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Thursday, September 29, 2011

Obama's Regulatory Blinders

The Obama White House's ignorance or simple disregard of the impact that policy has on business and the economy continues unabated.

One of the latest examples came as the U.S. House of Representatives moved to try to rein in the Environmental Protection Agency (EPA) on the matter of costly regulations.

In a statement, White House spokesman Jay Carney declared, "We wish House Republicans would spend less time focused on these ideological debates and more time focused on the things we can agree on to create jobs and grow the economy."

If it were not so sad for businesses, employees and those seeking work, this would be funny. After all, it's hard to think of any other presidential administration over the past six decades that's been as ideological, with economic blinders on, in its policy agenda as this White House.

The EPA has been a leading example of regulation running amok.

On Friday, September 23, the House voted to slow down and try to rationalize the EPA regulatory process. By a vote of 249-169, with 19 Democrats joining Republicans in favor, the House approved the TRAIN Act - or the "Transparency in Regulatory Analysis of Impacts on the Nation Act of 2011" (HR 2401), introduced by Reps. John Sullivan (R-OK) and Jim Matheson (D-UT) - that would require a more comprehensive, cabinet-level review of the impact that EPA rules would have on the economy, including on jobs, businesses, and energy supplies and prices. In addition, the legislation would stop the EPA from imposing two rules - one finalized and the other upcoming - that would mandate reductions in various emissions from power plants, refineries, and other industries, and require the agency to rewrite or draft new proposals.

Reining in the EPA's regulatory overreach is not about ideology. Instead, it's very much about the economy and jobs.

For example, the Houston Chronicle reported on September 23: "The cross-state rule requires power plants in 27 states including Texas to reduce emissions of sulfur dioxide and nitrogen oxides that EPA says can harm health across state lines. Texas officials and utilities say it could force some power plants to shut down when it takes effect on Jan. 1, 2012, and cause electricity disruptions and blackouts... Dallas-based Luminant Generation Co., Texas' largest electricity provider, said early last week that it would sue the EPA. The rule is forcing the company to shut down two units at a coal-fired power plant and cut 500 workers, Luminant said."

Regarding a requirement that the EPA review the economic impact of its upcoming "Tier 3" regulations for gasoline, API noted: "The new requirements could boost the cost of making gasoline by up to 25 cents per gallon, close up to seven U.S. refineries, and drive up carbon dioxide emissions by up to 7.4 million tons a year because of the increased energy needed to manufacture the new fuel blend, according to a study by energy consulting firm Baker& O'Brien."

In general, the EPA's moves to impose additional regulations on fossil-fuel-generated power, as Reuters has reported, means that utilities are going to be forced to close many coal-powered plants. The Reuters report noted: "Stricter regulations being formulated by the U.S. Environmental Protection Agency (EPA) to reduce air and water pollution as well as to control the handling of coal waste are expected to force the retirement of between 30,000 and 70,000 MW of coal and other fossil-fired generation across the country, according to several industry studies." Reuters' "partial list of U.S. coal plants that energy companies expect to retire in the coming years" tallied up to 52 plants.

In the end, all of this translates into higher costs for small businesses and consumers, in particular when it comes to energy.

Unfortunately, while there are very real economic costs, it's hard to see any substantive benefits that would accrue in terms of the environment. The so-called benefits seem to be more about assertions and emotion.

There should be nothing controversial about requiring a sound analysis of how increased regulation will affect our economy. Indeed, the only reason that the administration is opposed to such a measure goes back to ideology. They don't want the economic and environmental realities that the costs would far exceed the benefits to get in the way of expanding the regulatory state.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.

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