[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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                       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\
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    \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
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    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\
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    \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
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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
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    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\
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    \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

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    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
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    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\
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    \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
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         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\
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    \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
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    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\
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    \31\ Stiglitz, J. (2009). Capitalist fools. Vanity Fair, 51(1).
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    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.
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    \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.
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    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\
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    \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
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    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\
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    \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
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    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.
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    \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.
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  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\
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    \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\
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    \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\
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    \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\
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    \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\
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    \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\
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    \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\
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    \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\
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    \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\
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    \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\
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    \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.
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    \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.
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    \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.
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    \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 
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        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\
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    \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.
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    \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.
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    \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.
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    \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\
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    \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\
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    \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\
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    \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\
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    \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

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 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

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