Washington Notebook: The U.S. business community has vociferously complained about the burden it faces dealing with a rising tide of regulations from Washington. Regulations are a political punching bag in the Republican primaries because they supposedly represent know-nothing bureaucrats trying to hinder hard-working Americans.
“What really would help if you’re not going to do the major stimulus would be to reduce regulations and to at least allow the economy to grow and not layer on additional regulations and restrictions, which we seem to be getting month after month,” Daniel J. Meckstroth, chief economist for the Manufacturers Alliance, said at an economic forum in Washington last month.
“If we could have a moratorium on regulations in the non-financial sector, that would be a big help,” he said.
Republicans have characterized the Obama administration as overzealous in trying to implement a raft of “job-killing” regulations since the moment it got in office. Gov. Rick Perry of Texas recently said he’d get rid of the departments of Commerce, Education and one other he couldn’t quite remember.
Health care legislation was the mother of all mandates and most businesses do not like the extra costs they now will be responsible for.
The trucking industry fears that the Department of Transportation is poised to roll back the daily duty time for drivers by an hour, ostensibly for safety reasons, and force motor carriers to add drivers and trucks to move the same amount of freight. The government estimates the rule will cost industry more than $1 billion.
The DOT is also considering a rule that would add cost and complexity to transporting lithium batteries on aircraft by treating them as full hazardous materials, resulting in new packaging, documentation, training and other procedures, as well as limiting them to cargo compartments that are crew accessible or equipped with a fire suppression system.
House Republicans recently criticized the Senate for failing to act on a House-passed bill intended to prevent implementation of extra permitting requirements for the use of pesticides as ordered by the Sixth Circuit Court of Appeals. They said proper use of pesticides is already regulated by the Environmental Protection Agency under the Federal Insecticide, Fungicide, and Rodenticide Act and that the court ruling requiring EPA regulation under the Clean Water Act is redundant.
“Once this ill-advised court decision is implemented, public health officials, farmers, ranchers and even everyday citizens will face increased financial and administrative burdens in order to comply with the new permitting process; and all this expense comes with no additional environmental protection,” Rep. Bob Gibbs, R-Ohio, and chairman of the Transportation and Infrastructure water resources and environment subcommittee said.
“Regulations are run amuck. And that’s why the business community is so upset. It’s not just hours-of-service,” Lana Batts, a trucking industry expert and president of Transport Capital Partners, said of the Obama administration during a recent webinar organized by a financial services firm.
“It’s everything else. But that’s why the trucking industry is not really anxious to invest in new equipment until they can figure out what the rules are going to be.”
Early this year, U.S. Chamber of Commerce President Tom Donahue said the “regulatory tsunami” coming from the White House poses “the single-biggest challenge to jobs, our global competitiveness and the future of American enterprise.”
The most egregious examples of unjustified rulemakings have come on the labor front
, where the Obama administration appears determined to push through the agenda of its labor union backers. Union ranks have been on the decline for decades and their leadership is leaning on the Obama administration to make it easier to organize. A series of rulemakings and orders has tilted the playing field towards unions, but many of the decisions defy common sense or violate Americans’ sense of fairness. And they hamstring businesses and create uncertainty at a time when the economy is down and people are clamoring for Corporate America to create more jobs.
But the reality is that while there has been some regulatory overreaching, it’s not clear that regulations as a whole have been detrimental to the economy and that businesses are fighting rulemakings at every turn. In fact, you can find industry working closely with the administration and agencies to craft new rules in a way that achieves social benefits and maintains or strengthens business opportunities.
In several cases, groups like the U.S. Chamber of Commerce, Retail Leaders Industry Association and American Association of Exporters and Importers participate in working groups to develop policy solutions, and feel that government officials take their concerns seriously. Industry has particularly developed good relationships with the Consumer Product Safety Administration, Customs and Border Protection and the Environmental Protection Agency’s Smartway program for reducing air pollution emitted by commercial trucks.
Unfortunately, most of the time, the business sector and the administration don’t see eye to eye.
recently studied the record and reported that the Obama administration has actually proposed fewer regulations than predecessor George W. Bush at the same point in their presidencies, and the estimated costs of those hasn’t reached the annual peak set in fiscal year 1992 under Bush’s father.
The average annual cost to businesses under Obama is higher than under his predecessors, the Bloomberg
review shows. The increase is estimated to total as little as $100 million or as much as $4.1 billion, or at most three one-hundredths of a percent of the overall economy.
Obama’s team approved 613 federal rules during the first 33 months of his term, 4.7 percent fewer than the 643 cleared by President Bush’s administration in the same time frame, according to an Office of Management and Budget statistical database reviewed by Bloomberg
The number of significant federal rules, defined as those costing more than $100 million, has gone up under Obama, with 129 approved so far, compared with 90 for Bush, 115 for President Clinton and 127 for the first President Bush over the same period in their first terms. The difference is partly due to inflation over the years.
In the last 12 months through the end of September, the cost range of new regulations is estimated to be $8 billion to $9 billion, a decrease from 2010, according to Government Accountability Office reports analyzed by Bloomberg
. That total put the average annual cost of regulations under Obama at about $7 billion to $11 billion, compared with the $6.9 billion average from 1981 through 2008 in current dollars, according to the OMB data.
Regulations under the first President Bush in 1992 cost the country $20.9 billion in current dollars. In the last year of Ronald Reagan’s term the cost was $16.9 billion, Bloomberg
And let’s not forget that President Obama entered office after several years when industry oversight was a forgotten exercise. Lack of quality oversight contributed to Wall Street taking huge risks with investors’ money and the financial crisis in 2008, one of the worst mining disasters in U.S. history and the BP oil spill.
In response to the criticism, Obama last January ordered executive branch agencies to review federal regulations under their jurisdiction, determine which ones are harming economic growth and get rid of those that are redundant, anachronistic or ineffective. He also directed the federal government to make a greater effort to reduce the regulatory burden on small businesses.
Obama said he wanted rules to be written with greater input from stakeholders, appropriate cost-benefit analysis and scientific justification.
The president angered some of his liberal supporters in September by delaying for at least two years EPA efforts to tighten smog standards that are estimated to cost $10 billion and industry groups said would derail the economic recovery. There also has been silence about the lithium battery rule, leading to speculation that it is being held back by the White House review process.
Also, some government intervention has turned out better than the naysayers predicted. They said the government rescue of the domestic auto industry was socialism and that the taxpayers would get soaked because the government doesn’t know how to run a business. Instead, the Big Three are thriving today and the U.S. Treasury has not only recovered all the money loaned to the automakers but has made a profit.
Furthermore, nightmare scenarios painted by industry often don’t pan out. In many instances, the private sector has adapted well to rules it said would lead to economic chaos. Two immediately come to mind: the 2004 change in hours-of-service for the trucking industry and U.S. Customs’ Importer Security Filing requirement. Both have actually helped companies take a closer look at their operations and become more efficient.
The EPA has been a favorite kickball for conservatives. They erupted in furor when EPA Administrator Lisa Jackson ruled that the agency would regulate carbon because they felt Congress should pass legislation granting such authority. They claim that the economic costs far outweigh any environmental benefits from such a measure. But Jackson simply followed a Supreme Court ruling that basically said carbon dioxide fit the definition of a pollutant under the Clean Air Act and EPA could regulate it if it impacted human health. The EPA determined in 2009 that carbon dioxide falls in that category because of its impact on climate and long-term weather patterns that appear to threaten the ecological balance. The EPA is now developing standards to limit greenhouse gas emissions in the electric power sector.
In an interview with American Shipper
on the sidelines of an EPA conference on freight sustainability, American Trucking Associations President Bill Graves said the trucking industry was pleased with how the Obama administration included it on developing this year the first fuel-efficiency standards for heavy-duty trucks. He also said he can’t argue with open participation ATA was allowed by the DOT’s Federal Motor Carrier Safety Administration as it deliberated a new hours-of-service rule, even though the likely the outcome is not one the industry will favor.
Regulations also favor large, well-capitalized companies that can afford to keep up with new rules. Many trucking executives hope new rules will weed out actors that are able to keep rates low by skirting the rules so that they can make a better return on investment.
The FMCSA’s new CSA safety compliance monitoring system is an example of a regulation embraced by most brand-name trucking companies because they see it as a way to clean up an industry that has a bad rap among the public at large. Large companies also support mandates for electronic on-board recorders to track driver work time and habits knowing that the upfront costs will be exceeded by their ability to better manage their workforce.
The trucking industry’s attitude has evolved in recent years from always objecting to new regulations because of their cost.
Graves said the ATA’s leadership is more proactive about issues such as technology adoption, sustainability, fuel efficiency standards and safety regulations because its mindset is “how do we position ourselves for the future.
“Our membership at this point is basically saying, ‘Hey, we’re going to do the right thing irrespective of what it costs during the transition because it will pay off in the long run,’ ” he said.
Despite all the carping about the cost of programs to comply with clean air, water and soil regulations, there is substantial research that shows the country saves enormous amounts of money in health care costs and lost productivity the fewer people there are who suffer from asthma, lung cancer and other diseases. Tourism is enhanced when our rivers, skies, ground water and forests are not polluted. And we save hundreds of billions of dollars in clean-up costs if we can prevent hazardous waste contamination and other types of pollution.
This country doesn’t need more regulations or fewer regulations. It needs the right regulations. The trick is finding which ones work and which ones are perpetuated because of interest groups with ulterior motives or agencies that want to protect their turf. - Eric Kulisch