Upton and environmentalists go back and forth on regulations
Rep. Fred Upton published an op-ed piece in the Washington Times this week, arguing that the key to job creation is to eliminate federal environmental regulations. Laurie Johnson of the Natural Resources Defense Council responded to Upton, accusing him of distorting the study he cited.
Upton cited a study from the McKinsey Global Institute about job creation in the United States:
In our quest for job creation, we keep uncovering evidence pointing to a major culprit behind the malaise: the vast web of costly, duplicative and often ineffective federal regulations. This Washington-imposed juggernaut impacts every business or potential business in industries including health care, financial services, energy and the environment.
The McKinsey study agrees with our assessment. It concludes that regulations are one of the primary drags on job creation. Delay, uncertainty and higher costs imposed by the government cause business investment to dry up or look for better opportunities in foreign countries.
But Johnson argues that Upton misrepresents the study’s conclusions, which point much more to structural and educational factors as impediments to job creation rather than to regulation. Indeed, the executive summary of the study only mentions regulation in a single sentence at the end, and in reference only to speeding up regulatory decisionmaking.
- Progress on four dimensions will be essential for reviving the US job creation machine: develop the US workforces’ skill to better match what employers are looking for; expand US workers’ share of global economic growth by attracting foreign investment and spurring exports; revive the nation’s spark by supporting emerging industries, ensuring more of them scale up in the United States, and reviving new business start-ups; and speed up regulatory decision-making that blocks business expansion and new investment.
- The US workforce will continue to grow until 2020, but under current trends, many workers will not have the right skills for the available jobs. Technology is changing the nature of work: jobs are being disaggregated into tasks, work is becoming virtual, and firms are relying on flexible labor (temporary, contract workers). These trends offer new opportunities for creating jobs in the United States, a trend that some companies do not fully appreciate.
- The US needs to create 21 million new jobs by 2020 to regain full employment – and only achieves this in our most optimistic job growth scenario.
- Recoveries are increasingly becoming “jobless” due to firm restructuring, skill and geographic mismatches between workers and jobs, and sharp decline in new start-ups.
Johnson also notes that a recent report from the Office of Management and Budget showed that environmental regulations produced far more economic benefit than they cost:
According to a report just released by the Office of Management and Budget (OMB), the overall benefits of regulation exceed costs:
“The estimated annual benefits of major Federal regulations reviewed by OMB from October 1, 2000, to September 30, 2010, for which agencies estimated and monetized both benefits and costs, are in the aggregate between $132 billion and $655 billion, while the estimated annual costs are in the aggregate between $44 billion and $62 billion.”
Net gains are particularly strong under the Clean Air Act, currently under assault by some legislators in Congress. Benefits from regulations issued by the Office of Air were estimated to be between $77 to $535 billion, compared to $19 to $24 billion in costs (click here for a summary of EPA’s cost benefit analysis, and here for a description of the rigorous peer review it underwent). The fact that this assessment comes from OMB should not be overlooked: it is a tough critic of EPA regulations.
Upton, now chairman of the powerful House Energy and Commerce Committee, has gone from being a moderate, relatively pro-environmental Republican to being a staunch critic of government regulation. He is now advocating a number of bills to limit the EPA’s ability to regulate a wide range of activities that can cause serious environmental destruction.