    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

                     REGULATORY FREEZE FOR JOBS ACT OF 2012

    =======================================================================

                                    HEARING

                                   BEFORE THE

                       SUBCOMMITTEE ON COURTS, COMMERCIAL
                             AND ADMINISTRATIVE LAW

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                       ON

                                   H.R. 4078

                                   __________

                               FEBRUARY 27, 2012

                                   __________

                               Serial No. 112-90

                                   __________

             Printed for the use of the Committee on the Judiciary

          Available via the World Wide Web: http://judiciary.house.gov

                                   ----------
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    72-999 PDF                       WASHINGTON : 2012

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                           COMMITTEE ON THE JUDICIARY

                          LAMAR SMITH, Texas, Chairman
    F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
        Wisconsin                        HOWARD L. BERMAN, California
    HOWARD COBLE, North Carolina         JERROLD NADLER, New York
    ELTON GALLEGLY, California           ROBERT C. ``BOBBY'' SCOTT,
    BOB GOODLATTE, Virginia                  Virginia
    DANIEL E. LUNGREN, California        MELVIN L. WATT, North Carolina
    STEVE CHABOT, Ohio                   ZOE LOFGREN, California
    DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
    MIKE PENCE, Indiana                  MAXINE WATERS, California
    J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
    STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
    TRENT FRANKS, Arizona                  Georgia
    LOUIE GOHMERT, Texas                 PEDRO R. PIERLUISI, Puerto Rico
    JIM JORDAN, Ohio                     MIKE QUIGLEY, Illinois
    TED POE, Texas                       JUDY CHU, California
    JASON CHAFFETZ, Utah                 TED DEUTCH, Florida
    TIM GRIFFIN, Arkansas                LINDA T. SANCHEZ, California
    TOM MARINO, Pennsylvania             JARED POLIS, Colorado
    TREY GOWDY, South Carolina
    DENNIS ROSS, Florida
    SANDY ADAMS, Florida
    BEN QUAYLE, Arizona
    MARK AMODEI, Nevada

          Sean McLaughlin, Majority Chief of Staff and General Counsel
           Perry Apelbaum, Minority Staff Director and Chief Counsel
                                     ------

           Subcommittee on Courts, Commercial and Administrative Law

                     HOWARD COBLE, North Carolina, Chairman

                   TREY GOWDY, South Carolina, Vice-Chairman

    ELTON GALLEGLY, California           STEVE COHEN, Tennessee
    TRENT FRANKS, Arizona                HENRY C. ``HANK'' JOHNSON, Jr.,
    DENNIS ROSS, Florida                   Georgia
    BEN QUAYLE, Arizona                  MELVIN L. WATT, North Carolina
                                         JARED POLIS, Colorado

                          Daniel Flores, Chief Counsel

                          James Park, Minority Counsel

                                C O N T E N T S

                                  ----------

                               FEBRUARY 27, 2012

                                                                       Page

                                    THE BILL

    H.R. 4078, the ``Regulatory Freeze for Jobs Act of 2012''........     3

                               OPENING STATEMENTS

    The Honorable Howard Coble, a Representative in Congress from the
      State of North Carolina, and Chairman, Subcommittee on Courts,
      Commercial and Administrative Law..............................     1
    The Honorable John Conyers, Jr., a Representative in Congress
      from the State of Michigan, and Ranking Member, Committee on
      the Judiciary..................................................     9
    The Honorable Steve Cohen, a Representative in Congress from the
      State of Tennessee, and Ranking Member, Subcommittee on Courts,
      Commercial and Administrative Law..............................    10

                                   WITNESSES

    Allan H. Meltzer, Carnegie Mellon University and Hoover
      Institution
      Oral Testimony.................................................    12
      Prepared Statement.............................................    15
    John B. Taylor, Stanford University and Hoover Institution
      Oral Testimony.................................................    20
      Prepared Statement.............................................    22
    Robert Weissman, President, Public Citizen
      Oral Testimony.................................................    27
      Prepared Statement.............................................    29

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Letter from the Chamber of Commerce of the United States of
      America, submitted by the Honorable Howard Coble, a
      Representative in Congress from the State of North Carolina,
      and Chairman, Subcommittee on Courts, Commercial and
      Administrative Law.............................................    52

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Prepared Statement of the Honorable John Conyers, Jr., a
      Representative in Congress from the State of Michigan, and
      Ranking Member, Committee on the Judiciary.....................    55
    Prepared Statement of the Honorable Steve Cohen, a Representative
      in Congress from the State of Tennessee, and Ranking Member,
      Subcommittee on Courts, Commercial and Administrative Law......    57
    Letter from the Coalition for Sensible Safeguards................    59
    Response to Post-Hearing Questions from Robert Weissman,
      President, Public Citizen......................................    61
    Material submitted by the Honorable Steve Cohen, a Representative
      in Congress from the State of Tennessee, and Ranking Member,
      Subcommittee on Courts, Commercial and Administrative Law......    64

                     REGULATORY FREEZE FOR JOBS ACT OF 2012

                                  ----------

                           MONDAY, FEBRUARY 27, 2012

                  House of Representatives,
                        Subcommittee on Courts,
                     Commercial and Administrative Law,
                                    Committee on the Judiciary,
                                                        Washington, DC.

        The Subcommittee met, pursuant to call, at 4 p.m., in room
    2141, Rayburn House Office Building, the Honorable Howard Coble
    (Chairman of the Subcommittee) presiding.
        Present: Representatives Coble, Cohen, Conyers, and
    Johnson.
        Staff Present: (Majority) John Hilton, Counsel; John Mautz,
    Counsel; Ashley Lewis, Clerk; (Minority) James Park,
    Subcommittee Chief Counsel; and Rosalind Jackson, Professional
    Staff Member.
        Mr. Coble. Good afternoon. We will come to order. I have my
    opening statement, I recognize the gentleman from Michigan, and
    Mr. Cohen is on his way here, I am told. It has been said that
    there are three types of lies; lies, damn lies, and statistics.
    All three species abound in Washington--perhaps they abound
    everywhere. Last month, the Department of Labor reported the
    national unemployment rate as 8.3 percent. It is certainly
    better than 10 percent unemployment Labor reported in October,
    but a far cry from where we would like for it to be. And by the
    way, folks, you all pardon my raspy voice. I am trying to come
    down with my annual winter cold, so I will make it as
    inoffensive as possible.
        In reality, many millions of able-bodied Americans are
    still out of work, as bills pile up and hopes dwindle, the only
    statistic that matters to them and their families is that they
    are unemployed. We who voted against President Obama's so-
    called stimulus plan know that Washington really cannot create
    jobs, and the Federal Government certainly can destroy jobs.
    But what I found out is that people just will oftentimes just
    want Washington to get out of the way. A recent Gallup poll,
    for example, found out that almost half of small business
    owners who aren't hiring, are not looking for new employees
    because they are worried about new government regulations, and
    no wonder.
        With ObamaCare and Dodd-Frank on top of everything else,
    the red tape has been flying fast and furious lately in
    Washington. While the Bush administration issued an average of
    63 major regulations every year, the Obama administration has
    issued an average of 88 regulations annually. The number of
    economically significant regulations also has increased. Under
    President Bush, the Office of Information and Regulatory
    Affairs, reported reviewing an average of 77 economically
    significant regulations biannually. OIRA's biannual average
    under President Obama, however, is 125.
        The Heritage Foundation, conservatively estimates that
    President Bush added approximately 60 billion in annual
    regulatory costs over 80 years, but that in his first 26 months
    alone, President Obama added another 40 billion in annual
    regulatory costs. To give job creators some breathing room, Mr.
    Griffin, in his bill, has introduced the Regulatory Freeze for
    Jobs Act of 2012. Chairman Smith and I, along with several on
    the Subcommittee, and the full Committee, are original
    cosponsors of the Freeze Act, which would put a moratorium on
    new significant regs until the national unemployment rate
    stabilizes at or below 6 percent.
        The Freeze Act uses concepts and definitions that are well
    established in administrative law. For example, it defines
    significant regulatory action consistent with President
    Clinton's long-standing executive order, 12866, but with one
    important difference or exception: The bill only freezes
    economically significant regulations that would cost the
    economy $100 million or more, while executive order 12866
    speaks to effects on the economy of 100 million or more. If the
    President's common sense and the law of economics
    notwithstanding create jobs through regulation, then the Freeze
    Act won't stop them from doing so; nor would the Freeze Act
    permit the President from making necessary regulations such as
    for national security and public safety and health.
        What the Freeze Act will do is to give job creators a
    respite from unnecessary regulations until the unemployment
    rate gets back down to 6 percent, which we haven't seen in 3\1/
    2\ years, since the lame-duck days of the last Administration.
    The regulatory agency should lay off the red tape.
        In closing, I want to thank Mr. Griffin for sponsoring this
    important bill. The Freeze Act would give the economy a much
    needed boost and it deserve the Subcommittee's attention. I
    look forward to the witness' testimony, and reserve the balance
    of my time.
        [The bill, H.R. 4078, follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   __________

        Mr. Coble. It is good to see the gentleman, my good friend
    from the banks of the Mississippi, Steve Cohen, Ranking Member.
        Mr. Cohen. Thank you, and it is good to be seen and I would
    like to yield my time at first, if I can, to the distinguished
    Chairman from the State of Michigan, Mr. Conyers.
        Mr. Conyers. Thank you very much.
        Mr. Coble. Mr. Conyers, are you headed for the floor as
    well?
        Mr. Conyers. I was, but they tell me that our measure isn't
    coming up today.
        Mr. Coble. Okay.
        Mr. Conyers. But I would like to go in front of the Ranking
    Subcommittee Member anyway.
        Mr. Coble. All right, very well.
        Mr. Conyers. Thank you very much. We welcome our
    distinguished guests here from the Hoover Institute, well, both
    from the Hoover Institute. This is the ninth hearing on the
    subject so-called regulatory reform, and nearly all of these
    hearings there is always some discussion about how regulations
    depress job creation. And I am going to defer to the head of
    public citizens to help us examine that, but I invite our two
    other distinguished witnesses to join in in this evaluation.
    What the measure does is attempt to link regulations with
    employment by preventing agencies from engaging in regulatory
    actions if the average monthly unemployment rate exceeds 6
    percent in any quarter.
        This is legislatively unwise because the measure fails to
    acknowledge the fact that regulations play a critical role in
    ensuring the health and safety of Americans as well as through
    the economic well-being of our Nation. So what we would do is
    prevent agencies under this proposal from fulfilling the job
    that we in Congress entrusted them to do; namely, to ensure the
    safety of the foods we eat, the cars we drive, and the places
    where we work.
        Cass Sunstein who heads the agency charged with reviewing
    Federal regulations recently said this: A moratorium would not
    be a scalpel or a machete, it would be more like a nuclear bomb
    in the sense that it would prevent regulations that cost very
    little, and have very significant economic or public health
    benefits.
        And so I think unwittingly, the sponsors of this measure
    could not possibly be intending to deliberately jeopardize the
    health and safety of Americans in order to pursue their anti-
    regulatory political agenda, but I am afraid that that is
    exactly what would be the effect were this measure taken
    seriously and enacted into law.
        Finally, there isn't any credible evidence that regulations
    have any substantive impact on job creation. Last year, one of
    the conservatives' own witness testified before this
    Subcommittee that ``the focus on jobs can lead to confusion and
    regulatory debates.'' And that, quoting again, ``the employment
    effects of regulation while important, are indeterminate.''
        And so I approach this hearing with the hope that we will
    recognize that our statements are going into the record as a
    permanent part of the Judiciary Committee's responsibility, and
    I urge you to be as careful as you can in giving us your well
    thought out observations and convictions from the Hoover
    Institution. And with that, Mr. Chairman, I yield back the
    balance of my time, and thank you.
        Mr. Coble. Thank you, gentleman from Michigan.
        I am now pleased to recognize the Ranking Member of the
    Subcommittee, the distinguished gentleman from Tennessee, Mr.
    Cohen.
        Mr. Cohen. Thank you, Mr. Coble. This bill, the Regulatory
    Freeze for the Jobs Act is an instrument that creates a
    mistaken cure for a problem that doesn't exist. There is no
    ascertainable link between regulations and unemployment. There
    is anecdotal evidence, there is political jargon, but there is
    no empirical proof data that regulations affect unemployment,
    and to not have regulations until unemployment hits 6 percent
    is absolutely nonsensical. There is no reason for that. And the
    bill, even if it gives exemptions for the President to do
    certain things, gives judicial review over that process and it
    takes away from the Administration, and what the Constitution
    gives the executive otherwise.
        It also awards attorney's fees and costs to small
    businesses whenever an agency changes its position regarding a
    significant regulatory action, the subject of a lawsuit,
    independent of whether or not the change was because of filing
    the lawsuit; ipso facto, no correlation. It is premised on
    false assertions that regulations undermine job creation. And
    as I said, there is no evidence; all of it is anecdotal.
        One of the majority's own witnesses from a hearing last
    year testified that, at most, the effect of regulations on
    employment was indeterminate. Based on a review of their
    written statements, the two witnesses also did not offer
    evidence of an actual link, but an unemployment and regulation.
    They hang their arguments on unsupported notions that the
    creation of new rules creates uncertainty that causes
    businesses to hesitate in hiring. Yet surveys of business and
    economists show regulations have little to do with lack of
    hiring. It is basically the lack of demand, the destruction of
    the middle class, which has been done over and over through
    laws and policies, advocated by the majority of this House of
    Representatives. But it has hurt us, by being more austere
    rather than more robust in our economic policy, we have set the
    middle class back. And that has been a serious flaw.
        The Wall Street Journal surveyed business economists last
    summer and found the main reason U.S. Companies are reluctant
    to step up is scant demand, not uncertainty. National
    Federation of Independent Business, 45 percent said, dampening
    business confidence is why they are not getting sales. Only 10
    percent cited regulations. Proponents of this particular
    provision and other anti-regulatory measures forget that our
    unemployment problems can be traced right back to lack of
    regulation in the financial services industries, and the
    housing industry. And in this failure created the 2008 great
    recession, also known as the Bush recession.
        There are far greater economic costs to stopping agencies
    from regulating, than there is allowing new regulations to take
    effect. It raises many questions this particular bill, when
    does the 6 percent go into effect if it drops? But it is not
    worth going into all of those things because this bill is so
    bad on its face that going into the particulars of what would
    and if happen on such a poor-drawn bill is not worthy of the
    time of this Committee.
        There are issues that should be addressed as far as
    regulations. In my home city there is a regulation that says
    that you can't get your car inspected if you have a light that
    goes on that says that your engine needs to be checked. That
    may or may not relate to emissions. There should be a better
    way to test emissions than a light that your manufacturer puts
    on that basically says, do not pass the driver's license
    station; go directly to your mechanic, and put your hands up,
    and surrender. That is a regulation that could stop and I am
    going to work on that.
        There are regulations in my city concerning football
    stadiums, the number of seats that you have to have for people
    with disabilities. I may be one of those people that needs one
    of those seats with a disability sometime in the future, but
    right now, we don't have enough people to attend the games to
    merit the number of seats that they are requiring us to have,
    which could cost us a prohibitive amount of money, and maybe
    hamper the improved stadium that could get us an approved team
    and get some people with disabilities the interest to go into
    the games. The reality is, our team has been atrocious, and the
    average is about 8,000 people a game, and the people with
    disabilities have got better things to do because only 13 of
    them show up at an average game. But because of regulations,
    the Department of Justice wants us to create 250 seats and
    create all of these stands for the nonexistent fans that come
    and watch a terrible team that has many disabilities, which we
    hope will be cured with our new coach.
        Nevertheless, there are changes that can be made to some
    regulations. In EPA, it cost a lot of people a lot of money to
    get their light fixed who can't afford it, and that is
    something where there should be a waiver. In the football
    stadium, that makes no sense. For some reason, the University
    of Michigan got whatever they wanted. They had to have the same
    number of seats for people with disabilities as the University
    of Memphis has. Yet there is no comparison. One place averages
    120,000 people; one averages 8,000. We have the same number of
    seats for the stadiums.
        Well, I don't know, who went to Michigan? I don't know.
    Maybe somebody went to Michigan who cares about Michigan, but
    that is wrong. Regardless, I thank the gentleman for his
    opportunity, and he knows because East Carolina, his alma
    mater, also makes our team look awful and destroys us on the
    football field. I yield back the balance of my time.
        Mr. Coble. I didn't realize that you all were that inept.
    Steve, I will not provide you with that.
        Mr. Cohen. Obviously, you have not watched us play enough.
        Mr. Coble. Thank you, Steve, I appreciate that. Gentlemen,
    it is good to have you all with us. Professor Meltzer, is a
    distinguished visiting fellow at the Hoover Institute and
    professor of political economy at the Temple School of Business
    at Carnegie Mellon University. Professor Meltzer has served as
    a consultant on economic policy for Congress, U.S. Treasury,
    the Federal Reserve, the World Bank, and foreign governments,
    and chaired as well the International Financial Institution
    Advisory Commission.
        Professor Meltzer's writings have appeared in numerous
    journals. He is the author of numerous papers on economic
    theory and policy and of several books, including the newly
    released, Why Capitalism? Professor Meltzer earned his AB and
    MA from Duke University, and his Ph.D. From UCLA. Thank you,
    Professor, for coming to testify before the Subcommittee today.
        Professor Taylor, John B. Taylor, is a George P. Shultz
    Senior Fellow in economics at the Hoover Institute, and
    professor of economics at Stanford University. He was director
    of the Stanford Institute for Economic Policy and Research, and
    founder--founding director of Stanford's introductory Economic
    Center. Professor Taylor has the distinguished record of public
    service.
        Among other roles, he served as a member of the President's
    Council on Economic Advisors from 1989 to 1991, and Under
    Secretary of the Treasury for International Affairs from 2001
    to 2005. He currently is a member of the California Governor's
    Council of Economic Advisors. Professor Taylor received a BA in
    economics, summa cum laude from Princeton University, and a
    Ph.D. In economics from Stanford University. In recognition of
    his many achievements, in 2010, he received the prestigious
    Bradley Prize. We look forward to your testimony as well,
    Professor Taylor. Good to have you with us.
        Our final witness, Mr. Robert Weissman, as President of
    Public Citizens, Mr. Weissman works in the areas of economics,
    health care, trade, and globalization, intellectual property,
    and regulatory policy, and on issues related to financial
    accountability and corporate responsibility. He has worked to
    lower pharmaceutical prices for AIDS victims and others in the
    developing world.
        Mr. Weissman has appeared on television and radio and is
    published--and has been published and quoted in many
    newspapers. He earned his JD degree, magna cum laude, from
    Harvard School of Law and has led Public Citizens since 2009.
    Previously, he was director of the nonprofit organization,
    Central Action, and edited the magazine, Multinational Monitor,
    which tracks the activities of multinational corporations, and
    reports on the global economy. Thank you as well, Mr. Weissman,
    for being with us today.
        So welcome to all three of you. There is a timer on your
    desk that will reflect the green light. The green light will
    turn to amber, and when the amber light appears, the ice on
    which you are skating is getting thinner. We would like you all
    to close down on or about 5 minutes if you could. And then the
    red light will appear that will indicate that the final time
    has been exhausted.
        Mr. Meltzer, why don't you start us off? You all can see
    that timer, can you not? Mr. Meltzer, you will be our lead
    witness.

     TESTIMONY OF ALLAN H. MELTZER, CARNEGIE MELLON UNIVERSITY AND
                           HOOVER INSTITUTION

        Mr. Meltzer. Yes, sir. Thank you, Mr. Chairman, I support
    the proposed regulatory freeze--I support the proposed
    Regulatory Freeze for Jobs Act of 2012. It restricts new
    regulation during the current recession until the unemployment
    rate falls to 6 percent of the labor force. This is not an
    anti-regulation bill; it is a priority-setting bill. The
    proposed legislation includes safeguards that permit the
    restriction to be set aside for reasons of national security,
    public safety, or for some other purposes.
        I have urged repeatedly that Congress limit new, costly
    regulation in the interest of increasing the speed and size of
    the economic recovery. The proposed legislation does not oppose
    regulation. As the short title suggests, its recovery and
    reduced unemployment are set as priorities, badly needed
    priorities. We all recognize that unemployment rates remain
    high, growth and investment slow. Forecasters expected slow
    growth to continue. One main reason is that investors and
    producers are uncertain about regulation and taxation.
        Current and prospective regulation make estimates of future
    returns hard highly uncertain. Who can predict with acceptable
    confidence what new or pending regulation will do to future
    costs for energy, healthcare, finance, labor, or what they will
    do to productivity.
        I have taught in the business school for 50 years. We teach
    the students in the business school to estimate what the future
    rate of return is going to be. They can't do that in the
    current conditions of uncertainty with any accuracy. That is
    why regulation is costly.
        That is a recent survey by Michael Porter and Jan Rivkin of
    the Harvard Business School, asked thousands of HBS alumni
    about impediments to investment and job creation in the United
    States. The responses cited the U.S. Tax Code, the regulatory
    burden and uncertainty, as well as the absence of job skills
    among the unemployed.
        Unless changes are made to reduce these costs and burdens,
    the alumni expect the job-creating investment to decline over
    the near future. During the period where new regulations would
    be restricted, Congress can and should improve regulatory
    processes and administration. Mr. Cohen, I agree with you that
    much regulation is well intentioned, but wrong headed. Much
    current regulation is ineffective and doesn't accomplish the
    ends that the regulation is intending to achieve. Capture is
    one reason. The regulated become the regulators, or the
    regulators have one eye focused on a career change to work for
    the firms or industries that they regulate.
        The Securities and Exchange Commission is often cited as an
    example. We know that the SEC did nothing to stop Bernard
    Madoff's Ponzi scheme, despite several administrations--
    demonstrations by a financial professional directly warning the
    SEC of Madoff's claims could not be true.
        Examples of regulatory capture are common in the academic
    and policy literature. The claims are supported in practice.
    Steve Linnick, Inspector General of the Federal Housing Agency,
    issued a report stating that Fannie Mae knew about extensive
    foreclosure abuses by its outside law firms in 2003, 4 years
    before the crisis started. Regulators did not stop the bad
    practices when they could have prevented some of the costly
    failures that followed. Regulation failed in that case, as in
    many others.
        Banks are regulated by several agencies. Prior to the
    housing and financial crisis that started in 2007, the Federal
    Reserve had hundreds of regulators working inside the largest
    banks in New York and Charlotte. They examined the loans made
    during these periods. They did not prevent any bad loans.
    Regulation failed.
        Prior to the crisis, an agreement by all principal
    developed countries required commercial banks that lend on
    mortgages to increase their capital if they increase their
    mortgage loans. The banks circumvented the regulation by
    setting up subsidiaries to hold the mortgages. Instead of more
    capital per dollar of mortgages, there was less.
        Regulators did not object. Regulation failed. I am not
    opposed to all regulation. I repeat, not opposed to all
    regulation. Congress should work to develop effective
    regulation. My third principle of regulation will guide you to
    a more effective regulation. That principle says that
    regulation is effective if it changes the incentives of the
    regulated entity.
        In closing, I would like to repeat that I support the bill.
    But I urge you to be concerned about the broader consequences
    of the large increase that has taken place in regulation. Much
    of the regulation we have replaces the rule of law, with the
    rule by regulators. The rule of law, has been a pillar of
    successful capitalist development here and elsewhere. Increased
    regulation erodes the rule of law, and invites corruption.
    Under the rule of law, all citizens and companies are treated
    alike, or nearly alike as possible. Under rule by regulators,
    this is no longer so. Some gain advantages over others,
    distorting resource allocation and making us poorer.
        [The prepared statement of Mr. Meltzer follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   __________

        Mr. Coble. Professor Meltzer, I notice that you earned two
    of your degrees from Duke University. Did you have North
    Carolina connections prior to your enrollment?
        Mr. Meltzer. Yes, lots of--I have many examples of
    regulations which are misguided, or misdirected, or don't end
    up doing what they want. That is more likely to be the usual
    case, rather than the--the second, my first law of regulation,
    is that regulations are written by lawyers and bureaucrats, and
    markets learn to circumvent them. I gave a talk about that to
    the Council on Foreign Relations in New York, full of Wall
    Street people. The first question that came was from one of the
    lawyers who worked on Wall Street. He said, who do you think
    shows them how to circumvent them? We do. That was all I
    needed. I didn't have to argue with that.
        My second law of regulation is that regulations are static,
    and markets are dynamic. So if they don't learn to circumvent
    the regulation early, they will learn later, and the
    regulations get circumvented all the time. The only way that
    you can successfully regulate to bring social and private cost
    together, is to change the incentives of the people you
    regulate.
        I proposed that four times in hearings before the banking
    committees when they were discussion what became the Dodd-Frank
    regulation. One center introduced my legislation. It said,
    look, we now subsidize people who are too big to fail. Let's
    get rid of Too Big To Fail by saying the amount of capital that
    you have to hold rises with the size of the assets. So instead
    of being peanut subsidized, you are going to be penalized.
        Mr. Coble. Well, let's move on.
        Mr. Meltzer. Because we the public pay for the costs of
    what you do.
        Mr. Coble. Well, I thank you for that, Professor. I
    appreciate that. We have been joined by the distinguished
    gentlemen from Georgia, Mr. Johnson. Hi, good to have you with
    us.
        Mr. Coble. Mr. Taylor, you are now recognized for 5
    minutes.

           TESTIMONY OF JOHN B. TAYLOR, STANFORD UNIVERSITY
                         AND HOOVER INSTITUTION

        Mr. Taylor. Thank you, Mr. Chairman, Ranking Member Cohen
    and other Members of the Committee. I would like to submit my
    written testimony for the record and just summarize very
    briefly.
        Mr. Coble. Without objection.
        Mr. Taylor. I am very concerned about this recovery from
    the recession that ended in 2009. It is 2\1/2\ years old now,
    and it is like we don't have a recovery. And I make that
    assessment by comparing it to the most recent recovery from a
    deep recession and that was in the early 1980's. In the 10
    quarters of this recovery, growth has averaged 2.4 percent. In
    the 10 quarters following the recession that ended in 1982,
    growth was 5.9 percent. There is just no comparison.
        So there is a real problem here. That is why unemployment
    is remaining high. That is why people are dropping out of the
    labor force, and that is why employment growth is as weak as it
    is.
        This recovery has been weak from the start, and as a
    result, a year and a half ago, I wrote an op ed for the Journal
    along with the distinguished gentlemen on my right, and also
    with George Shultz, former Treasury Secretary, Secretary of
    State, and several other distinguished economists. We had a
    comprehensive strategy we recommended to get the economy
    moving. One part of that strategy, was, and I will quote, ``To
    enact an moratorium on all new regulations with exceptions of
    national security, and public safety.''
        We thought that should be part of a more comprehensive
    strategy which would include deficit reduction as well as a
    more rules-based monetary policy. Unfortunately, that
    recommendation was not enacted on, and as a result, this
    recovery, I believe, has continued to be very weak.
        And that is why I am so supportive of this bill, which
    really takes action along those lines, I think in an improved
    way. Ranking Member Cohen mentioned in his remarks that the
    problem is a lack of demand, not too many regulations. Well, I
    think the demand is low because of those regulations. Business
    firms create demand by investing and hiring people, and one of
    the reasons they are concerned about this, is uncertainty about
    what the regulations are actually going to be.
        I believe there is a growing recognition about the
    difficulty of regulating the economy when it gets too far. And
    in my testimony, I just offered this really very, I think
    excellent, recent issue in The Economist Magazine, entitled on
    the cover, The Overregulated America. And there is a detailed
    description of the things that really make it difficult for
    firms to expand. They are worried about the future. They don't
    know what the regulatory apparatus is going to be. By the way,
    there are also very worried about the tax laws, many things. So
    it seems to be very important to take this action now, and to
    really get this recovery moving.
        I think the--in addition to the normal kind of growing
    regulation, and cost of regulation that we are seeing, we have
    two bills passed recently that I think make this problem worse.
    And the one that I focus on mostly because that is my area, and
    that is the financial reform bill. There is lots of discussion
    about what caused the financial crisis, who caused it, you
    heard Professor Meltzer say a few things about that. In my
    view, it wasn't that there was not enough regulation; it was
    that the regulations on the books were not enforced. I think it
    is very clear when you look at the details of what happened.
        So in this sense, the analysis that led to the financial
    reform bill, misdiagnosed the crisis, instead added many new
    regulations which have nothing to do with the financial crisis;
    regulating payday loans for example, but I could go on and on.
    And the regulatory rules that the regulators must write now are
    just overwhelming to them, far more than they have had to write
    in the past. So it is like an order of magnitude difference.
        I know that is why so many firms are sitting on cash; why
    banks are sitting on cash. They don't know exactly what to do.
    So at this point, I think it is very important to enact some
    kind of a freeze like what is being proposed here. That is why
    I support the bill. And in a way, it addresses two problems
    which are holding the economy back. Number one is the growing
    amount of regulations that we are seeing. Number two, these
    recent bills that are still being implemented, the Congress
    gives instructions to the agencies to write the rules, and they
    are busy every day writing rules, and no one knows quite what
    to expect.
        So I think in this case, you kind of need a time-out on
    those bills; a time-out basically to digest what the rulemaking
    should be about. Give people a chance to digest what is going
    on. Maybe change some of those bills. But the regulatory freeze
    serves those two purposes which are, to me, extraordinarily
    important to get the economy moving again. Thank you.
        Mr. Coble. Thank you, Professor Taylor.
        [The prepared statement of Mr. Taylor follows:]

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                                   __________

        Mr. Coble. Mr. Weissman.

               TESTIMONY OF ROBERT WEISSMAN, PRESIDENT,
                             PUBLIC CITIZEN

        Mr. Weissman. Thank you very much, Mr. Chairman, Mr. Cohen,
    Mr. Johnson. I think it is an excellent thing that the
    Committee is focusing on the jobs crisis facing this country.
    And I agree completely with Professor Taylor that it needs to
    be a top priority for the Congress. However, I think the
    legislation is a misguided way of trying to address that
    problem. The legislation would effectively amount to a 5-year
    moratorium on new significant regulation. That is, I believe, a
    wrong and dangerous remedy for the problem we face. We have not
    addressed the problem, but would create many new problems. It
    is worth pointing out that the waivers in the bill are very
    limited, particularly in the area of health and safety, where
    it is only--the waiver is permissible only where necessary to
    meet an imminent problem or a pending emergency; not why most
    health and safety regulations are adopted.
        Let me try to make five quick points that summarize the
    testimony that I have submitted in writing. First point is that
    the evidence does not support the claim that regulation is a
    significant problem for a job preservation, or job creation.
    The real problem, as Mr. Cohen said, is indeed, the lack of
    demand. To the extent that there is a problem with uncertainty
    in the economy, the uncertainty is over the future of the
    economy, but not the future of regulation. And I go over in
    some detail evidence that I think that supports that claim.
        One data point that is relevant is that when employers
    report the reason for mass layoffs, they cite lack of sales or
    lack of demand as 100 times greater factor than regulation.
    That is retrospective, not prospective, but that is two orders
    of magnitude, and highly suggestive of what we are looking at.
    A second data point is, rather than analyzing this
    theoretically, to just look at the actual significant
    regulations that are proposed. And if you go back over the last
    10 years at almost any point, you will see the cost of almost
    every major regulation, is overwhelmed by the benefits, and the
    aggregate total of benefits exceeds the cost by 2 to 15 times.
    It is measured by the Office of Management & Budget under both
    the Obama Administration, and the Bush II administration.
        The second point is that the jobs crisis we now face, I
    agree with Professor Taylor, is a tribute to regulatory
    failure. I disagree with--I am sorry, with Professor Meltzer. I
    disagree with Professor Taylor that it is only a problem of
    regulatory enforcement, although it surely was that. There were
    many areas in which the failure to adopt new regulations to
    deal with an evolving and increasingly complicated financial
    sector contributed to the failure. I think that suggests a need
    for new regulations to address those problems going forward,
    some of them mandated by Dodd-Frank.
        Third point is that regulation, not abstracted but looked
    at concretely, makes our country stronger and makes us more
    prosperous and makes us healthier, safer, makes our country
    cleaner and more livable. I give a variety of examples of this
    in my written testimony, but it is worth mentioning that many
    regulations that will make our country stronger, and that are
    supported by the regulated industries, would be blocked for
    roughly 5 years by this legislation, including regulations
    proposed to increase the fuel efficiency of our Nation's
    automobiles and trucks, to improve food safety, and to enable
    the introduction of generic versions of biotech
    pharmaceuticals.
        A fourth point: Beyond the area of traditional health and
    safety regulation, this bill would impede many of the routine
    functions of government in ways that I am sure the drafters do
    not intend, but which I think are relatively inescapable under
    the framework of the legislation. They would prevent issuance
    of new annual rules that authorize bird hunting. They would
    prevent issuance of rules that provide for stop-loss pay for
    Veterans. They would prevent issuance of rules enabling
    compensation for Vietnam vets. They would prevent the issuance
    of rules, of which there are many, and a significant portion of
    the annual significant regulations issued that deal with
    Medicare reimbursement.
        A fifth and final point is to say that although I think the
    legislation is misguided as I have said, and I think regulation
    makes our country stronger and better, is not to suggest that
    we don't need to significantly reform the regulatory process. I
    absolutely agree with Professor Meltzer that regulatory
    captures a serious problem facing the country, and it would be
    an excellent thing for there to be bipartisan legislation to
    try to address that particular problem. I think another area of
    fruitful investigation is the problem of under enforcement of
    existing rules, and the failure to have sanctions for
    violations of rules that are sufficiently strong.
        Mr. Conyers, for example, has introduced legislation that
    would make it a criminal violation to introduce products into
    commerce or to expose workers to life-threatening hazards
    without sufficiently warning them. And I think that is
    something that this Congress ought to be looking at as well.
    Thank you very much.
        Mr. Coble. Thank you, Mr. Weissman.
        [The prepared statement of Mr. Weissman follows:]
        Prepared Statement of Robert Weissman, President, Public Citizen

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        Mr. Chairman and Members of the Committee,
        Thank you for the opportunity to testify today on H.R. 4078, the
    Regulatory Freeze for Jobs Act of 2012. I am Robert Weissman, president
    of Public Citizen. Public Citizen is a national public interest
    organization with 250,000 members and supporters. For more than 40
    years, we have advocated with some considerable success for stronger
    health, safety, consumer protection and other rules, as well as for a
    robust regulatory system that curtails corporate wrongdoing and
    advances the public interest.
        Public Citizen co-chairs the Coalition for Sensible Safeguards
    (CSS). CSS is an alliance of more than 75 consumer, small business,
    labor, scientific, research, good government, faith, community, health
    and environmental organizations joined in the belief that our country's
    system of regulatory safeguards provides a stable framework that
    secures our quality of life and paves the way for a sound economy that
    benefits us all. Time constraints prevented the Coalition from
    reviewing my testimony in advance, and today I speak only on behalf of
    Public Citizen.
        The Regulatory Freeze for Jobs Act would impose a moratorium on all
    significant regulatory action until the national unemployment rate
    drops to 6.0 percent. The legislation defines ``significant regulatory
    action'' as steps toward issuance of a rule having an impact on the
    economy of $100 million or more, or which meets other criteria. The
    legislation exempts action that would repeal a rule, but not to modify
    it (even if the modification weakened a standard). The legislation
    authorizes the president to waive the moratorium in certain limited
    cases (to address an ``imminent'' threat to human health or safety or
    other emergency; to enforce criminal laws; for national security; or
    pursuant to legislation implementing international trade agreements).
        Given current unemployment projections, the Act would impose a
    roughly five-year moratorium on significant regulatory action.\1\
    ---------------------------------------------------------------------------
        \1\ The Congressional Budget Office projects that unemployment will
    be 6.9 percent by the end of 2015 and 5.6 percent by the end of 2017.
    Congressional Budget Office. (2012). The Budget and Economic Outlook:
    Fiscal Years 2012 to 2022. Retrieved 24 February, 2012, from http://
    cbo.gov/publication/42905
    ---------------------------------------------------------------------------
        In the current context of scandalously high unemployment, the
    Committee is right to focus attention on the causes of unemployment and
    on needed remedies. However, excessive regulation is neither the cause
    of the jobs crisis nor a meaningful impediment to job creation. The
    Regulatory Freeze for Jobs Act is the wrong cure for the nation's
    serious job ailment--it wouldn't remedy the problem, could well make
    the problem worse, and would cause devastating side effects.
        The first section of this testimony argues that regulation does not
    have a meaningfully harmful impact on jobs and delivers significant net
    economic benefits. The second section argues that regulatory failures--
    deregulation, underregulation and lack of enforcement--had a central
    role in causing the Wall Street crash and the Great Recession.
    Recognizing the regulatory failures undergirding the current jobs
    crisis emphasizes the need for new and evolving rules to prevent
    another job-destroying, Wall Street-induced financial crisis. The third
    section discusses the vital function of regulation in making our
    country better and stronger, and shows some of the damage that would be
    done by a five-year moratorium on significant regulatory action. The
    fourth section analyzes the ways in which the legislation would,
    perhaps unintentionally, interfere with a diverse set of government
    programs and initiatives, including matters such as rules authorizing
    bird hunting. The conclusion emphasizes that the regulatory system is
    in need of significant reform, but not in the direction proposed by the
    Regulatory Freeze for Jobs Act.
                i. regulatory protections strengthen the economy
        The central premise of the Regulatory Freeze for Jobs Act is that
    regulatory protections meaningfully interfere with job preservation and
    creation. This premise is mistaken.
        While regulators commonly do not have job creation as a mission
    priority, they are mindful of regulatory cost, and by statutory
    directive or on their own initiative typically seek to minimize costs;
    relatedly, the rulemaking process gives affected industries ample
    opportunity to communicate with regulators over cost concerns, and
    these concerns are taken into account. To review the regulations
    actually proposed and adopted is to see how much attention regulators
    pay to reducing cost and detrimental impact on employment. And to
    assess the very extended rulemaking process is to see how substantial
    industry is influence over the rules ultimately adopted--or discarded.
        Even where the cost of regulatory compliance is nontrivial, the net
    job impact may be minimal or even positive; firm expenditures on
    regulatory compliance typically create new jobs within affected firms
    or other service or product companies with which they contract.
        It is also the case that firms typically innovate creatively and
    quickly to meet new regulatory requirements, even when they fought hard
    against adoption of the rules.\2\ The result is that costs are commonly
    lower than anticipated.
    ---------------------------------------------------------------------------
        \2\ Mouzoon, N., & Lincoln, T. (2011). Regulation: The Unsung Hero
    in American Innovation. Public Citizen. Retrieved 24 February, 2012,
    from http://www.citizen.org/documents/regulation-innovation.pdf
    ---------------------------------------------------------------------------
        The economics literature on regulation does not support the claim
    that regulation meaningfully impedes job growth. A survey of the
    literature conducted by the Economics Policy Institute finds a rough
    consensus: regulation has little direct impact on job creation, and may
    offer a net positive benefit.\3\ A literature review by the Office of
    Management and Budget, included in the 2011 Report to Congress on the
    Benefits and Costs of Federal Regulation, highlights several studies
    articulating theoretical approaches showing why different forms of
    regulation--including labor market, environmental and economic
    regulation--might increase or decrease employment and, in general,
    concludes the empirical evidence is ambiguous.\4\ Addressing the impact
    of a moratorium on environmental regulations, Congressional Budget
    Office Director Douglas Elmendorf in Senate testimony last year stated,
    ``On balance, CBO expects that delaying or eliminating those
    regulations regarding emissions would reduce investment and output
    during the next few years, because the response to the factors that
    would tend to boost investment under those circumstances would probably
    be smaller than the response to the factors that would reduce
    investment.'' \5\
    ---------------------------------------------------------------------------
        \3\ Shapiro, I., & Irons, J. (2011). Regulation, Employment, and
    the Economy: Fears of job loss are overblown. Economic Policy
    Institute. Retrieved 24 February, 2012, from http://www.epi.org/files/
    2011/BriefingPaper305.pdf
        \4\ Office of Management and Budget, Office of Information and
    Regulatory Affairs. (2011). 2011 Report to Congress on the Benefits and
    Costs of Federal Regulations on Unfunded Mandates on State, Local, and
    Tribal Entities. Retrieved 23 February, 2012, from http://
    www.whitehouse.gov/sites/default/files/omb/inforeg/2011_cb/
    2011_cba_report.pdf
        \5\ Congressional Budget Office. (2011, November 15). Statement of
    Douglas Elmendorf: Policies for Increasing Economic Growth and
    Employment in 2012 and 2013, page 49. Testimony before the Committee on
    the Budget, United States Senate. Retrieved 24 February, 2012, from
    http://budget.senate.gov/democratic/index.cfm/files/
    serve?File_id=795c2267-9349-4c2c-a488-262dfd346a2c
    ---------------------------------------------------------------------------
        Prognostications of job loss and excess cost from specific rules
    routinely turn out to be significantly overstated, EPI has shown, both
    in government estimates of the cost of regulatory compliance with new
    rules and especially in industry claims.\6\ Impacted industries have a
    natural bias to overestimate costs of regulatory compliance, and
    projections of cost regularly discount the impact of technological
    dynamism. In the case of acid rain regulations, for example, industry
    projected costs of $5.5 billion initially, rising to $7.1 billion in
    2000; ex-ante estimates place costs at $1.1 billion--$1.8 billion.\7\
    And, ``in the case of the regulation of benzene emissions, control
    costs were estimated at $350,000 per plant by the chemical industry,
    but soon thereafter the plants developed a new process in which more
    benign chemicals could be substituted for benzene, thereby reducing
    control costs to essentially zero.'' \8\ The last century teaches us
    that Chicken Little warnings about the costs of the next regulation
    should be, at the very least, heavily discounted.
    ---------------------------------------------------------------------------
        \6\ Shapiro, I., & Irons, J. (2011). Regulation, Employment, and
    the Economy: Fears of job loss are overblown. pp. 21-27 Retrieved 24
    February, 2012, from http://www.epi.org/files/2011/BriefingPaper305.pdf
        \7\ The Pew Environment Group. (2010, October). Industry Opposition
    to Government Regulation. Retrieved 24 February, 2012, from http://
    www.pewenvironment.org/uploadedFiles/PEG/Publications/Fact_Sheet/
    Industry%20Clean%20Energy%20Factsheet.pdf
        \8\ Shapiro, I., & Irons, J. (2011). Regulation, Employment, and
    the Economy: Fears of job loss are overblown. Economic Policy
    Institute. Retrieved 24 February, 2012, from http://www.epi.org/files/
    2011/BriefingPaper305.pdf
    ---------------------------------------------------------------------------
        Indeed, careful examination of one of the most costly rules issued
    during the Obama administration--national standards for mercury,
    arsenic and other toxic air pollutants emitted by power plants, known
    as the ``toxics rule''--shows that it will lead to net job creation.\9\
    ---------------------------------------------------------------------------
        \9\ Bivens, J. (2012). The `Toxics Rule' and Jobs: The job-creation
    potential of the EPA's new rule on toxic power-plant emissions.
    Economic Policy Institute. Retrieved 24 February, 2012, from http://
    www.epi.org/files/2012/ib325.pdf
    ---------------------------------------------------------------------------
        We are, of course, living in a period of shamefully high
    unemployment and underemployment, and it is absolutely correct to focus
    attention on job creation. But excessive regulation is neither the
    cause of the nation's mass unemployment--actually, to a very
    considerable extent, the opposite is the case, as discussed below--nor
    the barrier to job creation. Indeed, not only do business economists
    not cite regulation as a significant problem for business, they
    actually say the regulatory environment is ``good'' for business.\10\
    The overriding reason why business--including particularly small
    business--is not hiring is lack of demand.\11\
    ---------------------------------------------------------------------------
        \10\ National Association for Business Economics. (2011, August).
    Economic Policy Survey. Retrieved 24 February, 2012, from http://
    www.nabe.com/publib/pol/11/08/nabepolicy1108.pdf
        \11\ See the analysis by Treasury Department Assistant Secretary
    for Economic Policy Janice Eberly. Eberly, J. (2011, October 24). Is
    Regulatory Uncertainty a Major Impediment to Job Growth? U.S.
    Department of the Treasury. Retrieved 24 February, 2012, from http://
    www.treasury.gov/connect/blog/Pages/Is-Regulatory-Uncertainty-a-Major-
    Impediment-to-Job-Growth.aspx (``If regulatory uncertainty was a major
    impediment to hiring right now, we would expect to see indications of
    this in one or more of the following: business profits; trends in the
    workforce, capacity utilization, and business investment; differences
    between industries undergoing significant regulatory changes and those
    that are not; differences between the United States and other countries
    that are not undergoing the same changes; or surveys of business owners
    and economists. As discussed in a detailed review of the evidence
    below, none of these data support the claim that regulatory uncertainty
    is holding back hiring.'')
    ---------------------------------------------------------------------------
        While the U.S. Chamber of Commerce and industry trade associations
    regularly complain about regulation and argue that regulation is
    impeding job creation and injuring small business, that is not what
    actual small businesses say. They cite lack of demand and uncertainty
    about when demand will pick up as their primary concerns.
        Small business owners listed ``government regulation'' far down
    their list of concerns in a survey commissioned by the American
    Sustainable Business Council, Main Street Alliance and Small Business
    Majority; the number one and number two identified biggest problems
    facing their businesses are ``uncertainty about the future economy''
    and ``rising costs of doing business,'' both cited more than three
    times more frequently than ``government regulation.'' \12\ In an
    informal survey, McClatchy/Tribune News Service found no business
    owners complaining about regulation.\13\ The Chamber of Commerce's
    survey of small business similarly shows a relatively low ranking of
    concern about regulation.\14\ More than half of small businesses in the
    Chamber rank ``economic uncertainty'' atop their list of obstacles to
    hiring new employees; ``too much regulation'' is ranked fifth.\15\
    Similarly, a survey by the National Federation of Independent
    Businesses found small business owners ranking ``poor sales'' as the
    number one problem they face, outdistancing worries about ``government
    regulation,'' although as the economy has started to improve in recent
    months, small business respondents to the NFIB survey have expressed
    less concern about poor sales and more about regulation.\16\
    ---------------------------------------------------------------------------
        \12\ Small Business Majority. (2011). Opinion Survey: Small
    Business owners Believe National Standards Supporting Energy Innovation
    Will Increase Prosperity for Small Firms. Retrieved
    24 February, 2012, from http://smallbusinessmajority.org/energy/pdfs/
    Clean_Energy_
    Report_092011.pdf
        \13\ Hall, K. G. (2011, 1 September). Regulations, taxes aren't
    killing small business, owners say. McClatchy Newspapers. Retrieved 24
    February, 2012, from http://www.mcclatchydc.com/2011/09/01/122865/
    regulations-taxes-arent-killing.html
        \14\ U.S. Chamber of Commerce. (2011, July). Small Business Outlook
    Survey. Retrieved 24 February, 2012, from http://www.uschamber.com/
    sites/default/files/reports/1107usc_summit%20_
    harrisnteractive.pdf
        \15\ Ibid.
        \16\ Dunkelberg, W., & Wade, H. (2012). NFIB Small Business
    Economic Trends. Retrieved 24 February, 2012 from http://www.nfib.com/
    Portals/0/PDF/sbet/sbet201202.pdf
    ---------------------------------------------------------------------------
        Insufficient demand is also the primary reason for layoffs. In
    extensive survey data collected by the Bureau of Labor Statistics,
    employers cite lack of demand roughly 100 times more frequently as the
    reason for mass layoffs than government regulation! \17\
    ---------------------------------------------------------------------------
        \17\ U.S. Department of Labor, Bureau of Labor Statistics. (2011,
    November). Extended Mass Layoffs in 2010. Table 6. Reason for layoff:
    extended mass layoff events, separations, and initial claimants for
    unemployment insurance, private nonfarm sector, 2008-2010. Retrieved 24
    February, 2012, from http://www.bls.gov/mls/mlsreport1038.pdf
    ---------------------------------------------------------------------------
    Reason for layoff: 2008-2010 \18\
    ---------------------------------------------------------------------------
        \18\ Ibid.

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        Critics of regulation have relied on some muc-touted studies that
    emphasize the costs of regulation, but these studies are fundamentally
    flawed and should not inform policy debates. Several studies cite the
    ``cost'' of regulation, but neglect to identify correlative benefits.
    For example, The Heritage Foundation has issued a series of reports on
    the cost of regulation under the Obama administration. These reports
    simply ignore the benefits of rules, removing all context from the cost
    estimate. To take one example, The Heritage Foundation attributes more
    than a quarter of all costs of regulation issued under the Obama
    administration to fuel economy standards.\19\ Yet Heritage fails to
    mention that the National Highway Traffic Safety Administration--the
    source of Heritage's cost estimate--found those rules would confer
    benefits three times as great as the costs.\20\
    ---------------------------------------------------------------------------
        \19\ Gattuso, J., Katz, D., & Keen, S. (2010). Red Tape Rising:
    Obama's Torrent of New Regulation. The Heritage Foundation. Retrieved
    24 February, 2012, from http://www.heritage.org/research/reports/2010/
    10/red-tape-rising-obamas-torrent-of-new-regulation
        \20\ Public Citizen. (2010). Junk Math: How Public Interest
    Protection Opponents Count Costs and Ignore Benefits. Retrieved 24
    February, 2012, from http://www.citizen.org/documents/
    cafebenefits12222010.pdf
    ---------------------------------------------------------------------------
        Another study that replicates this error of counting costs but not
    benefits is the report issued by Nicole Crain and W. Mark Crain,
    consultants to the Small Business Administration Office of
    Advocacy.\21\ This study is thoroughly discredited, but the study's
    groundless conclusions (that regulation costs the U.S. economy $1.75
    trillion annually, or more than $10,000 per small business employee)
    continues to be cited too frequently in policy debates, often without
    attribution to the original, discredited study. Crain and Crain
    attribute $1.236 trillion in costs to ``economic regulation,'' \22\ a
    figure that is entirely derived from a regression analysis correlating
    ratings on a World Bank ``regulatory quality index''--which is itself
    based on nothing more than survey data from businesses and other
    sources--and national GDP per capita. It is remarkable enough to
    imagine that such a cross-cultural, international regression analysis
    would yield such a robust result that it should meaningfully inform
    U.S. policy; even more so, when it yields a total cost vastly out of
    line with other careful analysis, as well as such unlikely findings as
    a correlation between increased education and reduced economic growth.
    It turns out, as the Economic Policy Institute has shown, that with a
    more complete set of data than used by Crain and Crain--but still using
    the same regression equations--no statistical relationship between
    ``regulatory quality'' and GDP exists.\23\ Crain and Crain also include
    a cost for tax compliance--not typically considered a ``regulatory''
    cost--which they pin at roughly $160 billion. A number of other fatal
    flaws bedevil the discredited study.\24\
    ---------------------------------------------------------------------------
        \21\ Crain, N. V., & Crain, W. M. (2010). The Impact of Regulatory
    Costs on Small Firms. Prepared for Small Business Administration,
    Office of Advocacy. Retrieved 23 February, 2012, from http://
    archive.sba.gov/advo/research/rs371tot.pdf
        \22\ This concept as employed by Crain and Crain includes a range
    of elements that might properly be considered regulation, but which are
    not typically part of the regulatory policy debate. This includes
    matters such as tariffs, antitrust policy, complexity of the tax
    system, and ease of starting a new business. Ibid.
        \23\ Irons, J., & Green, A. (2011, 19 July). Flaws Call For
    Rejecting Crain and Crain Model. Economic Policy Institute. Retrieved
    24 February, 2012, from http://www.epi.org/page/-/EPI_IssueBrief308.pdf
        \24\ Eisenbrey, R., & Shapiro, I. (2011, August). Deconstructing
    Crain and Crain. Economic Policy Institute. Retrieved 24 February,
    2012, from http://web.epi-data.org/temp727/IssueBrief312-2.pdf; Irons,
    J. and Green, A., Flaws Call for Rejecting Crain and Crain Model.;
    Shapiro, S. A., & Ruttenberg, R. (2011, February). The Crain and Crain
    Report on Regulatory Costs. Center for Progressive Reform. Retrieved 24
    February, 2012, from http://www.progressivereform.org/articles/
    SBA_Regulatory_Costs_Analysis_1103.pdf ; Copeland, C. W. (2011, April
    6). Analysis of an Estimate of the Total Costs of Federal Regulations.
    Congressional Research Service. Retrieved 24 February, 2012, from
    http://www.progressivereform.org/articles/CRS_Crain_
    and_Crain.pdf
    ---------------------------------------------------------------------------
        A more robust system for assessing the impact of regulation on the
    economy--though significantly imprecise and heavily biased against the
    benefits of regulation--is not to conjure up a theory to which facts
    are made to conform, or to invent regression analyses that rely on poor
    data and far too few inputs and that demonstrate regulation to have an
    overdetermining impact on the overall economy, but to look at the
    actual impact of actual regulations. Although the federal government
    issues thousands of regulations every year, most of these are very
    limited in impact, and the universe of economically significant
    regulations--those that would be affected by the Regulatory Freeze
    act--is relatively small, identifiable and analyzable. Every year, the
    Office of Management and Budget analyzes the costs and benefits of
    rules with significant economic benefit. The benefits massively exceed
    costs.
        The principle finding of OMB's 2011 Report to Congress on the
    Benefits and Costs of Federal Regulation is:

            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. These ranges reflect
            uncertainty in the benefits and costs of each rule at the time
            that it was evaluated.\25\
    ---------------------------------------------------------------------------
        \25\ Office of Management and Budget, Office of Information and
    Regulatory Affairs. (2011). 2011 Report to Congress on the Benefits and
    Costs of Federal Regulations on Unfunded Mandates on State, Local, and
    Tribal Entities.

        In other words, even by OMB's most conservative accounting, the
    benefits of major regulations over the last decade exceeded costs by a
    factor of more than two-to-one. And benefits may exceed costs by a
    factor of 14.
        These results are consistent year-to-year:
    Total Annual Benefits and Costs of Major Rules by Fiscal Year (billions
            of 2001 dollars) \26\
    ---------------------------------------------------------------------------
        \26\ Office of Management and Budget, Office of Information and
    Regulatory Affairs. (2011). 2011 Report to Congress on the Benefits and
    Costs of Federal Regulations an Unfunded Mandates on State, Local, and
    Tribal Entities. Table 1-3, p. 19-20. Retrieved 23 February, 2012, from
    http://www.whitehouse.gov/sites/default/files/omb/inforeg/2011_cb/
    2011_cba_report.pdf

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The reason for the consistency is that regulators pay a great deal
    of concern to comparative costs and benefits (too great a concern, in
    our view, given the built-in bias of cost-benefit analysis against
    regulatory initiative \27\). Very few major rules are adopted where
    projected costs exceed projected benefits, and those cases typically
    involve direct Congressional mandates.
    ---------------------------------------------------------------------------
        \27\ See, e.g., Shapiro, S. et al., CPR Comments on Draft 2010
    Report to Congress on the Benefits and Costs of Federal Regulations 16-
    19 (App. A, Pt. C.) (2010), Retrieved 24 February, 2012, from http://
    www.progressivereform.org/articles/2010_CPR_Comments_OMB_Report.pdf;
    Steinzor, R. et al., CPR Comments on Draft 2009 Report to Congress on
    the Benefits and Costs of Federal Regulations 16-19 (App. A, Pt. C.)
    (2009), Retrieved 24 February, 2012, from http://
    www.progressivereform.org/articles/2009_CPR_Comments_OMB_Report.pdf;
    Sinden, A. & Goodwin, J., CPR Comments on Draft 2008 Report to Congress
    on the Benefits and Costs of
    Federal Regulations 5-8 (2008), Retrieved 24 February, 2012, from
    http://www.progressivereform.org/articles/2008_Comments_OMB_Report.pdf.
    For all of the comments on OMB's annual reports to Congress on the
    benefits and cost of federal regulation produced by CPR Member Scholars
    and staff, see Ctr. for Progressive Reform, OMB Reports on the Costs
    and Benefits of Regulation, Retrieved 24 February, 2012, from http://
    www.progressivereform.org/OMBCongress.cfm
    ---------------------------------------------------------------------------
        A final point on this topic: Missing from much of the literature on
    regulation and jobs are the economically systemic, positive impacts of
    regulation. Proper regulation can avert catastrophic damage not
    typically captured in prospective cost-benefit analyses, as the BP oil
    disaster shows.\28\ Proper regulation is also essential to enable
    markets to function efficiently and fairly. As the 2008 Wall Street
    crash shows, improperly and insufficiently regulated financial markets
    will fail with devastating consequences for job preservation and the
    real economy. Regulation also has an important role in promoting
    innovation and technological dynamism. Environmental and economic
    realities necessitate the development and deployment of transformative
    clean energy technologies. Markets alone do not offer sufficient
    incentive and reward for the timely deployment of such technologies,
    which promise both great economic savings and very significant job
    creation.\29\
    ---------------------------------------------------------------------------
        \28\ In addition to the loss of human life with the explosion of
    the Deepwater Horizon platform, the oil disaster imposed billions in
    economic damage. BP has paid more than $6 billion in compensation under
    the Gulf Coast Claims Facility it established. Many other claims are
    pending. Gulf Coast Claims Facility. (2012). Overall Program
    Statistics: Status Report as of February 23, 2012. Retrieved 24
    February, 2012, from http://www.gulfcoastclaimsfacility.com/
    GCCF_Overall_Status_Report.pdf Proper regulation could have averted the
    disaster.
        \29\ Pollin, R., Wicks-Lin, J., & Garret-Peltier, H. (2009, June).
    Green Prosperity: How Clean-Energy Policies Can Fight Poverty and Raise
    Living Standards in the United States. Political Economy Research
    Institute, University of Massachusetts Amherst. Retrieved 24 February,
    2012, from http://www.peri.umass.edu/fileadmin/pdf/
    other_publication_types/green_economics/green_prosperity/
    Green_Prosperity.pdf
    ---------------------------------------------------------------------------
             ii. regulatory failures helped create the jobs crisis
        The present jobs crisis has particular and identifiable causes: the
    collapse of the housing bubble and the ensuing financial crash. The
    crisis also has identifiable culprits: The big banks and Wall Street,
    which fueled the bubble through practices ranging from issuing
    predatory mortgage loans to creation of esoteric financial instruments
    that claimed to convert low-quality loans into top-notch investment
    opportunities. These practices were enabled not by too much regulation,
    but by too little. To a very considerable extent, the current jobs
    crisis should be understood as resulting from regulatory failure:
    deregulation, underregulation and underenforcement. The job loss
    stemming from this regulatory failure--the 8 million jobs shed
    following the Wall Street crash--vastly exceed any negative job impacts
    plausibly linked to regulation.
        Recognizing the regulatory failure underpinning the current jobs
    crisis suggests not only that a regulatory freeze will not contribute
    to or enable job growth, but that it risks imperiling our economy. An
    unregulated or under-regulated Wall Street will strongly tend to
    another crash, presenting the prospect of another major recession. The
    Dodd-Frank Wall Street Reform and Consumer Protection Act, to be sure,
    was an inadequate response to the crash--most notably in its failure to
    more aggressively confront the problem of too-big-to-fail financial
    institutions--but blocking implementation of Dodd-Frank or adoption of
    other financial regulations would be an invitation for the financial
    sector to engineer more mass rip-offs of consumers and make our economy
    more vulnerable to another job-devastating crash.
        There is by now a very considerable literature, and a very
    extensive Congressional hearing record, that documents in granular
    detail the ways in which regulatory failure led to financial crash and
    the onset of the Great Recession. ``Widespread failures in financial
    regulation and supervision proved devastating to the stability of the
    nation's financial markets,'' concluded the Financial Crisis Inquiry
    Commission. ``The sentries were not at their posts, in no small part
    due to the widely accepted faith in the self-correcting nature of the
    markets and the ability of financial institutions to effectively police
    themselves. More than 30 years of deregulation and reliance on self-
    regulation by financial institutions, championed by former Federal
    Reserve Chairman Alan Greenspan and others, supported by successive
    administrations and Congresses, and actively pushed by the powerful
    financial industry at every turn, had stripped away key safeguards,
    which could have helped avoid catastrophe. This approach had opened up
    gaps in oversight of critical areas with trillions of dollars at risk,
    such as the shadow banking system and over-the-counter derivatives
    markets. In addition, the government permitted financial firms to pick
    their preferred regulators in what became a race to the weakest
    supervisor.'' \30\
    ---------------------------------------------------------------------------
        \30\ The Financial Crisis Inquiry Commission. (2011, January).
    Final Report of the National Commission on the Causes of the Financial
    and Economic Crisis in the United States. Retrieved 24 February, 2012,
    from http://www.gpoaccess.gov/fcic/fcic.pdf, p. xviii
    ---------------------------------------------------------------------------
        Here I highlight just a few of the regulatory failures that
    contributed to the financial crash, by way of illuminating the need for
    a robust financial regulatory system that prevents excessive
    concentration and interconnection among firms, protects consumers,
    promotes transparency and facilitates systemic stability.
        Repeal of the Glass-Steagall Act. The Financial Services
    Modernization Act of 1999 formally repealed the Glass-Steagall Act of
    1933 (also known as the Banking Act of 1933) and related laws, which
    prohibited commercial banks from offering investment banking and
    insurance services. The 1999 repeal of Glass-Steagall helped create the
    conditions in which banks created and invested in creative financial
    instruments such as mortgage-backed securities and credit default
    swaps, investment gambles that rocked the financial markets in 2008.
    More generally, the Depression-era conflicts and consequences that
    Glass-Steagall was intended to prevent re-emerged once the Act was
    repealed. The once staid commercial banking sector quickly evolved to
    emulate the risk-taking attitude and practices of investment banks,
    with disastrous results. ``The most important consequence of the repeal
    of Glass-Steagall was indirect--it lay in the way repeal changed an
    entire culture,'' notes economist Joseph Stiglitz. ``When repeal of
    Glass-Steagall brought investment and commercial banks together, the
    investment-bank culture came out on top. There was a demand for the
    kind of high returns that could be obtained only through high leverage
    and big risk taking.'' \31\
    ---------------------------------------------------------------------------
        \31\ Stiglitz, J. (2009). Capitalist fools. Vanity Fair, 51(1).
    ---------------------------------------------------------------------------
        Unregulated Financial Derivatives. The 2008 crash proved Warren
    Buffet's warning that financial derivatives represent ``weapons of mass
    financial destruction'' to be prescient.\32\ Financial derivatives
    amplified the financial crisis far beyond the unavoidable troubles
    connected to the popping of the housing bubble. AIG made aggressive
    bets on credit default swaps (CDSs) that went bad with the housing
    bust, and led to a taxpayer-financed rescue of more than $130 billion.
    AIG was able to put itself at such risk because its CDS business was
    effectively subject to no governmental regulation or even oversight.
    That was because first, high officials in the Clinton administration
    and the Federal Reserve, including SEC Chair Arthur Levitt, Treasury
    Secretary Robert Rubin, Deputy Treasury Secretary Lawrence Summers and
    Federal Reserve Chair Alan Greenspan, blocked the Commodity Futures
    Trading Commission (CFTC) from regulating financial derivatives;\33\
    and second, because Congress and President Clinton codified regulatory
    inaction with passage of the Commodity Futures Modernization Act, which
    enacted a statutory prohibition on CFTC regulation of financial
    derivatives.
    ---------------------------------------------------------------------------
        \32\ Buffett, W. (2003). Report to Shareholders, February 21, 2003.
    Berkshire Hathaway. Retrieved 24 February, 2012, from http://
    www.berkshirehathaway.com/letters/2002pdf.pdf
        \33\ After the collapse of Long-Term Capital Management, Born
    issued a new call to regulate financial derivatives. ``This episode
    should serve as a wake-up call about the unknown risks that the over-
    the-counter derivatives market may pose to the U.S. economy and to
    financial stability around the world,'' Born told the House Banking
    Committee two days later. ``It has highlighted an immediate and
    pressing need to address whether there are unacceptable regulatory gaps
    relating to hedge funds and other large OTC derivatives market
    participants.'' But what should have been a moment of vindication for
    Born was swept aside by her adversaries, and Congress enacted a six-
    month moratorium on any CFTC action regarding derivatives or the swaps
    market. In May 1999, Born resigned in frustration. Born, B. (1998).
    Testimony of Brooksley Born, Chairperson, Commodity Futures Trading
    Commission Concerning Long-Term Capital Management Before the U.S.
    House of Representatives Committee on Banking and Financial Services.
    Retrieved 23 February, 2012, from http://www.cftc.gov/opa/speeches/
    opaborn-35.htm.
    ---------------------------------------------------------------------------
        The SEC's Voluntary Regulation Regime for Investment Banks. In
    1975, the SEC's trading and markets division promulgated a rule
    requiring investment banks to maintain a debt-to-net capital ratio of
    less than 12 to 1. It forbade trading in securities if the ratio
    reached or exceeded 12 to 1, so most companies maintained a ratio far
    below it. In 2004, however, the SEC succumbed to a push from the big
    investment banks--led by Goldman Sachs, and its then-chair, Henry
    Paulson--and authorized investment banks to develop their own net
    capital requirements in accordance with standards published by the
    Basel Committee on Banking Supervision. This essentially involved
    complicated mathematical formulas that imposed no real limits, and was
    voluntarily administered. With this new freedom, investment banks
    pushed borrowing ratios to as high as 40 to 1, as in the case of
    Merrill Lynch. This super-leverage not only made the investment banks
    more vulnerable when the housing bubble popped, it enabled the banks to
    create a more tangled mess of derivative investments--so that their
    individual failures, or the potential of failure, became systemic
    crises. On September 26, 2008, as the crisis became a financial
    meltdown of epic proportions, SEC Chair Christopher Cox, who spent his
    entire public career as a deregulator, conceded ``the last six months
    have made it abundantly clear that voluntary regulation does not
    work.'' \34\
    ---------------------------------------------------------------------------
        \34\ Faoila, A., Nakashima, E., & Drew, J. (2008, October 15). What
    Went Wrong. The Washington Post. Retrieved 24 February 2012, from
    www.washingtonpost.com/wp-dyn/content/story/2008/10/14/
    ST2008101403344.html
    ---------------------------------------------------------------------------
        Failure to Prevent Predatory Lending. Preventing predatory lending
    practices would not have prevented the housing bubble and the
    subsequent financial meltdown, but it would have taken some air out of
    the bubble and softened the economic crisis--and it would have saved
    millions of families and communities across the country from economic
    ruin. Predatory lending was easily avoidable through sound regulation,
    but regulators failed to act. On the one hand, regulators failed to use
    then-existing authority to crack down on abusive lending practices. The
    Federal Reserve took three formal actions against subprime lenders from
    2002 to 2007.\35\ The Office of Comptroller of the Currency, with
    authority over almost 1,800 banks, took three consumer-protection
    enforcement actions from 2004 to 2006.\36\ On the other hand, federal
    regulators refused to issue appropriate regulatory rules to stem
    predatory lending, despite persistent advocacy by consumer groups. By
    way of contrast, action at the state level showed that predatory
    lending rules could significantly limit abusive loans.\37\
    ---------------------------------------------------------------------------
        \35\ Tyson, J., Torres, C., & Vekshin, A. (2007, March 22). Fed
    Says It Could Have Acted Sooner on Subprime Rout. Bloomberg. Retrieved
    24 February, 2012, from http://www.bloomberg.com/apps/
    news?pid=newsarchive&sid=a1.KbcMbvIiA&refer=home
        \36\ Torres, C., & Vekshin, A. (2007, March 14). Fed, OCC Publicly
    Chastised Few Lenders During boom. Bloomberg. Retrieved 24 February,
    2012, from http://www.bloomberg.com/apps/
    news?pid=newsarchive&sid=a6WTZifUUH7g&refer=us
        \37\ Li, W., & Ernst, K. (2006). The Best Value in the Subprime
    Market: State Predatory Lending Reforms. Center for Responsible
    Lending. Retrieved 24 February, 2012 from http://
    www.responsiblelending.org/mortgage-lending/research-analysis/
    StateEffectsToolkit.pdf
    ---------------------------------------------------------------------------
        Poorly Regulated Credit Ratings Firms. The credit rating firms
    enabled pension funds and other institutional investors to enter the
    securitized asset game, by attaching high ratings to securities that
    actually were high risk--as subsequent events revealed. The credit
    ratings firms have a bias toward offering favorable ratings to new
    instruments because of their complex relationships with issuers,\38\
    and their desire to maintain and obtain other business dealings with
    issuers. This institutional failure and conflict of interest might and
    should have been forestalled by the SEC, but the Credit Rating Agencies
    Reform Act of 2006 gave the SEC insufficient oversight authority. In
    fact, under the Act, the SEC was required to give an approval rating to
    credit ratings agencies if they adhered to their own standards--even if
    the SEC knew those standards to be flawed.
    ---------------------------------------------------------------------------
        \38\ The CEO of Moody's reported in a confidential presentation
    that his company is ``continually `pitched' by bankers'' for the
    purpose of receiving high credit ratings and that sometimes ``we `drink
    the Kool-Aid.' '' A former managing director of credit policy at
    Moody's testified before Congress that, ``Originators of structured
    securities [e.g., banks] typically chose the agency with the lowest
    standards,'' allowing banks to engage in ``rating shopping'' until a
    desired credit rating was achieved. The agencies made millions on
    mortgage-backed securities ratings and, as one member of Congress said,
    ``sold their independence to the highest bidder.'' Banks paid large
    sums to the ratings companies for advice on how to achieve the maximum,
    highest quality rating. ``Let's hope we are all wealthy and retired by
    the time this house of cards falters,'' a Standard & Poor's employee
    candidly revealed in an internal email obtained by congressional
    investigators.
    ---------------------------------------------------------------------------
      Other evidence shows that the firms adjusted ratings out of fear of
    losing customers. For example, an internal email between senior
    business managers at one of the three ratings companies calls for a
    ``meeting'' to ``discuss adjusting criteria for rating CDOs
    [collateralized debt obligations] of real estate assets this week
    because of the ongoing threat of losing deals.'' In another email,
    following a discussion of a competitor's share of the ratings market,
    an employee of the same firm states that aspects of the firm's ratings
    methodology would have to be revisited in order to recapture market
    share from the competing firm.
      See, Weissman, R., & Donahue, J. (2009, March). Sold Out: How Wall
    Street and Washington Betrayed America. Essential Information and
    Consumer Education Foundation. Retrieved 24 February, 2012, from http:/
    /wallstreetwatch.org/reports/sold_out.pdf
        For purposes of evaluating the Regulatory Freeze and Jobs Act, the
    details of the regulatory failures that led to financial crash and
    Great Recession are less important than two overarching points: first,
    the cause of the current jobs crisis was too little regulation and too
    little enforcement, not too much regulation; and second, legislation
    that impedes financial regulators from issuing rules to control an
    overly complex, centralized and reckless financial sector risks
    enabling another financial meltdown with the attendant devastating jobs
    impact.
     iii. regulatory protections make our country stronger, safer and more
                                      just
        Health, safety, environmental, financial and other regulatory
    protections make our country stronger, safer and more just. The
    Regulatory Freeze and Jobs Act would impede our ability to strengthen
    our nation, adjust to changing problems and technologies, act on new
    evidence of harms and threats to public and environmental well-being,
    and leave our country more vulnerable to economic shocks like the Great
    Recession.
        As discussed above, one underlying premise of the Act that we
    believe mistaken is that regulation impedes job creation. Another
    premise that we believe deeply misplaced is that the country can afford
    a lengthy regulatory moratorium.
        Rhetorical debates and cost-benefit abstractions can obscure the
    dramatic gains our country has made due to regulation. Regulation has:

              Made our food safer.\39\
    ---------------------------------------------------------------------------
        \39\ American Public Health Association. (2010, November 30). APHA
    Commends Senate for Passing Strong Food Safety Legislation. Retrieved
    24 February, 2012, from http://www.makeourfoodsafe.org/tools/assets/
    files/APHA_Senate-Passage-Food-Act_FINAL2.pdf

              Saved tens of thousands of lives by making our cars
            safer.\40\
    ---------------------------------------------------------------------------
        \40\ NHTSA's vehicle safety standards have reduced the traffic
    fatality rate from nearly 3.5 fatalities per 100 million vehicles
    traveled in 1980 to 1.41 fatalities per 100 million vehicles traveled
    in 2006. Steinzor, R., & Shapiro, S. (2010). The People's Agents and
    the Battle to Protect the American Public: Special Interests,
    Government, and Threats to Health, Safety, and the Environment:
    University of Chicago Press.

              Made it safer to breathe, saving hundreds of
            thousands of lives annually.\41\
    ---------------------------------------------------------------------------
        \41\ Clean Air Act rules saved 164,300 adult lives in 2010. In
    February 2011, EPA estimated that by 2020 they will save 237,000 lives
    annually. EPA air pollution controls saved 13 million days of lost work
    and 3.2 million days of lost school in 2010, and EPA estimates that
    they will save 17 million work-loss days and 5.4 million school-loss
    days annually by 2020. See U.S. Environmental Protection Agency, Office
    of Air and Radiation. (2011, March). The Benefits and Costs of the
    Clean Air and Radiation Act from 1990 to 2020. Retrieved 23 February,
    2012, from http://www.epa.gov/oar/sect812/feb11/fullreport.pdf.

              Protected children's brain development by phasing out
            leaded gasoline and dramatically reducing average blood
            levels.\42\
    ---------------------------------------------------------------------------
        \42\ EPA regulations phasing out lead in gasoline helped reduce the
    average blood lead level in U.S. children ages 1 to 5. During the years
    1976 to 1980, 88 percent of all U.S. children had blood levels in
    excess of 10mg/dL; during the years 1991 to 1994, only 4.4 percent of
    all U.S. children had blood levels in excess of that dangerous amount.
    Office of Management and Budget, Office of Information and Regulatory
    Affairs. (2011). 2011 Report to Congress on the Benefits and Costs of
    Federal Regulations an Unfunded Mandates on State, Local, and Tribal
    Entities. Retrieved 23 February, 2012, from http://www.whitehouse.gov/
    sites/default/files/omb/inforeg/2011_cb/2011_cba_report.pdf

              Empowered disabled persons by giving them improved
            access to public facilities and workplace opportunities,
            through implementation of the Americans with Disabilities
            Act.\43\
    ---------------------------------------------------------------------------
        \43\ National Council on Disability. (2007). The Impact of the
    Americans with Disabilities Act. Retrieved 24 February, 2012, from
    http://www.ncd.gov/publications/2007/07262007

              Guaranteed a minimum wage, ended child labor and
            established limits on the length of the work week.\44\
    ---------------------------------------------------------------------------
        \44\ There are important exceptions to the child labor prohibition;
    significant enforcement failures regarding the minimum wage, child
    labor and length of work week (before time and a half compensation is
    mandated). But the quality of improvement in American lives has
    nonetheless been dramatic. Lardner, J. (2011). Good Rules: 10 Stories
    of Successful Regulation. Demos. Retrieved 24 February, 2012, from
    http://www.demos.org/sites/default/files/publications/
    goodrules_1_11.pdf

              Saved the lives of thousands of workers every
            year.\45\
    ---------------------------------------------------------------------------
        \45\ Deaths on the job have declined from more than 14,000 per year
    in 1970, when the Occupational Safety and Health Administration was
    created to under 4,500 at present. See AFL-CIO Safety and Health
    Department. (2011, April). Death on the Job: The Toll of Neglect.
    Retrieved 23 February, 2012, from http://www.aflcio.org/issues/safety/
    memorial/upload/dotj_2011.pdf Mining deaths fell by half shortly after
    creation of the Mine Safety and Health Administration. Weeks, J. L., &
    Fox, M. (1983). Fatality rates and regulatory policies in bituminous
    coal mining, United States, 1959-1981. American journal of public
    health, 73(11), 1278.

              Saved consumers and taxpayers billions of dollars by
            facilitating generic competition for medicines.\46\
    ---------------------------------------------------------------------------
        \46\ Through regulations facilitating effective implementation of
    the Drug Price Competition and Patent Term Restoration Act of 1984
    (``Hatch-Waxman''), including by limiting the ability of brand-name
    pharmaceutical companies to extend and maintain government-granted
    monopolies. Troy, D. E. (2003). Drug Price Competition and Patent Term
    Restoration Act of 1984 (Hatch-Waxman Amendments). Statement before the
    Senate Committee on the Judiciary. Retrieved 23 February, 2012, from
    http://www.fda.gov/newsevents/testimony/ucm115033.htm

              Protected the elderly and vulnerable consumers from a
            wide array of unfair and deceptive advertising techniques.\47\
    ---------------------------------------------------------------------------
        \47\ See 16 CFR 410-460.

              For half a century in the mid-twentieth century, and
            until the onset of financial deregulation, provided financial
            stability and a right-sized financial sector, helping create
            the conditions for robust economic growth and shared
            prosperity.\48\
    ---------------------------------------------------------------------------
        \48\ See Stiglitz, J. E. (2010). Freefall: America, free markets,
    and the sinking of the world economy: WW Norton & Co Inc.; Kuttner, R.
    (2008). The Squandering of America: how the failure of our politics
    undermines our prosperity: Vintage.

        These are not just the achievements of a bygone era. Regulation
    continues to improve the quality of life for every American, every day.
    Ongoing and emerging problems and a rapidly changing economy require
    the issuance of new rules to ensure that America is strong and safe,
    healthy and wealthy. Consider a small sampling of rules recently
    issued, pending, or that are or should be under consideration, but
    which would likely be (or would have been) blocked for a half a decade
    ---------------------------------------------------------------------------
    or more by the Regulatory Freeze and Jobs Act:

              Fuel efficiency standards. Pursuant to the Energy
            Policy and Conservation Act, the Energy Independence and
            Security Act and the Clean Air Act, the National Highway Safety
            and Transportation Agency and the Environmental Protection
            Agency have proposed new automobile and vehicular fuel
            efficiency standards. The new rules, on an average industry
            fleet-wide basis for cars and trucks combined, establish
            standards of 40.1 miles per gallon (mpg) in model year 2021,
            and 49.6 mpg in model year 2025. The agencies estimate that
            fuel savings will far outweigh higher vehicle costs, and that
            the net benefits to society from 2017-2025 will be in the range
            of $311 billion to $421 billion. The auto industry was
            integrally involved in the development of these proposed
            standards, and supports their promulgation. The Regulatory
            Freeze moratorium would prevent the adoption of the new fuel
            efficiency standards. While industry might adopt some fuel
            efficiency improvements in the absence of regulation, such a
            supposition is speculative and not supported by recent decades'
            history, and it's a virtual certainty that overall fuel
            efficiency performance will be substantially worse in the
            absence of new regulation. The costs would be high not just to
            the environment and human health, but to consumer pocketbooks.
            Our economy will be more efficient and stronger with the rules
            in place.

              Food safety rules. In 2010, with support from both
            industry and consumer groups, and in response to a series of
            food contamination incidents that rocked the nation, Congress
            passed the Food Safety Modernization Act. The Act should
            improve the safety of eggs, dairy, seafood, fruits, vegetable
            and many processed and imported foods, but its effective
            implementation depends on rulemaking. FDA has proposed a series
            of implementing rules establishing food safety programs and
            standards. These are delayed at OMB--a problem in its own
            right--but would be put on hold for likely half a decade under
            the Regulatory Freeze legislation. As recent outbreaks of
            listeria in cantaloupe and other products evidence, such a
            delay will likely cost lives. Not so incidentally, it will also
            have major harmful economic impact on the agriculture and food
            industries and job creation and preservation in those
            industries.

              Energy efficiency standards. Pursuant to the Energy
            Security and Independence Act, the Department of Energy
            currently has proposed energy efficiency standards for a range
            of products, including Department of Energy energy efficiency
            standards for a range of products, including Metal Halide Lamp
            Fixtures, Commercial Refrigeration Equipment, and Battery
            Chargers and External Power Supplies, Walk-In Coolers and Walk-
            In Freezers, Residential Clothes Washers.\49\ Under the
            Regulatory Freeze act, adoption of all of these standards would
            be delayed for a half decade. Such a delay would injure the
            U.S. economy and undermine job creation. The Department of
            Energy estimates the net savings from implementation of the
            Energy Security and Independence Act to be $48 billion--$105
            billion (in 2007 dollars).\50\ Meanwhile, the Federal Trade
            Commission is undertaking a labeling rulemaking on energy
            efficiency, to protect consumers from misleading and deceptive
            claims about energy savings from product purchases.\51\ This
            would likely be caught in the Regulatory Freeze act net, with
            consumers significantly harmed and no plausible beneficial
            impact on job creation or maintenance.
    ---------------------------------------------------------------------------
        \49\ List of Regulatory Actions Currently Under Review. Available
    at: http://www.reginfo.gov/public/jsp/EO/eoDashboard.jsp
        \50\ U.S. Department of Energy. (2007). Energy Independence and
    Security Act of 2007 Prescribed Standards. Retrieved 23 February, 2012,
    from http://www1.eere.energy.gov/buildings/appliance_standards/m/
    eisa2007.html
        \51\ Federal Trade Commission. (28 November 2011). Rule Concerning
    Disclosures Regarding Energy Consumption and Water Use of Certain Home
    Appliances and Other Products Required Under the Energy Policy and
    Conservation Act (``Appliance Labeling Rule''). Federal Register. Vol.
    76, No. 228. Retrieved 23 February, 2012, from http://ftc.gov/os/
    fedreg/2011/11/111118appliancelabelingfrn.pdf

              Rules to avert workplace hazards. By way of example,
            consider the case of beryllium, a toxic substance to which
            workers in the electronics, nuclear, and metalwork sector are
            exposed. The current OSHA beryllium standard, based on science
            from the 1950s, allows workers to be exposed at levels that are
            ten times higher than those allowed by Department of Energy for
            nuclear power plant workers. Public Citizen petitioned OSHA to
            update the standard in 2001. In response, the agency began a
            rulemaking in November 2002. It is a testament to major
            problems in the regulatory process that OSHA has still not
            issued appropriate rules. OSHA's estimates show that, if it
            were enacted nine years ago, the standard would have prevented
            4,194 cases of chronic beryllium disease (a potentially fatal
            respiratory ailment), 5,413 cases of beryllium sensitization (a
            condition that often leads to chronic beryllium disease) and
            216 cases of lung cancer.\52\ There is indeed very good reason
            under the current regime to be skeptical that this rule will be
            issued in the next five years, even as failure to act causes
            the loss of hundreds of lives among exposed workers and the
            long-existing health evidence should compel action. Under the
            Regulatory Freeze act, however, it is a certainty that the rule
            would not be issued; workers would needlessly be exposed to
            dangerous beryllium levels, and many would die or become
            seriously sick as a result. A number of other needed and
            pending OSHA rules would meet the same fate, with similar
            deadly consequences for workers.
    ---------------------------------------------------------------------------
        \52\ U.S. Occupational Safety and Health Administration. (2007).
    Preliminary Initial Regulatory Flexibility Analysis of the Preliminary
    Draft Standard for Occupational Exposure to Beryllium.

              Controls on Wall Street. As discussed above, the 2008
            financial crash was a direct result of regulatory failures.
            These failures including inadequate regulation of mortgages and
            other consumer financial products, on the one hand, and
            esoteric financial products and the markets on which they
            trade, on the other. Another critical failure was permitting
            the rise of too-big-to-fail financial institutions, traceable
            both to the failure to enforce existing rules and policies, and
            the repeal and nonissuance of important rules. Few people are
            entirely satisfied with the Dodd-Frank legislation--Public
            Citizen is highly critical of a number of important omissions--
            but the Act does include an array of very important reforms
            that will make our financial system fairer and more stable--if
            properly implemented through robust rulemaking. To take three
    ---------------------------------------------------------------------------
            examples:

                The Volcker Rule: While Dodd-Frank failed to
            revitalize the Glass-Steagall separation between commercial and
            investment banking, or to break up the too-big-to-fail
            financial institutions, it does include the consequential
            Volcker Rule. The Volcker Rule aims to prohibit institutions
            regulated under the Bank Holding Company Act (now including the
            largest remaining traditional investment banks, Goldman Sachs
            and Morgan Stanley) from engaging in proprietary trading--the
            kind of activity that exposes taxpayer-protected depository
            institutions to excessive risk, creates institutional
            complexity and conflicts of interest, and heightens the
            fragility and riskiness of both individual institutions and the
            overall financial system. The Volcker Rule is perhaps Dodd-
            Frank's most important provision to contain the size of too-
            big-to-fail institutions and reduce systemic complexity and
            risk. The provision could not be implemented under the
            Regulatory Freeze act.

                Consumer protections: Dodd-Frank created the
            Consumer Financial Protection Bureau, charging the agency with
            the single mission of protecting consumers and empowering it to
            issue new consumer protection rules. Given the very
            considerable extent to which the financial industry has
            constructed a business model around trickery and unjust fees,
            there are many potential rules that it may issue. These may
            concern matters including: requiring mortgage lenders to
            consider borrowers' ability to pay; prohibiting banks from
            charging excessive overdraft fees or tricking consumers into
            opting in to unreasonable overdraft fee harvesting schemes;
            eliminating forced arbitration provisions in consumer financial
            contracts; banning unfair practices in the payday loan
            industry; prohibiting kickbacks to auto dealers who steer
            buyers into overpriced loans; stopping student loan companies
            from tricking students into taking high-priced private loans
            before they exhaust cheaper federal loans.\53\ Under the
            Regulatory Freeze act, the CFPB would be shackled from
            advancing these needed consumer protections.
    ---------------------------------------------------------------------------
        \53\ National Consumer Law Center. (2010). An Agenda for the
    Consumer Financial Protection Bureau: Challenges for a New Era in
    Consumer Protection. Retrieved 24 February, 2012, from http://
    www.nclc.org/images/pdf/regulatory_reform/pr-cfpb-agenda.pdf

                Position limits in commodities markets: Consumers
            are rightfully angry about rising prices for gasoline. There
            are many factors explaining the rise in price, and some of them
            cannot be addressed by governmental action. But some can.
            Speculation on the oil commodity markets is likely responsible
            for 20 percent or more of the price of oil. Even Goldman Sachs
            suggests that legal speculation may be adding 65-70 cents to
            the price of a gallon of gasoline. Speculators, in other words,
            are imposing a private tax on us, with the proceeds of this
            Wall Street-imposed tax going to Wall Street interests, giant
            oil companies and foreign oil interests. Dodd-Frank instructed
            the Commodity Futures Trading Commission to impose position
            limits on speculators, limiting the portion of the market that
            could be controlled by individual traders. The CFTC,
            unfortunately, has adopted an inadequate rule; and Wall Street
            interests have sued the agency to block implementation even of
            this inadequate rule. Under the Regulatory Freeze act, however,
            we would be forced to accept the Wall Street-imposed private
            tax for 5 years, at very significant cost to consumers, the
    ---------------------------------------------------------------------------
            overall economy and job creation.

              Generic competition for biotech medicines. An
            overlooked component of the Affordable Care Act was the
            creation of a process for the Food and Drug Administration to
            grant regulatory approval for generic biologic pharmaceutical
            products--essentially generic versions of biotech medicines.
            Because the molecular composition of biologic drugs is more
            complicated than traditional medicines, FDA had adopted the
            position that, with some exceptions, it could not grant
            regulatory approval for biologics under its previously existing
            authority. In an important provision of the Affordable Care
            Act--supported by the biotech industry--FDA was explicitly
            granted such authority. The provision wrongly grants extended
            monopolies to brand-name biologic manufacturers, but belated
            generic competition is better than none. Implementation of the
            new regulatory pathway for biogenerics, however, depends on
            issuance of rules by the FDA. Under the Regulatory Freeze act,
            FDA would likely be prevented from such action for a half a
            decade, pointlessly and needlessly costing consumers and
            taxpayers billions of dollars.

              Crib safety. Pursuant to the Consumer Product Safety
            Improvement Act of 2008, the Consumer Product Safety Commission
            (CPSC) finalized updated safety standards for cribs that halted
            the manufacture and sale of traditional drop-side cribs,
            required stronger mattress supports, more durable hardware and
            regular safety testing. These new crib safety standards mean
            ``that parents, grandparents, and caregivers can now shop for
            cribs with more confidence--confidence that the rules put the
            safety of infants above all else.'' \54\ Under the Regulatory
            Freeze act, the CPSC would have been prevented from taking such
            action for half a decade, with the result that some families
            would have been experienced the preventable tragedy of a lost
            or seriously injured baby.\55\
    ---------------------------------------------------------------------------
        \54\ Consumer Federation of America. (2011, June 28). Senators,
    CPSC, Consumer Advocates Applaud Strong Crib Safety Standards to
    Prevent Infant Deaths and Injuries. Retrieved 24 February, 2012, from
    http://www.consumerfed.org/pdfs/crib-standards-press-release-6-28-
    11.pdf
        \55\ U.S. Product Safety Commission. (2011, June 27). Statement of
    Commissioner Nancy Nord On The Vote To Extend The Compliance Date For
    The New Crib Standard. Retrieved 24 February, 2012, from http://
    www.cpsc.gov/pr/nord06272011.pdf The crib standard is only the second
    major rule issued by this agency in its entire history. (A major rule
    has an impact on the economy of over $100 million. The only other CPSC
    major rule dealt with the flammability of mattresses.)

        In short, the costs of the Regulatory Freeze act would be very
    high. The act would forestall needed progress across the American
    panorama. If the legislation were made law, Americans would needlessly
    be exposed to more dangerous products; we would needlessly be forced to
    breathe dirtier air; we would needlessly be forced to spend more on
    gasoline; we would needlessly be subject to financial tricks and rip-
    offs; we would needlessly be forced to confront more hazardous
    conditions at work; we would needlessly pay more for biologic
    pharmaceuticals; we would needlessly be forced to live with a riskier
    financial system and a greater risk of another financial implosion; and
    much more. The act, in short, would weaken America.
      iv. a regulatory freeze would impede everyday governmental action,
                    including issuance of bird hunting rules
        The Regulatory Freeze for Jobs Act is vast in its scope, with
    implications perhaps exceeding the intentions of its drafters. A
    significant portion of the government's work depends on rulemaking and
    regulation. As drafted, the legislation imposes a moratorium on all
    ``significant regulatory actions'' until unemployment drops to 6.0
    percent. Significant regulatory action is broadly defined, and the
    moratorium is subject to very limited exceptions: to combat ``an
    imminent threat to health or safety or other emergency;'' to enforce
    criminal laws; to ensure national security; or to comply with terms of
    an international trade agreement.
        Under this legislative rubric, many regulatory actions that do not
    fit the popular conception of ``regulation'' would be halted. Consider
    this selection of recent and prospective rules that would have been or
    will be affected:

              Bird hunting. Every year, the Fish and Wildlife
            Service analyzes massive amounts of data and public comments to
            determine the appropriate bird hunting season for each state.
            The Migratory Bird Hunting; Late Seasons and Bag and Possession
            Limits for Certain Migratory Game Birds rule \56\ tells hunters
            which birds they can hunt, how many of them they can take,
            where they can do it, and when the season begins. This is a
            significant regulatory action that would be caught in the
            Regulatory Freeze net.
    ---------------------------------------------------------------------------
        \56\ Fish and Wildlife Service. (24 September 2010). Migratory Bird
    Hunting; Late Seasons and Bag and Possession Limits for Certain
    Migratory Game Birds. Federal Register. Retrieved 23 February, 2012,
    from: http://www.federalregister.gov/articles/2010/09/24/2010-23754/
    migratory-bird-hunting-late-seasons-and-bag-and-possession-limits-for-
    certain-migratory-game-birds

              Stop loss pay for service members. In 2009,
            Retroactive Stop Loss Special Pay Compensation \57\ rule was
            implemented to pay back the debt we owe to soldiers who stayed
            for prolonged periods in Iraq and Afghanistan. This rule pays
            $500 per month of stop loss, and includes partial months. This
            is a significant regulatory action that would be caught in the
            Regulatory Freeze net.
    ---------------------------------------------------------------------------
        \57\ See, for example, U.S. Department of Defense. (16 April 2010).
    Retroactive Stop Loss
    Special Pay Compensation. Federal Register. Retrieved 23 February,
    2012, from:
    http://www.federalregister.gov/articles/2010/04/16/2010-8739/
    retroactive-stop-loss-special-pay-compensation#p-29

              Compensation for veterans. Agent Orange left many
            returning soldiers returning from Vietnam with lifelong
            debilitating illnesses. In 2010, the Department of Veterans
            Affairs (VA) expanded the list of ailments \58\ attributable to
            Agent Orange and for which veterans could receive benefits. The
            VA also decided that it should create a schedule of back
            benefits for Vietnam veterans still suffering from these newly
            added diseases and for widows of sufferers. More than 85,000
            Vietnam vets and their families will be eligible for these
            benefits.\59\ The rule written by the VA will give retroactive
            payments to sufferers of these newly added diseases and will
            allow 69,957 previously denied living veterans to receive
            payments that will greatly improve their living conditions.
            This is a significant regulatory action that would have been
            caught in the Regulatory Freeze net.
    ---------------------------------------------------------------------------
        \58\ U.S. Department of Veterans Affairs. Veterans' Diseases
    Associated with Agent Orange. Retrieved 23 February, 2012, from: http:/
    /www.publichealth.va.gov/exposures/agentorange/diseases.asp
        \59\ U.S. Department of Veterans Affairs. (31 August 2010).
    Diseases Associated with Exposure to Certain Herbicide Agents. Federal
    Register. Retrieved 23 February, 2012, from: http://
    www.federalregister.gov/articles/2010/08/31/2010-21556/diseases-
    associated-with-exposure-to-certain-herbicide-agents-hairy-cell-
    leukemia-and-other-chronic#p-81

              Medicare reimbursement rates. Every year, the Centers
            for Medicare & Medicaid Services publish new Medicare payment
            schedules for provision of medical care by physicians,
            hospitals, home health workers and others. These schedules are
            significant regulatory actions that would be caught in the
    ---------------------------------------------------------------------------
            Regulatory Freeze net.

              Immigration visas and fees. In 2010, the Department
            of Homeland Security issued a new fee schedule for visas and
            immigrant benefits \60\, and adopted a fee for travel
            authorizations for nonimmigrant aliens entering the United
            States under a visa waiver program.\61\ This schedule is a
            significant regulatory action that would have been caught in
            the Regulatory Freeze net.
    ---------------------------------------------------------------------------
        \60\ U.S Department of Homeland Security. (8 October 2010)
    Department of Homeland Security: U.S. Citizenship and Immigration
    Services Fee Schedule, GAO-11-104R. Retrieved 23 February, 2012, from:
    http://www.gao.gov/decisions/majrule/d11104r.htm
        \61\ U.S Department of Homeland Security. (20 August 2010)
    Department of Homeland Security, U.S. Customs and Border Protection:
    Electronic System for Travel Authorization (ESTA): Travel Promotion Fee
    and Fee for Use of the System, GAO-10-1010R. Retrieved 23 February,
    2012, from: http://www.gao.gov/decisions/majrule/d101010r.htm

              Pell grants. In 2009, the Department of Education
            issued new regulations concerning eligibility and other rules
            relating to the issuance of Pell, TEACH, Academic
            Competitiveness and National Science and Mathematics to Retain
            Talent and other grants. These regulations are significant
            regulatory actions that would have been caught in the
            Regulatory Freeze net.\62\
    ---------------------------------------------------------------------------
        \62\ U.S. Department of Education. (23 November 2009). Student
    Assistance General Provisions; Teacher Education Assistance for College
    and Higher Education (TEACH) Grant Program; Federal Pell Grant Program;
    Academic Competitiveness Grant Program and National Science and
    Mathematics Access to Retain Talent Grant Program. Federal Register.
    Retrieved 23 February 2012, from: http://www.gpo.gov/fdsys/pkg/FR-2009-
    11-23/pdf/E9-28050.pdf

              Pharmaceutical approval standards. Every five years,
            Congress reauthorizes the Prescription Drug and User Fee Act
            (PDUFA), which establishes the framework for Food and Drug
            Administration approval of new medicines and for the level of
            user fees to be paid by industry for FDA review, as well as the
            Medical Device User Fee Act, which functions similarly for
            medical devices. Both acts are set to be reauthorized this
            year. Implementation of the legislation, which historically has
            been supported by the regulated industries and is formally
            negotiated with industry, depends on FDA regulation. Such
            regulation likely would be a significant regulatory action that
            would be caught in the Regulatory Freeze net.\63\
    ---------------------------------------------------------------------------
        \63\ U.S Department of Health and Human Services. (1 August 2011).
    Prescription Drug User Fee Rates for Fiscal Year 2012. Federal
    Register. Retrieved 24 February, 2012, from http://www.gpo.gov/fdsys/
    pkg/FR-2011-08-01/pdf/2011-19332.pdf

              Preventing prison rape. Pursuant to the Prison Rape
            Elimination Act of 2003, the Attorney General has proposed
            rules that aim to prevent prison rape. This regulation is a
            significant regulatory action that would be caught in the
            Regulatory Freeze net (although it might conceivably be subject
            to a waiver if the president determined it necessary to enforce
            criminal laws).\64\
    ---------------------------------------------------------------------------
        \64\ U.S. Department of Justice. (3 February 2011). National
    Standards to Prevent, Detect, and Respond to Prison Rape. Federal
    Register. Retrieved 23 February, 2012, from: http://www.gpo.gov/fdsys/
    pkg/FR-2011-02-03/pdf/2011-1905.pdf

              Medical examiner registry. Pursuant to the most
            recent transportation act, the Federal Motor Carrier Safety
            Administration aims to propose a rule to establish a national
            registry of certified medical examiners responsible for
            certifying that truck drivers meet physical qualification
            standards. This regulation would be a significant regulatory
            action that would be caught in the Regulatory Freeze net.\65\
    ---------------------------------------------------------------------------
        \65\ 49 CFR Ch. 111, Part 390 (1 October 2011). Federal Motor
    Carrier Safety Regulations; General. Retrieved 23 February, 2012, from:
    http://www.gpo.gov/fdsys/pkg/CFR-2011-title49-vol5/pdf/CFR-2011-
    title49-vol5-part390.pdf

              Family and medical leave for military service
            personnel. The Department of Labor is proposing rules to ensure
            the Family and Medical Leave Act is applied fairly to military
            service personnel. This regulation would be a significant
            regulatory action that would be caught in the Regulatory Freeze
            net.\66\
    ---------------------------------------------------------------------------
        \66\ Proposed rule can be found at: U.S. Department of Labor. Wage
    and Hour Division. (15 February 2012.) Notice of Proposed Rulemaking,
    29 CFR Part 825 RIN 1215--AB76, RIN 1235--AA03. The Family and Medical
    Leave Act. Federal Register. Retrieved 23 February, 2012, from: http://
    www.regulations.gov/#!documentDetail;D=WHD-2012-0001-0001

        These examples highlight the overreach of the Regulatory Freeze
    act. As the regulatory policy debate has heated up, perhaps some of the
    more textured understanding of how regulation works in practice--and
    its centrality to government carrying out its core functions--has been
    lost. As drafted, the Regulatory Freeze act would halt a wide range of
    governmental programs and initiatives not likely to be the target of
    the legislation's supporters. However, there is no obvious fix to this
    problem; it is a direct result of the ill-advised broad brush approach
    of the legislation.
             v. strengthening the system of regulatory safeguards
                             to strengthen america
        To say that it would be a grave error to impose a 5-year moratorium
    on regulation is not to say that all is well with the regulatory
    system. It is in need of substantial reform to ensure that it serves
    the broad public interest, not the narrow commercial interests of
    regulated corporations. Many of the high-profile examples of regulatory
    failure in recent years--the Wall Street crash, the BP oil disaster,
    the Massey mine explosion, and others--evidence both the need for
    stronger rules to limit corporate wrongdoing, and stronger enforcement
    of existing rules. Those examples of regulatory failure also highlight
    the very serious problem of regulated industries exerting undue
    influence over the regulatory process itself.
        Congress could meaningfully improve the functioning of the
    regulatory system by working to ensure stronger enforcement of existing
    rules. In too many cases, it pays for corporations to violate the law,
    because penalties for regulatory violations are too small. As one step
    forward, Congress should act to make it a crime for businesses to
    recklessly expose consumers or workers to deadly products or working
    conditions.\67\ Congress should also increase the enforcement budgets
    of regulatory agencies, and hold those agencies accountable for
    enforcing the law. And citizens should be given some direct authority
    to enforce regulatory standards, loosely following the model of the
    False Claims Act.
    ---------------------------------------------------------------------------
        \67\ See, for example, the Dangerous Products Warning Act, H.R.
    322, introduced by Rep. John Conyers.
    ---------------------------------------------------------------------------
        Congress should also prioritize addressing the problem of
    regulatory capture and excessive corporate influence over the
    regulatory process. Too many agencies are too cozy with the industries
    they are supposed to regulate. These relationships undermine effective
    rulemaking and enforcement, and fuel public frustration with our
    government. Progress could be made in addressing regulatory capture and
    undue industry influence with stronger revolving door (and reverse
    revolving door) rules for regulators. Another positive step would be to
    prevent regulated parties from meeting with staff at the Office of
    Management and Budget's Office of Information and Regulatory Affairs
    (OIRA) about pending rules, or to adopt new rules relating to such
    meetings.\68\
    ---------------------------------------------------------------------------
        \68\ The Center for Progressive Reform has documented that OIRA
    meets with regulated parties five times more frequently than with
    public interest representatives; and that rules that were the subject
    of meetings were 29 percent more likely to be changed during the review
    than those that were not the subject of meetings. Steinzor, R., Patoka,
    M., & Goodwin, J. (2011). Behind Closed Doors at the White House: How
    Politics Trumps Protection of Public Health, Worker Safety, and the
    Environment. Center for Progressive Reform. Retrieved 24 February,
    2012, from http://www.progressivereform.org/articles/
    OIRA_Meetings_1111.pdf
    ---------------------------------------------------------------------------
        It is not the position of Public Citizen that all is well with the
    regulatory process. But for all its flaws, the regulatory system has
    made, and continues to make, our country stronger, safer and more
    prosperous. We need to improve the regulatory system, not bring new
    rulemaking to a halt.
                                   __________

        Mr. Coble. Thank you, gentlemen, for your testimony. We try
    to apply the 5-minute rule to ourselves as well. So if you can
    keep your responses terse, that would help us beat the red-
    light illumination. The gentleman from Tennessee.
        Mr. Cohen. Thank you. Thank you, Mr. Chairman. Let me ask
    Professor Taylor first. We have had great periods of commercial
    success, and bullish periods. The Clinton years were very
    economically robust. Did we have regulations during that time
    period?
        Mr. Taylor. Absolutely, we had regulations.
        Mr. Cohen. And they didn't impede job growth, did they?
        Mr. Taylor. Well, I think one thing that is very important
    about the period of the--I referred to in the early 1980's,
    was, there was a huge movement there to try to deregulate
    certain industries. The mode began in the Carter
    administration, and the airlines, and Fred Kahn. There was an
    effort to try to rationalize regulations. There was an effort
    to try to deal with regulatory capture. The important work done
    by economists like Stigler, who won a Nobel Prize, pointed out
    this regulatory capture, and that enabled the deregulation
    movement of many industries to occur.
        Mr. Cohen. Do you think that the deregulation of airlines
    is a good thing? Have you traveled lately?
        Mr. Taylor. I think that deregulation of airlines is a good
    thing, because I can travel across the country at a much lower
    rate than I could at that time, and there is other reasons too.
        Mr. Cohen. You don't travel our of Memphis, sir. When you
    are a hub town, and you are basically a company town, we have
    got the highest rates of any place in the country. And back
    when you had Northwest and you had Southern, and you had
    Republic, and you had Delta, and you had American, and you had
    TWA, and you had Fly Eastern, and you know, any of those folks,
    you had competition. That kept prices down. That is America's
    competition. Deregulation, I would submit, has not been the
    panacea that some thought it was--during the 1990's, and
    regulations didn't impede that expansionism, did it not?
        Mr. Taylor. I think when you have a lack of enforcement of
    antitrust or a competition policy you are going to get problems
    like this. And of course, there are some routes now where there
    is very high prices. So I think the advantage of deregulating,
    when you don't need deregulations, is you let the markets work
    and the prices are determined and there the new routes that
    would not have existed if there had not been the regulation.
    Now, to answer your question, because I think in some sense,
    what happened in the 1980's, is an example of what can happen
    if you try to more rationalize these regulations more than we
    have been doing recently.
        We are now, in my view, moving in the other direction. And
    the fear that many businesses, economists have, that that
    moving of the direction is actually holding us back. Again,
    this recovery----
        Mr. Cohen. A great example of what you are promoting or
    suggesting is that we drop the regulations, we are going to
    have this business boon, because businesses will be certain, is
    what you are saying.
        Mr. Taylor. No, I don't want to drop regulations. Excuse
    me----
        Mr. Cohen. Well, you would until the rates got down to 6
    percent, until the unemployment rate gets to 6 percent under
    this bill, would it not be a moratorium on regulations?
        Mr. Taylor. Seems to me this bill is a freeze, while we
    have this terrible problem with recovery. After the freeze, you
    should put in the kind of reforms that have been discussed by
    my colleagues. I would believe that is something that you
    should rule on right now.
        Mr. Cohen. And I understand what you are saying, Professor
    Taylor, and I respect you. I think you have a tremendous
    background, and you are acclaimed, and I can't compete with you
    really. But you know, I just had an Aspen Institute seminar on
    China. China has got this great booming economy. It is
    unbelievable what they are doing. But they have like no
    regulations. And children have got insects--or not insects, but
    some type of substances in their intestines to where they can't
    absorb their food because they are eating food that is not
    well-regulated and it is not safe food, and the air is awful,
    and the conditions in China--so if you had to take away
    regulations, how do you make up for it when you put all of that
    in the air, or have those children that don't get any nutrition
    because you don't have regulations. And we have the same thing
    here with air quality, and food quality, et cetera.
        Mr. Taylor. Seems to me that this bill here, allows for a
    lot of exceptions for things that have been mentioned already.
    The intent is for this to be temporary, or a period where
    people can take a breather, a time out, assess whether this is
    damaging the economy. And the issues you are raising,
    obviously, everyone wants to have a way to regulate in a
    sensible way. There is an important role for regulation in an
    economy. Economists have ways to describe when you should
    regulate, when you shouldn't. There is a cost-benefit analysis,
    I think the cost-benefit analysis should be done in a little
    more independent way than it is now.
        Mr. Cohen. I thank you for your testimony. My time is about
    to run out. Professor Meltzer, I am going to follow up on the
    question that I think was attempted to ask you. Duke, UCLA? Who
    do you pull for?
        Mr. Meltzer. Pardon me?
        Mr. Cohen. Duke, UCLA? Who do you pull for? Who is your
    basketball team?
        Mr. Meltzer. Toss a coin.
        Mr. Cohen. Toss a coin. I got you. Thank you, I yield back
    the balance of my time.
        Mr. Coble. I thank the gentlemen. Mr. Taylor, what do you
    mean by the uncertainty that arises from new regulatory
    authority, such as from the Administration's health care and
    financial reform legislation? How can this uncertainty, as you
    say, hold back investment and firm expansion and how does this,
    in turn, affect job creation.
        Mr. Meltzer. I think that is to me?
        Mr. Coble. No, Mr. Taylor.
        Mr. Taylor. So, the financial firm regulations, now they
    are writing the rules. In normal periods, the Federal Reserve
    and other regulatory agencies would have a period of time to
    write rules. Now, they have roughly 200 they have to write. An
    example is the so-called Volcker rule, which was in the
    legislation, well-intentioned, to try to reduce the risk-taking
    of the large financial institutions. But the implementation of
    those rules, or rulemakings, 300 pages, there is thousands of
    pages of remarks put in place, so people don't know how that is
    going to be applied. The banks don't know how it is going to be
    applied. People who would compete with the banks don't know how
    it is going to be applied.
        So that is a huge degree of uncertainty that that
    legislation is causing. And of course, the alternatives, simply
    just to try to raise capital requirements on the financial
    institutions. So I think that is a big one in terms of giving
    an example of what you are looking for.
        Mr. Coble. Thank you, Mr. Taylor. Were you finished Mr.
    Taylor? I didn't mean to cut you off.
        Mr. Meltzer. Were you finished?
        Mr. Taylor. It is off now.
        Mr. Weissman. Were you finished with your answer?
        Mr. Taylor. Yes.
        Mr. Coble. Mr. Melter, you cite housing and the mortgage
    market as examples of how regulators are undermining recovery.
    Describe that in a little more detail, if you would.
        Mr. Meltzer. Well, on one day, the Administration says we
    want more mortgages issued. We really want the banks to issue
    more mortgages. A few days later, or even on the same day, some
    other agency of government sues the mortgage lenders for some
    practice that they had in the past. Now, they may have
    committed some egregious action, but that is not going to get
    more mortgages. So that creates uncertainty. Are there going to
    be more mortgages? Are we going to encourage the mortgage
    lenders to issue mortgages, or are we going to encourage the
    mortgage lenders to pay for the abuses, alleged abuses that
    occurred in the past? Is that going to get us more housing? No,
    it is not. It is going to get us less, fewer mortgages, and
    less housing. That is an example. Here is another example, if I
    may.
        We have just seen in the last couple of years the
    uncertainties created by the regulation that says women under
    40, or at the age of 40, should not be given breast
    examinations. Well, the government is deciding that. Many women
    think that is not a good idea. The same thing is happening with
    contraceptives. The same thing is going to happen with the
    regulation, with hundreds of regulations that are going to come
    down under the Health Care Act. The same thing is happening--
    the K Street lawyers are descending on the Administration
    agencies, like the Fed and Treasury, to get them to change the
    legislation. Even Mr. Volcker has complained about what is
    happening to the Volcker bill. Those are some of the
    uncertainties, and there are many, many of them.
        Mr. Coble. I thank you, Professor. Mr. Weissman, some
    indicate that regulations do not inhibit job creation. And I am
    not--I probably don't come down on that side. The President, in
    his State of the Union address, identified himself as a less
    prolific regulator than was President Bush. Can you square me
    on that? I mean, on the one hand, folks say that the
    regulations inhibit job creation, but yet the President claims
    that he is going to be a less prolific regulator.
        Mr. Weissman. Well, as you know, Mr. Chairman, I don't
    represent the Administration. However, I believe that the
    President's position is, and I think it may have changed. At
    the time that he said that, I think that over the same time
    period he had issued fewer regulations than President Bush had.
    Be that as it may, I mean, obviously, the goal of issuing
    regulations is to advance social objectives, including
    financial protection, but not to issue regulations for
    regulations sake. And anyone can make up a regulation that
    would interfere with regular business operations, and I think
    the President was saying, look, we don't make that. Our
    regulations are as careful as we can possibly do them. We go
    out of our way, which I believe to be true, to limit the impact
    and the complexity that we are imposing on business. There are
    surely examples where there is failure of that. But I think if
    you actually look at the regulations that are issued, and look
    especially at the rationales, the cost-benefit analysis, and so
    on, that are issued for those regulations, you have to be
    impressed with the care with which regulators generally put
    forward those rules.
        Mr. Coble. I thank you, Mr. Cohen. I see that my red light
    has illuminated. The distinguished gentlemen from Georgia, Mr.
    Johnson. You are recognized for 5 minutes.
        Mr. Johnson. Thank you, Professor Meltzer. I see that you
    have been highly critical of the Federal Reserve's decision to
    rescue AIG.
        Mr. Meltzer. Indeed.
        Mr. Johnson. And was it--do you think it was because of
    regulations that AIG failed, or was it because of lack of
    regulation?
        Mr. Meltzer. I don't think that regulation was a central
    issue.
        Mr. Johnson. Don't you agree, though, that----
        Mr. Meltzer. The regulation was a problem.
        Mr. Johnson. Well, you must then agree that it was the lack
    of regulation.
        Mr. Meltzer. No, I think that it----
        Mr. Johnson. Well, what was it then? Either too much
    regulation, or not enough.
        Mr. Meltzer. The core problem was that both
    Administrations, that is, Republican and Democrat, believed
    that they were doing good things by encouraging housing for
    under-housed minorities.
        Mr. Johnson. Well, let's look at--is it a lack of
    regulation that----
        Mr. Meltzer. No, the regulation----
        Mr. Johnson [continuing]. That has gotten into problems?
        Mr. Meltzer. Mr. Johnson, there is an excellent book which
    I recommend to you by the--one of the editors of The New York
    Times, that goes through what happened when Jim Johnson, who
    had been the campaign chairman for Walter Mondale, became the
    head of an agency that was, at that time, 50 or 60 years old.
    The Federal--Fannie Mae. He then expanded Fannie Mae into doing
    many, many things that it had not done before, and he found----
        Mr. Johnson. Including, including----
        Mr. Meltzer [continuing]. People in the private sector.
        Mr. Johnson [continuing]. Including taking it out from
    under the Federal Government.
        Mr. Meltzer. Well, that happened in the Johnson
    administration.
        Mr. Johnson. Well, I mean, so, now----
        Mr. Meltzer. In the Johnson administration.
        Mr. Johnson. Let's get our facts straight now. Tell me
    something. Do you still agree that Lehman Brothers should have
    been allowed to bite the dust?
        Mr. Meltzer. I am sorry, that who?
        Mr. Johnson. Lehman Brothers?
        Mr. Meltzer. Lehman. I believe that Lehman, we would have
    been better off if Lehman had gone into bankruptcy. That was
    fine. What we shouldn't do----
        Mr. Johnson. What about GM?
        Mr. Meltzer. What was a mistake--the mistake was not
    letting them go into bankruptcy. The mistake was that it had
    bailed out Bear Stearns, and that it convinced the people that
    the game was going to be played the way it usually was, and
    then suddenly, without any warning, the rules were changed.
        Mr. Johnson. And there was a failure of regulatory
    authority basically, is what you are talking about.
        Mr. Meltzer. Yes, there was a failure.
        Mr. Johnson. Lack of regulations, in other words----
        Mr. Meltzer. Not lack of regulation. It was the failure of
    the regulators.
        Mr. Johnson. Well, and you are not blaming any of that on
    President Obama, are you?
        Mr. Meltzer. No, President Obama had nothing to do with
    what happened in 2008. He was in the Senate at that time.
        Mr. Johnson. Okay, well, for 2 years. But Professor Taylor,
    you have indicted the current Administration, it would seem,
    for the lack of vitality in the recovery. In fact, you
    criticized the recovery as being kind of just piddling, I think
    you would agree to, but you would also agree with me, would you
    not, that there had been 27 straight quarters of economic
    growth during the last 27 months? Would you agree with that?
        Mr. Taylor. We have had 10 quarters of positive economic
    growth. The problem is the growth rate is only 2.4 percent.
        Mr. Johnson. Now, is that because of regulations, or is it
    because of Republican obstruction of the Congress, and the
    President's initiatives to create a more stimulating
    environment?
        Mr. Taylor. The regulations are part of it, I believe. But
    in addition, you know, the stimulus packages and the cash for
    clunkers and the first-time home buyers, which were all efforts
    to stimulate, I don't think stimulated, but, in fact, had----
        Mr. Johnson. How do you account for the 2.--how do you
    account for the 10.5 percent unemployment rate that has been
    reduced now to 8.5 under the Obama administration? How do you
    account for that?
        Mr. Taylor. Well, unfortunately, a big part of that is
    people dropping out of the labor force in unprecedented
    amounts. And I----
        Mr. Johnson. It was under President Reagan, as soon as he
    came into office, that they changed the benchmarks for
    measuring unemployment insurance. Isn't that--the unemployment
    rate. Isn't that correct?
        Mr. Taylor. Well, this recent reduction in the labor force
    doesn't----
        Mr. Johnson. No, no, no, no. I am talking about changing
    the formula to determine who is employed, who is unemployed,
    and how much that rate is based on a number of different
    factors. That was changed as soon as President Reagan came into
    office to make his numbers look better, and now you are going
    to judge President Obama on the statistics that we have been
    relying upon since 1980, and that just doesn't seem fair to me.
        Mr. Taylor. I don't think the issue is measurement of the
    statistics. I think if you look at the growth rates of GDP.
    Again, GDP has grown 2.4 percent in this recovery, 5.9 percent
    in early recovery.
        Mr. Johnson. We didn't have a obstruction of Congress,
    though, back then.
        Mr. Taylor. But I don't think it is a partisan issue. I
    think it is a policy issue.
        Mr. Johnson. Well, sometimes it is political.
        Mr. Taylor. Sometimes policies are good in different
    Administrations and sometimes they are bad. I do not think it
    is partisan. I have lots of examples where Republicans don't
    follow good policy, lots of examples where Democrats follow
    good policy. And so I do not think this is partisan at all. I
    think it is a question of resolve to find the good policies. In
    the late 1990's during the Clinton administration, we didn't
    have all of these stimulus packages. We were able to reduce the
    role of the Federal Government in regulatory areas, and for
    that matter, for example, the welfare reform. I think if you go
    back into the 1970's, a very poor time with the economy,
    Republicans, President Nixon, President Ford were there for
    part of that time. So I think it is a mistake to think of this
    as partisan. I honestly do. There are differences in the policy
    which can you learn from, and some work, and some don't.
        Mr. Coble. The gentleman's time is expired. The
    distinguished gentlemen from Michigan, Mr. Conyers.
        Mr. Conyers. Thank you, Chairman Coble. I would like to
    review with Attorney Weissman, the five points that he
    summarized against the conversation and interchange that we
    have had with our witnesses, and with the Members on the
    Subcommittee. The whole idea of strengthening the economy,
    creating jobs, safer--safer conditions for citizens, the
    unintended impeding of everyday government action, and the
    strengthening of America.
        And the strengthening of America through regulatory
    safeguards. How has some of our discussion failed to take into
    consideration much, if not almost all of the points that you
    have made?
        Mr. Weissman. Well, I think that the theory Professor
    Meltzer and Professor Taylor is that regulatory uncertainty is
    a significant problem for job creation and preservation. I
    think that is not true. And I think the best evidence for that
    is purely theoretical and almost philosophical, and existing
    empirical evidence doesn't suggest it. And I think the
    discussion of concrete examples is very helpful for elaborating
    on that in a variety of ways. If you look at some of the
    examples that were highlighted, and I know they could point to
    others as well. The Volcker rule, for example is a very
    important regulation being proposed. I believe it has flaws
    too, for some of the reasons that Professors Meltzer and Taylor
    say. It is overly complicated. It would be much better if it
    was simpler. But it is a structural remedy for a very serious
    problem.
        It does, for sure, creates some uncertainty in the
    financial sector, but that doesn't mean there is any connection
    to job creation. I don't know what the story is about that. The
    standard for breast examinations, I am not even sure it
    constitutes a significant regulatory action as defined by the
    bill. I think one would be very hard placed to say how that has
    anything to do with economic uncertainty and job creation. The
    fact that the Justice Department is considering suing mortgage
    lenders for their rampant criminality in the mortgage market or
    that State AGs are doing that, first of all, is a positive
    thing. And it ultimately will be very important, I believe, for
    reducing principal owed, actually by mortgage borrowers, and
    expanding the economy. It has nothing to do with uncertainty in
    the economic market and impeding job creation. That is on the
    one hand.
        On the other hand, there is a failure to address what the
    bill would actually do. And what the bill would actually do is
    block for 5 years with almost no relevant exceptions the
    issuance of new health, safety, environmental, and financial
    protections. It would also, not so trivially, undermine the
    ability of the government to do what it does on a day-to-day
    basis, including revamp the Medicare payment system every year.
        So I think there is a philosophy that I disagree with.
    There is a theoretical construct about what the bill would do
    and why it should be issued, and I think that is misguided and
    not supported by the evidence on the one hand.
        On the other hand, when you look at the actual details of
    what is at stake, you are looking at very serious things, both
    in the health safety environmental financial protection realm,
    traditionally what we think of regulation, but also a lot of
    what the government just does. I think it is a huge mistake out
    of a philosophical commitment to commit that error.
        Mr. Conyers. Mr. Meltzer, I would like to recognize you at
    this point.
        Mr. Meltzer. It isn't what I say about uncertainty, the
    Harvard Business graduates, they are the people who make these
    decisions. They say this creates uncertainty, they say it
    deters hiring, that is their view. They are the people who do
    the hiring. I don't hire anybody except one secretary. They
    hire hundreds of thousands of people. They are the leaders of
    American industry. They say it causes a problem.
        Second, I would like to say this bill does not prevent the
    Administration from doing anything that it believes is in the
    public interest. All it has to do under the bill is notify the
    Congress that that is what it is asking and then the Congress
    has a right as it should have, to make a judgment as to whether
    it prefers to do what the Administration is asking, or whether
    it prefers to avoid the regulation. It doesn't hamper
    regulation. It is wrong to think of the bill as hampering
    regulation. It may delay regulation, but we have gotten along
    for hundreds of years without some of these regulations, so it
    is probable that we can survive very well for another 5 years.
        Mr. Conyers. Could I ask for 2 additional minutes, sir?
        Mr. Coble. The gentleman is allowed 2 additional minutes.
        Mr. Conyers. And I would just like to return to Attorney
    Weissman because I haven't heard anything about what Harvard
    said, with all due respect for Harvard, but let me yield to you
    for the last comments in this hearing.
        Mr. Weissman. Well, I will avoid the impulse to make some
    comment about Jeremy Lin and the basketball team and things
    like that. I think that Professor Meltzer is misreading the
    bill. The bill provides for regulatory a regulatory freeze
    until unemployment hits 6.0, that is it, that is the bill.
        Mr. Conyers. You know----
        Mr. Weissman. There are exceptions that are permitted that
    is relatively routine for implementation of provisions required
    under international trade--legislation to implement
    international trade agreements. You could imagine that they
    would be easily granted in the case of national security as
    articulated in the legislation. But the requirement, as regards
    health and safety, is necessary because of an imminent threat
    to health or safety or other emergency. And there is quite a
    bit of jurisprudence on this, plus the plain language of the
    statute. Imminent threat means immediate, right now, something
    that has to be done to prevent something that is otherwise
    going to happen in a very near term with a high degree of
    certainty. That is just not why most regulation takes place.
    Take the example of food safety, we issue food safety rules
    usually because there has just been an outbreak of some
    problem, but not because we think it is about to happen again.
        You can go down the case of crib safety or auto safety or
    environmental protection or preventing another financial
    crisis, on and on, you go down the list--it will almost never
    meet the standard of an imminent threat to health or safety or
    other emergencies. I believe the proper interpretation of this
    bill is that will be a roughly 5-year moratorium on all health,
    safety, environmental, financial, et cetera, protections.
        Mr. Conyers. Well, I thank you very much. And I think we
    need to examine the record as closely as we can, Chairman
    Coble, because there is a great discrepancy of interpretation
    about the measures as it has been brought forward. I thank you
    for the additional time.
        Mr. Coble. I thank the gentleman, without objection I want
    to enter into the record a letter from the U.S. Chamber of
    Commerce endorsing this bill.
        [The information referred to follows:]

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                                   __________

        Mr. Coble. Gentlemen, thank you all for being with us, we
    appreciate your testimony today. Without objection, all Members
    will have 5 legislative days to submit to the Chair additional
    written questions for the witnesses, which we will forward and
    ask the witnesses to respond as promptly as they can do so with
    their answers that may be made a part of the record.
        Without objection, all Members will have 5 legislative days
    to submit any additional materials for inclusion in the record.
    And with that, again, I thank the witnesses and this hearing
    stands adjourned.
        [Whereupon, at 5:11 p.m., the Subcommittee was adjourned.]
                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

    Prepared Statement of the Honorable John Conyers, Jr., a Representative
     in Congress from the State of Michigan, and Ranking Member, Committee
                                on the Judiciary
        Today's hearing marks the ninth one held to date during this
    Congress on the subject of so-called ``regulatory reform.''
        A common argument made by my friends on the other side of the aisle
    at nearly all of these hearings is that regulations somehow depress job
    creation.
        H.R. 4078, the ``Regulatory Freeze for Jobs Act of 2012,'' clearly
    attempts to link regulations with employment by preventing agencies
    from engaging in significant regulatory actions if the average monthly
    unemployment rate exceeds 6% in any quarter.
        Let me explain why H.R. 4078 represents the ultimate in legislative
    foolhardiness.
        First, the bill fails to acknowledge the fact that regulations play
    a critical role in ensuring the health and safety of Americans as well
    as to the economic well-being of our Nation.
        By imposing a moratorium on significant regulatory action, H.R.
    4078 would prevent agencies from fulfilling the job that we in Congress
    entrusted them to do, namely, to ensure the safety of the foods we eat,
    the cars we drive, and the places where we work.
        As Cass Sunstein, who heads the agency charged with reviewing
    federal regulations, recently observed:

            ``A moratorium would not be a scalpel or a machete, it would be
            more like a nuclear bomb, in the sense that it would prevent
            regulations that . . . cost very little, and have very
            significant economic or public health benefits.''

        The proponents of this legislation could not possibly be intending
    to jeopardize the health and safety of Americans in order to pursue an
    anti-regulatory political agenda, but I'm afraid that would be the
    exact practical effect of H.R. 4078.
        Second, there is absolutely no credible evidence establishing that
    regulations have any substantive impact on job creation.
        Last year, the Majority's own witness testified before this
    Subcommittee that the ``focus on jobs . . . can lead to confusion in
    regulatory debates'' and that ``the employment effects of regulation,
    while important, are indeterminate.''
        The truth is that regulations can, in fact, lead to job creation.
    And, here are just a few examples:

              A pending regulation limiting the amount of airborne
            mercury will not just reduce the amount of seriously toxic
            pollutants, but create as many as 45,000 temporary jobs and
            possibly 8,000 permanent jobs, as the New York Times noted last
            week.

              Heightened vehicle emissions standards have spurred
            clean vehicle research, development and production efforts
            that, in turn, have already generated more than 150,000 jobs at
            504 facilities in 43 states across the U.S.

        It should, therefore, not come as a surprise that Bruce Bartlett, a
    former senior Republican Advisor in the Reagan and George H.W. Bush
    Administrations, says that there is ``no hard evidence'' that
    regulations stifle job creation and that it's simply being ``asserted
    as self-evident and repeated endlessly throughout the conservative echo
    chamber.''
        And, finally, this bill will result in greater, not less, business
    uncertainty. In fact, it will increase the cost of doing business.
        By its own terms, H.R. 4078 makes the regulatory process dependent
    on the national unemployment rate, which, as we all know, can fluctuate
    from quarter to quarter for any number of reasons, creating a
    tremendous amount of regulatory uncertainty for businesses.
        Factors that can depress employment include a devastating terrorist
    attack, a world-wide fuel shortage, or some cataclysmic natural
    disaster.
        So how is a company to plan in a regulatory regime that would
    start, then stop, and then at some indeterminate point re-start, and
    then possibly stop all over again, all as a result of outside events?
        Even if we were to accept the premise that regulatory uncertainty
    is currently a problem, there is no evidence that it is a significant
    problem.
        As Minority witness Professor Sidney Shapiro testified before this
    Subcommittee last year, ``All of the available evidence contradicts the
    claim that regulatory uncertainty is deterring business investment.''
        This also explains why a July 2011 Wall Street Journal survey of
    business economists found that the ``main reason U.S. companies are
    reluctant to step up hiring is scant demand, rather than uncertainty
    over government policies.''
        Similarly, a September 2011 National Federation of Independent
    Business survey of its members found that ``poor sales''--not
    regulation--is the biggest problem.
        Indeed, the Main Street Alliance, an small business organization,
    observes: ``In survey after survey and interview after interview, Main
    Street small business owners confirm that what we really need is more
    customers--more demand--not deregulation.''
        And, we cannot ignore the fact that the lack of regulation can lead
    to greater costs for industry.
        Take, for example, the disastrous BP oil spill that occurred a
    couple of years ago.
        New regulations intended to prevent another such spill will cost
    the deep water drilling industry about $180 million. But compare that
    figure with the cost of one well blowout: $16.3 billion.
        This bill attempts to deal with a concern that is already being
    addressed by the current Administration.
        The Obama Administration has undertaken a series number of
    innovative initiatives to ensure that the regulations it approves
    result in net savings.
        For instance, the net benefits of regulations issued by this
    Administration in three fiscal years exceed $91 billion, which is more
    than 25 times the net benefits of regulations issued by the Bush
    Administration for a comparable period.
        Rather than pursuing solutions for problems that don't exist, we
    should be using the resources of the Judiciary Committee to address
    real problems, like the ongoing home foreclosure crisis.
        And, with respect to the real problem of unemployment, our
    Committee should be promoting real solutions instead of discussing
    solutions that are in search of a problem.

     Prepared Statement of the Honorable Steve Cohen, a Representative in
    Congress from the State of Tennessee, and Ranking Member, Subcommittee
                  on Courts, Commercial and Administrative Law
        H.R. 4078, the ``Regulatory Freeze for Jobs Act of 2012,'' is a
    blunt instrument designed to respond to a mistaken belief--namely, that
    there is a purported link between regulations and unemployment.
        The bill would prohibit agencies from engaging in any significant
    regulatory action until the average monthly unemployment rate for one
    quarter reaches 6% or less.
        The bill also provides for judicial review of agency action,
    including presidential determinations that certain circumstances exist
    that ought to permit significant regulatory action even when it is
    otherwise prohibited under this bill.
        Finally, the bill requires courts to award attorneys fees and costs
    to small businesses whenever an agency changes its position regarding a
    significant regulatory action that is a subject of a lawsuit,
    regardless of whether the change in agency position resulted from the
    filing of the lawsuit.
        H.R. 4078 is premised on the false assertion that regulations
    undermine job creation. Proponents of anti-regulatory legislation have
    asserted this again and again in favor of such measures, yet they have
    never provided evidence of such a link. At best, all I have ever heard
    in support of this assertion are anecdotes, and anecdotes are not
    evidence.
        Indeed, even one of the Majority's own witnesses from a hearing
    last year testified before us that, at most, the effect of regulations
    on employment was ``indeterminate.''
        Based on a review of their written statements, the two Majority
    witnesses today also do not offer evidence of an actual link between
    unemployment and regulation. At best, they hang their arguments on the
    unsupported notion that the creation of new rules creates
    ``uncertainty'' that causes businesses to hesitate in hiring.
        Yet survey after survey of businesses and economists has shown that
    regulations have little to do with a lack of hiring. Instead, they
    overwhelmingly point to a lack of demand among consumers as the primary
    culprit.
        For instance, the Wall Street Journal surveyed business economists
    last summer and found that the ``main reason U.S. companies are
    reluctant to step up hiring is scant demand, rather than uncertainty
    over government policies.''
        Likewise, the National Federation of Independent Business found
    from a survey of its members that 45% cited faltering sales as the
    biggest factor in dampening business confidence. Only 10% of NFIB
    members identified ``regulations'' as a factor.
        Moreover, regulatory failure is more harmful to the economy than
    the existence or creation of new regulations.
        Proponents of H.R. 4078 and other anti-regulatory measures seem to
    forget that our current employment troubles can be traced to a lack of
    adequate regulation of the financial services and housing industries,
    which allowed for reckless private sector behavior that, in turn, led
    to the 2008 financial crisis and the Great Recession, the most severe
    economic recession since the Great Depression.
        In short, there is a far greater economic cost to stopping agencies
    from regulating than there is to allowing new regulations to take
    effect.
        In addition to problems with its philosophical underpinnings, H.R.
    4078 raises a number of troubling questions
        First, when could non-exempt significant regulatory actions
    commence? While economists can take educated guesses as to when the
    quarterly unemployment rate will reach 6%, at best it would be just
    that--a guess.
        Second, what happens when the quarterly unemployment rate reaches
    6% in one quarter, and becomes 6.1% in the next? By H.R. 4078's terms,
    agencies potentially would have to re-freeze significant regulatory
    actions after one quarter.
        Third, what happens when the quarterly unemployment rate reaches
    6.1% in one quarter? Should businesses start preparing for a slew new
    regulations to go into effect in the next quarter in anticipation of
    the unemployment rate reaching 6%?
        Fourth, with respect to judicial review of presidential waiver
    determinations, what would be the standard of review that a court
    should apply? Would the President be required to keep a record of his
    decisionmaking process, to be reviewed by the court? Does this judicial
    review provision violate separation of powers and, in certain
    instances, executive privilege?
        Fifth, with respect to the attorney's fee provision, why is there
    no link between the mandatory award of attorney's fees and costs to
    small businesses, on the one hand, and the change in agency position
    with respect to the significant regulatory action? The language of this
    provision does not require the agency to have changed its position
    because of the filing of the civil action.
        I hope the witnesses will address these questions thoroughly. I
    thank them for being here today and eagerly await their answers.

               Letter from the Coalition for Sensible Safeguards

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      Response to Post-Hearing Questions from Robert Weissman, President,
                                 Public Citizen

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     Material submitted by the Honorable Steve Cohen, a Representative in
    Congress from the State of Tennessee, and Ranking Member, Subcommittee
                  on Courts, Commercial and Administrative Law

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]