Revealing the Costs, Consequences of Regulation

Jay Timmons, president of the National Association of Manufacturers, testifies this morning before the House Oversight and Government Reform Committee at a hearing, “Regulatory Impediments To Job Creation.”

Timmons’ prepared statement has been posted online at the committee website, here. Among the topics he discusses are regulations from the Occupational Safety and Health Administration, the proposal from the Department of Transportation over air shipments of lithium batteries, the DOT’s rulemaking on hours of service, the Consumer Product Safety Commission’s product safety database, and, of course, the major EPA regulations that will retard economic growth.

One expects today’s hearing will include much discussion of the EPA’s power grab in attempting to regulate greenhouse gas emissions without statutory authority, but we hope the horrendous, anti-competitive proposals on ground-level ozone also gets attention. From Timmons’ prepared testimony:

The EPA has been embarked on a decades-long process to implement the Clean Air Act and its amendments. There is no doubt that enormous benefits have been brought to our nation from efforts to improve air quality. But the continued ratcheting down of emission limits produces diminishing returns at far higher marginal costs. This means that each new air rule will have a greater impact on job creation than those in the past.

Costs of pollution abatement are capital intensive. In a time of economic recovery where capital is extremely scarce, every dollar diverted from productive use creates additional pressure to reduce labor costs. And when commodities and other
manufacturing inputs are increasing in costs, even more pressure builds to squeeze labor costs. In this environment, it is very clear that unnecessary or cost-ineffective regulation will dampen economic growth and will continue to hold down job creation. For some firms it will be the final marginal straw that destroys the whole business.

That is why it is so shocking that the EPA decided to take a Bush Administration rule that was enormously costly, the National Ambient Air Quality Standard (NAAQS) for Ozone, and propose making it even more stringent and costly. One study by the Manufacturers Allliance/MAPI estimated the most stringent proposal would result in the loss of 7.3 million jobs by 2020 and add $1 trillion in new regulatory costs per year between 2020 and 2030. We have a short reprieve from this rule because the EPA has delayed its final proposal until July. But Congress must work with the EPA to stop the
agency from making a $1 trillion mistake.

The hearing begins at 9:30 a.m.

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