Red Tape: Seeing it's vulnerable on the issue of job-killing regulation, the White House is pushing back with media spin and misleading studies. Unfortunately, some conservatives have taken the bait.
Columnist David Brooks, for one, claims "it's not clear that regulations are a major contributor to the current period of slow growth," adding "Obama has not increased regulatory costs more than Reagan and the Bushes."
Never mind that Obama in just his first two years racked up $40 billion in new costs, almost matching the prior eight-year total.
Guzzling more Kool-Aid, Brooks maintained the Obama White House "does rigorous cost-benefit analyses to review proposed regulations and minimize their economic harm." His proof? Obama's regulatory czar Cass Sunstein "is incredibly wonky" and no ideologue.
Uh huh. This is the same Sunstein who wrote a book proposing a "Second Bill of Rights," including guaranteed homeownership and health care for all.
Yeah, he'll work real hard to rein in ObamaCare.
Parroting Obama's top economist Alan Krueger, Brooks argued "if new regulations were eating into business, we'd see a slip in corporate profits. We are not."
But profits are up mainly because businesses have slashed payrolls and other costs.
Brooks also cited a survey allegedly showing businesses shrugging off red tape. "The Bureau of Labor Statistics asks companies why they have laid off workers," he said. "Only 13% said regulations were a major factor."
Only, Brooks got the survey wrong. The 13% finding actually came from the pro-Obama Small Business Majority, a Bay Area nonprofit that polled business owners primarily in California and two other states about the EPA and energy issues. The survey never even asked about ObamaCare or Dodd-Frank financial regulations, the biggest impediments to hiring right now.
The BLS survey, which was reported in the Washington Post to back up Sunstein's spin, found that few large firms have cited regulations as a reason for recent big layoffs. Most cited the recession. But it didn't ask them why they're not hiring new workers, which is the more relevant question concerning regulations.
New government rules create uncertainty that makes it hard for businesses to plan, invest and staff up. Nor did the government survey small firms, which struggle more with the costs of complying with regulations.
On that score, a recent Harris poll of 1,330 small-business owners found that the greatest obstacles to their hiring more employees were "too much regulation" and "uncertainty about what Washington will do next."
Specifically, 41% of CEOs in October cited new health care mandates as a "top concern" - up from 39% in July - meaning anxiety over ObamaCare is growing. Only 17% of small businesses expect to add employees through next October.
Gallup also asked small-business owners about government rules; and it, too, found they are "the most important problem" they face today. Polled in October, "Small-business owners seem to feel government regulations are making their difficult operating environment even more challenging," Gallup concluded.
The anecdotal evidence is legion:
• Bill Looman, owner of U.S. Cranes in Waco, Ga., says regulatory "policies" have handcuffed him. "I've got people that I want to hire now, but I just can't afford it," he said. "And I don't foresee that I'll be able to afford it unless some things change in D.C."
• CKE Restaurants, which runs Carl's Jr. and Hardee's, will have to spend twice as much complying with ObamaCare as it does opening new restaurants.
• Verizon Communications Chairman Ivan Seidenberg, an early Obama supporter, complained the administration is "injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses."
Atlanta Federal Reserve Bank President Dennis Lockhart says prominent among the hurdles to hiring "is the lack of clarity about the cost implications of the recent health care legislation."
He added: "We've frequently heard strong comments to the effect of: 'My company won't hire a single additional worker until we know what health insurance costs are going to be.'"
ObamaCare discourages hiring in other ways, too.
Keeping staff below 50 lets employers avoid the mandate to provide government-approved health coverage or face a penalty. For larger firms, it's more costly to add workers under new health-benefit mandates.
It's no coincidence the job market stopped improving within two months of ObamaCare's passage.
Dodd-Frank is also a jobs killer:
• Banker Dennis Ramsey, who also happens to be mayor of Bill Clinton's hometown of Hope, Ark., says the Dodd-Frank process is so complicated his bank stopped doing mortgages in-house.
• Wall Street firms reportedly have explained in exit interviews with laid-off workers that they had to raise revenue to meet new capital-reserve requirements under Dodd-Frank.
• Even Democratic Rep. Barney Frank admits the regulation he co-sponsored has cost jobs in the financial sector. But he says it's a "reasonable price" to pay to bring "greedy" bankers to heel. "If you lock up drug dealers," he said, "you're going to have fewer jobs."
In fact, according to an Institute of International Finance study, Dodd-Frank threatens to cost the U.S. economy 2.9 million jobs over the next three years alone-and that's without all the rules yet in effect.
During the last deep recession of the early 1980s, President Reagan slashed red tape. His regulatory reform, in contrast, encouraged competition and innovation, and helped trigger a hiring boom.
Real economic growth soared an average 7% during the recovery years, while employers churned out an average 350,000 new jobs a month. That compares with this recovery's anemic 2.5% growth and sub-100,000 new jobs.
It's the regulations, stupid.
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