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Cut Regulation, Not Just the Budget

“But you must remember, my fellow-citizens, that eternal vigilance by the people is the price of liberty, and that you must pay the price if you wish to secure the blessing.  It behooves you, therefore, to be watchful in your States as well as in the Federal Government.”

– Andrew Jackson, Farewell Address, March 4, 1837.

President Obama’s proposed FY2012 Federal Budget has come under heavy fire for its modest reach in real reform. With deficits projected to be in the trillions for the foreseeable future, the amount of budget cutting proposed is certainly underwhelming. Lost in the battle over $6 billion cuts offered by the President and the Democrats, and the $61 billion of cuts the Republicans want, is the use of another powerful tool to help get the economy moving – reining in regulation.

Regulation is a hidden tax on all of us. Costly rules written by unelected bureaucrats add to the costs of producing goods and services in the private sector. Our firms must recoup those costs by passing them on to consumers. In this global economy, American workers then are put out of work because our firms cannot compete with lower prices for imports from foreign manufacturers. Regulations whose benefits don’t exceed their costs are a serious drag on the economy.

In his State of the Union Address, President Obama called for congressional support for a review of all federal regulations that put an unnecessary burden on businesses. Well, the 112th Congress is going the President one better by calling out the EPA for its plans for extremely costly regulation of greenhouse gasses. Both the Senate and the House have proposed legislation to take back control of this issue.

President Obama has called for a regulatory system that protects public health and the environment and also promotes economic growth. He has said that benefits and costs must be taken into account to achieve these objectives.

EPA’s Futile Crusade

Greenhouse gas regulations being developed at the Environmental Protection Agency are a veritable mother load of extremely costly rules with doubtful benefits. Furthermore, EPA has proposed guidelines for reducing greenhouse gas emissions from power plants and automobiles without comparing costs and benefits.

Unilaterally requiring reductions in CO2 emissions in the United States, while emissions of this global gas are increasing rapidly in China, India and elsewhere, defies common sense. Moreover, if the EPA’s goal is to support the President’s call in the State of the Union Address for 80% of America’s electricity to come from clean energy sources by 2035, the costs to the economy will be immense.

Though the President has not weighed in on the legislative proposals to trim EPA’s sails, Senate Democrats have not been shy about denouncing them. The favorite themes of the naysayers seem to be that CO2 is a toxic pollutant and that the only jobs that count are “green jobs.”

Senator John Kerry (D-Mass) has been quoted as saying that Senator Barrasso’s (R-WY) bill (S228) “puts the public health at risk and encourages the outsourcing of American jobs.” Senator Robert Menendez (D-NJ) is even shriller in his comments, saying, “The health of our children must come before the interests of polluters.” Regardless of the tenor of the debate, the hearings on the two bills should bring into focus the high costs and speculative benefits of EPA’s greenhouse gas programs.

Conclusion

If the President and Congress wish to focus on the economy like a laser beam, then they must cut federal regulations, as well as, federal spending. In particular, halting EPA’s rush to regulate would prevent the chilling effect of high energy costs from spreading throughout the U.S. economy. Surely, our unemployed and underemployed workforce deserves to be protected from such a self-inflicted wound. Taxpayers too.

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Kenneth W. Chilton, Ph.D. is Interim Director of the Institute for Study of Economics and the Environment, School of Business and Entrepreneurship, at Lindenwood University in St. Charles, MO.

2 comments

1 Ed Reid { 03.22.11 at 8:23 am }

Arguably, the most expensive and least effective approach to any issue is goal-less, plan-less incrementalism.

The US environmental community has been wringing its hands about global warming since it stopped wringing its hands about global cooling. The global governance community has been licking its chops over the possibilities as well.

However, in all that time, we have not seen these groups “consense” on a single, universally accepted goal, nor on a single, universally accepted plan to achieve such a goal. What we have seen, rather, is a very loud, though so far ineffectual, attempt to get the developed nations to step off onto the “slippery slope”, with the tacit understanding that they would learn how far “down” was when they got there.

I have this image of China, India and other developing countries digging a hole with power equipment, while the developed countries surround the hole and attempt to refill it with hand shovels; and, the undeveloped countries try to pick the pockets of the developed countries. (Sounds like a summary of Copenhagen!)

2 Whipping boy? No. Misanthropic enemy of modern society? That’s getting closer to the mark. | JunkScience Sidebar { 03.23.11 at 2:11 am }

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