Industry study: Regulations weighing down manufacturing
The Hill
Bernie Becker
August 21, 2012
Federal regulations could prove to be a deep drag on manufacturing output in the coming years, according to a new study from an industry group.
The report commissioned by the Manufacturers Alliance for Productivity and Innovation (MAPI) found that major regulations could roll back output by between 2 percent and 6 percent over the next decade, and shrink 2012 values by as much as $500 billion.
NERA Economic Consulting, with conducted the study, also reported that major regulations had grown much more common over the last two decades.
President Clinton’s administration averaged 36 new regulations a year, a figure that grew to 45 under President George W. Bush and ballooned to 72 in the Obama administration.
“The whole point is simply to show that the numbers and costs of regulations continue to grow, even when we’re in a downturn, even when U.S. manufacturing has to face a recession,” Stephen Gold, MAPI’s chief executive told The Hill about the study. “There’s no political or managerial discipline over regulation.”
But environmental and liberal groups also slammed the study for not considering the benefits of major regulations, noting that both the Obama and Bush administrations have found the positive from rules from the Environmental Protection Agency and other agencies far exceed the costs.
“This is outrageous,” Scott Slesinger of the Natural Resources Defense Council said in a Tuesday statement. “Would the Washington Nationals consider the cost of a pitcher without looking at whether they were getting Stephen Strasburg or Stephen Colbert?”
Critics also noted that pay for corporate executives continues to rise, and that regulations allow consumers to be more confident in products manufactured in the U.S.
"This appears to be another industry lobby piece dressed as a 'study,'" said Robert Weissman of Public Citizen.
The study come as regulations have proven to a major part of the debate over how Washington can best give a boost to an economy still struggling with an unemployment rate over 8 percent.
Mitt Romney, the presumptive GOP nominee for president, and Republicans on Capitol Hill have routinely knocked President Obama for promulgating too many regulations.
The House, shortly before it recessed for August, passed a measure to block all major regulations until the jobless rate hit 6 percent, and Romney’s jobs and economic plan says that regulations are a major reason that U.S. is losing ground in the global marketplace.
Meanwhile, the Obama administration has moved to streamline federal regulations, saying a plan announced in August 2011 could save $10 billion over five years, and shelved a major smog regulation last year.
For their part, the study’s authors said their analysis likely underestimates the cost of regulations in general. The report only examines major regulations, where compliance costs are estimated to be at least $100 million, because the federal government does not track the cost of non-major rules.
In all, the study looked at major regulations in the financial, labor, energy, environment and transportation sectors, including rules that deal with workplace safety, clean air and fuel economy standards.
The benefits of those regulations, according to the authors, were not addressed because they were harder to put into dollar terms.
“The problem with benefits is that it’s easy to say this is a cost. You look at your outlays, your spending on labor,” Gold said. “We can easily say that there are fewer injuries because of workplace safety rules. But it’s very difficult to actually ascertain what’s the price tag for that benefit.”
According to the study, the EPA imposed the largest number of regulations, and the full weight of the regulatory burden could shrink 2012 exports by between 6.5 percent and 17 percent.
David Montgomery, the principal investigator on the study, said that he believed the study showed that the scales had tipped too much against businesses, and that federal authorities needed to examine whether there was a better way when it came to regulations.
“At some point, it’s the law of diminishing return,” Montgomery told The Hill. “At some point, it’s costing you more than you’re getting from the regulations. I think that’s something that we would like to get people to think about.”
