, the argument is not that we don't need any regulations
at all. Reasonable rules provide clear rules of the road for
businesses so they have some certainty and know what to expect,
they provide safeguards for consumers and the general public,
and they provide protection for the environment. But clear and
reasonable rules of the road that provide certainty are not
what we have gotten from this administration, and that has been
a major contributing cause to the continuing underperformance
of the U.S. economy.
That is something that I have experienced with the
oversight of the Dodd-Frank Act, but it cuts across every
Federal agency. For example, in 2011 the President ordered
regulatory agencies to consider cost and benefits and choose
the least burdensome path. We applauded that statement. The
order continued, and I quote, ``The regulatory process must be
transparent and include public participation.'' This sounded
perfectly reasonable, and that is how it was reported.
But the devil is in the details. It is at the
implementation stage where the promises have failed to pan out,
and it is there that a regulatory tax is imposed on jobs, the
economy, and America's global competitiveness. Only an expert
would notice how the administration's cost-benefit analysis has
been skewed. For example, less than 0.01 of a percent of the
claimed monetary benefits from the EPA's rule to reduce mercury
emissions actually come from reducing mercury. The rest arises
from the so-called incidental benefit of reducing particulate
matter that was not the principal target of the regulation
because such particulate matter was already considered by EPA
to be generally within acceptable limits.
What does this translate to? In my district in Alabama, it
is the difference between a concrete plant in Leeds, Alabama,
employing hundreds of people, being able to comply with the new
regulations or potentially being shut down because of the cost.
Many of the new regulations fall most heavily on small
businesses that are the job creators in our economy. If you are
a larger company, you can probably financially afford to hire
an army of compliance officers. But if you are a small
business, you are already stretched thin, and every extra
regulatory cost means you have less money to invest in your
business and hire workers. I think that is something that I
think Republicans and Democrats are in agreement on, and that
is the burden on small businesses.
Factory workers, anxious about the economy, need to know
about recent findings that over the next 10 years regulations
could shave industrial output from between 2.3 to 6 percent at
a time when we need more growth and jobs. Americans still
looking for work need to be aware that agencies ignore the
burden of job displacement when calculating regulatory cost.
Agencies simply assume displaced workers will find a new job
quickly. But a recent study shows overwhelming evidence that
even temporary job displacements cause significant long lasting
declines in earnings. Of workers who lost long-tenured jobs
from 2009 to 2011, 44 percent were still unemployed 3 years
later. Fifty-four percent of those who did find jobs earned
less. Older workers were hit hardest.
Communities bear the impact, too. In Avon Lake, Ohio, a
plant is shutting down because of the rising costs associated
with EPA's controversial utility MACT rule. Closures like this
devastate families, neighborhoods, and the local tax base that
schools and city governments depend on. We often think of
regulatory tradeoffs affecting only businesses, but they affect
individuals as well. If a regulation increases the price of a
needed product without a corresponding benefit, it takes money
away from a person that could be spent elsewhere that would
have a greater health or safety benefit. This especially
affects low-income Americans for whom money is already tight.
This is another area which very provocative research is
being done on the harmful effects of regulations on our most
vulnerable citizens. During this series of hearings, we will
examine the shortcomings and failures of the current regulatory
system, with an eye to developing clearheaded, workable
solutions. Federal agencies need to do a better job--a much
better job--of determining when regulation is needed and
proposing smarter regulations when it is. And in forming
regulations we actually do have to consider the consequences on
jobs and the economy, because that is the foundation on which
everything else rests.
Finally, I want to close with this video of a statement
made by Federal Reserve Chairman Ben Bernanke at a Humphrey-
Hawkins hearing earlier this week. Please turn to our video
monitor. I guess we need some sound, too.
[Video shown.]
Mr. Bachus. Okay. Thank you. At this time I recognize the
Ranking Member for his opening statement.
Mr. Cohen. Thank you, Mr. Chairman. First, I would like to
put that video back on and get to the part where Bernanke says
the sequester could hurt the deficit more than it could help.
That was coming up in just a minute, I think.
Mr. Bachus. Let me say this. In the hearing, I stated very
clearly that Congress ought to come together. And Chairman
Bernanke said we ought to come together and make long-term
structural changes in our entitlement programs. And I think
there is agreement on that across the aisle. And I have urged
the Congress and the President to get to work.
And we were all told that the sequester wasn't going to
happen, and we all know that that is just another promise that
didn't happen. So, you are absolutely right. That work should
have started months ago. And we could actually raise the
retirement age for Social Security in the future by 2 months
and save more money than this sequester will save, and it will
be a long-term structural change and less harmful for the
economy.
He also said that fee-for-services in our medical system
was driving up costs, and that addressing that, reforming our
health care system and doing away with fee-for-services and
having the patient invest more in their own health care would
change the entire dynamics of the debt.
Mr. Cohen. Thank you. I appreciate that.
Mr. Issa. Thank you for yielding all that time to the
Chairman, too.
Mr. Bachus. You have 5 minutes, Mr. Cohen.
Mr. Cohen. Thank you, Mr. Chairman.
Mr. Bachus. And for Mr. Issa, I think he only has a minute
left.
Mr. Cohen. Thank you.
On a typical day, and today is a typical day, I get up,
brush my teeth, shower, get bagel and bacon, coffee, get
dressed, go to my car parked outside, and drive into the
Capitol. And then I am in the office, and I work, I come to
hearings such as this, I go to the House floor, I meet with
constituents, and, you know, grab a bite to eat here and there,
finish the day with dinner, and that is it.
At the end of each week, when we are in session, I will fly
back and forth from Memphis to Washington. And I do all this
without thinking twice about whether any of these activities
are going to be harmful to my health or whether there is going
to be a risk of harm whatsoever. And that is because we take
these activities for granted in our country because we have a
strong regulatory system that allows us to go on with our lives
and not have to be at risk so many times.
We strive to protect our environment, our health, and
ensure the safety of our workplaces, our public spaces, our
consumer products, cars, airplanes, among other things. And we
are concerned about our most vulnerable citizens who might get
black lung disease if we didn't have regulations in mining,
health care workers who are exposed to too much radiation,
asbestos exposure to construction workers, and other of our
most vulnerable citizens who are put in jobs that are often the
least desired and the most at risk for health hazards. But
regulations have helped over those years. Sinclair Lewis would
think, I think, that regulations are good for our most
vulnerable citizens, and so do most people, I think.
The regulatory debates in this Subcommittee which we have
had over the last couple of years have focused almost
exclusively on the costs of implementing regulations, and there
are costs indeed. It is often left to those of us on this side
of the aisle to defend regulations and the benefits that they
have, and the benefits consistently outweigh the costs of
regulations. In addition to ignoring the net benefits of
regulations, those who focus exclusively on the costs tend to
ignore the greater costs of regulatory failure. Mr. Glicksman
of GW Law School and Mr. Weissman of Public Citizen will
discuss in greater detail regulatory failure, that that
regulatory failure can be more costly for the economy and
society than the existence or the creation of new regulations.
Let's not forget that it was the lack of adequate
regulations that caused the Deepwater Horizon oil spill, still
in litigation, still affecting the Gulf Coast, or the mine
disasters that we recently experienced. The mortgage
foreclosure crisis was caused by the lack of adequate
regulations and enforcement thereof. And the 2008 financial
crisis and the great recession that followed and the sequester
that we see today that does involve different issues that we
have discussed.
In short, there is a far greater human and economic cost to
stopping agencies from regulating than there is in allowing new
regulations to take effect. I will leave the rest of our
discussion to our panel of witnesses and our question time, but
I would like to ask this of our good Chairman. We ought to be
able to have serious, substantive, and nuanced discussion about
what problems might exist in the Federal regulatory system--
nothing is perfect, and indeed it isn't--and what Congress
ought to do to address the problems. But to have hearings with
inflammatory titles like ``The Obama Administration's
Regulatory War on Jobs, the Economy and America's Global
Competitiveness,'' those such inflammatory and partisan titles
take us away from discussions of issues and make us have to
defend our President and make this a fight back and forth over
politics and verbiage. And that is not the way to resolve
regulations and good policy. It makes it difficult for all of
us to have a debate in a proper atmosphere.
We will, as we did the last Congress, unfortunately, end up
with a battle of talking points. So if we want to work on this,
I would suggest that. I am afraid if I got on the floor and
said something about war there would be an entire CNN episode
about it, so we won't do that. And we know from the song, war,
what is it good for? Absolutely nothing. So I hope we can move
forward and do better, and I yield back the balance of my time
to Mr. Issa or whoever.
Mr. Bachus. Thank you, Mr. Cohen.
I would now like to recognize the full Committee Chairman,
Mr. Bob Goodlatte of Virginia, for his opening statement.
Mr. Goodlatte. Thank you, Mr. Chairman. And thank you for
holding this important hearing.
Since the November 2012 election, the Obama administration
has moved into overdrive in its regulatory war on jobs, the
economy, and America's global competitiveness. Let me be clear,
Congress cannot sit silent while America's economic growth is
imperiled. One of my top priorities in this Congress will be to
do everything possible to reduce the regulatory burdens that
our Nation's small businesses are facing, to get more Americans
back to work, and to help grow our economy.
A study last summer by the Organization for Economic
Cooperation and Development revealed that after measuring
countries by the number of regulations they have, it is now
easier to start a business in Slovenia, Estonia, and Hungary,
than in America. According to former CBO Director Douglas
Holtz-Eakin, countries from England to South Korea to Portugal
have already undertaken regulatory reforms. England has been
particularly aggressive, adopting a one-in, two-out rule for
new regulations, which requires policymakers introducing a new
regulation to rescind or modify an existing regulation that
costs double so that the total regulatory burden is actually
reduced. The governments of our international competitors are
not merely paying lip service to lightening the regulatory
load, they are taking meaningful actions.
We seem to be moving in the opposite direction. Last year,
the total U.S. paperwork burden grew by more than 355 million
hours, or 4 percent. A 2012 report by the NERA Economic
Consultants on the regulations affecting the manufacturing
sector found that exports in 2012 might have been as much as 17
percent lower than they would have been without the estimated
regulatory burden. Such loss in output directly represents lost
jobs and economic opportunities.
Instead of the regulatory burden diminishing to keep
American businesses competitive and hiring, experts expect the
pace of regulation to increase in President Obama's second
term. Just prior to Election Day, the National Journal reported
that, quote, ``Federal agencies are sitting on a pile of major
health, environmental, and financial regulations that
lobbyists, congressional staffers, and former administration
officials say are being held back to avoid providing ammunition
to Mitt Romney and other Republican critics.''
Now the floodgates are open. For example, the Patient
Protection and Affordable Care Act and the Dodd-Frank Wall
Street Reform and Consumer Protection Act created a host of
regulatory obligations which agencies have yet to fulfill.
Similarly, the American Action Forum identified $123 billion in
possible regulations in the administration's 2012 Unified
Regulatory Agenda that would also add more than 13 million
hours of paperwork burden. It is no wonder that the
administration delayed releasing this agenda and its plans for
128 new economically significant regulations until after the
election.
What is most striking, perhaps, is this administration's
insensitivity to the negative effects overregulation has on
vulnerable groups. Overregulation costs American jobs. And a
new study shows agencies' cost-benefit analyses fail to
consider that over 75 percent of older workers who lose their
jobs remain unemployed 3 years later, and those who can find
work frequently must accept as much as 20 percent less in pay.
Overregulation also disproportionately burdens low-income
households. Because of the law of diminishing returns, new
regulations require spending increasingly more money to
mitigate increasingly smaller risks. Many of these costs are
passed down to consumers. New research from the Mercatus Center
shows low-income households would be much better off spending
this money mitigating more immediate personal risks, for
example, by using money that should rightfully be theirs to
afford rents in safer neighborhoods.
In light of these real trade-offs, I am deeply concerned
that some pro-regulation advocates are calling for an executive
order to rescind requirements that there be cost-benefit
analysis of significant regulations. I hope that stories from
Main Street about the negative impacts plant closures have on
lives and communities will help sensitize regulators and their
allies to the very real suffering that even well-meaning
regulatory advocacy can impose.
However, we cannot rely on hope to turn the tide of
excessive regulation. I am committed to restoring
accountability and providing relief from excessive regulation
to our Nation's small businesses and job creators who need it
most. Last Congress, the Committee reported a number of
important and far-reaching bills to reform overregulation, ease
burden on jobs and the American economy, and restore America's
competitiveness. The House passed them all, but the Democrat-
led Senate refused to act, and President Obama threatened to
veto them.
The overreach of Obama administration regulations is one of
the chief reasons the economy has failed adequately to recover
and produce new jobs throughout the Obama administration.
Congress and the President must act to take a different
direction that will allow America's jobs, economy, and
competitiveness to be restored. The House will do its part, and
for the sake of our economic future, I call on the Senate and
the Obama administration to do theirs.
I thank the Chairman. I yield back.
Mr. Bachus. Thank you, Chairman Goodlatte.
I would now like to recognize Mr. Doug Collins of Georgia
for his opening statement.
Mr. Collins. Thank you, Mr. Chairman. I appreciate you
convening a hearing on this important topic. I think this is
one of the things that is vital to our country right now, and
something we ought to look at to get us on a path to prosperity
again.
It is an unfortunate misconception to paint the regulatory
arena as being disconnected from the everyday lives of
Americans. Regulations affect the air we breathe, the type of
car we drive, and the food we feed our pets. Unfortunately, the
Obama administration has created a web of regulations that are
too complex, too expensive, and completely ineffective.
Economic growth cannot occur if job creators continue to be
crushed by the fatal grip of overregulation.
In the upcoming days I plan to introduce the Sunshine and
Regulatory Decree Settlement Act of 2013. This legislation ends
the abuse of consent decrees and settlements to require more
regulations. Regulators often use consent decrees and
settlements to secretly establish new rules outside the regular
rulemaking procedures without transparency and without public
participation. This sue-and-settle approach has enabled
agencies to impose higher costs with no accountability to those
directly impacted.
One of the issues that has already been said today, and I
think when we get into this there is a problem when we paint
the fact that there is either one extreme or the other, that we
need no regulation or we need overregulation. I think the
problem we have got here is most people just want to get up,
start their business or go to their workplaces, and be safe and
do the things that need to be done. Government has a role, but
government's role is not at the expense of business.
Government's role is not at the expense of making the growth
industry, as I had a constituent tell me yesterday, the only
people we are hiring right now are people to do our regulatory
reform, to make sure that we do the paperwork. That is not what
this business was made to do. He wants to be able to expand his
business in what he wants to be able to do in his field, not
having to comply with overburdensome regulations that do not
help his business.
I look forward to this hearing from the witnesses on this
issue and many others. I thank the Chairman, and yield back the
balance of my time.
Mr. Bachus. I thank you, Mr. Collins.
I would now like to recognize the Chairman of the
Government Oversight and Investigations Committee, and Member
of this Subcommittee, Mr. Darrell Issa of California, for his
opening statement.
Mr. Issa. Thank you, Mr. Chairman. I would ask unanimous
consent I have a full 5 minutes, in spite of my earlier
outbreak.
Mr. Bachus. All right.
Mr. Issa. The Ranking Member, Mr. Cohen, talked about
getting on an airplane without fear. Steve and I have been
friends since he arrived here, and I know that when he arrived
here several years ago he also got on that airplane without
fear. We are not talking today about regulations in memoriam.
We are not talking about decades and decades. We are not
talking about reversing ones which have made our air and our
water and our transportation safer.
What we are talking about here today, and what I know that
the witnesses will be speaking of, is the growth of new
regulations in a nanny state that is attempting to regulate
every aspect without concern for the cost. Our Committee pushed
hard and continues to push hard for cost-benefit.
Now, Mr. Greenblatt, I note, has a combination of stamped
and probably multi-slide and every other machine it took to
create that part in front of him. And on top of that, it has a
plating. When I began work in my industry in Cleveland, Ohio,
we still had chromium and other metals that were being dumped
into the Cuyahoga River, getting into Lake Erie and getting
into our drinking water. Again, throughout the years of the
Clean Air and Clean Water Act, we have addressed actual health
hazards, manufacturers taking their leftovers and putting them
on the backs of American people trying simply to drink water
and breathe air.
But those days in fact have been a success. And rather than
saying that it has been a success and making incremental
changes closely analyzed to figure out whether or not it
actually adds to life expectancy and quality of life, we on
this side of the dais and those down Pennsylvania Avenue and
beyond have an assumption that if they are not doing something
and creating new rules and laws, they are obviously not doing
their job.
The fact is that the Ranking Member, as is often does, used
talking points, and he talked about lack of regulation causing
Deepwater Horizon. Nothing could be further from the truth.
Failure to comply with existing regulations by the Federal
Government was a major factor. On the very day that the
Deepwater Horizon blew up, two individuals from Mineral
Management Service came aboard that facility. In violation of
any form of common sense, where they were required to be two
separate people conducting investigations designed to be check
and balance of what they saw, it was a father-son team. They
came, they drank coffee, and they left.
The truth is all of the materials and all of the
information was honestly given to Mineral Management as they
asked and they did not see a problem. Likewise, as the euphoria
of debt far beyond that which people could pay, even in my
original hometown of Cleveland, Ohio, caused people to have no
possibility of paying their mortgages unless their home
continued to rise in value and they could refinance, as that
happened, the Federal Reserve, the treasurer, and others
continued to talk about--and the President of the United States
at that time, George W. Bush--continued to talk about the
benefit of home ownership.
So let us not rewrite history here today and say that all
government needs to do is have more regulations. All government
needs to do is do what it is required to do and do it well.
Then regulations on a limited basis with a cost-benefit and a
degree of transparency can be considered.
In closing, I might say here today that there are three
kinds of taxes. There are taxes in which we take money. And I
would share with the Ranking Member a concern that we only take
60 cents for every dollar we spend, clearly unsustainable, and
we need to address that. There are taxes in which we ask people
to do things at their expense--actually order them do them at
their expense--and then don't consider it a tax. As a matter of
fact, it is only tax deductible to the extent that you didn't
make a profit and therefore do not have to pay taxes on it.
Last but not least, there is the new tax in the Obama
administration. That is that any time government does not
provide more goods and services with somebody else's money you
must be taxing people's ability to live their lives. The
sequestration today is being talked about as though it is an
onerous tax on every American if somehow 2.4 percent of
spending were not to happen. For example, the Ranking Member,
when he talks about going back and forth on that airplane, he
has been doing it since the TSA had about 15,000 employees.
Today they have 68,000 employees. There is no question as to
why TSA stands for thousands standing around. When you triple
the amount of employees for the same amount of flying
personnel, you are inevitably going to have built in
inefficiencies.
So today our job is to listen to people who have dealt with
these new regulations, listen to them honestly, and, Mr. Cohen,
ask the question was that particular regulation necessary? Was
that regulatory assertion necessary? Not should we have had the
Clean Air and Clean Water Act, something that people on both
sides of the dais agree with. And I yield back.
Mr. Bachus. Thank you.
I now recognize our Ranking Member, Mr. Steve Cohen, for
the purposes of introducing an opening statement.
Mr. Cohen. Thank you. Thank you, Mr. Chairman. Mr.
Chairman, the Ranking Member of the full Committee, Mr.
Conyers, has a statement. And while you were kind enough to
allow me to read it, I won't do so.
[The prepared statement of Mr. Conyers follows:]
Prepared Statement of the Honorable John Conyers, Jr., a Representative
in Congress from the State of Michigan, Ranking Member, Committee on
the Judiciary, and Member, Subcommittee on Regulatory Reform,
Commercial and Antitrust Law
Today's hearing title reflects the 3 principal canards of the
Majority's anti-regulatory agenda and I want to address each of these
in detail.
Let's first begin with the Majority's claim that regulations
inhibit job creation.
It is pretty incredible that the Majority continues to make this
claim in light of the fact that there is absolutely no credible
evidence establishing the fact that regulations have any substantive
impact on job creation.
And, that is not just me saying this. Bruce Bartlett, a senior
policy analyst in the Reagan and George H.W. Bush Administrations, has
explained:
Republicans have a problem. People are increasingly concerned
about unemployment, but Republicans have nothing to offer them.
The G.O.P. opposes additional government spending for jobs
programs and, in fact, favors big cuts in spending that would
be likely to lead to further layoffs at all levels of
government[.]
These constraints have led Republicans to embrace the idea
that government regulation is the principal factor holding back
employment. They assert that Barack Obama has unleashed a tidal
wave of new regulations, which has created uncertainty among
businesses and prevents them from investing and hiring.
He then concludes:
No hard evidence is offered for this claim; it is simply
asserted as self-evident and repeated endlessly throughout the
conservative echo chamber.
Susan Dudley, who headed the Office of Information and Regulatory
Affairs during the administration of George W. Bush, has been quoted as
saying that it is ``hard to know what the real impacts of regulation
are.'' She also stated that she was unaware of any ``empirically sound
way'' to assess the impact that proposed rules have on jobs.
And, during one of the many hearings held on this issue in the last
Congress, the Majority's own witness clearly debunked the myth that
regulations stymie job creation.
Christopher DeMuth, with the American Enterprise Institute (a
conservative think tank), stated in his prepared testimony that the
``focus on jobs . . . can lead to confusion in regulatory debates'' and
that ``the employment effects of regulation, while important, are
indeterminate.''
Another unsubstantiated claim that the Majority makes in support of
its anti-regulatory agenda is that ``regulatory uncertainty is hurting
the business community'' and makes American businesses less competitive
in the global marketplace.
Once again, Bruce Bartlett, the senior economic official from the
Reagan and Bush Administrations, rejects this false claim:
[R]egulatory uncertainty is a canard invented by Republicans
that allows them to use current economic problems to pursue an
agenda supported by the business community year in and year
out. In other words, it is a simple case of political
opportunism, not a serious effort to deal with high
unemployment.
So make no mistake, today's hearing is yet another example of that
political opportunism recognized by Mr. Bartlett.
Perhaps the biggest canard in the Majority's arguments for so-
called regulatory reform is the purported damaging impact of
regulations on the Nation's economy.
Throughout the previous Congress, the Majority cited a deeply
flawed study that estimated regulations had a $1.75 trillion cost of
regulations.
This figure is utterly unreliable and meaningless. And, again,
don't take my word for this.
The nonpartisan Congressional Research Service conducted an
extensive examination of the study and found much of its methodology to
be flawed.
Moreover, CRS noted that the study's authors themselves
acknowledged that their analysis was ``not meant to be a decision-
making tool for lawmakers or Federal regulatory agencies to use in
choosing the `right' level of regulation.''
At the hearing the Subcommittee held on this issue last September,
Professor Lisa Heinzerling testified about her well-researched academic
analysis of this study and its numerous methodological flaws.
The Majority's focus on regulatory costs also completely and
blatantly ignore the overwhelming net benefits of regulations.
According to the Office of Management and Budget, the net benefits
of regulations through the third fiscal year of the Obama
Administration exceeded $91 billion, which is 25 times more than the
net benefits during the first three years of the George W. Bush
Administration.
OMB also reports that for fiscal year 2010, federal regulations
cost between $6.5 billion and $12.5 billion, but generated between
$18.8 billion and $86.1 billion in benefits.
Yet another concern that I have about this hearing is that it is
the 17th time that the Committee has considered what is essentially the
same topic: federal agencies and rulemaking.
I know regulations play a major role in ensuring the safety of the
food we eat, the cars we drive, the air we breathe, and the medicine we
consume.
And that the Nation's Great Recession was the result of too little,
not too much regulation.
Major financial distress in American history has often been
triggered by a regulatory failure of some type. The Great Depression
largely resulted from the failure of severely undercapitalized banks
that engaged in imprudent lending practices and other speculative
activities.
The current Great Recession was largely fueled by an unregulated
home mortgage industry and securitization market.
But come on now. During the 112th Congress, this Committee did not
hold a single hearing on:
the ongoing foreclosure crisis and its crippling
effect on the Nation's ability to recover its financial
stability as well as that of millions of Americans in
communities across the Nation;
the nearly lifelong peonage that millions of young
Americans must endure to repay private student loan debt, that
even bankruptcy will not alleviate; and
the extremely deleterious effects of mandatory
minimums and the resultant overincarceration particularly has
on African Americans in our Nation.
I could go on and on listing the critical issues that this
Committee should consider.
Finally, if we were really serious about creating jobs, then we
should be focusing on those measures that will actually result in
creating jobs.
Just over a year ago, President Obama addressed a joint session of
Congress at which he presented his American Jobs Act, a comprehensive
bill that would have:
cut payroll taxes for qualifying employers,
fund a work program to provide employment
opportunities for low-income youths and adults;
fund various infrastructure construction projects,
including the modernization of public schools; and
start a program to rehabilitate and refurbishing
hundreds of thousands of foreclosed homes and businesses.
Unfortunately, Congress chose to ignore this worthy initiative.
As many of you know, I have a measure--H.R. 4277, the ``Humphrey-
Hawkins 21st Century Full Employment and Training Act''--which aims to
provide a job to any American who seeks work.
My bill would create a funding mechanism to pay for job creation
and training programs.
These jobs would be located in the public sector, community not-
for-profit organizations, and small businesses that provide community
benefits.
But, like the President's proposal, my legislation did not receive
any consideration during the last Congress, which is unfortunate
because both of these measures would have, in fact, created jobs and
helped our Nation's economic recovery.
It's time we legislate based on facts, not rhetoric. Unfortunately,
I fear today's hearing will not enable us to accomplish that goal.
__________
Mr. Cohen. But I will mention that what the statement
contains therein, which I am going to offer to the Committee,
is three basic principles. First, that the majority's claim
that regulations inhibit job creation is not appropriate and
correct. And he uses as his supportive individuals Bruce
Bartlett, the senior policy analyst in the Reagan and George
H.W. Bush administration, who concluded in a statement, no hard
evidence is offered for the claim that regulations cost jobs,
it is simply asserted as self-evident and repeated endlessly
throughout the conservative echo chamber. He also cites Susan
Dudley, who was the head of OIRA during the administration of
George W. Bush. And she says it is hard to know what the real
impacts of regulations are unaware of any empirical, sound way
to assess the impact that proposed rules have on jobs.
He also makes a point that this Committee is now on its
17th hearing on basically the same subject and that the
Committee seems to sometimes forget the positive facts of
regulation. According to the Office of Management and Budget,
the net benefits of regulations through the third fiscal year
of the Obama administration exceeded $91 billion, 25 times more
than the net benefits during the first 3 years of the George W.
Bush administration. OMB also reported that for fiscal year
2010, Federal regulations cost between $6.5 billion and $12.5
billion but generated between $18.8 billion and $86.1 billion
in benefits. That is the Office of Management and Budget. There
is other salient information that I will submit as part of the
record, and hope that they will be perused and absorbed. Thank
you, Mr. Chairman.
Mr. Bachus. Thank you, Mr. Cohen. And I want to commend you
as an Alabamian on your active participation in our civil
rights pilgrimage. As you know, Alabama was kind of the
epicenter of the civil rights struggle.
We have a very distinguished panel today, and I will begin
by first introducing our witnesses.
Professor Robert Glicksman, welcome.
Professor Glicksman has published widely on the subject of
environmental and administrative law. Before coming to George
Washington University in 2009, he taught at the University of
Kansas School of Law, where he was the Robert W. Wagstaff
Distinguished Professor of Law. He is a graduate of Cornell
School of Law. And Professor Glicksman worked in private
practice at a firm in Washington, D.C., where he focused on
environmental, energy, and administrative law issues. Professor
Glicksman joined the Center for Progressive Reform in 2002 and
has sat on its board of directors since 2008.
Our next witness, Mr. Drew Greenblatt. Mr. Greenblatt is
the President and CEO of Marlin Steel in Baltimore, Maryland.
It is one of the fastest growing companies in the United
States. Marlin Steel exports engineering baskets and custom
sheet metal fabrications to 36 countries around the world. Mr.
Greenblatt is a leading voice for small business manufacturing,
as well as taxation, regulation, trade policy, and economic
growth. He serves as an executive board member of the National
Association of Manufacturers and as Chairman of the board of
the Regional Manufacturing Institute. In addition, Mr.
Greenblatt serves on the Maryland Commission on Manufacturing
Competitiveness and on the Governor's International Advisory
Council. He received his bachelor's degree from Dickinson
College and an MBA from Tulane University.
Welcome.
Mr. Greenblatt. Thank you.
Mr. Bachus. Mr. Rob James is Chairman of the Public Service
Committee on the Avon Lake City Council in Ohio, a town which I
named in my opening statement. From 2006 to 2012, he served as
the assistant attorney general for the Ohio Attorney General's
office. He clerked in the Tenth District Court of Appeals from
2005 to 2006. He received an MBA in diplomacy and foreign
affairs from Miami University, and a J.D. From Catholic
University Columbus School of Law.
Welcome, Mr. James.
Mr. Douglas Holtz-Eakin is President of the American Action
Forum and commissioner on the congressionally chartered
Financial Crisis Inquiry Commission. He began his career at
Columbia University and moved to Syracuse University, where he
became trustee, professor of economics, Chairman of the
Department of Economics, and associate director of the Center
for Policy Research. In 1989, and from 2001, he served as chief
economist of the President's Council of Economic Advisers. Mr.
Holtz-Eakin is a former director of the Congressional Budget
Office and served as the economic policy director for the John
McCain Presidential campaign. Mr. Holtz-Eakin serves on the
board of the Tax Foundation, National Economists Club, and the
Research Advisory Board of the Center for Economic Development.
He received his B.A. In economics and mathematics from Denison
University, and a Ph.D. in economics from Princeton University.
And have read several of your articles and books. And you
are no stranger to Congress. And we welcome you back.
Mr. William Kovacs provides the overall direction,
strategy, and management for the Environmental, Technology and
Regulatory Affairs Division at the U.S. Chamber of Commerce.
Since joining the Chamber in March 1998, Mr. Kovacs has
transformed a small division concentrating on a handful of
issues and Committee meetings into one of the most significant
in the organization. His division initiates and leads
multidimensional national issue campaigns on energy
legislation, complex environmental rulemaking,
telecommunications reform, emerging technologies, and applying
sound science to the Federal regulatory process. Mr. Kovacs
previously served as chief counsel and staff director for the
House Subcommittee on Transportation and Commerce. He earned
his J.D. From Ohio State University School of Law and a
bachelor of science degree from the University of Scranton
magna cum laude.
Mr. Rob Weissman is President of Public Citizen. Mr.
Weissman works in the area of economics, health care, trade and
globalization, intellectual property, and regulatory policy,
and on issues relating to financial accountability and
corporate responsibility. He has worked to lower pharmaceutical
prices for AIDS victims and others in the developing world. Mr.
Weissman has appeared on television and radio, and has been
published and quoted in many newspapers. He earned his J.D.
Magna cum laude from Harvard Law School and has led Public
Citizen since 2009. Previously, he was the director of the
nonprofit organization Essential Action, and edited the
magazine Multinational Monitor, which tracks the activities of
multinational corporations and reports on the global economy.
And I am sure we will be hearing from you on many future
occasions, too. So we welcome you to the Committee.
We will now proceed under the 5-minute rule with questions.
No, I am sorry, we will now have the opening statements from
our witnesses, starting with Mr. Glicksman, Professor
Glicksman. Mr. Frank one time had a hearing where he forgot to
have the opening statements, and he started doing his questions
and got about halfway through before he let the witnesses
speak.
Thank you, Mr. Glicksman. Professor.
TESTIMONY OF ROBERT L. GLICKSMAN, J.B. & MAURICE C. SHAPIRO
PROFESSOR OF ENVIRONMENTAL LAW, THE GEORGE WASHINGTON
UNIVERSITY SCHOOL OF LAW
Mr. Glicksman. My name is Robert Glicksman. I teach at the
George Washington University Law School, and I thank the
Committee for asking me to speak today. My testimony makes
several points about the impact of regulation on society and
the likely effect of proposals such as those introduced in
Congress in the past couple of years, which would dramatically
alter the manner in which agencies are required to adopt
regulations. My written testimony elaborates on each point,
which I will summarize today.
First, regulations often provide great benefits to the
public interest, such as by protecting the health and safety of
Americans from pollution and other harms. As a necessary
corollary, proposals that would indiscriminately block
regulation would reduce or eliminate those benefits. In other
words, even though those trying to slow down our regulatory
system focus on the costs of regulation, they tend to ignore
the very real costs that result from a failure to regulate.
In the environmental area, once those costs have been
incurred, it is typically disproportionately expensive to
remedy the harms caused by inadequate regulation, and it may be
impossible to do so. Some illnesses are not reversible, to say
nothing of deaths. Even where illness is reversible, the pain,
suffering, and reduced productivity that resulted before a
regulatory fix took effect cannot be eliminated retroactively.
So costs flow from decisions not to regulate, just as they do
from decisions to regulate.
Second, the existing Federal regulatory system is already
process heavy. It is characterized by multiple regulatory
obstacles and burdens that result from analytical duties that
are at best duplicative and sometimes of little apparent value.
The legislative proposals placed on the table in recent years
would make this situation worse, not better.
In addition, the notion that changes are needed to remove
barriers to effective participation in regulatory processes for
industries and other affected interests is hard to fathom. The
Federal Administrative Procedure Act and related Federal laws
already provide ample opportunities for such participation.
Studies show that regulated entities dominate the aspects of
the regulatory process that involve agency solicitation and
public comment.
Legislation is not needed to give regulated businesses even
greater access to regulators than they already have or to
improve the information base upon which agencies make
regulatory choices. Rather, this kind of legislation would add
to the regulatory thicket that already ensnares agencies,
perhaps by design, and hinders the adoption of even the most
needed and beneficial regulations. In addition, it is not hard
to imagine the approval process under a bill such as the REINS
Act from becoming a nakedly political exercise, reflecting the
political power of special interests rather than a fair and
informed evaluation of the pros and cons of regulation.
Rulemaking needs to become less, not more politicized.
Third, despite numerous claims to the contrary, there is
little reason to believe that existing Federal regulations
issued by agencies such as EPA are imposing disproportionate
costs or inhibiting economic recovery. Studies alleging
negative economic effects tend to both overestimate the costs
of regulation and discount or completely ignore regulatory
benefits. For one thing, these studies often rely on estimates
of regulatory costs that were supplied by regulated entities
before the regulations were adopted, at a time when they had
significant incentives to overestimate these costs. For
another, retrospective studies of regulations adopted by
agencies such as OSHA and EPA often show that actual compliance
costs turned out to be significantly lower than predicted
before the regulations were adopted.
Similarly, claims that the uncertainty created by
regulation poses an obstacle to economic growth are not
convincing. Even if they were, the legislative proposals being
considered would increase, not decrease that uncertainty by
dragging out the regulatory process. Some industries have
recognized the ability of rapid regulatory decisions to create
a climate of certainty that businesses prefer. The major auto
manufacturers, for example, did so in supporting EPA and
Department of Transportation efforts to increase the fuel
efficiency of cars and trucks.
Finally, if efforts to refashion the regulatory process
proceed, they should be redirected. Congress should focus on
ensuring that agencies have adequate resources to carry out the
tasks assigned to them by statute. The proponents of change say
they are concerned about agencies that take regulatory
shortcuts. If so, they should be worried about forcing agencies
to operate on shoestring budgets while heaping ever more
burdensome procedural duties on them.
Thank you.
[The prepared statement of Mr. Glicksman follows:]
__________
Mr. Bachus. Thank you.
Mr. Greenblatt?
TESTIMONY OF DREW GREENBLATT, PRESIDENT AND OWNER, MARLIN STEEL
WIRE PRODUCTS, LLC, ON BEHALF OF THE NATIONAL ASSOCIATION OF
MANUFACTURERS
Mr. Greenblatt. Chairman Bachus, Ranking Member Cohen,
thank you for inviting me today to testify----
Mr. Bachus. I am not sure the microphone is on. Or just
pull it right under you. Get it as close as you can there.
Mr. Greenblatt. Is this better?
Mr. Bachus. Better.
Mr. Greenblatt. Okay. Great.
Mr. Bachus. Much better.
Mr. Greenblatt. Thank for inviting me today to discuss
regulation and its impact on manufacturing. My name is Drew
Greenblatt. I am the owner of Marlin Steel. We are a
manufacturer of sheet metal baskets, wire baskets. We make
everything in the USA. We export to 36 countries. We make it in
Baltimore City. Twenty percent of our employees are degreed
mechanical engineers. We primarily use recycled steel. All of
our steel comes from Indiana, Illinois, and Pennsylvania.
When I bought the company, the company made $800,000 in
sales, we had 18 employees. Now we have over 32 employees, and
we are growing. We have grown 7 years in a row. I am on the
board of the National Association of Manufacturers. I am an
executive board member. We represent 12,000 factories
throughout America, and both small and large factories. A total
of 12 million people are represented by NAM.
America is the world's largest manufacturer. Eighteen
percent of global manufacturing is done by America. More than
China. And we support 17 million jobs. These are great jobs,
high-paying jobs. The average wage of a manufacturer is
$77,000. We want to coddle these jobs. We want these jobs to
grow. Matter of fact, since 2009 they have grown a half million
jobs.
However, we have had a setback. At the bottom of the
recession we lost 2 million jobs. We need to have improved
economic conditions and improved government policies so that we
can grow these jobs to heights that we have never seen in the
past.
NAM has a growth agenda, four goals for manufacturing
resurgence in America. Number one, we want to be the best place
in the world to manufacture. Number two, we want to be the
world's best innovator. Number three, we need access to the
global markets. We need to sell to the 95 percent of the world
that doesn't live in America. Number four, we have to have the
best trained workforce in the world.
One of our biggest challenges are poorly designed
regulations. Duplicative paperwork causes a lot of heartburn
and slows us down from our mission of growing, growing,
growing, and hiring people. Let me give an example of what has
happened in our government and with Marlin. We got a love
letter from the Department of Treasury, and it was a $15,000
fine in 2010. Why? Because in 2006, there was a 20-page form
sent to me. I diligently signed it in two places. However, in
2006 I missed one signature, and I got a $15,000 fine.
So I had my smartest people trying to fight this. It was a
lot of aggravation. It was a lot of anxiety. And it is a
complete lack of mission-critical focus for a company that is
trying to hire people in the inner city of Baltimore.
Let me give you another example. We export. We make
everything in Baltimore City using American steel. And we
export to 36 countries, including China, okay? This is a good
thing for our country. However, it takes time to fill out all
the paperwork to ship and export, which is a good thing. So we
have to have very smart people filling out all kind of forms
that doesn't add any value. So, for example, it takes us 3
minutes for a NAFTA form and it is 20 minutes for a form that
is non-NAFTA. That is a waste of our time and waste of our
smartest people's efforts.
But it is not just Marlin. Seventy-four percent of
manufacturers said unfavorable business climate caused by
regulations and taxes is a primary challenge facing business.
And this has gone up from 62 percent. And this poll was taken
in December. Seventy-six percent indicated that a pressing
priority for the Obama administration and this Congress should
be reducing the regulatory burden for the factories.
A couple examples of the cost burden on us. It is about
$14,000 per employee. I assure you China doesn't have these
kinds of burdens on their factories. And for small factories,
it is closer to $28,000 per factory--per employee at a factory.
So NAM has five ideas on how we can improve the regulatory
environment so that we could grow jobs and hire more people and
get us out of the recession.
Number one, we have to hold independent regulatory agencies
accountable. We need agencies like the NLRB, the SEC, the
Consumer Product Safety Commission to have control by the
executive branch. Congress should confirm this authority to the
President.
Number two, we need to streamline regulations through
sunsetting them. Recently, Representative Randy Hultgren of
Illinois has the Sunset and Review Act of 2013. This would
implement a mandatory retrospective review of regulations to
remove conflicting and outdated laws. This is wonderful. We
need this.
Three, we have to increase sensitivity to small business.
Small businesses are burdened more than the average company.
Number four, we have to strengthen and codify sound
regulatory principles. We have to do things based on science
and math.
Number five, we have to improve the institutions. We have
to have these offices properly staffed and resourced.
So in conclusion, Congressman Bachus, Ranking Member Cohen,
and Members of the Subcommittee, thank you again for this
opportunity to testify today. The President stated in his
Executive Order 13653 on improving regulations, and regulatory
review and our regulatory system should promote economic
growth, should promote innovation and competitiveness, and job
creation. Manufacturers agree with the President, and we are
committed to working toward policies that will restore common
sense to our regulatory system. We hope this Subcommittee will
hold the administration to its commitment in the executive
order. The best way to ensure continued economic growth and
employment by enacting a comprehensive, consistent set of
policies that allow manufacturers to compete in the global
marketplace. Reforming our regulatory systems to prevent the
continued piling on of unnecessary regulations is an immediate
priority.
[The prepared statement of Mr. Greenblatt follows:]
__________
Mr. Bachus. Thank you, Mr. Greenblatt.
And, Mr. James, welcome to you.
TESTIMONY OF ROBERT K. JAMES,
MEMBER OF THE AVON LAKE CITY COUNCIL
Mr. James. I would like to thank Chairman Bachus, Ranking
Member Cohen, and the other Members of the Subcommittee for
inviting me to testify today. My name is Rob James, and I am a
member of the City Council of Avon Lake, Ohio, where I
represent the residents of Ward 1. Avon Lake is a beautiful
community of over 23,000 residents on the shores of Lake Erie,
approximately 20 miles west of Cleveland.
Although I am currently an attorney in private practice, I
previously served as an assistant attorney general for the Ohio
Attorney General, where I represented the State of Ohio and its
agencies, including the Ohio EPA. My work as an assistant
attorney general included enforcing the environmental laws and
regulations, and ensuring that the natural resources of Ohio
were protected. However, I am here today because I think it is
important that Congress understands the impact of Federal
regulation, and specifically Federal environmental regulation
on local communities such as Avon Lake.
Almost exactly a year ago, on February 29, 2012, GenOn
Energy, Inc., announced that it would close the coal and fuel
oil-fired electric generating plant in Avon Lake in 2015. The
Avon Lake Generating Station is capable of generating 734
megawatts, providing baseload electric capacity and load-
following capability to the grid, as well as essential peaking
capacity and black start capability. This facility plays an
important role in providing a reliable and affordable supply of
electricity.
The reasons behind this closure are clear. GenOn stated
that the closure was a result of the rising costs associated
with EPA's regulations and the fact that the overwhelming costs
associated with complying with the rules could not be recovered
by continuing to operate the facility. In particular, GenOn
cited the EPA Mercury and Air Toxic Standards rule, known as
MATS, as the primary reason motivating the Avon Lake
deactivation.
On July 22, 2012, NRG Energy, Inc., and GenOn announced
that they would combine the two companies, leaving NRG as the
successor company. Despite the merger, NRG has publicly stated
that the Avon Lake Generating Station remains as schedule to be
deactivated in 2015. Although NRG has left open the possibility
of reevaluating the projected deactivation of the facility, and
there is the prospect that the small oil-fired boiler may
remain operational, the unavoidable truth remains that the Avon
Lake facility will be deactivated in 2015.
While some may celebrate the closure of these types of
facilities based on broader policy objectives, the loss of
power plants as a consequence of Federal regulation has a very
real impact on communities in which they are located. These are
not just abstract costs. The families of my community will have
to absorb these significant losses.
The most immediate impact of the closure will be on the 80
people employed at the Avon Lake facility. These type of
quality jobs at the Avon Lake plant are increasingly hard to
find in our country, let alone in Ohio and in the greater
Cleveland area. But it is more about than just the jobs or the
people employed at the plant. Instead, it is about the ripple
effect that harms an entire community. In present dollars,
closure of the Avon Lake generating facility will cost the city
of Avon Lake $69,000 in income taxes and over $291,000 in
property taxes each year.
This loss of taxes does not just represent the loss of
general revenue used to fund the city and its programs.
Significantly, a sizable portion of the property taxes
collected is used to fund Avon Lake paramedics and emergency
medical services. The loss of $71,000 annually from the EMS
budget, which is the amount that would be lost from the
closure, would reduce the EMS operating budget by half.
Undoubtedly, this will have a direct impact on the health of
Avon Lake residents.
Even more concerning is the impact the closure will have on
the Avon Lake School District and other educational
institutions in Avon Lake. At present, Avon Lake schools
collect $1.8 million in utility taxes alone, and another $1.5
million in real property taxes each year. This potential loss
of $3.3 million each year would have an unimaginable effect on
Avon Lake schools. Not only will the loss of revenue directly
impact the ability of the schools to provide a high quality of
education for all students, but many of the programs offered by
the schools for students with the greatest needs will be lost.
In addition, consumers in northeastern Ohio are likely to
pay more for their electricity. Catholic Charities of Cleveland
has previously testified to Congress that the loss of power
plants would have a devastating effect on the people of Ohio
and on our country, particularly the poor and elderly.
As the Subcommittee continues to evaluate the extent and
the impact of Federal regulation, I hope you will keep in mind
communities like Avon Lake. While government regulation is
appropriate in certain circumstances, the Federal Government
must understand the consequences of its regulations on our
communities. Places like Avon Lake need affordable and reliable
electricity, a strong educational system, and opportunities for
our economies to rebuild and grow. The U.S. economy is still
struggling to recover, and northeastern Ohio is at the center
of the struggle. We know that we can have clean air, good jobs,
and reliable electricity, but only if policies are implemented
based on sound analysis and with full consideration of the real
costs of the choices made by regulators.
Thank you again for the opportunity to testify today.
[The prepared statement of Mr. James follows:]
__________
Mr. Bachus. Thank you, Mr. James.
And now, Dr. Holtz-Eakin, we welcome you. And let you give
your opening statement.
TESTIMONY OF DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION
FORUM
Mr. Holtz-Eakin. Chairman Bachus, thank you. Ranking Member
Cohen, Members of the Committee, it is a privilege to be here
today. I submitted a written testimony which is a very
elaborate accounting of recent regulatory costs, both annually,
cumulatively over the past several Congresses, those that can
be attributed to major pieces of legislation such as the
Affordable Care Act, the Dodd-Frank legislation, and attempted
to put these in a global context and to identify particular
impacts on small businesses. It is chock full of numbers, and I
respect you too much to go through it all.
Let me just say three things. Number one, as a starting
point, these regulatory costs are quite significant. At the
moment, there are 128 so-called economically significant
regulations under consideration. We have seen nearly $300
billion in regulatory activity in 2011, another $200 billion in
2012. Over the past 4 years, roughly $520 billion in regulatory
costs.
I would point out that these are on the same order of
magnitude as the much ballyhooed fiscal cliff tax increase we
saw at the beginning of the year, but often get much less
attention. And their likely incidence, the people who will
ultimately bear their costs, are much more focused on workers
and the middle class than those increases would be. They are
also having an increasing impact on U.S.' standing in
international competitiveness. And as Chairman Goodlatte
mentioned in his remarks, the U.S. is lagging behind other
countries in terms of broad-based attempts to look at the
impact of the regulatory system on their economic performance.
Britain got a lot of attention for its one-in, two-out
approach, but countries as small as Portugal are looking at the
impact of their regulatory approaches on economic performance.
They have adopted something called the Simplex approach. The
Organization for Economic Cooperation and Development has
placed regulatory review at the top of its policy agenda. And I
think all of this highlights the importance of thinking about
this for the United States, where we have in recent years seen
two executive orders from the President, which are laudable,
but which are small by comparison and have not produced large
changes in the regulatory burden.
The second point I would make is that I believe it is
indisputable that this is slowing the recovery from the very
large recession that followed the financial crisis of 2008. It
is straightforward textbook economics to recognize the impact
of large tax increases on the pace of such recoveries. The
regulatory burdens are of the same character. And as I
mentioned, they are quite large, over $0.5 trillion dollars.
Some of the pieces of legislation have had very specific
and large-scale impacts. The Affordable Care Act has a big
regulatory burden, $35 billion in measured regulatory costs,
something like $80 million in hours of compliance.
But it is also now recognized to have large impacts across
the economy. The employer mandate to provide insurance is a
real impediment to labor market performance. It is going to hit
especially minimum wage workers, where employers will be
obligated to layer on top of that existing compensation more in
the way of health compensation with no offset in cash wages.
That is going to hurt hiring. We are already seeing a spate of
companies reorganize the hours of work to make sure that people
fall under the threshold for full-time workers, and thus create
part-time employment instead of full-time employment. That is a
cost by any measure.
We have done a lot of research at the American Action Forum
on the implications of the various mandates within the
Affordable Care Act for greater benefits, the MOR rule, things
like that, on the costs of insurance. And those insurance costs
in an employer-sponsored system will be passed along as costs
to the labor force, and thus impede hiring and expansion as
well. So we have seen these kinds of impacts, and they are
indeed slowing the recovery.
The last point I would emphasize is that many of these
costs are concentrated in disproportionate ways on smaller
businesses. One of the outstanding features of the data that we
have seen over the past several years is the diminished rate at
which small businesses are created in the United States. It is
also an empirical regularity that small-business creation is
associated with job creation. It is new firms that create a lot
of jobs. The diminished creation of small businesses is
directly related with our poor job growth.
In the testimony there is a table that looks, for example,
at the Affordable Care Act rules on small businesses, from menu
labeling, to vending machine labeling, to an enormous number of
payment rules. All of these I think are having a big impact.
And the Dodd-Frank rule does the same thing. We did some work
on what the combination of the QRM, QM, and Basel III accords
will do for mortgage origination in the United States. In
normal circumstances, it will be down about 20 percent. That
translates directly into smaller number of housing starts. And
housing contractors are one of our most vibrant small
businesses.
So I am pleased to have the chance to be here today. I look
forward to answering your questions, and would just raise the
importance of these issues on our overall economic importance
and growth.
[The prepared statement of Mr. Holtz-Eakin follows:]
__________
Mr. Bachus. Thank you very much.
And now, Mr. Kovacs, I welcome you and the Chamber to this
hearing.
TESTIMONY OF WILLIAM L. KOVACS, SENIOR VICE PRESIDENT,
ENVIRONMENT, TECHNOLOGY & REGULATORY AFFAIRS, U.S. CHAMBER OF
COMMERCE
Mr. Kovacs. Good morning, Chairman Bachus and Ranking
Member Cohen and Members of the Committee. Thank you for
inviting me here. I guess when Congressman Cohen was saying
this is the 17th hearing, one of the things that was going
through my mind is, I think this is my 17th year talking about
some form of regulatory reform, and I guess it sort of feels
like Groundhog Day.
One of the things I wanted to do is maybe give a little bit
of perspective without just going into this reg is bad or this
reg----
Mr. Bachus. Pull that just a little closer to you.
Mr. Kovacs. Certainly.
Mr. Bachus. Thank you.
Mr. Kovacs. Is that fine?
Mr. Bachus. That is great.
Mr. Kovacs. You know, when I was preparing for the
testimony, we sort of looked at the legislative history. This
issue has been going on as to whether or not regulations harm
jobs for almost 45 years. Congress had, in the 1960's, a very
extensive debate at the beginnings of the Clean Air Act, and
what was so fascinating about the debate is, if you looked at
it, some of the Democrats at that time had some of the same
issues as the Republicans have today. And what was interesting
is--and we are talking the Bella Abzugs of the world and
Jennings Randolphs--they recognized, the Congress recognized
overwhelmingly that they needed to clean the air and the water.
There were serious environmental problems and they had occur.
But they also recognized that as part of that they were going
to impose regulations to protect health and safety that were
going to have adverse economic impacts on cities, industries,
and people. And they came to a deal, which is something
Congress could do in those days, and that is, they decided that
they were going to give the agencies the authority to put the
regulations in that would protect health and welfare.
In exchange, Congress asked the agency, in particular EPA,
to do what they call a continuing evaluation of potential job
loss and shifts in employment. And why that was so important is
because they knew they were putting these burdens on society.
And when they were putting the burdens on, Congress needed to
be able to monitor what was happening and what was happening to
particular industries.
And this is not something that, you know, we are now
imagining. There were two Supreme Court cases, one written by
Justice White, who was a liberal, and one by Scalia, who is a
conservative, both recognizing the same principle: That this
was where it acted. But what happened is, over the years,
Congress forgot to do its oversight, so I thank you for doing
more, and the agencies themselves forgot--they remembered to do
the regulations, they remembered to say costs aren't a problem,
but they also forgot to do the continuing analysis which showed
the impact on jobs, and that is really crucial.
And so one of the things that, as the chamber was looking
in this, we wanted to know what has happened in the system. And
we did this study, we had hired it out to NERA, and we asked,
from 1997 forward what has the EPA done in terms of any kind of
ananalysis on the effects of these regulations on employment?
And one of the things we found is, out of the 58 regulations,
they only looked at jobs 18 times, and out of the 18 times that
they looked at jobs in some way, 16 of them were the wrong
analysis. They used a partial versus an economy-wide analysis.
But they never did the continuing analysis, and the difference
between the RIA and the continuing is the RIA looks at a very
specific industry and asks the question, what does it take to
come into compliance, and that model will show job creation.
On the other side of the issue, if you do an economy-wide,
you see the costs that you are imposing on the industry flow
through the economy. And I wanted to give you an idea of just
the difference using only EPA statistics.
If you did the Utility MACT using EPA's data, just EPA's
data, EPA got 54,000 jobs created. That is what it would have
taken for that industry to come into compliance. If you look at
the added costs that flow through society, you come up with a
180,000 to 215,000 job loss. And in some of the regs that are
going to come out later this year, like ozone, for example, EPA
refused to do even a regulatory analysis looking at impact, but
we decided to do it, and it is 609,000 jobs. So these are big
differences.
The point that I am really trying to make as I wrap up my
last 38 seconds is, this is an institutional issue. Congress
has made a deal. You passed the law. And where I say it is an
institutional issue is, the agencies really at this point in
time--I mean, you may have some control over their budget but
it is getting to be less and less--but the agencies are really
free to do what they want. And at some point, we really beg
you, that the Congress needs to get involved in the process
because it is a serious process. It does involve not just cost
and benefit, that is very theoretical, but it does involve real
people, real displaced workers, real communities. And when
these regulations hit, they are not affecting what we would
call computer model people. These regulations are affecting
real people and displacing real people. Thank you very much.
[The prepared statement of Mr. Kovacs follows:]
__________
Mr. Bachus. Thank you, Mr. Kovacs.
And, Mr. Weissman. And we will get the microphone and we
won't start the time till we have got all that in place.
TESTIMONY OF ROBERT WEISSMAN, PRESIDENT,
PUBLIC CITIZEN
Mr. Weissman. Want the rules of the road be fair for
everybody.
Thank you very much, Mr. Chairman, Mr. Cohen, Members of
the Committee. I have three points today, and I will disclose
out front that the third point has subpoints. So before you
criticize my math.
The first point is this: The regulatory system in this
country makes us a stronger Nation, makes us healthier, makes
our economy more secure, makes us fairer, makes our environment
cleaner. It is a point that I think is lost in much of the
regulatory policy debate that focuses on cost. Indeed, there is
no small irony in the proponents of cost-benefit analysis, when
it comes to regulation, talking about regulatory policy, but
focussing exclusively on cost and ignoring altogether the
benefits of the fair kind of analysis they suggest should be
done.
For example, if you look at the American Action Forum
analysis on cost, costs are fairly calculated. The cost for
2012 regulations are on the order of $220 billion. The primary
cost in that figure is $150 billion attributed to fuel
efficiency standards, the CAFE standards that will take effect
in 2017, also to just relying on an EPA analysis. They neglect,
however, to mention the benefits. The benefits are far greater
than the costs. And these are not abstract benefits. They are
not based on health impacts. They are primarily based just on
savings at the gas pump.
So, in the model year 2025, consumers will pay $1,800
additional for an automobile, but they will save between $5,700
and $7,400 per automobile. In fact, if you look at the CAFE
standards that started in 2012 and the new ones that will come
into place in 2017, the overall net benefit to the United
States is $1.7 trillion--trillion with a ``t.'' That is indeed
one of the most efficient regulations we could imagine. It will
have huge benefits for small business and massively increase
global competitiveness for American business.
Second point. Too much of the debate about regulation, jobs
and the economy ignores the cause of our current jobs crisis.
The housing bubble, the financial bubble, financial crash,
great recession, ongoing stagnation are traceable in very large
measure to regulatory failure. It is indeed, as Mr. Issa said,
in part a failure of regulatory enforcement. It is also a
result of the rollback of previously existing regulation and
the failure to adopt additional regulation to deal with ongoing
issues.
So, for example, there was insufficient regulation on toxic
and predatory mortgage lending, there was too little regulation
on securitization, too little regulation and inadequate
enforcement on the credit rating agencies, too little
regulation--actually no regulation on financial derivatives
that expanded the crisis, insufficient capital standards
required of financial institutions, and so on. Many other
examples listed in my testimony. It is worth underscoring the
impact of the great recession: $13 trillion in reduced economic
output, $9 trillion in lost home equity, though that partly is
inflated by the actual housing bubble itself.
Third point. To say that the regulatory system provides so
many protections for our country is not to say that all is
well. There are indeed many problems with the regulatory
system. It needs very far-reaching repairs. I have got a number
of examples elaborated in my testimony. I wanted to highlight
just a few.
First--if you could put the chart up, please, sir--the
regulatory system now is characterized by a Rube Goldberg
process, that it actually builds in endless delay, and this
chart follows that Rube Goldberg process, although it is
unreadable unless we blow it up to a screen about six times
bigger than that one. I think the lesson from that is not that
new additional analytic requirements should be imposed on
agencies, but that we ought to try to streamline the process to
the extent we can. But new analytic requirements of the kind
embodied the Regulatory Accountability Act, I think, are the
wrong way to go.
A second point, which is also implicit from that chart. The
OIRA is a roadblock to effective new rulemaking, and there
needs to be not an expansion of the scope of OIRA authority, as
would be required under several so-called regulatory reforms,
but increased transparency at OIRA and increased accountability
at the agency. Indeed, I think as regards the independent
agencies, those are accountable to Congress, not to the
executive, and it would be a mistake to expand the executive
direct authority over them.
Third point. There are issues about regulatory enforcement
and rulemaking and undue influence of regulated parties and of
regulated agencies. That is a hard problem to deal with, but
one important thing we could do is to crack down on revolving
door abuses which continue despite some reforms by the Obama
administration.
And a last point, on the matter of small business. There is
an important discussion to be had about the nexus between
regulatory policy and small business interests, but one thing I
think that has been too overlooked is how competition policy is
needed to advance small business interests. I go into some
detail about this in my testimony, but one area that perhaps
there can be bipartisan agreement about is start by looking at
the too-big-to-fail financial institutions that get an implicit
subsidy of about $80 billion, according to Bloomberg, and I
think that is a complete unfair situation as regards small
banks and it disadvantages other businesses as well. Maybe that
is an area where there actually could be some regulatory policy
going forward across party lines to advance small business
interests.
Thank you so much.
Mr. Bachus. Thank you.
[The prepared statement of Mr. Weissman follows:]
__________
Mr. Bachus. And we will now proceed under the 5-minute rule
with questions, and I begin by recognizing the gentleman from
Georgia, Mr. Doug Collins, for 5 minutes.
Mr. Collins. Thank you, Mr. Chairman. I appreciate it.
This is a concern, as I stated in my opening statement, the
issue that we have moving forward with this. I want to start
with Professor Glicksman, if you would. One of the things that
I have for you is a discussion that just came up with banks.
There is regulation that needs to be here. Many times
Republicans and conservative Republicans and myself are painted
as just do away with government and we don't need regulation.
That is the furthest thing from the truth. We need proper
regulation.
What was just mentioned here, especially with the Dodd-
Frank issue, is we are killing community banks. I am from
northeast Georgia, and we had a bank which had nine employees
in its home office. They had two other branches. When the
auditors and all came in, they brought 14 people and complained
because they didn't have enough room to do their work.
Is there a certain point in time that you would agree that
there is need for base regulations, but the continued expansion
of regulation is killing jobs?
Mr. Glicksman. I don't think there is strong evidence that
existing regulations are killing jobs. Surveys conducted by the
Bureau of Labor Statistics and others consistently demonstrate
that when businesses are asked what the problems they are
facing are, they tend to point to low demand and general
economic conditions, not excessive regulation. There may,
however----
Mr. Collins. But, Professor, let me stop right here. Have
you smarted a small business?
Mr. Glicksman. No, I haven't.
Mr. Collins. Have you worked outside of academia?
Mr. Glicksman. Yes, I have.
Mr. Collins. Okay. In the last how many years?
Mr. Glicksman. Oh, the last 15 years.
Mr. Collins. Okay. I think the interesting thing is we can
do policy and then we can do polls, and we all know how polls
go around here, and if they say, well, we don't say it. But
when you get into the real world, you come travel with me in
the Ninth District of Georgia, you will see how it affects real
jobs, and it is not according to some survey. It is according
to the fact that they have jobs that are at issue.
The other thing I have, and I read your testimony, and I
appreciate opinions, but one of the things that you bring up
that really is disturbing to me, and it is popular in the
country right now, is that the Congress is too stupid to do
this act. And you put it in your testimony where you said,
``Neither most Members of Congress, nor their staffs, lack the
sufficient expertise regarding complex regulatory matters to
consider decisions on whether to adopt a regulation or not.''
I want to think that is very offensive, one, to Congress,
and the staff and the resources that we have, but it just also
goes back to, I mean, I have a question for you. If that is
where we are looking at right now, then should we have juries--
I mean, does that not affect whether they have juries in which
DNA and scientific evidence and where you have members of the
population, should we say, well, they don't have enough
understanding of scientific, so we need to change our jury
system. I mean, is that not just a straw argument you are
throwing up there to maintain a regulatory system?
Mr. Glicksman. I didn't mean to offend the Members of
Congress or the staff. Congress created----
Mr. Bachus. We get offended every day, so don't worry about
that. That is not a problem.
Mr. Glicksman. Congress created agencies and has been doing
so for well over 100 years because it recognizes that it has
neither the time nor the expertise to legislate in the detail
that is reflected in agency regulations. Congress certainly has
the expertise to set broad policy, and it appropriately should
do so, but it delegates to agencies the responsibility for
translating the broad legislative goals into detailed
regulatory mandates, and I think that is perfectly appropriate
for it to do so.
Mr. Collins. And one of the things is, too, is remembering
that we have, from a perspective of designating, yes, but also
having oversight, because we are the ones who have to stand
before the people and actually have to say, you know, here is
why we are running and here is what the government is doing or
not doing.
Mr. Glicksman. It would be appropriate for Congress to
amend a statute if it felt on review that the agencies are not
doing an appropriate job implementing it.
Mr. Collins. Thank you.
Mr. Weissman, should it be easy? I mean, you showed this
wonderful chart and this graph about how hard it is. Should it
be easy? I mean, let's go to the other side here. You know,
what is the balance that you see? If you make the sort of the
chart here that says, well, this is just awful and terrible,
should it be easy?
Mr. Weissman. Should it be easy to issue----
Mr. Collins. To do regulations that impact businesses on
which the regulators themselves do not have to feel the impact?
Mr. Weissman. Well, the decision should be informed, but,
yeah, for sure, it shouldn't be subjected to needless red tape,
just the way businesses should not be subject to red tape.
Mr. Collins. I think one last thing, I know my time is
running out. But, Mr. James, you provide a face to this. We can
be academic, we can be congressmen, and we can go back and
forth and be offended and not offended, that is normal. But for
you, you provide a face to this, and I think that is what is
missing often when we talk about these in these large economic
terms and we talk about it in large policy terms, and I just
wanted to thank you for being a part of this and showing that
there is a balance that can be struck. And any comments that
you would like to elaborate from your testimony I would like to
hear.
Mr. James. Well, thank you, Congressman. And you are
absolutely right, these aren't abstract costs. And we can talk
about statistics and numbers all day long, but the reality of
it is, is that this is going to have a real impact on my
community. It is not just the power plant. There is a ripple
effect that will be associated with it. It will be the closing
of restaurants near the power plant. It will be the closing of
dry cleaners that clean the uniforms for the plant workers.
This will affect families. It will affect the children. It is
not just about these high ideals. There is a real impact here
and it worries me every day as an elected official. Thank you.
Mr. Collins. Well, I appreciate that.
Mr. Bachus. Thank you.
Mr. Collins. Mr. Chairman, I yield back.
Mr. Bachus. Thank you.
Mr. Cohen, for 5 minutes.
Mr. Cohen. Thank you, Mr. Chair.
Dr. Holtz-Eakin, in your opinion, was the great recession
largely fueled by the unregulated mortgage industry and
securitization market? Was that a great----
Mr. Holtz-Eakin. No.
Mr. Cohen. It is not your opinion.
Mr. Holtz-Eakin. No, that is not my opinion. As you know, I
was on the Financial Crisis Inquiry Commission. We spent 2
years looking at this issue. We had housing bubbles, both
residential and commercial, in Spain, in Ireland, England, New
Zealand, and those took place in vastly different regulatory
markets. There is nothing about the regulatory system that
appears to be correlated with the presence of big housing
bubbles and the aftermath. It is also true that we had large
institutions fail in, for example, in the United Kingdom,
Northern Rock, with a very different regulatory system. They
have a unified regulator.
So I find it utterly uncompelling to assert that somehow it
was the regulatory system per se and uniquely that generated
this phenomenon.
Mr. Cohen. Do you think there should be regulations on
securitization of these mortgages?
Mr. Holtz-Eakin. Indeed, there have been for a long time. I
mean, securitization came from the creation of Fannie Mae,
Freddie Mac. It was originally designed to bridge what were
regional lending markets in the United States which led to
financial market failures when we had crop failures, in
particular, earlier in our stage of economic development. And
so those were never unregulated markets. They were part and
parcel of government policy.
Mr. Cohen. Mr. Weissman, I would like you to respond to
that. I mean, you, in your testimony, talked about this issue.
Mr. Weissman. Well, since the author is here I don't want
to put words in his mouth, but I did review again the dissent
that you coauthored to the Financial Crisis Inquiry Commission
report. It is indeed a thoughtful perspective on in trying to
explain the crisis.
My interpretation, though, is it is not fundamentally one
that is at odds necessarily with the majority, but in any case,
with a view that says that regulatory failure was a
considerable contributing factor. I mean, the framework
explanation and the dissent is that there was a housing bubble
and a financial bubble, those were sort of structural factors,
and as you look at this cross-cultural comparison, they may not
be attributed to any regulatory issue or anything that is
domestic, but that they were exacerbated--but those problems
were exacerbated by a number of things--bad mortgages,
relatively unregulated securitization, financial derivatives in
the derivatives trade, and credit ratings failures, all things
that were listed in the dissent.
From my point of view, at least, and I can't speak for Dr.
Holtz-Eakin, those are all things that either should have been
prevented altogether or problems that should have been limited
through appropriate regulation, either better enforcement or
stronger rules on the books.
Mr. Cohen. Federal Reserve Chairman Alan Greenspan opposed
regulation of the practices that allowed subprime mortgages to
be bundled into large securities--opposed those regulations--
and sold to investors. In 2008, however, he testified, ``I made
a mistake in presuming that the self-interest of organizations,
specifically banks and others, were such that they were the
best capable of protecting their own shareholders, and their
equity in the firms.'' I think Alan Greenspan was right to make
his mea culpa and admit that the regulations should have been
in place and that they did help result in that.
Let me ask you this. Dr. Holtz-Eakin,you have made some
criticisms of the Affordable Care Act. Your criticism, I
presume, was not that you don't think we should have health
care for people that otherwise aren't getting it. You are in
favor then, I guess, of a single-payer system?
Mr. Holtz-Eakin. No, I am not, sir.
Mr. Cohen. No, you are not. So what are you in favor of?
Any health care at all for the poor people that aren't getting
health care today?
Mr. Holtz-Eakin. The Affordable Care Act has two key
components. Key component number one is an expansion of health
insurance coverage, largely through the exchanges and the
Federal subsidies----
Mr. Cohen. Right. Which we wouldn't have if we had a
single-payer system.
Mr. Holtz-Eakin. But those aren't care decisions. Care
decisions, the actual use of health care services are things to
which people are constitutionally entitled, that has been
determined, and which are happening right now.
So the second big piece of the Affordable Care Act is those
activities which would change the delivery system, produce
higher quality care, in particular move us away from fee-for-
service medicine, which is widely recognized as part of the
problem.
I believe the act has, you know, sort of three key
features. Number one, I think the insurance expansions are very
poorly designed and will harm us from a budgetary and economic
point of view. I think the delivery system reforms are under-
exploited. I mean, this doesn't solve our cost problem, which
is the fundamental health care problem in the United States and
which harms the ability of the less affluent and everybody to
get affordable care. And the third is timing. It is not a pro-
growth strategy to impose $700 billion in new taxes, create a
trillion-dollar new entitlement program at a time when our
entitlements need to be reformed to begin with, and impose the
large regulatory burdens that come with the ACA. That is what
we did at a time when we were trying to crawl out of the
greatest recession since the Great Depression.
Mr. Cohen. Dr. Holtz-Eakin----
Mr. Holtz-Eakin. So that is why I think it flunks the
benefit-cost estimate, because if you think about it, you
wouldn't do it.
Mr. Cohen. Well, I did think about it, and I was for it and
I am still for it because somebody----
Mr. Holtz-Eakin. Well, you asked what I thought.
Mr. Cohen. I know I did. And I am saying you don't take
into consideration people whose lives would be lost. If you are
65 years old and you need a lung and you can't afford it, you
don't have insurance, you can't wait for years to come. And
this whole regulatory scheme of EPA and health care and China
is wonderful and China has less regulations, China's air is
awful and their people don't have the life expectancy we have,
nor do they have it in India. And a lot of things we do that
are regulations save peoples lives, and nobody here seems to be
concerned with life expectancy, quality of life, health care,
all of which are affected by regulations that this Congress has
passed that have become law and make America the best country
in the world.
I yield back the balance of my time.
Mr. Bachus. Thank you. And I would let Mr. Holtz-
Eakinrespond, though.
Mr. Cohen. Then I am going to respond. Congress always gets
the last say. You know that.
Mr. Bachus. Well, how about 20 seconds?
Mr. Holtz-Eakin. Eighteen.
Mr. Bachus. Eighteen seconds.
Mr. Holtz-Eakin. None of my remarks raised China, the
desirability of air pollution regulation, all of which I do
have opinions on, but wasn't my point. The Affordable Care Act
has relatively modest expansions of the actual access to health
care in the United States. We spend $3.6 trillion already. We
have aggressive programs at the State and Federal level for the
elderly and low income. It does add some, but I don't think it
passes the benefit-cost test in terms of those very important
issues. We have better ways to accomplish the same things, and
that would have been my goal.
Mr. Bachus. Thank you.
Mr. Farenthold, who is next. Then Mr. Rothfus after that.
Mr. Farenthold. I am sorry?
Mr. Bachus. Five minutes.
Mr. Farenthold. I will be as brief as possible. I know we
have got a busy day. We got a big panel. Lots of people to ask
questions.
The district I represent is the heart of the Eagle Ford
Shale development in Texas. It is providing unprecedented
amounts of energy for our country at incredibly low cost. Right
now there are just a ton, there are actually 10 agencies now
that have been charged with regulating the hydraulic fracking
industry. I mean, it seems ridiculous that we have to go
through this many regulatory hoops to regulate one activity. It
seems like there is a natural desire for everybody to get their
hand into the pudding.
How can we structure something where, whether it be
hydraulic fracking, building a much-needed bridge or a new
railroad or infrastructure, or developing a plant that will put
people back to work, how can we consolidate this without
putting in jeopardy the environment? I will throw that open to
give each of you all 15 or 20 seconds for your best idea, and
we will start with Professor Glicksman.
Mr. Glicksman. It is funny that you ask that question
because my latest article is on exactly that, and I commend it
to all of you.
What my coauthor and I do in that article is to look at the
different dimensions upon which regulation and agency
relationships can proceed in. So we look at whether or not it
makes sense to have centralized or decentralized regulation,
whether if we have decentralized regulation one ought to have
an array of authorities that are distinct, with each agency
having jurisdiction over a separate problem or whether we ought
to have overlapping authority. And finally, we look at whether
or not it makes sense to have coordination among the agencies
that have jurisdiction over a single problem or whether we want
them to act independently.
Mr. Farenthold. You have given me some light reading for
the flight home. I appreciate that, Professor.
Mr. Glicksman. We make suggestions about how best to answer
those questions.
Mr. Farenthold. Thank you.
Mr. Glicksman. Very context specific.
Mr. Greenblatt. America hit the lottery when we figured out
fracking in natural gas. This is wonderful for our country.
This is wonderful for our factories. This is going to grow
employment in our country. So we have to streamline the
environmental regulatory authority so that----
Mr. Farenthold. I am sorry. I don't mean to rush you. I
have got one more. I have got another question I want to ask,
though. Quickly, give me your bullet point, anything we can do,
where is our biggest bang for the buck?
Mr. Greenblatt. I think if we have one entity in charge of
fracking and all other groups have to----
Mr. Farenthold. Great idea.
Mr. Greenblatt [continuing]. Cede authority to them.
Mr. Farenthold. Mr. James.
Mr. James. Thank you, Congressman. I will be brief. When an
environmental agency, either it is the Ohio EPA or the U.S.
EPA, is promulgating a regulation, they look at the direct cost
of that regulation, and when they analyze direct cost, it is
usually the cost of compliance with that regulation. My
suggestion would be simple, that these agencies look at other
costs associated with that regulation, particularly indirect
costs to communities that those regulations impact. Thank you.
Mr. Farenthold. Sold on that one, too.
Mr. Holtz-Eakin. I haven't written on this, but my instinct
is monopolies are bad and government monopolies are just as
bad, and while it is messier, multiple jurisdiction provides
checks and balances that go back to our founders.
Mr. Kovacs. This Committee has already had a great start.
Last year you passed out of the House the Regulatory
Accountability Act, which allows good data to get into the
system and for a way to check the data that is bad, and second,
permanent streamlining, very important. And the few pilots that
we have had, both in SAFETEA-LU and in the Recovery Act, showed
that we can cut permit time in half.
Mr. Farenthold. All right. Mr. Weissman.
Mr. Weissman. I think the key issue that is highlighted is
what happens when there is a new technology or an old
technology that is operating at a scale beyond anything that
happened before. And I think there is a key role for Congress
in saying, look, we need a framework to think about this. The
frustration you have, I think, is agencies just trying to catch
up. They are behind.
Mr. Farenthold. All right. Thank you very much.
Mr. James, Corpus Christi, my hometown, similar to you, we
have a large petrochemical industry. We are suffering as a
result of regulation. Fortunately, the low cost of natural gas,
you know, in the 3.25 range is making it awful attractive to
overcome either our higher labor costs or our higher regulatory
costs, but not necessarily both.
I mean, obviously we talk about the jobs. But in your
community, what are you seeing is the impact on people and
families as jobs are evaporating? Your population has got to be
suffering.
Mr. James. Absolutely. And it truly does keep me awake at
night and throughout the day thinking about what I am going to
tell families when they find out that their job has been
eliminated and they call me and they tell me that they can't
make their mortgage payments and I have to refer them to some
of our welfare services to help them out. It is these kind of
indirect costs that I think Congress and the administration and
agencies need to look at as they are making----
Mr. Farenthold. I appreciate that. And my word to our
agencies and regulators, every day you delay in approving that
permit is a day somebody doesn't go back to work. And I wish
more of our regulators were staying up at night worrying about
the people that the regulations are affecting.
Thank you. I yield back.
Mr. Bachus. Thank you. And now the gentlelady from
Washington state, Ms. DelBene, is recognized for 5 minutes.
Ms. DelBene. Thank you, Mr. Chair.
Mr. Greenblatt, I wanted to ask you about, you talked about
sunsetting regulations, and I assume that the intent is that we
put together regulations, we have an idea of what the intent is
of the regulation and the result of that, and after some period
of time we evaluate whether or not that is working or not
working or how we can improve and it would either sunset or be
reinstated. Is that what you are suggesting?
Mr. Greenblatt. I agree.
Ms. DelBene. And so when we look across our environment,
another scenario where we have a similar challenge is in our
tax system. And do you think that that would also be a place
where we should put things in place and let those sunset as
well so that we don't continue to build complexity on top of
complexity?
Mr. Greenblatt. I am sorry. You are talking about taxes or
you talking about environment or both?
Ms. DelBene. Tax system. Things like exemptions and
incentives that are also put in place with an intent to either
help----
Mr. Greenblatt. Sunsetting is a good idea. It cleans things
out.
Ms. DelBene. Well, we have had this conversation in our
state a lot, and I agree that if we can get rid of the layers
and we are better stewards of policy and keep it up to date, we
would probably reduce a lot of complexity. Thank you.
Mr. Weissman, several witnesses are suggesting that
regulations are a significant factor in our current
unemployment situation, and clearly we have talked about the
benefits and challenges, but I wondered what proposals you
might have or what we could do in our regulatory system to
support job creation and innovation and what changes we might
make to reduce that burden.
Mr. Weissman. I think there is a huge number of things. I
think the first point is that much of the regulation that is
being criticized actually itself is a spur to new innovation.
So if we talk, for example, about the fuel efficiency
standards, that is going to spur all kinds of new innovation in
the auto industry. The various environment or energy efficiency
standards that are being promulgated by EPA will massively spur
innovation.
So, if you look in the auto industry, same kind of things.
In fact, we were looking at the airbag example, and I mentioned
some of this in my testimony. When airbags were first being
proposed and seriously considered in the 1970's, the industry
said that the cost--publicly they said the cost was going to be
well over $1,000 and sometimes up to $1,500 or more. It turned
out that their internal data showed that the cost would be more
like $200, and thanks to economies of scale and dynamic
efficiencies, actually the costs are now far, far lower and we
are saving $2300 a year.
So, actually a lot of regulation is itself innovation-
spurring. If we want to look, I think, broadly, in terms of
making the economy more stable in the regulatory area, I think
given the experience we have just had with the great recession,
the most important thing is to stabilize the financial system.
I think there probably is pretty widespread agreement that the
system remains quite fragile.
From my point of view, if there is a single most important
thing to do, it really is to go after the large institutions
that are able to hold hostage prosecutors, enforcement
agencies, and some extent Congress, and I don't think there is
any solution to that short of breaking them up.
Ms. DelBene. Thank you. I yield back the remainder of my
time, Mr. Chair.
Mr. Bachus. Thank you. That is much appreciated.
Mr. Rothfus, the gentleman from Pennsylvania, is recognized
for 5 minutes.
Mr. Rothfus. Thank you, Mr. Chairman.
And thank you to the panel. It is a fascinating discussion.
I represent a big swath of southwestern Pennsylvania. It is
unique in that we have a significant concentration of national
leaders in health care, energy, financial services, and
manufacturing. In fact, it is hard for me to think of another
region of the country that has the number of leaders across
these fields that southwestern Pennsylvania does.
I think every regulation that requires a private sector
entity to undertake a certain action and expend funds can
rightly be called a tax. You know, the Small Business
Administration has stated that the cost of compliance with the
current regulatory framework that we have is over $1.75
trillion. You know, we are competing in a world economy, and I
think that overburdening regulations, along with higher taxes,
as well as other costs being passed along to employers, such as
through the Affordable Care Act, are strangling our economy.
You know, the fourth quarter we saw a contraction, and we see
unemployment chronically high and wages are stagnant. So, I do
think that we need to be taking a look at what is going on with
the regulatory framework. I am looking at a list of regulations
that are, you know, on the deck at EPA and very concerned about
what the impact is going to be on the ability of our job
creators.
A little bit, you know, Professor Glicksman, I would like
to go in a little bit about the REINS Act that you had
mentioned, and a concern about interjection of politics. You
know, I am a little puzzled by that, and I wonder if you could
maybe elaborate on that. I look at under our constitutional
framework, that the legislative branch is the law making. We
have the responsibility. I mean, if you take your analysis,
isn't every piece of legislation that we put out of here has
some kind of political background?
Mr. Glicksman. Yes, certainly it does, and I am not
disputing the fact that Congress has the responsibility and the
right to make legislative policy, which is based in part upon
political judgments. My point was simply that the detailed
regulatory decisions made by agencies such as EPA are based
upon the information provided by experts, such as toxicologists
and epidemiologists.
I have been teaching and writing about environmental law
for 35 years. I don't have the technical expertise to know
whether a particular air quality standard ought to be set at
0.08 parts per million or 0.075 parts per million. That is
beyond my expertise.
Mr. Rothfus. Do you think it is beyond the expertise of
this body to pull the experts in to ask questions so that we
can understand that, too, or do we have to have elites over in
the agencies telling us this?
Mr. Glicksman. I wouldn't call agency members elites. I
think they are experts. And they have been delegated authority
by Congress precisely so that Congress is relieved of the
burden of making detailed technical judgment.
Mr. Rothfus. Relieved of the burden or relieved of the
responsibility to evaluate that?
Mr. Glicksman. I would say relieved of the burden. If you
determine that an agency is not operating pursuant to the
mandate that you delegated to the agency, you certainly have
the right to amend a statute, to change the agency's mandates
and authorities. But it seems to me that making the kind of
technical judgments reflected in the regulations that are
issued on a daily basis by agencies is going to swamp Congress.
I don't think, realistically, practically, there is any way to
do an adequate job overseeing the details of every regulation
issued by Federal agencies in a timely manner.
Mr. Rothfus. Dr. Holtz-Eakin,I would like to follow up. You
mentioned Fannie and Freddie, and there were attempts under the
Bush administration to provide some further regulations for
Fannie and Freddie, weren't there?
Mr. Holtz-Eakin. Yeah. When I was CBO director, there were
a number of initiatives to change the special provisions that
surrounded the housing GSEs, and most importantly, to increase
the capital requirements. They were very thinly capitalized
entities.
Mr. Rothfus. And then, you know, you look at, you know, a
gentleman like former Congressman Frank, who wanted to, quote,
roll the dice with Fannie and Freddie. Any idea what was he was
talking about there?
Mr. Holtz-Eakin. I won't speak on behalf of the former
Congressman, but I think the reality was, and there are CBO
reports to this effect, it was predictable that there was a
very high probability that the taxpayers would have to step in,
and history has shown it happened quicker than even we thought
it would.
Mr. Rothfus. Mr. Weissman, any idea what Congressman Frank
would have been talking about when he wanted to roll the dice
with Fannie and Freddie?
Mr. Weissman. No. And I will follow the example of not
wanting to speak for him. But I agree with your point. I think
that it is correct that they were undercapitalized and
underregulated.
Mr. Rothfus. Any thoughts, Dr. Holtz-Eakin, onefforts such
as the REINS Act to have the Congress really exercise its
constitutional responsibility when it comes to the law-making,
you know, responsibility within this government?
Mr. Holtz-Eakin. It is standard practice in Congress to
authorize activities for finite amounts of time, to do
oversight of those activities, and then to decide whether to
reauthorize or not. This strikes me as entirely consistent with
that way of doing business. And I know that there is concern
about the relative balance of benefits and costs, which is the
fundamental legitimate issue, but I don't see, if Congress is
involved on a regular basis, how that can get too far out of
whack. In fact, I think that helps keep the broad measure of
benefits and costs in balance.
Mr. Rothfus. Thank you.
Mr. Bachus. Thank you.
Mr. Rothfus. I yield back.
Mr. Bachus. Thank you.
Mr. Garcia, the gentleman from Florida, is recognized for 5
minutes.
Mr. Garcia. Thank you very much, Mr. Chairman.
Mr. Kovacs, I noticed you said that you have been coming
here for 17 years on this issue, which strikes me, because I
thought it was Obama that declared the war. So I wanted to know
exactly when is it that we went off the rails here.
Mr. Kovacs. Well, I have said this to Republicans and
Democrats. I think that Congress has delegated far too much
authority to the agencies. And it probably happened 45 years
ago. The Administrative Procedure Act is now over 65 years old
and last year was the first time anyone looked at how agencies
operate.
I think the first thing, and this is just gratuitous
advice, is that Congress, as an institution, is the elected
representatives of the people, not the agencies, and that when
he you have a divided government that we have today, one of the
difficulties is the executive controls it, not the Congress.
And so to a large extent you have lost control over the
legislative process because the courts have actually
recognized, like you look at the American Trucking Association
case where Scalia says you delegated it away. Your job is to
get it back, and I think that is the most important thing now,
because if you look at it--and let me start with my one
example.
Mr. Garcia. Mr. Kovacs, I have a limited amount of time,
but I don't disagree with you. I have worked in regulatory
agencies. It has been a major part of my career, particularly
because I am so bad at getting elected, so I have to pray I am
getting appointed. But I would agree with you, and my worry is
that the tone and tenor of this debate should be rational.
Mr. Kovacs. Yes.
Mr. Garcia. It shouldn't be about extremes. I think this
side of the aisle would love to cooperate with the other side,
and I am sure that you and Mr. Weissman could sit down and come
up with all sorts of regulatory mumbo jumbo that we need to get
rid of, and Mr. Greenblatt would probably agree with you. My
suggestion is it is something that we should try. I mean, if we
are broken here, there needs to be some form, particularly from
outside us, because we are busy here sort of posing and
preening, but we are not getting much done. But there is a need
for the system to go forward. And you are right, because we
have a divided government, the ability to strike at things that
are obviously wrong in the regulatory system, just like there
are things that we can do better.
Mr. Greenblatt, I read your testimony, and first of all, I
want to congratulate you for your tremendous business success.
Mr. Greenblatt. Thank you.
Mr. Garcia. I assume that is not because we overregulate
you. It must be because of your exceptional talent?
Mr. Greenblatt. I have a great team of people.
Mr. Garcia. Very good. Mr. Greenblatt, you mentioned China.
Would you believe that a communist government with central
planned economy is a better format for dispensing business
wisdom or a better environment for business?
Mr. Greenblatt. No, absolutely not.
Mr. Garcia. Okay. I just wanted to make sure. I didn't want
to sort of get it wrong. You do realize that where we are
reading about cancer----
Mr. Greenblatt. And I----
Mr. Garcia. No, no, that is my point. You are competing
with them.
Mr. Greenblatt. I am competing with China. We lock skulls
with them every day of the week.
Mr. Garcia. I understand.
Mr. Greenblatt. When we win jobs, we are taking them----
Mr. Garcia. There is a great British phrase that says
choose your enemiescarefully because in the end you will be
most like them, and we certainly don't want to look like China
when you look at cancer spreading, you have cancer clusters all
over manufacturing areas. It is certainly not a place you want
to be.
I wanted to ask Mr. James. Do you know what mercury cause,
what happens when mercury is ingested by life?
Mr. James. Absolutely, Congressman. I spent part of my
career as an assistant attorney general enforcing the Clean Air
Act.
Mr. Garcia. Very good.
Mr. James. And I believe very deeply in it. But at the same
time, when an employee of the plant that is closed down and
they come to me and they don't know where to look for work, it
is very difficult for me to tell them that EPA has said that
54,000 jobs have been created. What do I tell them to do? Do I
tell them to leave Avon Lake?
Mr. Garcia. I don't know. It is better than helping one of
your constituents bury a child, right? And those are things
that are just as serious. I understand----
Mr. James. I respect that, Congressman, but at the same
time, if I can----
Mr. Garcia. Mr. James, Mr. James, if you will let me
finish. I was asking a specific question. My point to you, Mr.
James, is I have regulated the energy industry and I have
regulated power companies and I have worked for the FERC, and
many times when energy companies say we have decided to get out
of the business because of regulations--how old is the power
plant in your district?
Mr. James. It is approximately 60 years old.
Mr. Garcia. Right. Well, Mr. James, I guarantee you that
that power plant is closing not because of regulatory overview.
That power plant is closing because it is no longer competitive
with other forms of energy that are being developed by places
where my colleagues reside, and that is a reality. And you
know, I am sure that the last buggy whip manufacturing facility
employed a lot of people. Unfortunately, we weren't in the
business of buggy whips anymore. Likewise, power plants after
60 years are almost impossible to maintain, they are impossible
to be productive, and what you are experiencing is free market
and its effects.
And I say this because I understand. I have been a
regulator and I have shut down power plants. I had one power
plant where a local manatee group came to say let's keep the
power plant open because it puts hot water into the river so we
can keep the manatees warm in the winter. While it was a
wonderful idea, a nice little water heater would have been
better than keeping a power plant that was inefficient.
And those market efficiencies, I think, are what all of you
in business want. A 60-year old power plant, a 60-year old
coal-fired power plant is technology that long ago ceased to be
the best to have in the market. But thank you, and I do
sympathize for you.
I yield back the balance of my time.
Mr. Marino [presiding]. Mr. James, I am going to give you
30 seconds if you would like to respond.
Mr. James. Thank you, Congressman.
Congressman, I would remind you that I am not here on
behalf of private business, but I am here on behalf of city
government, and I am concerned when a power plant closes and
the jobs aren't replaced and the income tax isn't replaced and
we can't afford to pay for ambulances anymore. And so when that
child is sick and they call 911 and we can't send an ambulance
to come get that child and take them to the hospital, what do
we do? That is a serious problem as well.
Mr. Garcia. Mr. Chairman, if I could respond very quickly.
I do sympathize.
Mr. Marino. No, sir. We are not going to have an exchange
of an argument back and forth. You have had your time. He
responded to your statement, and we are going to move on to Mr.
Jeffries from New York.
Mr. Jeffries. Thank you very much. Thank you, Mr. Chairman.
Earlier today, our distinguished Ranking Member made the
observation that he was concerned with the inflammatory nature
of the title, and I would agree with the distinguished
gentleman from Memphis, Tennessee. I was quite startled when I
took a look at the title, ``The Obama Administration's
Regulatory War on Jobs, the Economy, and America's Global
Competitiveness.'' Sounds very ominous, paints a picture of
doom and gloom. I looked at it this morning and I was concerned
with the history of the Republic and our ability to actually
move forward and sustain ourselves as the great Nation that we
are because of this apparent regulatory overreach. And we have
got a few witnesses today, real world witnesses who are here to
present evidence of this doom-and-gloom concern that we have
with the history of the Republic proceeding as we know it.
And I appreciate your presence, Mr. Greenblatt, and you
have obviously been a very successful businessman. And I salute
you for that, inner-city community apparently in Baltimore, but
you provided an example in your testimony of the type of
concern that you have and you cited a $15,000 dollar fine. Is
that right?
Mr. Greenblatt. Yes, sir.
Mr. Jeffries. Okay. And that $15,000 fine, apparently you
eventually paid, you negotiated it down, and it was somewhere
south of $15,000. Is that correct?
Mr. Greenblatt. Yes.
Mr. Jeffries. Now, on your Web site you indicated that you
are one of the fastest growing businesses in America. Is that
right?
Mr. Greenblatt. Yes.
Mr. Jeffries. And last year, I just want to make sure I get
this right, your revenues were in excess of $4.5 million, or
maybe that was 2011. Is that right?
Mr. Greenblatt. We crossed over $5 million last year.
Mr. Jeffries. I congratulate you on that. So apparently
this regulatory overreach, as evidenced by the $15,000 fine
that you, yourself, cited as Exhibit A in your testimony hasn't
been overly burdensome in your ability to become one of the
fastest-growing companies in America. Correct?
Mr. Greenblatt. If I had my people focused on important
things like growing the company, we would hire more unemployed
steelworkers in Baltimore City. I think you and I both want me
to thrive and prosper because when I thrive and prosper we hire
more people. We are trying to end the recession in our small
way.
Mr. Jeffries. Thanks very much. I salute you on your
success.
Council Member James, I appreciate your concern. I was
involved in State government before having the opportunity to
serve here in the House of Representatives. And as my
distinguished colleague from Miami pointed out, the reality is
probably more likely that that 60-year-old plant closed because
of reasons of market competitiveness, having nothing to do with
a concern, very legitimate one, presumably, for the human
intake of mercury.
But let's put that aside. You are citing, I believe, an
issue with the possibility of $70,000 in tax revenue, painful,
but am I correct, I guess the number of $69,878.62, that is the
concern?
Mr. James. Honestly, Congressman, my concern would be less
for the city of Avon Lake and more for the Avon Lake School
District. The Avon Lake School District is anticipating losing
$3.3 million per year--per year--in revenue. I mean, that is
going to challenge Avon Lake's ability to educate its students,
it is going to challenge the ability to take care of the
students that have the most needs.
Mr. Jeffries. I agree with you. I agree with you
absolutely. And one of the things that I think we supported,
certainly on this side of the aisle, is an increased investment
in first responders all across this country, so perhaps those
EMS personnel, those challenges that you raised, that could be
addressed. An increased investment in teachers, we are facing
an $85 billion sequestration. But we are here at a doom-and-
gloom hearing related to alleged regulatory overreach.
Now, my time is limited, but, Mr. Kovacs, the economy
collapsed in 2008. Is that correct?
Mr. Kovacs. Around there, yes.
Mr. Jeffries. Okay. And this was the worst economic crisis
since the Great Depression, is that correct? That is what it
triggered?
Mr. Kovacs. Well, I do not know. I mean, I am not going to
characterize it as the worst. It was bad.
Mr. Jeffries. Okay. Mr. Holtz said that in his testimony,
so I will accept that.
Who was the President in 2008?
Mr. Kovacs. It was George Bush.
Mr. Jeffries. Okay. And would you describe the Bush
administration as excessive in its regulatory zeal?
Mr. Kovacs. I think I have been pretty clear in what I have
said. I think that the regulatory process--and we have a chart
that shows how 180,000 new regulations have started since
1980--the regulatory process has been growing for a very long
time, and we have suggested and we have tried to keep it in a
very bipartisan, nonpartisan way, that Congress has an
institutional stake in getting control of the agencies.
Mr. Jeffries. Thank you. I see my time is limited, but one
last question. Would you agree that the $22 trillion that the
Wall Street collapse cost the American economy is a more
significant problem that perhaps related to the underregulation
of the market? Not the mortgage-backed securities--as Mr. Holtz
indicated, they were regulated to some degree--but the credit
the false default swaps which grew to about $50 trillion that
was an entirely unregulated insurance product? Do you think
that was a problem that perhaps needed to be addressed by Dodd-
Frank and this Congress?
Mr. Kovacs. Congressman, there are very few times in my
life I say I really don't know how to respond to that issue. I
am not an expert in banking, so I am just going to tell you I
don't know.
Mr. Jeffries. Thank you.
Mr. Garcia. We never in Congress say we don't know.
Mr. Bachus [presiding]. Thank you.
I guess we are to the point where I will ask questions.
Everybody else has.
My first question, and I will ask this to you, Dr. Holtz-
Eakin,according to the National Federation of Independent
Businesses, paperwork is one of the biggest concerns for small
businesses. Could you explain how paperwork diverts resources
from productive activity and how the administration has failed
to fulfill its commitment to reduce red tape? And I am sure
this is not the first administration to fail in that
commitment.
Mr. Holtz-Eakin. I think we have heard very clear testimony
on this from Mr. Greenblatt.
Mr. Bachus. Right.
Mr. Holtz-Eakin. You have hours in the day, you have
workers, and you can task them for things that will increase
your sales and your productivity, or you can task them to
comply. And those are clear tradeoffs.
One of the things that I have found most disturbing about
the recent regulatory initiatives is the White House, OIRA in
particular, issuing a statement that said it was okay to count
as a benefit of regulation the people hired to comply with that
regulation. Any clear accounting of benefits and costs puts
that on the cost side of the ledger. And I think at a minimum
we ought to do that right.
Mr. Bachus. I did also note Mr. Greenblatt when he said you
had a form and you just failed to sign in one of three places.
Mr. Greenblatt. Right. We signed it in two of three places.
I omitted signing the last, as an oversight, it was a 20-
something page form, and because of that we received a $15,000
fine from the government. Our top team had to spend hours on
the phone, you know, waiting on hold with the IRS trying to do
something about it. It was a complete distraction of important,
mission-critical tasks.
Mr. Bachus. So it wasn't a failure to pay moneys.
Mr. Greenblatt. No, no. It was a 2006 form, it was an
annual form you are supposed to fill out, and it was one of
those things where there is pages and pages of forms, and my
bookkeeper told me where to sign, I signed it, and I didn't
sign the third one. Either she or I overlooked it. It was 4
years before. And it is dispiriting that the government finds
that as a productive task.
Mr. Bachus. Did you get any notice? Did they first send it
back and say please sign this?
Mr. Greenblatt. The first form was a fine.
Mr. Bachus. Wow. Okay.
Mr. James, I think your testimony kind of brings it down to
the community and the individual level. Have you had a chance
to meet any parents or students who have benefited from social
services offered at Avon for children with autism, depression,
or who have been abused? What can you tell them about the
effects, as a city councilman, of coming budget cuts of these
services due to the loss of revenue from the plant closing? And
what do you expect will happen to these children?
Mr. James. Well, I can tell you they are very concerned,
and they don't know what the answer is, and honestly the city
doesn't know what the answer is yet either. You know, there has
been comments this morning that market forces are closing the
power plant. We are not talking about a typewriter factory and
the typewriter factory is being closed because of computers. We
are talking about an electric power plant. We are going to need
electricity today, we are going to need electricity tomorrow.
And so I question whether it is really market forces that are
closing this or an overaggressive regulation that is making the
market incapable to deal with the costs of the regulation.
Mr. Bachus. Okay. But did you mention or have a reason to
believe that some of the services may have closed in Avon park
already?
Mr. James. If the power plant does close, nearly half of
the $3.3 million that the school district is talking about
losing comes just from the generation of electricity. They are
going to have to make significant cuts, and they are going to
have to look at the special programs that they offer,
everything from AP programs for the educated and gifted
students, to the social services, the autism, the community
counseling, the other kinds of things that needy children and
needy families need.
Mr. Bachus. Okay.
Mr. Kovacs, do you think that the House-passed regulatory
reform bills from last term, especially the Regulatory
Accountability Act, the REINS Act, the Regulatory Flexibility
Improvement Act, and the Sunshine for Regulatory Decrees and
Settlements Act would help substantially to address some of the
economically impacting regulations that have been identified
today?
Mr. Kovacs. I think it is fair to say that some are more
important than others. I think that the permit streamlining
bill that this Committee passed out of Committee and passed
through the House last year is very important. That could cut
the time for getting permits in half. At least that is what the
pilot programs have shown. And it does so without really
offending anyone's rights. It literally puts a lead agency in
charge, drives the process and timeframes. Very, very workable.
The Regulatory Accountability Act is very important because
it allows more transparency of the agencies and the information
that they are relying on, and it allows us, as the regulated
community, to put more information into the system. And it
begins to take away the deference from the agencies and restore
it to more of a level playing field so Congress has more of a
role.
I think on the sue-and-settle litigation, I don't know what
it is called this year, that is certainly important because one
of the things that does is when you have a sue-and-settle
arrangement between the agencies, an outside group is actually
deciding how the agency is going to prioritize its time and its
budget.
I would put those in the top three. But I would certainly
say permit streamlining is something that I think you can get
agreement with. I think even the Obama administration talks
about it. CEQ has talked about it. So if you are talking on all
of the bills, on permit streamlining you really start narrowing
it to where if you want to do something that is practical, that
is it.
Mr. Bachus. All right. Thank you.
And I will say, Mr. Weissman, too big to fail, I think
Chairman Bernanke again testified yesterday that it was causing
some distortions.
I can conclude the hearing. However, we don't have votes.
And if Members would like to have a second round of questions.
Mr. Cohen. Can I go to the dentist instead?
Mr. Bachus. Dentist? To the dentist? Sure. Sure. And I
don't know if Mr. Garcia wants to stay.
Mr. Garcia. Mr. James, I don't want you to take offense to
my questioning. I do understand. And I know how tough it is to
have revenue that you want to put into your city. You know, I
appreciate the Chairman and talking about social services.
There is nothing more that heartens me more than to have
Republicans talk about a social safety net provided by a
competitive model that doesn't work, which of course implies
subsidization, which I am sure Mr. Greenblatt would love to pay
taxes for. And then Mr. Weissman would agree to, Mr. Kovacs
would object to, Mr. Glicksman would justify, and Mr. Holtz-
Eakin would say you are all crazy. All right?
So the reality here is that we all want what is best for
our country. I would suggest to you that when you are looking
at a power plant of that age, you are done. It has nothing to
do with regulation. But it is easier for your local power
plant, which contributes to your local chamber of commerce,
which is an essential element to your community, to blame it on
us in Washington. Everybody blames it on us in Washington, and
most of the time they are right.
But you are at a point where, I would suggest to you, you
know, use the power of your office to find an alternative
process, because you are going to get yourself in trouble,
right? To depend on keeping a power plant open at this
timeframe with the innovations that the market has created in
energy. We are about to experience an energy boom in our
country that is going to make Mr. Greenblatt more productive,
is going to create more customers for the Chamber of Commerce,
and is going to give Mr. Glicksman and Mr. Weissman more work
trying to regulate.
But the reality is that we are looking at a renaissance.
And so I say this just so you are aware of it, because we
sometimes are misled by community leaders who feel, it is
unfortunate, but 60-year-old coal-fired power plants are
usually a little bit behind the time. And that is all I wanted
to make a point about.
Mr. Bachus. All right. Thank you.
Mr. Marino, do you?
Mr. Marino. No, my gift to everybody is I have no
questions. But thank you. It was very interesting and I learned
a great deal today. Thank you.
Mr. Bachus. Thank you.
Mr. Collins.
Mr. Collins. Thank you, Mr. Chairman. We have disagreements
across the aisle here, and I understand that. I used to be in
the industry as well with smokestack monitoring and other
things. Right now we are cleaner than we have ever been. And I
agree, there is regulations that need to be in place. But to
say that, and to attack a 60-year-old plant, you can come to
Georgia, we have got less than 60-year-old plants that are
looking to close. And they are closing because of regulation.
Okay. And you understand that, and I respectfully agree.
The problem is here is there is a regulatory issue and
there is regulatory problems. There is a balance that needs to
be struck. And right now, from my perspective, there is--and we
have heard testimony today that there is areas that we can
agree on or disagree on, but there is an effect. And that is
why I appreciate Mr. James and Mr. Greenblatt and others, and
also the professors who are here and from the chamber
discussing this in an open format. I think the interesting
question is, when you talk about investment, and the discussion
I think my other colleague from across the aisle said, well, we
wanted to put more EMS and more firefighters and teachers.
Well, we are doing that with borrowed money, and we are also
doing it with strings attached. We are talking about regulatory
reform here. And we are going to add that together.
One last sort of question, Mr. Greenblatt, the $15,000,
which was made sort of light of in the fact that you have a
very successful company and that. Were you able to calculate
how much--you said mission essential--how much do you think you
lost, in addition to whatever you may have ended up paying,
what did you time-wise, do you even have a calculation of what
actual cost, not just to do this, but just the distraction
factor here?
Mr. Greenblatt. My CFO had to spend 15 to 20 hours, you
know, on hold, discussing, negotiating with the IRS. We had to
write letters. We had to get our accountant involved. It was
thousands of dollars. And, you know, that CFO could have been
doing job costing so we could quote the next job well, you
know. He could have been negotiating with our vendors, all
productive tasks. Instead, he is doing things that add no
value. And we are fighting with China every day. So we need to
have a very streamlined system so that we can be more
competitive so we can export more and hire more locals.
Mr. Collins. I know this has been many hearings, and I am
new and have not been a part of the 17 hearings, but to me if
we do 17 hearings, if doing 17 hearings makes a difference in
job creation, job growth, and a better government, then let's
have 17 more. Let's get it done. Because our people are looking
for that. They are not looking for anything else. And I
appreciate my friends across the aisle in discussing this. And
we will have more discussions as we go, Mr. Chairman. I yield
back.
Mr. Garcia. Mr. Chairman, if I could. With all respect to
the gentleman from Georgia, I would love to sit here and, you
know, work on regulatory reform. You know, we know it is
broken. But all government is broken. It is the nature of why
we have a Congress. We have to meet regularly to fix it. But
there is no question that cool heads can prevail, not declare
war, whether it be Obama or other Presidents that may have
declared war. I didn't even know that he had invoked the war
powers, because we certainly didn't vote it out of Congress.
But my hope would be that on all of this that reasonable
men and women sitting in this chamber can agree that there are
huge swaths of--that Mr. Greenblatt is filling out a form
should be absurd to all of us, right? With our computer
technology, that he has to sit there and do this. And I am more
than happy, if the Chairman wants to convene a working group,
or if we want to set--I am a freshman. We are not doing
anything here anyway.
So the reality is that we have time to sit down and try to
work on these solutions. And I am sure that the Chamber of
Commerce would give us lodging space and lock us in a room and
feed us every once in a while. But we understand there is
regulation and then there is excessive regulation. There are
rules that have been there too long. There are billions of
dollars of unnecessary loopholes that no longer make sense. And
we could be working on all of this. Yet we have had this week
our sum total of important vote was naming a space center after
Neil Armstrong, which is a wonderful thing.
Mr. Bachus. We actually approved the journal, too.
Mr. Garcia. On a recorded vote.
Mr. Bachus. Mr. Cohen?
Mr. Cohen. Let me ask one small question, and we probably
shouldn't be lost in the weeds. But Mr. Greenblatt, I was
concerned, $15,000 for a signature. Was that signature one that
if you would have signed it you would have put yourself under
some penalty or some oath that by signing here you are
indicating that everything above is subject to penalties? Was
it one of those type signatures that by not signing it----
Mr. Greenblatt. It was a form we received in 2006. And in
2010, we got the fine. So there was this empty time where
nothing happened.
Mr. Cohen. Right.
Mr. Greenblatt. And I had to sign the form in three
different places. It was for our 401(k) program. And, you know,
so I hit two of the three. I missed the third.
Mr. Cohen. So when you failed to sign it, you had gone
through two administrations. That was the Bush administration
that levied the fine?
Mr. Greenblatt. Yeah. I mean, the point is it is
paperwork----
Mr. Cohen. I know, it does seem absurd.
Mr. Greenblatt. We are trying to grow jobs. We are fighting
China and Mexico.
Mr. Cohen. And you have done a great job, and I hope that
Tulane stays in the Big East with Memphis, and we will have
many good games in the future.
Mr. Bachus. Thank you. Thank you.
This concludes today's hearing. Thanks to all our witnesses
for attending. Without objection, all Members will have 5
legislative days to submit additional written questions for the
witnesses or additional materials for the record.
This hearing is adjourned. And I will say this. We are
going to take up, Mr. Garcia, and get a working group together
and invite some of you in on those discussions in a balanced
approach. Thank you.
[Whereupon, at 11:10 a.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Spencer Bachus, a Representative in
Congress from the State of Alabama, and Chairman, Subcommittee on
Regulatory Reform, Commercial and Antitrust Law
Since the November 2012 election, the Obama Administration has
moved into overdrive in its regulatory war on jobs, the economy, and
America's global competitiveness.
Let me be clear. Congress cannot sit silent while America's
economic growth is imperiled. One of my top priorities in this Congress
will be to do everything possible to reduce the regulatory burdens that
our nation's small businesses are facing, to get more Americans back to
work, and to help grow our economy.
A study last summer by the Organization for Economic Cooperation
and Development revealed that after measuring countries by the number
of regulations they have, ``it is now easier to start a business in
Slovenia, Estonia and Hungary . . . than in America.''
According to former CBO Director Douglas Holtz-Eakin, countries
from England, to South Korea to Portugal have already undertaken
regulatory reforms. England has been particularly aggressive, adopting
a ``one in two out'' rule for new regulations, which requires
policymakers introducing a new regulation to rescind or modify an
existing regulation that costs double so the total regulatory burden is
actually reduced.
The governments of our international competitors are not merely
paying lip service to lightening the regulatory load, they are taking
meaningful actions. We seem to be moving in the opposite direction.
Last fiscal year, the total U.S. paperwork burden grew by more than
355 million hours, or four percent.
A 2012 report by NERA Economic Consultants on the regulations
affecting the manufacturing sector found that exports in 2012 might
have been as much as 17% lower than they would have been without the
estimated regulatory burden. Such loss in output directly represents
lost jobs and economic opportunities.
Instead of the regulatory burden diminishing to keep American
businesses competitive and hiring, experts expect the pace of
regulation to increase in President Obama's second term.
Just prior to Election Day, the National Journal reported that
``[f]ederal agencies are sitting on a pile of major health,
environmental, and financial regulations that lobbyists, congressional
staffers, and former administration officials say are being held back
to avoid providing ammunition to Mitt Romney and other Republican
critics.'' Now the floodgates are open. For example, the Patient
Protection and Affordable Care Act and the Dodd-Frank Wall Street
Reform and Consumer Protection Act created a host of regulatory
obligations which agencies have yet to fulfill.
Similarly, the American Action Forum identified $123 billion in
possible regulations in the Administration's 2012 Unified Regulatory
Agenda that would also add more than 13 million hours of paperwork
burden. It is no wonder the Administration delayed releasing this
agenda, and its plans for 128 new ``economically significant''
regulations until after the election.
What is most striking perhaps is this Administration's
insensitivity to the negative effects overregulation has on vulnerable
groups. Overregulation costs Americans jobs and a new study shows
agencies' cost benefit analyses fail to consider that over 75% of older
workers who lose their jobs remain unemployed three years later and
those who can find work frequently must accept as much as 20% less pay.
Overregulation also disproportionately burdens low income
households. Because of the law of diminishing returns, new regulations
require spending increasingly more money to mitigate increasingly
smaller risks. Many of these costs are passed down to consumers. New
research from the Mercatus Center shows low income households would be
much better off spending this money mitigating more immediate personal
risks, for example, by using money that should rightfully be theirs to
afford rents in safer neighborhoods.
In light of these very real trade-offs, I am deeply concerned that
some pro-regulation advocates are calling for an Executive Order to
``rescind requirements'' that there be cost-benefit analyses of
significant regulations. I hope that stories from Main Street about the
negative impacts plant closures have on lives and communities will help
sensitize regulators and their allies to the very real suffering that
even well-meaning regulatory advocacy can impose.
However, we cannot rely on hope to turn the tide of excessive
regulation. I am committed to restoring accountability and providing
relief from excessive regulation to our nation's small businesses and
job creators who need it most.
Last Congress, the Committee reported a number of important and
far-reaching bills to reform overregulation, ease the burden on jobs
and the American economy, and restore America's competitiveness. The
House passed them all, but the Democrat-led Senate refused to act and
President Obama threatened to veto them.
The overreach of Obama Administration regulations is one of the
chief reasons the economy has failed adequately to recover and produce
new jobs throughout the Obama Administration. Congress and the
President must act to take a different direction that will allow
America's jobs, economy, and competitiveness to be restored. The House
will do its part, and for the sake of our economic future, I call on
the Senate and the Obama Administration to do theirs.
Prepared Statement of the Honorable Steve Cohen, a Representative in
Congress from the State of Tennessee, and Ranking Member, Subcommittee
on Regulatory Reform, Commercial and Antitrust Law
On a typical day, I wake up, brush my teeth, take a shower, maybe
have some breakfast, get dressed, and go outside to where I parked my
car, which I drive to work.
I then spend most of the day at the office, in hearings, on the
House floor, or meeting constituents. I will grab some lunch and dinner
when I find the time.
At the beginning and end of the week, whenever the House is in
session, I get on a plane, as I will this afternoon, to travel between
Washington and Memphis.
I can do all this without thinking twice about whether any of those
activities will expose me to a high risk of harm.
The reason I can take my well-being for granted in these day-to-day
activities is because our Nation has a strong regulatory system, one
that strives to protect our environment and our health and ensure the
safety our workplaces, our public spaces, our consumer products, our
cars, and our airplanes, among many other things.
Yet the regulatory debates in this Subcommittee over the last
couple of years have been focused almost exclusively on the costs of
implementing regulations. It is often left to those of us on this side
of the aisle to point out not only that there are benefits to
regulation, but that those benefits consistently outweigh regulation's
costs.
In addition to ignoring the net benefits of regulation, those who
focus solely on regulatory costs also tend to ignore the even greater
costs of regulatory failure. As two of our witnesses--Robert Glicksman
of George Washington University Law School and Robert Weissman of
Public Citizen--will discuss in greater detail, regulatory failure is
far more costly for the economy and for society than the existence or
creation of new regulations.
We must not forget that it was the lack of adequate regulation
which caused the Deepwater Horizon oil spill, the Sago Mine disaster,
the mortgage foreclosure crisis, and the 2008 financial crisis and
Great Recession that followed.
In short, there is a far greater human and economic cost to
stopping agencies from regulating than there is to allowing new
regulations to take effect.
I will leave the rest of the discussion to our witness panel and to
our question time, but I would like to offer this plea.
We ought to be able to have a serious, substantive, and nuanced
discussion about what problems exist in the federal regulatory system
and what Congress ought to do to address those problems.
But so long as we continue to hold hearings with inflammatory and
partisan titles like this one, where the premise suggests that the
debate should revolve only around regulatory costs, such a discussion
will be difficult to have, as it only invites defensiveness and
conflict.
We will, as we did last Congress, devolve into a hollow debate, a
battle of talking points, without really engaging each other.
I hope that we can do better going forward.
Prepared Statement of the Honorable Bob Goodlatte, a Representative in
Congress from the State of Virginia, and Chairman, Committee on the
Judiciary
Since the November 2012 election, the Obama Administration has
moved into overdrive in its regulatory war on jobs, the economy, and
America's global competitiveness.
Let me be clear. Congress cannot sit silent while America's
economic growth is imperiled. One of my top priorities in this Congress
will be to do everything possible to reduce the regulatory burdens that
our nation's small businesses are facing, to get more Americans back to
work, and to help grow our economy.
A study last summer by the Organization for Economic Cooperation
and Development revealed that after measuring countries by the number
of regulations they have, ``it is now easier to start a business in
Slovenia, Estonia and Hungary . . . than in America.''
According to former CBO Director Douglas Holtz-Eakin, countries
from England, to South Korea to Portugal have already undertaken
regulatory reforms. England has been particularly aggressive, adopting
a ``one in two out'' rule for new regulations, which requires
policymakers introducing a new regulation to rescind or modify an
existing regulation that costs double so the total regulatory burden is
actually reduced.
The governments of our international competitors are not merely
paying lip service to lightening the regulatory load, they are taking
meaningful actions. We seem to be moving in the opposite direction.
Last fiscal year, the total U.S. paperwork burden grew by more than
355 million hours, or four percent.
A 2012 report by NERA Economic Consultants on the regulations
affecting the manufacturing sector found that exports in 2012 might
have been as much as 17% lower than they would have been without the
estimated regulatory burden. Such loss in output directly represents
lost jobs and economic opportunities.
Instead of the regulatory burden diminishing to keep American
businesses competitive and hiring, experts expect the pace of
regulation to increase in President Obama's second term.
Just prior to Election Day, the National Journal reported that
``[f]ederal agencies are sitting on a pile of major health,
environmental, and financial regulations that lobbyists, congressional
staffers, and former administration officials say are being held back
to avoid providing ammunition to Mitt Romney and other Republican
critics.'' Now the floodgates are open. For example, the Patient
Protection and Affordable Care Act and the Dodd-Frank Wall Street
Reform and Consumer Protection Act created a host of regulatory
obligations which agencies have yet to fulfill.
Similarly, the American Action Forum identified $123 billion in
possible regulations in the Administration's 2012 Unified Regulatory
Agenda that would also add more than 13 million hours of paperwork
burden. It is no wonder the Administration delayed releasing this
agenda, and its plans for 128 new ``economically significant''
regulations until after the election.
What is most striking perhaps is this Administration's
insensitivity to the negative effects overregulation has on vulnerable
groups. Overregulation costs Americans jobs and a new study shows
agencies' cost benefit analyses fail to consider that over 75% of older
workers who lose their jobs remain unemployed three years later and
those who can find work frequently must accept as much as 20% less pay.
Overregulation also disproportionately burdens low income
households. Because of the law of diminishing returns, new regulations
require spending increasingly more money to mitigate increasingly
smaller risks. Many of these costs are passed down to consumers. New
research from the Mercatus Center shows low income households would be
much better off spending this money mitigating more immediate personal
risks, for example, by using money that should rightfully be theirs to
afford rents in safer neighborhoods.
In light of these very real trade-offs, I am deeply concerned that
some pro-regulation advocates are calling for an Executive Order to
``rescind requirements'' that there be cost-benefit analyses of
significant regulations. I hope that stories from Main Street about the
negative impacts plant closures have on lives and communities will help
sensitize regulators and their allies to the very real suffering that
even well-meaning regulatory advocacy can impose.
However, we cannot rely on hope to turn the tide of excessive
regulation. I am committed to restoring accountability and providing
relief from excessive regulation to our nation's small businesses and
job creators who need it most.
Last Congress, the Committee reported a number of important and
far-reaching bills to reform overregulation, ease the burden on jobs
and the American economy, and restore America's competitiveness. The
House passed them all, but the Democrat-led Senate refused to act and
President Obama threatened to veto them.
The overreach of Obama Administration regulations is one of the
chief reasons the economy has failed adequately to recover and produce
new jobs throughout the Obama Administration. Congress and the
President must act to take a different direction that will allow
America's jobs, economy, and competitiveness to be restored. The House
will do its part, and for the sake of our economic future, I call on
the Senate and the Obama Administration to do theirs.
Prepared Statement of the Honorable Doug Collins, a Representative in
Congress from the State of Georgia, and Member, Subcommittee on
Regulatory Reform, Commercial and Antitrust Law
Prepared Statement of the Honorable Henry C. ``Hank'' Johnson, Jr., a
Representative in Congress from the State of Georgia, and Member,
Subcommittee on Regulatory Reform, Commercial and Antitrust Law
This politicized hearing is yet another example of a Majority more
interested in attacking the President than providing thoughtful
solutions to our Nation's most pressing issues.
This hearing purports to explore solutions to growing the economy,
creating jobs, and increasing America's competitiveness
internationally. These are all worthy, laudable goals. But we cannot
pretend that this hearing is about economic growth or American
prosperity.
The Majority pre-supposes that regulations have harmful effects,
despite ample evidence from leading bipartisan and non-partisan reports
have found the opposite. The Majority continues to rely on studies that
are partisan or have been debunked, and overlooks the public benefits
associated with regulation. For instance, the BP oil spill costs tens
of billions in damages to the Gulf of Mexico and the Gulf Coast
communities. Likewise, the 2008 Wall Street collapse stemmed from an
avoidable lapse of financial regulation, costing trillions and
collapsing the global economy. These costs far exceed the cost of
paperwork or compliance, and are only recent examples.
We have already heard testimony on the issue in numerous hearings
in the Committee and this Subcommittee. We have debated these issues
tirelessly. And now, instead of addressing important issues, this Do
Nothing Congress is using yet another hearing in its attempt to
discredit President Obama.
If this body does not address sequestration, American workers will
face yet another hurdle to providing for their families and realizing
the American dream. This mindless austerity takes a meat-cleaver
approach to cutting programs, regardless of the wisdom of doing so or
the long-term costs that these cuts would create. Indeed, the only plan
that the Majority has advanced is one that would not stem job loss, but
one that would cut the programs that help the unemployed, the sick, and
the poor. Sequestration threatens to forestall economic recovery,
amplifying the effects of the recession on so many Americans.
If the Majority was truly concerned with growing the economy,
creating jobs, and protecting American competitiveness, we would have
come together with a Grand Bargain of spending cuts to address the
government's long-term budget deficits and prevented sequestration long
ago. Instead, sequestration will arbitrarily take 85 billion dollars of
out our economy, lower our GDP, cost jobs, and harm our economic
recovery and global competiveness. The Republican leadership failure
will be felt nationwide, and its impact on my home state of Georgia is
of grave concern to me.
We cannot pretend that this hearing is about growing the economy or
creating jobs.
I also take considerable issue with the title of this hearing. In a
week when this Committee discussed terrorism at length in a hearing on
drones and national security, the title of this hearing belittles the
great sacrifices our brave men and women in the military have made in
support of our country's security. I ask that the Majority consider the
hardships and sacrifices that so many Americans have made when using
the words ``regulatory war.''
Material submitted by the Honorable Hakeem Jeffries, a Representative
in Congress from the State of New York, and Member, Subcommittee on
Regulatory Reform, Commercial and Antitrust Law
__________
Response to Questions for the Record from Robert L. Glicksman, J.B. &
Maurice C. Shapiro Professor of Environmental Law, The George
Washington University School of Law
Response to Questions for the Record from Drew Greenblatt,
President and Owner, Marlin Steel Wire Products, LLC
Response to Questions for the Record from Robert K. James,
Member of the Avon Lake City Council
Response to Questions for the Record from Douglas Holtz-Eakin,
President, American Action Forum
Response to Questions for the Record from William L. Kovacs, Senior
Vice President, Environment, Technology & Regulatory Affairs, U.S.
Chamber of Commerce
Response to Questions for the Record from Robert Weissman,
President, Public Citizen